On May 24, 2006, the Compensation Committee and the Board of Directors of CECO Environmental Corp. ("CECO") approved and adopted a 2006 Executive Incentive Compensation Plan. The Plan is to be administered by the Compensation Committee of CECO, which will select the persons to be granted awards under the Plan, determine the time when awards will be granted, determine the performance goals, and determine whether objectives and conditions for earning awards have been met.

Generally, all executive officers of CECO are eligible to participate in the Plan for any fiscal year. The Committee, however, will select the officers of the Company to whom awards may from time to time be granted under this Plan.

The awards under the Plan will be based on performance targets established for a fiscal year, commencing with fiscal year 2006. The Compensation Committee will establish and approve performance targets for awards for each year, which may be based on certain objective criteria and/or on subjective individual goals established by a participant, management, and the Compensation Committee. Awards will be payable in cash each year upon certification by the Compensation Committee that the specified performance targets for the preceding fiscal year were achieved.

The description set forth herein of the terms of the Plan is qualified in its entirety by reference to the full text of the Plan, which is filed with this report as Exhibit 10.1 and incorporated by reference into this Item 1.01.   

Eligible Participants and Performance Targets -- 2006

On May 24, 2006, the Compensation Committee of CECO approved and adopted the Eligible Participants and Performance Targets for 2006 ("2006 Performance Targets"). The participants in the Plan for 2006 are President and COO Richard J. Blum, CFO and Vice President Dennis W. Blazer, and Senior Vice President David D. Blum. There will be two components to the 2006 performance targets: an objective target based on achievement of a financial goal (the "Objective Bonus") and a target based on achievement of an individual goal. The objective bonus is based on whether and to the extent the amount of actual income from operations before executive bonuses exceeds the target amount of actual income from operations before executive bonuses.

The description set forth herein of the terms the 2006 Performance Targets is qualified in its entirety by reference to the full text of the 2006 Performance Targets, which is filed with this report as Exhibit 10.2 and incorporated by reference into this Item 10.2.