AMERICAN SCIENCE & ENGINEERING INC - ASEI Proxy Statement (definitive) (DEF 14A) EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The table below shows the annual compensation of our Chief Executive Officer and our next four most highly compensated executive officers (the “Named Executive Officers”) for the fiscal year ended March 31, 2005.

			Annual Compensation
Name and Principal Position	Fiscal Year		Salary ($)			Bonus ($)			Long-Term Compensation Option Awards (#)		All other Compensation ($)(1)
Anthony R. Fabiano		2005		312,000			616,000	(4)		28,000		47,000
President and CEO		2004		151,000	(2)		—			75,000		—
Joseph Callerame		2005		200,000			92,000			25,500		2,100
Vice President, Science and		2004		54,000	(3)		—			—		—
Technology		2003		210,000			—			—		2,000
Kenneth J. Galaznik		2005		144,000			115,000			44,000		—
Chief Financial Officer and		2004		82,000	(2)		3,000			6,000		—
Treasurer
Paul H. Grazewski		2005		155,000			120,000			33,000		—
Vice President, Product		2004		131,000			—			6,000		—
Management		2003		125,000			—			—		—
Robert G. Postle		2005		205,000			141,000			13,500		—
Vice President, Worldwide Sales		2004		11,000	(2)		—			—		—
and Marketing

(1) All Other Compensation includes amounts paid for moving allowances to Mr. Fabiano and officer life insurance premiums paid for Mr. Fabiano and Mr. Callerame.

(2) The indicated year was a year of partial employment with the Company for the named executive.

(3) Dr. Callerame was on leave of absence for portion of fiscal 2004.

(4) Includes $134,000 paid in fiscal 2005 earned in fiscal 2004

Mr. Fabiano has an employment arrangement with the Company that provided in September 2003 for his employment as President and Chief Executive Officer, and as a Director, at an initial annual salary of $280,000, subject to annual review, plus performance bonuses tied to Company performance and specific accomplishments. Under the arrangement, Mr. Fabiano received a bonus of $134,000 for fiscal 2004 based on his accomplishment of goals established by the Compensation Committee. Mr. Fabiano also was awarded a special bonus of $175,000 during fiscal 2005 in connection with the successful sale of assets of the High Energy Systems division in January 2005 Mr. Fabiano received a bonus of $306,000 for fiscal 2005 in recognition of having exceeded a combination of Company financial, organizational and operational objectives previously established by the board. Under his initial offer letter, the Company granted Mr. Fabiano options to purchase 75,000 shares of the Company’s Common Stock at the fair market value of the Company’s Common Stock on the date of grant. The options are exercisable at the rate of 25,000 options per year on the first three anniversaries of the grant. During fiscal 2005, Mr. Fabiano was also awarded 28,000 additional options that vest equally over three years. As of the beginning of fiscal 2006, Mr. Fabiano’s annual base salary was set at $336,750.

Mr. Fabiano’s arrangement stipulates that in the event that Mr. Fabiano’s employment with the Company is terminated, he would receive twelve months salary continuation and twelve months of health insurance continuation. The Company also has agreed to provide Mr. Fabiano protection in the event of a change of control.

Dr. Callerame has an employment agreement with the Company granting severance payments equal to one year’s salary if he is terminated for any reason other than for cause or pursuant to a change of control, as defined in the agreement. Under the agreement, severance would also include continuation of benefits for a period equal to the lesser of one year or the start of new employment in which he receives substantially similar benefits.

OPTION GRANTS IN THE LAST FISCAL YEAR

The following table provides information on option grants in the fiscal year ended March 31, 2005 to the Named Executive Officers.

	Individual Grants									Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (1)
	Options Granted		% of Total Options Granted To All Employees			Exercise Price			Expiration Date	5%/year		10%/year
Anthony R. Fabiano		28,000		5.5	%		$	39.06	12/2/2014	$	603,000	$	1,743,000
Joseph Callerame		12,000		2.4	%		15.65		4/15/2014	104,000		299,000
Joseph Callerame		13,500		2.6	%		39.06		12/2/2014	291,000		840,000
Kenneth J. Galaznik		9,000		1.8	%		39.06		12/2/2014	194,000		560,000
Kenneth J. Galaznik		35,000		6.9	%		44.35		2/25/2015	856,000		2,474,000
Paul H. Grazewski		24,000		4.7	%		20.55		6/28/2014	272,000		786,000
Paul H. Grazewski		9,000		1.8	%		39.06		12/2/2014	194,000		560,000
Robert Postle		13,500		2.6	%		39.06		12/2/2014	291,000		840,000

(1) The potential realizable value is calculated based on the term of the option at its date of grant. It is calculated assuming that the fair market value of the Company’s Common Stock on the date of grant appreciates at the indicated annual rates compounded annually for the entire term of the option and that the option is exercised and sold on the last day for its term for the appreciated stock price. These numbers are calculated based on the requirements of the Securities and Exchange Commission and do not reflect our estimate of future stock price growth.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

The following table sets forth the information for the Named Executive Officers with respect to options exercised during the fiscal year ended March 31, 2005 and the value of options held as of March 31, 2005 by such persons.

						Number of Unexercised Options at Fiscal Year End— March 31, 2005				Value of Unexercised In-The- Money Options at Fiscal Year End—March 31, 2005
	Shares Acquired on Exercise (#)		Value Realized ($)			Exercisable (#)		Unexercisable (#)		Exercisable ($)		Unexercisable ($)
Anthony R. Fabiano		25,000		$	815,000		—		78,000	$	—		$	1,880,000
Joseph Callerame		23,000		$	444,000		37,333		32,167	$	1,194,000		$	647,000
Kenneth J. Galaznik		2,000		$	61,000		—		48,000	$	—		$	195,000
Paul H. Grazewski		4,000		$	56,000		3,000		38,000	$	91,000		$	792,000
Robert G. Postle		3,000		$	100,000		9,000		37,500	$	295,000		$	862,000

(1) The value of in-the-money options for the Company represents the positive spread between the exercise price of the stock options and the closing price of the Common Stock as of March 31, 2005 which was $44.71 per share.

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION

During the fiscal year ended March 31, 2005, the Company’s Compensation Committee consisted of Dr. Roger Heinisch, Mr. Denis Brown and Mr. Carl Vogt. No reportable relationship existed with respect to any member of the Compensation Committee.