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<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES </B></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>WASHINGTON, D.C. 20549 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM 8-K </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CURRENT REPORT </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PURSUANT TO SECTION 13 OR 15 (d)&nbsp;OF
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>THE SECURITIES EXCHANGE ACT OF 1934</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Date of Report (Date of earliest event
reported): March 11, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 24pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LYDALL, INC. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Exact name of registrant as specified
in its charter) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Commission file number: 1-7665 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <TD STYLE="width: 50%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 2%; vertical-align: bottom; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 48%; font-size: 10pt">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-size: 10pt; font-weight: normal; text-align: center; font-style: normal"><B>Delaware</B></TD>
    <TD STYLE="vertical-align: bottom; font-size: 10pt"><B>&nbsp;</B></TD>
    <TD STYLE="vertical-align: top; font-size: 10pt; font-weight: normal; text-align: center; font-style: normal"><B>06-0865505</B></TD></TR>
<TR>
    <TD STYLE="vertical-align: top"><P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(State
                                    or Other Jurisdiction of</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Incorporation or Organization)</P></TD>
    <TD STYLE="vertical-align: bottom; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="vertical-align: top">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(I.R.S. Employer</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Identification No.)</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR>
    <TD STYLE="width: 50%">&nbsp;</TD>
    <TD STYLE="width: 2%; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 48%">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center">One Colonial Road, Manchester, Connecticut</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: bold; text-align: center">06042</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-weight: normal; text-align: center; font-style: normal">(Address of principal executive offices)</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top; font-weight: normal; text-align: center; font-style: normal">(zip&nbsp;code)</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Registrant&rsquo;s telephone number,
including area code: (860)&nbsp;646-1233 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">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 provisions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <TD STYLE="width: 4%; font-family: Wingdings">&uml;</TD>
    <TD>Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD></TR>
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    <TD STYLE="width: 4%; font-family: Wingdings">&uml;</TD>
    <TD>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD></TR>
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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%; font-family: Wingdings">&uml;</TD>
    <TD>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD></TR>
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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%; font-family: Wingdings">&uml;</TD>
    <TD>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 9%; font-weight: bold">Item&nbsp;5.02.</TD>
    <TD STYLE="font-weight: bold">Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March&nbsp;11, 2012, Lydall, Inc. (the &ldquo;Company&rdquo;)
adopted an Annual Incentive Performance Program (the &ldquo;Program&rdquo;). The following description of the Program is qualified
in its entirety by reference to the full text of the Program, which is attached as Exhibit 10.1 to this Current Report on Form
8&minus;K and is incorporated by reference herein.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Lydall, Inc. Annual Incentive Performance Program </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Program is effective as of January 1, 2012 and applicable
to officers of the Company and Senior Vice Presidents of its subsidiaries (referred to herein as &ldquo;Group A Participating Employees&rdquo;)
and other employees of the Company who are designated by the Company&rsquo;s Chief Executive Officer (referred to herein as &ldquo;Group
B Participating Employees&rdquo;). Collectively, these categories of employees eligible to participate are referred to herein as
&ldquo;Participating Employees.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Target bonus opportunities under
the Program are based on designated percentages of each Participating Employee&rsquo;s base compensation, and range from 15% to
80% of base compensation. <FONT STYLE="letter-spacing: 0pt">The applicable percentage multiplied by the applicable Participating
Employee&rsquo;s base salary is referred to herein as the &ldquo;Target Bonus Amount&rdquo;. </FONT>The Company&rsquo;s Chief
Executive Officer&rsquo;s target bonus opportunity has been set at 80% of base compensation, while all other Named Executive Officers
currently employed by the Company have a bonus opportunity that ranges from 35% to 40% of base compensation. Participating Employees
are eligible for cash bonuses based upon the attainment of specific measures of financial performance (&ldquo;Performance Targets&rdquo;)
for specified, pre-established financial performance metrics (&ldquo;Performance Metrics&rdquo;) for the applicable calendar year
(&ldquo;Program Year&rdquo;) relating to either the Company on a consolidated basis or with respect to a business unit of the
Company (a &ldquo;Business Unit&rdquo;) as determined by the Compensation Committee of the Board of Directors (the &ldquo;Committee&rdquo;).
The Performance Targets for each Performance Metric are established and approved by the Committee no later than March 31 of each
Program Year. All Performance Targets and actual performance with respect to such Performance Targets may be adjusted by the Committee
in its discretion if the Committee determines necessary or appropriate to adjust for the effects of various extraordinary items
specified in the Program.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Program establishes three separate Performance Metrics for
each Participating Employee, in each case, in respect of the Company on a consolidated basis or of a Business Unit: (i)&nbsp;an
operating income metric (defined as operating income from continuing operations), (ii) a free cash flow metric (defined as operating
income from continuing operations, plus depreciation/amortization, plus or minus changes in working capital and minus capital expenditures)
and (iii) a gross margin metric (defined as the percentage resulting from dividing (a)&nbsp;the excess, if any, of net sales from
continuing operations over cost of sales from continuing operations by (b) net sales from continuing operations).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For corporate headquarters&rsquo; Participating Employees, the
target bonus percentage is a combination of consolidated operating income, consolidated free cash flow and consolidated gross margin
Performance Metrics. The relative weights of these Performance Metrics are outlined below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 35%; font-weight: bold; text-align: center">Consolidated<BR> Operating<BR> Income</TD>
    <TD STYLE="width: 30%; font-weight: bold; text-align: center">Consolidated<BR> Free Cash<BR> Flow</TD>
    <TD STYLE="width: 35%; font-weight: bold; text-align: center">Consolidated<BR> Gross Margin</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">50%</TD>
    <TD STYLE="text-align: center">25%</TD>
    <TD STYLE="text-align: center">25%</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For Business Unit Participating Employees, the target bonus
percentage is a combination of individual Business Unit operating income, individual Business Unit free cash flow, and individual
Business Unit gross margin Performance Metrics. The relative weights of these Performance Metrics are outlined below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 35%; font-weight: bold; text-align: center">Business Unit<BR> Operating<BR> Income</TD>
    <TD STYLE="width: 30%; font-weight: bold; text-align: center">Business&nbsp;Unit<BR> Free Cash<BR> Flow</TD>
    <TD STYLE="width: 35%; font-weight: bold; text-align: center">Business Unit<BR> Gross Margin</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">50%</TD>
    <TD STYLE="text-align: center">25%</TD>
    <TD STYLE="text-align: center">25%</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The bonus paid under the Program is determined based on the
actual performance of the Company or the applicable Business Unit as compared to the Performance Target with respect to each Performance
Metric. If actual performance does not exceed specified threshold levels, then no bonus is payable with respect to that Performance
Metric. If the Company&rsquo;s performance exceeds the applicable Performance Targets, Participating Employees may be eligible
for an additional bonus payment up to 100% of the Target Bonus Amount for a Group A Participating Employee and 50% of the Target
Bonus Amount for a Group B Participating Employee. The maximum total bonuses that may be earned under the Program can not exceed
200% of the Target Bonus Amount for a Group A Participating Employee and 150% of the Target Bonus Amount for a Group B Participating
Employee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If earned, cash bonus payments are expected to be paid as soon
as practicable after the completion of the applicable Program Year and the preparation of the Company&rsquo;s audited financial
statements for such year, and after certification of Performance Metrics and Performance Target achievement by the Committee. Participating
Employees must be an employee of the Company in good standing as of the date a cash bonus is actually paid by the Company, except
as otherwise specifically agreed to by the Company&rsquo;s Board of Directors or the Committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Cash bonus payments are subject to recoupment if the Committee
determines that a Participating Employee committed wrongdoing that contributed to a material misstatement, intentional or gross
misconduct, a breach of a fiduciary duty to the Company or its shareholders, or fraud. In addition, at its discretion, the Committee
may require a Participating Employee to disgorge and repay any bonus received based upon financial statements that are later restated,
other than restatements due solely to facts external to the Company, such as a change in accounting principles or a retroactive
change in law. Cash bonus payments also may be recouped in accordance with the applicable provisions of any law, regulation, stock
exchange listing requirement or Company policy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Participation in the Program provides no guarantee that a bonus
under the Program will be paid. The Committee may modify, amend, or terminate the provisions of the Program at any time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt"><B>Section&nbsp;9 - Financial Statements
and Exhibits </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 9%; font-weight: bold">Item&nbsp;9.01.</TD>
    <TD STYLE="font-weight: bold">&nbsp; Financial Statements and Exhibits</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt"><B>(d) Exhibits. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 48.95pt">The following exhibits are furnished with
this report, as set forth below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font-family: Times New Roman, Times, Serif">
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    <TD NOWRAP STYLE="padding-right: 0; padding-left: 0; width: 10%">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; border-bottom: black 0.75pt solid"><B>Exhibit<BR>
        Number</B></P></TD>
    <TD STYLE="font-size: 10pt; padding-right: 0; padding-left: 0; width: 2%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; font-size: 10pt; font-weight: bold; padding-right: 0; padding-left: 0; width: 88%">Exhibit Description</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-size: 10pt; padding-right: 0; padding-left: 0">10.1</TD>
    <TD STYLE="vertical-align: bottom; font-size: 10pt; padding-right: 0; padding-left: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; font-size: 10pt; padding-right: 0; padding-left: 0">Lydall, Inc. Annual Incentive Performance Program.</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURE </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt"><B>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 thereunto
duly authorized. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TR>
    <TD STYLE="width: 48%">&nbsp;</TD>
    <TD STYLE="width: 1%; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="width: 48%">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="vertical-align: bottom">LYDALL, INC.</TD></TR>
<TR>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">March&nbsp;15, 2012</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">By:</TD>
    <TD STYLE="vertical-align: bottom"><B>&nbsp;</B></TD>
    <TD STYLE="vertical-align: bottom; border-bottom: Black 1pt solid">/s/ Paul G. Igoe</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; font-weight: bold; text-align: left">Paul G. Igoe</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; font-weight: bold">Vice President, General Counsel &nbsp;and Corporate Secretary</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXHIBIT INDEX </B></P>

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        Number</B></P></TD>
    <TD STYLE="font-size: 10pt; width: 2%">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; font-size: 10pt; font-weight: bold; width: 88%">Exhibit Description</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-size: 10pt">10.1</TD>
    <TD STYLE="vertical-align: bottom; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; font-size: 10pt">Lydall, Inc. Annual Incentive Performance Program.</TD></TR>
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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 11, 2012
LYDALL, INC.
(Exact name of registrant as specified
in its charter)
Commission file number: 1-7665
Delaware
06-0865505
(State
                                    or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
One Colonial Road, Manchester, Connecticut
06042
(Address of principal executive offices)
(zip code)
Registrant's telephone number,
including area code: (860) 646-1233
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 provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On March 11, 2012, Lydall, Inc. (the "Company")
adopted an Annual Incentive Performance Program (the "Program"). The following description of the Program is qualified
in its entirety by reference to the full text of the Program, which is attached as Exhibit 10.1 to this Current Report on Form
8−K and is incorporated by reference herein.
Lydall, Inc. Annual Incentive Performance Program
The Program is effective as of January 1, 2012 and applicable
to officers of the Company and Senior Vice Presidents of its subsidiaries (referred to herein as "Group A Participating Employees")
and other employees of the Company who are designated by the Company's Chief Executive Officer (referred to herein as "Group
B Participating Employees"). Collectively, these categories of employees eligible to participate are referred to herein as
"Participating Employees."
Target bonus opportunities under
the Program are based on designated percentages of each Participating Employee's base compensation, and range from 15% to
80% of base compensation.
The applicable percentage multiplied by the applicable Participating
Employee's base salary is referred to herein as the "Target Bonus Amount".
The Company's Chief
Executive Officer's target bonus opportunity has been set at 80% of base compensation, while all other Named Executive Officers
currently employed by the Company have a bonus opportunity that ranges from 35% to 40% of base compensation. Participating Employees
are eligible for cash bonuses based upon the attainment of specific measures of financial performance ("Performance Targets")
for specified, pre-established financial performance metrics ("Performance Metrics") for the applicable calendar year
("Program Year") relating to either the Company on a consolidated basis or with respect to a business unit of the
Company (a "Business Unit") as determined by the Compensation Committee of the Board of Directors (the "Committee").
The Performance Targets for each Performance Metric are established and approved by the Committee no later than March 31 of each
Program Year. All Performance Targets and actual performance with respect to such Performance Targets may be adjusted by the Committee
in its discretion if the Committee determines necessary or appropriate to adjust for the effects of various extraordinary items
specified in the Program.
The Program establishes three separate Performance Metrics for
each Participating Employee, in each case, in respect of the Company on a consolidated basis or of a Business Unit: (i) an
operating income metric (defined as operating income from continuing operations), (ii) a free cash flow metric (defined as operating
income from continuing operations, plus depreciation/amortization, plus or minus changes in working capital and minus capital expenditures)
and (iii) a gross margin metric (defined as the percentage resulting from dividing (a) the excess, if any, of net sales from
continuing operations over cost of sales from continuing operations by (b) net sales from continuing operations).
For corporate headquarters' Participating Employees, the
target bonus percentage is a combination of consolidated operating income, consolidated free cash flow and consolidated gross margin
Performance Metrics. The relative weights of these Performance Metrics are outlined below:
Consolidated
Operating
Income
Consolidated
Free Cash
Flow
Consolidated
Gross Margin
50%
25%
25%
For Business Unit Participating Employees, the target bonus
percentage is a combination of individual Business Unit operating income, individual Business Unit free cash flow, and individual
Business Unit gross margin Performance Metrics. The relative weights of these Performance Metrics are outlined below:
Business Unit
Operating
Income
Business Unit
Free Cash
Flow
Business Unit
Gross Margin
50%
25%
25%
The bonus paid under the Program is determined based on the
actual performance of the Company or the applicable Business Unit as compared to the Performance Target with respect to each Performance
Metric. If actual performance does not exceed specified threshold levels, then no bonus is payable with respect to that Performance
Metric. If the Company's performance exceeds the applicable Performance Targets, Participating Employees may be eligible
for an additional bonus payment up to 100% of the Target Bonus Amount for a Group A Participating Employee and 50% of the Target
Bonus Amount for a Group B Participating Employee. The maximum total bonuses that may be earned under the Program can not exceed
200% of the Target Bonus Amount for a Group A Participating Employee and 150% of the Target Bonus Amount for a Group B Participating
Employee.
If earned, cash bonus payments are expected to be paid as soon
as practicable after the completion of the applicable Program Year and the preparation of the Company's audited financial
statements for such year, and after certification of Performance Metrics and Performance Target achievement by the Committee. Participating
Employees must be an employee of the Company in good standing as of the date a cash bonus is actually paid by the Company, except
as otherwise specifically agreed to by the Company's Board of Directors or the Committee.
Cash bonus payments are subject to recoupment if the Committee
determines that a Participating Employee committed wrongdoing that contributed to a material misstatement, intentional or gross
misconduct, a breach of a fiduciary duty to the Company or its shareholders, or fraud. In addition, at its discretion, the Committee
may require a Participating Employee to disgorge and repay any bonus received based upon financial statements that are later restated,
other than restatements due solely to facts external to the Company, such as a change in accounting principles or a retroactive
change in law. Cash bonus payments also may be recouped in accordance with the applicable provisions of any law, regulation, stock
exchange listing requirement or Company policy.
Participation in the Program provides no guarantee that a bonus
under the Program will be paid. The Committee may modify, amend, or terminate the provisions of the Program at any time.
Section 9 - Financial Statements
and Exhibits
Item 9.01.
Financial Statements and Exhibits
(d) Exhibits.
The following exhibits are furnished with
this report, as set forth below:
Exhibit
Number
Exhibit Description
10.1
Lydall, Inc. Annual Incentive Performance Program.
SIGNATURE
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 thereunto
duly authorized.
LYDALL, INC.
March 15, 2012
By:
/s/ Paul G. Igoe
Paul G. Igoe
Vice President, General Counsel  and Corporate Secretary
EXHIBIT INDEX
Exhibit
Number
Exhibit Description
10.1
Lydall, Inc. Annual Incentive Performance Program.