UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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ENERGY CONVERSION DEVICES, INC.
2956 Waterview Drive
Rochester Hills, Michigan 48309

Dear Stockholder:

     We invite you to attend the 2010 Annual Meeting of Stockholders of Energy Conversion Devices, Inc., which will be held at 1:00 p.m. Eastern Time on Tuesday, December 14, 2010, at the Michigan State University Management Education Center, 811 West Square Lake Road, Troy, Michigan. A map is on the back cover of this proxy statement. We look forward to your attendance either in person or by proxy. If you plan to attend the annual meeting in person, please contact the Company at (248) 299-6063 or send us an e-mail at investor.relations@energyconversiondevices.com.

     Details of the business to be conducted at this meeting are given in the attached Notice of 2010 Annual Meeting of Stockholders.

     Whether or not you plan to attend the annual meeting, your vote is important to us and we encourage you to vote promptly. Even if you intend to attend the annual meeting in person, please sign and date the enclosed proxy card or voting instruction form and return it in the accompanying envelope, or vote via telephone or the Internet, to ensure the presence of a quorum. A proxy may be revoked in the manner described in the accompanying proxy statement at any time before it has been voted at the annual meeting.

     We look forward to seeing you at the annual meeting.

ENERGY CONVERSION DEVICES, INC.

NOTICE OF 2010 ANNUAL MEETING OF STOCKHOLDERS

December 14, 2010 — 1:00 p.m. ET

Dear Stockholder:

     We invite you to attend our 2010 Annual Meeting of Stockholders which will be held at 1:00 p.m. Eastern Time on Tuesday, December 14, 2010, at the Michigan State University Management Education Center, 811 West Square Lake Road, Troy, Michigan.

     We are holding the annual meeting for the following purposes:

	1.		To elect seven directors to hold office until our 2011 Annual Meeting of Stockholders.
	2.		To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2011.
	3.		To approve the Company’s 2010 Omnibus Incentive Compensation Plan.
	4.		To approve an amendment to the Company’s Restated Certificate of Incorporation that would increase the number of shares of common stock that are authorized for issuance from 100,000,000 to 150,000,000.
	5.		To transact such other business as may properly come before the meeting or any adjournment or postponement of the meeting.

     Only stockholders of record at the close of business on October 15, 2010 will be entitled to vote at the annual meeting and any postponements or adjournments of the meeting. For 10 days before the annual meeting, a list of stockholders entitled to vote will be available for inspection during ordinary business hours at our principal executive offices at 2956 Waterview Drive, Rochester Hills, Michigan 48309. If you would like to view the stockholder list, please call the Assistant Corporate Secretary at (248) 299-6060 to schedule an appointment.

     The business of the annual meeting cannot be completed unless a majority of our outstanding common stock is represented at the meeting. As a stockholder, you can help us avoid unnecessary expense and delay by promptly voting even if you plan to attend the annual meeting. You have three options for submitting your vote before the annual meeting: via the Internet, by telephone or by mail.

Rochester Hills, Michigan
November 1, 2010

The Proxy Statement and 2010 Annual Report are available at
www.energyconversiondevices.com/proxymaterials

PROXY STATEMENT

     The Board of Directors (the “Board”) solicits your proxy for the 2010 Annual Meeting of Stockholders of Energy Conversion Devices, Inc. (“ECD” or the “Company”) to be held at 1:00 p.m. Eastern Time on Tuesday, December 14, 2010, at the Michigan State University Management Education Center, 811 West Square Lake Road, Troy, Michigan, and any postponements or adjournments of the annual meeting, for the purposes set forth in the accompanying Notice of 2010 Annual Meeting of Stockholders.

     This proxy statement and accompanying proxy were first mailed to stockholders on or about November 1, 2010.

     Purpose of the Annual Meeting. The specific proposals to be considered and acted upon at the annual meeting are summarized in the Notice and are described in more detail in this proxy statement.

     Record Date and Voting Rights of Stockholders. The Board of the Company has fixed October 15, 2010 as the record date for the determination of stockholders entitled to notice of, and to vote at, the annual meeting or any postponement or adjournment thereof. As of October 15, 2010, there were outstanding and entitled to vote 49,836,031 shares of ECD common stock, each of which is entitled to one vote with respect to each matter to be voted on at the annual meeting.

     Quorum. The Company’s bylaws provide that the required quorum for the transaction of business at the annual meeting is the presence, in person or by proxy, of a majority of the votes eligible to be cast by holders of record of ECD common stock as of the close of business on the record date. If a stockholder submits a proxy and withholds such stockholder’s vote for the election of directors or abstains from voting on the other proposals to be considered at the annual meeting, the shares owned by such stockholder will be considered to be present at the annual meeting for all purposes. If shares are held in “street name” (held for your account by a broker or other nominee) and the broker or other nominee indicates it does not have discretionary authority as to certain shares to vote on certain proposals (broker non-votes), those shares will be considered to be present at the annual meeting for all purposes.

     Proposal No. 1. The nominees for director receiving the highest number of affirmative votes will be elected. Therefore, abstentions and withheld votes have no impact in the election of directors once a quorum is established.

     Proposal Nos. 2 and 3. The affirmative vote of a majority of the votes cast at the annual meeting will be required to approve the proposals:

	•		to ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for fiscal 2011, and
	•		to approve the Company’s 2010 Omnibus Incentive Compensation Plan.

     Abstentions and broker non-votes are not considered as votes cast with respect to such proposals and will have no effect on the outcome of these proposals.

     Proposal No. 4. The affirmative vote of a majority of the outstanding shares of ECD common stock will be required to approve the proposal to amend the Company’s Restated Certificate of Incorporation to increase its authorized shares. Abstentions and broker non-votes on this proposal will have the same effect as a vote against the proposal.

     THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSALS 1, 2, 3 AND 4.

     Voting of Proxies. If your shares are registered directly in your name and you submit your proxy to the Company, you authorize the Company to vote your shares at the annual meeting in accordance with your instructions. If you submit a proxy to the Company without instructions, your shares will be voted in accordance to the recommendations of the Board set forth in this proxy statement. Proxies further authorize the Company to vote on any adjournments or postponements of the annual meeting, and on other matters which may properly come before the annual meeting. All shares represented by signed proxies received by the Company at or prior to the annual meeting from stockholders of record as of the close of business on October 15, 2010 will be voted at the meeting.

     How you can vote. If your shares are registered directly in your name, you may vote:

	•		Via the Internet. Go to the website of our tabulator, Computershare, at www.investorvote.com/ener and follow the instructions. You must specify how you want your shares voted or your Internet vote cannot be completed and you will receive an error message. Your shares will be voted according to your instructions.
	•		By Telephone. If you have a touch-tone phone, call 1-800-652-VOTE (8683) toll free from the U.S. and Canada and follow the instructions. You must specify how you want your shares voted and confirm your vote at the end of the call or your telephone vote cannot be completed. Your shares will be voted according to your instructions.
	•		By Mail. Complete and sign the enclosed proxy and mail it in the enclosed postage prepaid envelope to Computershare. Your proxy will be voted according to your instructions. If you do not specify how you want your shares voted, the shares will be voted as recommended by our Board.
	•		In Person at the Annual Meeting. If you choose to vote in person at the annual meeting, you must bring a government-issued proof of identification that includes a photo (such as a driver’s license or passport) and either the enclosed proxy card or other verification of your ownership of common stock as of October 15, 2010.

     If your shares are held in “street name” (held for your account by a broker or other nominee), you may vote:

	•		Via the Internet or by Telephone. You should receive instructions from your broker or other nominee if you are permitted to vote via the Internet or by telephone.
	•		By Mail. You should receive instructions from your broker or other nominee explaining how to vote your shares by mail.

•

In Person at the Annual Meeting. Contact your broker or other nominee to obtain a legal proxy and bring it with you to the annual meeting. The form of proxy enclosed with the proxy statement that you receive from your broker or other nominee is not a legal proxy on behalf of your broker or other nominee. You will not be able to vote shares you hold in street name at the annual meeting unless you have a proxy from your broker or other nominee issued in your name giving you the right to vote the shares.

     Revocation of Proxies. You may revoke your proxy and/or change your vote at any time before the annual meeting.

     If your shares are registered directly in your name, you must do one of the following:

	•		Via the Internet or by Telephone. Vote via the Internet or by telephone by following the directions above. Only the last Internet or telephone vote will be counted.
	•		By Mail. Sign a new proxy and submit it as instructed above, or send a notice revoking your proxy to the Corporate Secretary so that it is received on or before December 13, 2010.
	•		In Person at the Annual Meeting. Attend the annual meeting and vote in person. Attending the annual meeting will not revoke your proxy unless you specifically request that your proxy be revoked.

     If your shares are held through a broker or other nominee, you should contact such person prior to the time such person carries out any voting instructions you have provided.

ELECTION OF DIRECTORS

     The Company’s entire Board is elected annually by the stockholders. The Board, upon the recommendation of the Corporate Governance and Nominating Committee, has nominated the persons listed below to serve as directors for the one-year term beginning at our annual meeting on December 14, 2010 or until their successors, if any, are elected or appointed. Our nominees for the election of directors at the annual meeting include six independent directors, as defined in the applicable rules for companies traded on The NASDAQ Global Select Market (NASDAQ), and our Chief Executive Officer (CEO), each of whom has consented to serve.

     Mr. Christopher Belden, a director of the Company since February 2008, informed the Company that he will not stand for re-election at our 2010 annual meeting due to the requirements of his position as Executive Vice President of Global Operations at NXP Semiconductors located in The Netherlands.

     The seven nominees who receive the most votes cast at the annual meeting will be elected as directors of the Company.

     While the Nominating and Corporate Governance Committee does not have a written policy regarding diversity in identifying new director candidates, the Committee takes diversity into account in looking for the best available candidates to serve on the Board of Directors. The Committee looks to establish diversity on the Board through a number of demographics, experiences, including operational experience, skills, and viewpoints, all with a view to identify candidates that can assist the Board with its decision making. The Committee believes that the current Board of Directors reflects diversity on a number of these factors.

     Director Qualification. As a participant in the renewable energy sector, our business involves a multifaceted operational structure that operates on a global scale and encompasses research, manufacturing, and marketing functions characterized by rapidly evolving technologies, exposure to business cycles and significant competition. The Corporate Governance and Nominating Committee is responsible for reviewing and assessing with the Board the appropriate skills, experience, and background sought of board members in the context of our business and the then-current membership on the Board. This assessment of board skills, experience, and background includes numerous diverse factors, such as understanding of and experience in corporate strategy, finance, technology, manufacturing and governance, together with energy industry knowledge, with the objective of recommending a group that can best achieve the success of our business and represent stockholders’ interests through the exercise of sound judgment, using its diversity of experience. Additionally, our directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the Company and its stockholders.

     Listed below are the specific experiences, qualifications, attributes or skills that led to the conclusion that our directors should serve on our board in light of our current business and structure.

	•		Leadership and Strategic Experience. We believe that directors with experience in significant leadership positions over an extended period, especially CEO positions, provide the company with relevant insights. They generally possess outstanding leadership qualities and the ability to identify those qualities in others. They demonstrate a practical understanding of organizations, processes, strategy, risk management and the methods to drive change and growth.
	•		Financial Expertise. Knowledge of financial markets, financing and funding operations, and accounting and financial reporting processes is important because it assists our

directors in understanding, advising, and overseeing our capital structure, financing and investing activities, financial reporting, and internal control of such activities.

	•		Marketing experience. We continue to explore ways to increase our market share by identifying and developing new markets for our products. Therefore, marketing expertise, especially on an international basis, is important to us.
	•		Global experience. Our success depends, in part, on our success in growing our business worldwide. For example, in fiscal year 2010, 84% of our revenues came from outside the United States. This highlights the importance of having directors with a global business perspective.

     THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” EACH OF THE FOLLOWING NOMINEES:

Joseph A. Avila, 59, has been a director since September 2007. Mr. Avila currently provides advisory and management services to energy and private equity firms. From September 29, 2006 to March 6, 2008, Mr. Avila served as an officer and Executive Vice President, Strategic Operations and Process at Quanta Services, Inc., a leading provider of specialized contracting services, delivering end-to-end network solutions for the electric power, gas, telecommunications and cable television industries. From 1978 to 2006, he held various positions with McKinsey & Company, most recently as a director providing leadership to the Energy and Technology Management Practices. Mr. Avila has extensive consulting experience with a wide range of companies in the energy, industrial and technologies industries. Mr. Avila serves on the Advisory Board of the Houston Technology Center.

Mr. Avila brings to the Board strategic and financial expertise as a result of his leadership role with a global business consulting firm, as well as extensive experience in the energy and technology industries.

Alan E. Barton, 55, has been a director since September 2008. He is the Chief Executive Officer and a member of the Board of Directors of Lehigh Technologies, Inc., a manufacturer and distributor of fine and ultra-fine engineered rubber powders. Prior to his retirement in October 2008, he was an Executive Vice President of Rohm and Haas Company. During his 24-year career at Rohm and Haas, Dr. Barton held many positions, including Vice President and Business Group Executive, Coatings (2002-2006) with oversight for operations, engineering and Latin America; Regional Director, Asia-Pacific Region (2004-2005), and was named to Rohm and Haas’ Executive Council in 2001. His experience at Rohm and Haas included product development, business development and scientific research. Dr. Barton was named a director of Sriya Innovations Inc., a Kleiner-Perkins portfolio company, in September 2010. From January 2004 to March 2009, Dr. Barton was a member of the Board of Directors of Technitrol, Inc. and served on its Compensation Committee and was the Chairman of its Governance Committee.

Mr. Barton brings to the Board senior leadership, strategic and marketing expertise from his current position as CEO of Lehigh Technologies, and a global business and technology perspective as a result of his 24-year leadership position with Rohm and Haas.

Robert I. Frey, 67, has been a director since April 2004. He is an assistant professor of Global Management and Business Ethics at Grand Valley State University, in Grand Rapids, Michigan. He joined Herman Miller, Inc. in 1996, where he was an Executive Vice President and member of the Executive Committee and President of Herman Miller International, accountable for international strategic planning, manufacturing, sales and marketing until his retirement in 2002. Prior thereto, Mr. Frey served as General Counsel and then Executive Vice President and President of Whirlpool, Inc.’s Asian operations.

As an assistant professor of Global Management and Business Ethics, Mr. Frey brings to the Board extensive governance experience. Additionally, his significant global experience in international strategic planning, sales and marketing enables him to offer valuable perspective.

William J. Ketelhut, 58, has been a director since April 2004. He has served as an advisor to and Division Managing Director of CSE-Global Ltd. Singapore since 2004. From 2001 to 2002, he was President of Control Products at Honeywell International, Inc., a global company with 15 major lines of businesses including semiconductors, consumer products and sensors products. From 1994 to 2001, he served as President of several business units of Invensys plc, a global automation, controls and process solutions group. Mr. Ketelhut was President and Chief Executive Officer at GE/Micro Switch Control Inc. (a joint venture between GE and Honeywell Microswitch Division) from 1992 to1994. He has served as an independent director of the privately held company, Industrial Defender, an industrial cyber-security company since 2003.

Mr. Ketelhut brings to the Board extensive global experience in corporate leadership and financial management. Additionally, his background in technology is useful in analyzing the market segments in which we compete. Mr. Ketelhut also qualifies as an audit committee financial expert.

Mark D. Morelli, 46, has been President, Chief Executive Officer and director of ECD since September 1, 2007. He served as President of Carrier Commercial Refrigeration, a division of Carrier Corporation, from April 2006 until he joined ECD in September 2007. From June 2004 to April 2006, Mr. Morelli was Vice President and General Manager of the Marine Container Business with Carrier Transicold, and from September 2002 to June 2004 he was the Managing Director of Transport Air Conditioning with Carrier Transicold. Prior to 2002, he also served as Vice President of Marketing and Strategy for United Technologies Power Division and in various positions for Carrier. His customer and strategic business experience includes developing and marketing building-integrated products within United Technologies Corporation.

Mr. Morelli brings to the Board significant senior leadership, strategic, marketing and global operations experience. As our CEO and a senior executive, he is directly responsible for the Company’s strategy and operations.

Stephen Rabinowitz, 67, a director since April 2004, serves as ECD’s Chairman of the Board. He was Chairman and Chief Executive Officer of General Cable, Inc., a leader in the development, design, manufacture, marketing and distribution of copper, aluminum and fiber optic wire and cable products for the communications, energy and specialty markets, until he retired in 2001. Prior to joining General Cable as President and CEO in 1994, he served as President and CEO of Allied Signal Braking Systems, and before that as President and CEO of General Electric’s Electrical Distribution and Control business. He has also held management positions in manufacturing operations and technology at the General Electric Company and the Ford Motor Company. Mr. Rabinowitz is a member of the Board of Directors of Columbus McKinnon Corp. and serves on its Audit Committee and chairs its Compensation and Succession Committee.

Mr. Rabinowitz has significant executive experience with the strategic, financial, and operational requirements of a research and manufacturing-oriented organization and brings to our Board senior leadership, strategic, manufacturing, financial and governance experience. Moreover, as director of public companies, he provides cross-board experience.

George A. Schreiber, Jr., 62, has been a director since September 2006. He is the President and Chief Executive Officer of Continental Energy Systems LLC, a holding company that invests in regulated public utility companies. Continental Energy Systems’ principal investments include natural gas distribution businesses serving markets in Michigan, Alaska and New Mexico. From September 1999 to March 2004, he was the Chairman, Global Energy Group, at Credit Suisse First Boston, New York.

Mr. Schreiber brings senior leadership and strategic expertise to the Board from his current position as CEO of Continental Energy Systems. Additionally, with his experience as the former Chairman of the Global Energy Group at Credit Suisse First Boston, he provides significant business development and financial experience in the energy sector.

     Board Responsibilities and Structure. The Board oversees, counsels and directs management in serving the long-term interests of the Company and our stockholders. The Board’s responsibilities include:

	•		selecting, evaluating and compensating the chief executive officer and overseeing chief executive officer succession planning;
	•		providing counsel on and oversight of the selection, evaluation, development and compensation of officers and senior management;
	•		reviewing, monitoring and, where appropriate, approving fundamental financial and business strategies and significant Company actions;
	•		assessing major risks facing the Company, and reviewing options for mitigation; and
	•		overseeing processes designed to maintain the integrity and reputation of the Company, including the integrity of the financial statements and compliance with law and ethics.

     The Board and the committees through which it carries out these responsibilities meet throughout the year on a set schedule, hold special meetings and act by written consent from time to time as appropriate. Board agendas include regularly scheduled sessions for the independent directors to meet without management present.

     Board Leadership Structure. The roles of the Company’s Chairman and Chief Executive Officer are served by separate individuals since December 2007. Separating the two roles allows our Chief Executive Officer to lead our business on a day-to-day basis and focus on growing the business particularly in the current challenging economic and business environment. The Board annually appoints a Chairman, who is responsible for, among other things, presiding over all meetings of the Board and stockholders. Stephen Rabinowitz, an independent director, was appointed as non-executive Chairman in November 2009.

     The Board’s Role in Risk Oversight. One of the Board’s primary responsibilities is to review the adequacy of our systems for compliance with all applicable laws and regulations; for safeguarding the Company’s assets; and for managing the major risks the Company faces. The Board executes its responsibility for risk management directly and through its committees. The committees oversee risk matters associated with their respective areas of responsibility. The full Board regularly considers risks relating to our strategic plan and our significant investing activities. At least annually, the full Board reviews the Company’s processes for identifying and assessing risk, and the guidelines and policies by which key risks are managed. The Audit Committee regularly considers major financial risk exposures and the steps taken to monitor and control such exposures, including our risk assessment and risk management policies. The Audit Committee also reviews risks associated with our financial accounting and reporting processes, litigation matters, the receipt and processing of whistleblower complaints and our compliance with legal and regulatory requirements. The Compensation Committee considers risks associated with our compensation policies and practices, management development, and retention. The Governance and Nominating Committee considers risks relating to governance matters.

     Risk Assessment in Compensation Programs. We believe that our compensation policies and practices for all participants, including officers, do not create risks that are reasonably likely to have a material adverse effect on the Company. We believe that the Company has appropriate safeguards in place with respect to the compensation programs that assist in mitigating excessive risk-taking that could harm our value or reward poor judgment by our officers and other participants in the program. These safeguards include: managing pay opportunities to market levels through peer benchmarking;

balancing performance focus between near-term objectives and long-term shareholder value creation; and issuing equity awards that vest over extended time horizons. In addition, our performance-based plans contain provisions under which cash and equity awards may be recouped or forfeited if the financial results for a period affecting the calculation of an award are later restated. Furthermore, the Compensation Committee retains its own independent compensation consultant to provide input on executive compensation matters, meets regularly and approves all performance goals, types of awards and target pay. In fiscal 2010, the Compensation Committee reviewed risk as it relates to our compensation programs and determined that our programs do not encourage excessive or inappropriate risk.

     Attendance at Board and Committee Meetings, and Annual Meeting of Stockholders. The Board held 10 meetings in fiscal 2010. Each director is expected to attend all meetings of the Board and of the committees on which the director serves, as well as the annual meeting of stockholders. In fiscal 2010, all of our directors attended at least 75% of the meetings of the Board and of those committees of which he was a member. Each director attended our 2009 Annual Meeting of Stockholders.

     Determination of Independence of Board Members. The Board has determined that each of Messrs. Avila, Barton, Frey, Ketelhut, Rabinowitz and Schreiber, and therefore a majority of the directors, are independent in accordance with the NASDAQ listing standards (which are incorporated into the Company’s Corporate Governance Principles). To be considered independent, the Board must determine that a director does not have any direct or indirect material relationships with the Company and meets categorical and other criteria set forth in the NASDAQ listing standards and the Company’s Corporate Governance Principles. In addition, the Board has determined that each member of the Audit Committee qualifies under the additional independence standards for Audit Committee members established by the Securities and Exchange Commission (Commission) and NASDAQ. Each of the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee is composed entirely of independent directors.

     Mr. Morelli, due to his employment with the Company, is not an independent director.

     Board Committees and Charters. The Board delegates various responsibilities and authority to committees of the Board. Committees regularly report to the full Board on their activities and actions. The Board currently has four standing committees: the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Strategy and Finance Committee. The members of the committees and committee Chairs are recommended by the Corporate Governance and Nominating Committee and then appointed annually by the Board. Each of the committees has the authority to engage legal counsel or other experts, consultants and third-party service providers as it deems appropriate to carry out its responsibilities, including the authority to approve their fees and other retention terms. Each standing committee of the Board has a written charter, which we post in the “Corporate Information—Corporate Governance” section of our website located at www.energyconversiondevices.com. The following table identifies the committee members and number of committee meetings in fiscal 2010.

     Audit Committee. The Audit Committee assists the Board in its oversight of the quality and integrity of the accounting, auditing, and reporting practices of the Company. The Audit Committee’s role includes discussing with management the Company’s processes for managing business and financial risk, and for compliance with significant applicable legal, ethical, and regulatory requirements. The Audit Committee is responsible for the appointment, replacement, compensation, and oversight of the independent registered public accounting firm engaged to issue audit reports on the financial statements of the Company and for the activities, staffing and structure of the internal audit function. The Audit Committee relies on the expertise and knowledge of management and the Company’s internal and external auditors in carrying out its oversight responsibilities. The specific responsibilities of the Audit Committee’s oversight role are described in detail in “Audit Committee Report” and the Audit Committee’s charter.

     The Board determined that each Audit Committee member has sufficient knowledge in financial, accounting and auditing matters to serve on the Audit Committee. Further, the Board has determined Mr. Ketelhut, Chairman of the Audit Committee, is an “audit committee financial expert” within the meaning of the rules of the Commission.

     Compensation Committee. The Compensation Committee administers the executive compensation programs of the Company. For more information on the responsibilities and activities of the Compensation Committee, including the Committee’s processes for determining executive compensation, see “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Executive Compensation Tables,” and the Compensation Committee’s charter.

     Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee is responsible for identifying individuals qualified to become Board members; recommending to the Board director nominees for election at each annual meeting of stockholders and for appointment to fill any vacancies; and developing and implementing the Company’s corporate governance principles. The specific responsibilities and functions of the Corporate Governance and Nominating Committee can be found in the Corporate Governance and Nominating Committee charter. See “Nominating Directors” for further information on the director nomination process.

     Strategy and Finance Committee. The Strategy and Finance Committee assists the Board in fulfilling its responsibilities in connection with the financial affairs of the Company. Key responsibilities include approving the Company’s significant financial and investment plans, policies and strategies, including the Company’s investment objectives and overseeing the Company’s business and financial risk management policies, including capital structure, overall quality of revenue and customer credit. The specific responsibilities and functions of the Strategy and Finance Committee can be found in the Strategy and Finance Committee charter.

     Nominating Directors. The Corporate Governance and Nominating Committee historically has re-nominated those incumbent directors who continue to satisfy the Committee’s criteria for Board membership and who the Committee believes will continue to make important contributions to the Board and the Company. In recommending nominees to the Board, the Committee reviews the experience, mix of skills and background, independence and other qualities of a candidate to assure appropriate Board composition after taking into account the current Board members and the specific needs of the Company and the Board. The Board has specified the following minimum qualifications in the Committee’s charter that it believes must be met by nominees to the Board (see “Election of Directors for further information on director qualifications):

	•		have the highest personal and professional ethics and integrity and whose values are compatible with the Company’s values;
	•		have had experiences and achievements that have given them the ability to exercise good business judgment;
	•		can make significant contributions to the Company’s success;
	•		have the ability to provide wise, informed and thoughtful counsel to top management on a range of issues;
	•		are willing to devote the necessary time to the work of the Board and its Committees;
	•		understand and meet their responsibilities to the Company’s stockholders including the duty of care (making informed decisions) and the duty of loyalty (maintaining confidentiality and avoiding conflicts of interest); and
	•		have backgrounds that provide a portfolio of experience and knowledge commensurate with the Company’s needs.

     The Corporate Governance and Nominating Committee generally relies on multiple sources for identifying and evaluating new nominees, including referrals from the Board and management and the use of third-party consultants. The Committee does not solicit director nominations from stockholders, but will consider such recommendations with respect to elections to be held at an annual meeting so long as such recommendations are timely made and otherwise in accordance with the Company’s Bylaws and applicable law. Stockholder recommendations will be evaluated against the same criteria used to evaluate other nominees. The Company did not receive any nominations by stockholders for the 2010 Annual Meeting of Stockholders. Stockholder recommendations for nominees to be considered by the Committee should be submitted to the Corporate Secretary at its corporate headquarters. See “Additional Information—Stockholder Proposals for 2011 Annual Meeting” for information on how stockholders can make director nominations for the 2011 Annual Meeting of Stockholders. In accordance with the Company’s bylaws, written notice of director nominations by stockholders to be considered at the annual meeting must include (1) as to each nominee, all information required to be disclosed in solicitation of proxies for elections of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, (2) the name and address of the stockholder giving the notice, (3) a representation that the stockholder is a holder of ECD common stock and intends to appear at the annual meeting to make the nomination, (4) a representation whether the stockholder intends, or is part of a group which intends, (a) to deliver a proxy statement and/or form of proxy to holders of at

least the percentage of the Corporation’s outstanding capital stock required to elect the nominee and/or (b) otherwise to solicit proxies from stockholders in support of such nomination, and (5) the written consent of each nominee to serve as a director if so elected.

     Code of Business Conduct. We have adopted a code of business conduct that applies to employees, including our chief executive officer and chief financial officer, and directors. Compliance with the code of business conduct is reaffirmed annually. A copy of our code of business conduct can be found in the “Corporate Information—Corporate Governance” section of our website located at www.energyconversiondevices.com.

     Corporate Governance Principles. The Board’s Corporate Governance Principles, together with the charters of the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Strategy and Finance Committee, provide the framework for the governance of the Company. The Corporate Governance Principles, which include guidelines for determining director independence and qualifications for directors, are available in the “Corporate Information—Corporate Governance” section of our website located at www.energyconversiondevices.com.

     Communicating with Directors. Stockholders may communicate by mail with the Board of Directors individually or as a group through the Corporate Secretary at Energy Conversion Devices, Inc., 2956 Waterview Drive, Rochester Hills, MI 48309. The Board has instructed our Corporate Secretary to review such correspondence and, at his discretion, not to forward items if he deems them to be of a frivolous nature or otherwise inappropriate for the Board’s consideration.

     The Compensation Committee, with support from its independent compensation consultant Exequity, LLP, has the primary responsibility for reviewing and considering adjustments to director compensation and making any recommendations it may have to the Board, which is responsible for approving director compensation. The general policy of the Board and Compensation Committee is that the compensation of non-employee directors should be a mix of cash and equity-based compensation. Compensation paid to the non-employee directors is intended to provide an incentive to continue to serve on the Board and to attract new directors with outstanding qualifications. Directors who are also employed by the Company or any of its subsidiaries do not receive compensation for serving on the Board or any of its committees.

     In August 2008, Exequity, at the request of the Committee, conducted an analysis of proxy statements and other public disclosures of companies that the Board uses for competitive purposes for determining the competitiveness of both non-employee director and executive officer compensation. After reviewing the data from Exequity’s analysis, the Compensation Committee, in October 2008, recommended changes to our 2009 and 2010 non-employee director compensation. Our non-employee directors each receive an annual retainer of $125,000, $85,000 of which is paid in restricted stock units (RSUs) and the balance is paid in quarterly cash installments. The RSUs vest on the last day of the annual term of the director and convert into deferred stock units to be paid out as stock when board service ends. Committee chairmen each receive an additional annual retainer as follows: Audit Committee — $10,000; each of the Compensation Committee and Strategy and Finance Committee — $7,500; Corporate Governance and Nominating Committee — $5,000. Our Chairman of the Board receives an additional annual retainer of $50,000. Non-employee directors are eligible to receive stock options upon their initial appointment to the Board. No additional fees are paid for attendance at Board of Director or Committee meetings. Non-employee directors are reimbursed for any reasonable expenses incurred in attending Board and committee meetings.

     The following table details the total compensation of our non-employee directors for the fiscal year ended June 30, 2010:

     The following table includes outstanding stock options, restricted stock awards, and restricted stock units held by each director at fiscal year end. Market value of unexercised stock options is calculated by taking the difference between the closing price of our common stock on NASDAQ on the last trading day of the fiscal year ($4.10 on June 30, 2010) and the option exercise price and multiplying it by the number of options. Market value of shares or units of stock that have not vested is determined by multiplying the number of shares or units by the closing price of our common stock on NASDAQ on the last trading day of the fiscal year.

     As of October 15, 2010, the executive officers of ECD are as follows:

     Ted F. Amyuni joined the Company in January 2009 as President — Europe, Middle East and Africa (EMEA) and was named an Executive Vice President in August 2009. He is responsible for developing the EMEA team and spearheading all commercial activities in the regions. Prior to joining ECD, Mr. Amyuni served in a number of key executive leadership positions at Carrier Corporation (a division of United Technologies Corporation) in the United States, in Europe, and the Middle East. He has over 30 years of global leadership experience in operations and commercial management and has held international management assignments in Europe, Middle East and Africa. He was a member of UTC’s Executive Leadership Group.

     William C. “Kriss” Andrews is the Interim Chief Financial Officer of ECD. Prior to joining ECD in April 2010, Mr. Andrews spent 12 years at global business advisory firm BBK Ltd., where he was most recently a Senior Managing Director and co-lead of the firm’s North American automotive practice. At BBK, Mr. Andrews advised clients on numerous complex financial transactions and operational improvements, served as a client’s interim CFO, and served for two years on the firm’s Executive Committee. Mr. Andrews also served as Vice President of Finance for Philip Services Corporation’s By-Products Recovery Group, and before that as General Manager at two groups within Rollins Environmental Services. He also spent 13 years serving GATX Corporation in multiple financial positions, including CFO of two of its largest subsidiaries.

     Joseph P. Conroy joined the Company in December 2007 as Vice President of Operations of United Solar Ovonic, and was appointed Senior Vice President of Operations in August 2008. In August 2009, he was named Executive Vice President of Operations. Before coming to ECD, Mr. Conroy had been at American Axle & Manufacturing, Inc. since March 1994. While with American Axle & Manufacturing, Inc., Mr. Conroy served as general manager of the Driveline Americas Division, the company’s largest division, from July 2006 until he joined ECD, general manager of the Metal Formed Products Division from July 2004 to July 2006, and plant manager for the Three Rivers Driveline facility from January 2003 to July 2004.

     Kenneth P. Fox joined the Company in April 2009 as the Company’s Chief Marketing Officer and President — Americas. He is currently Executive Vice President, a position to which he was named in August 2009, and President — Americas. In this role, he is responsible for all commercial operations in the Americas, including sales, applications, project financing, design and field execution. Mr. Fox has over 30 years of global experience in developing and leading high growth, profitable businesses. Prior to joining ECD, he served in a number of key executive leadership roles at United Technologies Corporation and most recently was responsible for UTC Power’s Stationary Power Solutions, a business focused on distributed power generation and building efficiency services.

     Subhendu Guha is Executive Vice President, Photovoltaic Technology of ECD and Chairman of its wholly owned subsidiary, United Solar Ovonic. Dr. Guha joined ECD in 1982. He was named United Solar Ovonic’s President in 2000 and its President and Chief Operating Officer in May 2003, a position he held from 2003 until 2007, when he assumed his current position. Dr. Guha is a world-renowned authority in PV technology, with many years of experience in the development and manufacture of solar panels. He serves on many national and international PV committees, including the Advisory Board of National Center for Photovoltaics, the body responsible for directing and implementing the U.S. Department of Energy’s strategy in PV.

     Jay B. Knoll is Executive Vice President, General Counsel, Chief Administrative Officer and Corporate Secretary of ECD. Prior to being named Executive Vice President in August 2009, he was Senior Vice President, General Counsel and Chief Administrative Officer, a position he held since October 2007. Mr. Knoll joined the Company in 2006 as Vice President and General Counsel. Prior to joining ECD, Mr. Knoll was Vice President, General Counsel and Corporate Secretary of Collins & Aikman Corporation from November 2002 to September 2005. Collins & Aikman filed for bankruptcy in May 2005. Mr. Knoll has held positions at Lear Corporation, Covisint LLC, Visteon Corporation, and Detroit Diesel Corporation.

     The Company faces a dynamic and competitive marketplace that has necessitated the recruitment and development of a substantially new senior management team over the past several years. In support of this transition, the Compensation Committee of the Board conducted a thorough review of the Company’s compensation philosophy and programs. The Committee recognizes that the long-term success of the Company is dependent on the leadership, experience, motivation, execution effectiveness and ingenuity of its executive officers. With this objective, the Committee has overseen development and implementation of a comprehensive compensation program designed to:

	•		attract, retain, and develop key executives critical to the Company’s initiatives;
	•		motivate and reward superior performance, based on competitively benchmarked expectations and resulting from decisions and actions consistent with the Company’s Code of Business Conduct;
	•		foster individual growth; and
	•		align the long-term interests of executives with stockholders.

     In particular, the compensation program in fiscal 2010 consisted of various compensation elements linked to performance-based measures and aligned with stockholder interests. These included an annual cash bonus program and a long-term performance share plan based on specific company performance goals. In addition, time-based restricted stock units were granted in 2010. The annual and long-term incentive plans were designed to focus our executives on our long-term commercialization strategy and reward them for taking effective steps toward delivering on that strategy, with the stock portions of our incentive program intended to align executives’ interests with those of stockholders.

     During fiscal 2010, in light of the economic downturn and the actual performance achieved, the Company and Committee also took certain actions relating to executive officer pay such as maintaining the voluntary salary reductions, paying no bonus for fiscal 2010 performance and revisiting the long-term incentive performance grants implemented in September 2008. All of these compensation actions are described in further detail later in this Compensation Discussion and Analysis.

     The Committee, composed entirely of independent directors, administers the executive compensation programs of the Company. The Committee’s responsibilities include recommending and overseeing compensation and benefit plans and policies, approving equity grants and otherwise administering share-based plans, and reviewing annually all compensation decisions relating to the Company’s executive officers, including the Chief Executive Officer and the Chief Financial Officer and all other executive officers, including those named in the “Summary Compensation Table” (the named executive officers). The Committee’s charter, which is reviewed at least annually by the Committee and approved by the Board, reflects its responsibilities and is available for review in the “Corporate Information—Corporate Governance” section of the Company’s website at www.energyconversiondevices.com. In fiscal 2010, the Committee held 10 meetings.

     Management and Other Employees. The Committee works with management to set the agenda for Committee meetings, and the Chief Executive Officer and other members of management are regularly invited to attend such meetings. The Committee meets in executive session as necessary to discuss compensation issues generally outside the presence of management, as well as to review

the performance and consider the compensation of the Chief Executive Officer. The compensation of the Chief Executive Officer is then reviewed and determined, in executive session, by the entire Board of Directors.

     The Committee takes significant direction from the recommendations of the Chief Executive Officer and Executive Vice President and Chief Human Resources Officer in establishing the compensation for the other named executive officers (and from the Chief Executive Officer alone for the Executive Vice President and Chief Human Resources Officer), as it believes the Chief Executive Officer, with the support of the Chief Human Resources Officer has the best understanding of the overall effectiveness of the management team and each person’s individual contribution to the Company’s performance. For each named executive officer, the Chief Executive Officer provides information to the Committee regarding the individual’s experience, current performance, potential for advancement and other subjective factors. The Committee retains discretion to modify the Chief Executive Officer’s recommendations and reviews such recommendations for their reasonableness based on individual and Company performance as well as market information.

     The Company’s legal, human resources and corporate finance departments also attend Committee meetings upon request and support the Committee in its work pursuant to delegated authority to fulfill various functions in developing and administering the compensation plans and programs.

     Third-Party Consultants. The Committee has the authority to retain and obtain assistance from, and to approve engagement fees and other retention terms of, legal, accounting, compensation and other advisors. Since 2008, the Committee has engaged Exequity, LLP, an independent compensation consultant, to provide market information and analyses in connection with the Committee’s review of the Company’s compensation programs and consideration of individual executive’s compensation packages, and in the determination of equity grants made to executive officers and executive candidates. The Committee approved the terms of the engagement and determined the responsibilities of Exequity independently from the Company’s management. In carrying out the responsibilities assigned to it by the Committee, Exequity worked with Company management in developing and implementing compensation programs approved by the Committee.

     Exequity assisted the Committee in developing incentive programs and competitive opportunities for fiscal 2010, along with providing market information on compensation changes in light of the challenging economy and sharing executive compensation trends. Exequity participated in 10 meetings of the Committee in fiscal 2010.

     The Committee’s decisions with respect to compensation for named executive officers and other executive officers in fiscal 2010 were guided by the following objectives:

	•		Our compensation program should be comprehensive, consisting of base salary, annual incentives, long-term incentives and benefits, and designed to support our commercialization, technology development and growth strategies.
	•		Our compensation program should be designed to motivate and reward our executives for performance through the use of variable compensation tied to short-, intermediate- and long-term results.
	•		Our business success depends on our ability to attract and retain executive talent through competitive compensation opportunity, which we have defined as the 50th percentile of our benchmarking peer group and above the 50th percentile for above target performance.

Benchmarking Group

     In administering the compensation program, the Committee generally relies on market data provided by its independent consultant and management. We reevaluated and revised our peer group for executive officer compensation benchmarking in fiscal 2009 to more closely align with companies similar in terms of their rate of growth, global scale, technological complexity, and nature of business involving the conversion of commodity-based materials into highly valued and unique end products. As a result, for purposes of benchmarking executive officer compensation in fiscal 2009, the Committee reviewed pay data and practices for a group of publicly traded companies consisting of solar companies of similar size to the Company plus similarly sized semiconductor companies with three-year average revenue growth of 15% or more. That group consisted of 26 companies with revenues between $100 million and $1 billion. The following companies were included in that benchmarking peer group:

     However, while the above represents the benchmarking peer group we used in fiscal 2009 when benchmarking executive officer compensation, we did not engage in any further benchmarking for fiscal 2010 because benchmarking was not viewed as necessary or even meaningful due to changes in the macro-economic environment as well as the compensation pay program changes we initiated in response to such conditions. Nevertheless, we believe benchmarking can provide valuable information in most cases and we reviewed the composition of our benchmarking peer group and utilized benchmarking as we considered executive officer compensation for fiscal 2011.

     The total compensation package for our executive officers consists of base salary, annual bonus, long-term incentives and benefits. In determining both the target level of compensation and the mix of compensation elements, we consider market practice, business objectives, expectations of our stockholders, and our own judgment of where the targets should be established. In making this determination, we reviewed historical market practice with regard to such components of compensation, with actual pay mix varying based on Company performance. Market practices will continue to be monitored as one reference point as we make decisions regarding target pay mix. However, we will also continue to make strategic decisions based on our unique business objectives, which may differ from comparator company practices.

     In recent years, we have moved to strengthen our pay-for-performance orientation with a higher proportion of compensation targeted through variable pay. We believe the current target pay mix achieves several important objectives: it supports a strong pay-for-performance culture; it balances the focus on annual and long-term objectives in support of our business strategy; it satisfies the need for

flexibility to motivate and reward exceptional performance; and it better reflects competitive market practice allowing us to attract and retain talented executives.

     Actual compensation levels are a function of Company performance as described under each specific compensation element below. When making pay decisions, the Committee considered the aggregate sum of base salary, annual incentives and the fair value of long-term incentives (determined at grant) for an executive officer. The Committee may also consider salary increase history, past bonus awards and past equity awards as context in understanding year-to-year changes in compensation and retention effect of prior awards. Under the Annual Incentive Program and Long-Term Incentive Program, initial award amounts were determined based on our judgment after reviewing prior year compensation information for our executive officers, as well as current economic conditions. The Committee retains the discretion to decrease the size of individual awards in situations where an executive officer’s individual performance does not receive at least a “satisfactory” rating during his or her annual performance evaluation. Final decisions on any major element of compensation, as well as total compensation for executive officers except the Chief Executive Officer, are made by the Committee, and by the Board, on recommendation by the Committee, for the Chief Executive Officer. As a general matter, our compensation program treats all of the named executive officers similarly.

     The following table shows the intended full-year target values of our fiscal year-end 2010 base salaries, and annual bonus and long-term incentive target pay opportunities for our named executive officers. The Committee reviewed the individual annual incentive and long-term incentive targets for fiscal 2010 and decided to maintain the target opportunities for the named executive officers at fiscal 2009 levels. However, as discussed further below, the long-term incentive opportunities awarded in fiscal 2010 were significantly lower than our targets identified in the table below.

     The Committee believes that base salary is a significant factor in attracting and retaining key employees and also serves to preserve an employee’s commitment to the Company during any downturns. The Committee also believes that base salary should be commensurate with a named executive officer’s scope of responsibilities, demonstrated leadership abilities, management experience and effectiveness and potential for advancement. Accordingly, the Committee intends to review base salaries of our named executive officers on an annual basis, as well as at the time of a promotion or other significant change in responsibilities.

     Fiscal 2010 year-end base salaries for our named executive officers are shown in the table above. The Committee decided that no executive’s salary should be increased in fiscal 2010. As a result, these base salaries continue to reflect the 10% reduction made to base salaries of named executive officers effective May 24, 2009 to July 3, 2010 in light of the economic downturn.

     The Committee believes that the Company’s annual cash incentive program provides a meaningful reward for the achievement of significant short-term Company performance, while assisting the Company in attracting, motivating, and retaining employees. At the beginning of fiscal 2010, the Committee established that performance should be measured based on a combination of financial and individual performance. The weighting of financial and individual performance was equal, with 50% on each component; however, no annual bonus pool would be established unless a minimum level of corporate consolidated adjusted operating income was achieved. The annual incentive for the Chief Executive Officer was based on financial performance only.

     The financial performance metrics for fiscal 2010 were volume and cost per watt produced, two measures that the Committee believes closely correlate with the Company’s goal of achieving

sustainable profitability. Volume includes the megawatt sales physically shipped in accordance with the Company’s revenue recognition policy plus megawatts physically shipped according to the terms of signed project agreements. Average cost per watt produced is defined as the total actual costs to manufacture our product divided by the nominal watt rating of the product. The Committee established specific performance goals around these measures, with individual target awards subject to adjustment based on actual financial performance as follows:

     The fiscal 2010 target bonus for executive officers was 60% of their respective base salary, other than Mr. Morelli whose fiscal 2010 target bonus was 85% of his base salary. These target figures were set by the Committee after discussions with management and the Committee’s consultant and were unchanged from fiscal 2009 targets.

     Upon completion of fiscal 2010, the Committee reviewed actual performance and, since the threshold adjusted operating income was not achieved, no annual incentive payouts were made.

     Awards of Performance-Based RSUs for Fiscal 2010

     At the beginning of fiscal 2009, the Committee considered an approach to equity compensation for both fiscal 2009 and fiscal 2010 in support of the capacity expansion goals that were communicated to the marketplace during 2008. The Committee believes that awarding performance-based equity awards to executive officers and certain other key employees serves as a powerful tool that motivates such individuals to generate long-term returns for the Company’s stockholders.

     Accordingly, the Committee awarded performance-based restricted stock units (RSUs) to the Company’s executive officers based on capacity expansion goals to be achieved by the end of fiscal 2010 and the end of fiscal 2012, along with associated gross margin goals. These awards were denominated in shares of common stock and were to vest upon the achievement of performance conditions set by the Committee. Similar to the annual bonus plan, if the target performance goals were met, then 100% of the target shares were to vest. If maximum goals were met, 200% of the target shares were to vest; and, conversely, if threshold goals were met, 50% of the target shares were to vest. If performance was below the threshold goals, then no shares were to be earned. Linear interpolation was to be used for actual performance between these “mileposts.” Generally, an executive officer must remain employed by the Company through the end of a performance cycle in order to receive restricted stock units upon vesting.

     As a result of the global credit crunch and economic downturn that began unfolding during fiscal 2009, the Company revised its strategy and slowed its timetable for capacity expansion in response to the Company’s dramatically changing business environment. Consequently, the Compensation Committee determined that the capacity expansion goals in the performance-based RSUs were inconsistent with the revised business strategy. After significant deliberation, the Committee decided to pursue a revised two-prong approach to equity-based compensation for fiscal 2010 emphasizing performance, retention, and stockholder alignment. The Committee granted performance-based RSUs

that represented approximately 50% of the fiscal 2010 grant with the remaining 50% of the fiscal 2010 target grant made as time-based RSUs. Taking into account the Company’s decline in stock price, the combination of these two types of awards approximated 45% of the Company’s annual market-based long-term incentive award targets. For example, the annual long-term incentive target for the Chief Executive Officer is 200% of salary, and the combination of these two types of awards approximated 90% of salary.

     The performance-based RSUs had a one-year performance goal based on fiscal 2010 adjusted operating income performance. The maximum number of shares that could be earned was 150% of target. Any shares so earned based on fiscal 2010 actual performance would then be subject to a further two-year time vesting requirement, after which, if the executive was still employed by the Company, the shares would be paid. Upon completion of fiscal 2010, the Committee reviewed actual performance. Since the performance goal of having positive adjusted operating income was not achieved, none of the fiscal 2010 performance-based RSUs were earned.

     The time-based RSUs vest in full three years from the date of grant. Given the new fiscal 2010 grants and the revised business strategy, the Committee decided that the best approach to making fiscal 2010 time-based RSU grants was through the modification of the performance-based RSUs granted in September 2008. In essence, RSU grants made in 2008 that were tied to achieving certain capacity goals by fiscal 2012 were exchanged for time-based awards that vest at the end of three years. The Committee concluded that this was the right approach given the desire to balance the focus on performance and retention in challenging times, while remaining sensitive to share price declines as well as share pool constraints of the 2006 Incentive Plan.

     The following table summarizes the equity grants that were received in exchange for 2008 RSUs (i.e., the time-based RSUs) as well as the performance-based RSUs that were granted in fiscal 2010 to the named executive officers. As previously noted, the performance-based RSUs were not earned in fiscal 2010:

     The Committee believes that limited perquisites and other personal benefits may be appropriate to attract and retain employees for key positions and to increase workplace efficiency. Historically, these benefits have generally been limited to relocation and similar transition costs and have made up a very small percentage of total compensation for the named executive officers. The Committee did not make any adjustments to these benefits for the named executive officers for fiscal 2010.

     The Company also provides benefits such as medical, dental, and disability coverage, paid vacation and term-life insurance to each employee in a non-discriminatory manner. The named executive officers receive benefits on the same terms and conditions as are generally available to all employees.

     The Committee believes that termination benefits serve to enhance our ability to attract and retain talented executive officers and ensure the continued dedication of such employees. In particular, such termination benefits diminish the inevitable distraction of employees caused by personal uncertainties and risk of job loss.

     The Committee approved the Executive Severance Plan pursuant to which executive officers will be eligible to receive severance benefits in connection with the Company’s termination of their employment without “cause” or the employee’s termination of employment for “good reason.” A termination is for “cause” if it relates to willful and continual failure after notice to substantially perform the duties of employment (other than resulting from illness), any other breach resulting in material harm to the Company, conviction of a felony, or fraud or embezzlement, or a material violation of our Code of Business Conduct. A termination by the employee is for “good reason” if it relates to a material reduction in base pay, a material diminution in authorities, duties, or responsibilities, or a material change in office location, with an exception for across-the-board changes unless such changes occur within one year before or after a change in control. An employee must provide written notice of termination for good reason within 90 days following the initial existence of the qualifying condition, and the Company has a right to cure such condition within 30 days of notice. All executive officers participate in the Executive Severance Plan.

     Under the Executive Severance Plan, participants will receive: (1) a base salary equal to the highest amount in the 180 days prior to such termination, for the severance coverage period specified in the participation agreement; (2) a pro-rata portion of the target annual incentive award under the Annual Incentive Program; (3) an additional cash bonus payment based on the severance coverage period and the most recent target annual incentive award; (4) subsidized medical and dental benefits for the severance coverage period, but for no more than 18 months; and (5) outplacement services for the severance coverage period, but for no more than 18 months. The severance coverage period for the executive officers, other than the Chief Executive Officer, is one year. Mr. Morelli’s severance coverage period, as modified by his employment arrangement, is two years if termination occurs prior to a change in control and three years if termination occurs following a change in control. In addition, all unvested awards of stock options, stock appreciation rights, restricted stock, and restricted stock units will vest effective upon the termination date and, for stock options and stock appreciation rights, will be exercisable for six months after the termination date, unless otherwise specified in the award (but no later than the 10th anniversary of the grant date). Unvested awards of performance-based restricted stock units will vest on a pro-rated basis at the end of the performance cycle based on the portion of the performance period employed and the actual performance through the full performance cycle.

     Further, in the event of a termination in connection with a change in control, the Company will provide each participant with a full excise tax gross-up (including, without limitation, any interest or penalties imposed with respect to such taxes) on the above benefits in the event such benefits exceed

310% of the base amount determined under Section 280G of the Code. The gross-up payment generally will be paid (to the extent not required to be withheld) in a lump sum on the fifth day before the due date of such excise taxes. If the participant’s benefits are above 300% and equal to or less than 310% of the base amount, the benefits under the plan will be reduced by the smallest amount necessary to ensure that the benefits are not subject to excise taxes. See “—Tax and Accounting Implications—Change in Control Payments” for further information.

     In order to receive benefits under the Executive Severance Plan, participants must agree to non-competition, non-solicitation, non-disparagement and confidentiality provisions, as well as provide a full waiver and release of any potential employment-related claims (excluding claims under the Executive Severance Plan or any employee benefit plan sponsored by the Company). If a participant violates any of such provisions, the Company will not be required to pay any further amounts under the plan and the participant must repay all amounts previously paid under the Executive Severance Plan.

     Chief Financial Officer Changes

     Harry W. Zike resigned as the Company’s Executive Vice President and Chief Financial Officer, effective April 5, 2010 for personal reasons. At that time, the Board of Directors appointed William C. Andrews to serve as the Chief Financial Officer on an interim basis.

     During fiscal 2010, the challenging and volatile economic environment, particularly as it pertains to the solar industry, created significant difficulty in establishing reasonably challenging but achievable financial goals in the short-term and long-term incentive plans. Early in the fiscal year, it became evident that the performance goals in both the short- and long-term incentive plan were unlikely to be achieved. While management and the Committee anticipate an improving environment and improved performance, it has become clear that budgeting annual performance has become extremely challenging in this volatile environment. Further, the Committee believes it is important that the annual cash bonus and long-term incentive programs motivate and support performance throughout the entire year.

     As a result, for fiscal 2011, the Company has determined that cash bonuses should be based on a combination of financial performance (Earnings Before Interest, Taxes, Depreciation, Restructuring and Stock-Based Compensation [EBITDARS] and Megawatts Shipped), as well as individual performance. The weighting of financial and individual performance is equal, with 50% on each component. However, the goals of the fiscal 2011 annual bonus plan will be set quarterly for the financial performance metrics and semi-annually for the personal performance metrics. Payouts will be made at the end of the relevant performance period; however, the amount of the potential payments is weighted toward the final payment pending review and audit of full fiscal year financial results. As a result, assuming a target level of performance is achieved under both the financial and individual performance goals, the following chart illustrates the amount of the target bonus that would be earned and paid each quarter:

     Further, from a long-term incentive perspective, the Committee maintains a desire to be market competitive and to align executives’ interests with stockholders. Thus, the Committee believes that it is important to continue to provide executives opportunities to earn stock in the Company. Given the limited number of shares available under the 2006 Stock Incentive Plan, the Committee determined that it could not provide market competitive grants in fiscal 2011. In light of that determination, in August 2010 the Committee opted to utilize most of the remaining share pool in the 2006 Stock Incentive Plan to make time-based restricted stock grants to the management team, effectively depleting the pool. The grants made in August approximate 30% of the targeted long-term incentive opportunity (which remained unchanged from those described on pages 20 and 21 of the proxy). The Company is requesting stockholder approval of a new equity compensation plan (see page 47 of this proxy, 2010 Omnibus Incentive Compensation Plan Proposal). If the plan is approved, the Company anticipates making another equity grant for fiscal 2011 to bring equity awards closer to market competitive levels.

     If the Board determines that an executive officer has engaged in fraudulent or intentional misconduct, the Board intends to take action to remedy the misconduct, prevent its recurrence, and impose appropriate discipline on the wrongdoer(s). Discipline would vary depending on the facts and circumstances, and may include, without limitation, (1) termination of employment, (2) initiation of an action for breach of fiduciary duty, and/or (3) if the misconduct resulted in a significant restatement of the Company’s financial results, seeking reimbursement of any portion of performance-based or incentive compensation paid or awarded to the executive that is greater than would have been paid or awarded if calculated based on the restated financial results. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.

     The Committee-approved forms of the Company’s stock option, restricted stock, restricted stock unit, and performance-based restricted stock unit award agreements provide for the recoupment of a portion of share-based compensation paid to executive officers, plus interest, upon the restatement of financial results if such were to occur. In order to trigger recoupment of such funds, the gain on the award must be at least in part attributable to the achievement of certain financial results that were subsequently the subject of restatement, the person must have engaged in fraud or intentional misconduct that is a substantial contributing cause to the need for such restatement and the gain based upon the restated results must be lower than the gain based on the reported results. The terms of the recoupment provision applied to award grants in fiscal 2010. The Annual Incentive Program includes a comparable recoupment provision, and the Committee currently intends to include similar recoupment provisions in its compensation plans, programs and agreements in the future.

Deductibility of Executive Compensation

     The Committee has reviewed the Company’s compensation programs and policies in light of Section 162(m) of the Code, which states that annual compensation in excess of $1 million paid to the Company’s Chief Executive Officer and the three other highest compensated executive officers is not deductible by the Company for federal income tax purposes, subject to specified exemptions (the most significant of which is certain performance-based compensation). Amounts payable under the Annual Incentive Program, approved by the stockholders at the 2007 Annual Meeting of Stockholders, may qualify as performance-based compensation in accordance with Section 162(m). Share-based awards granted under the 2006 Stock Incentive Plan also may qualify as performance-based compensation. To maintain flexibility in compensating the Company’s executive officers to meet a variety of objectives, the Committee does not have a policy that all executive compensation must be tax-deductible. The Committee intends to continue to review the application of Section 162(m) with respect to any future compensation arrangements considered by the Company.

     Section 409A of the Code generally provides that, unless certain requirements are met, amounts deferred under nonqualified deferred compensation arrangements will be included in an employee’s income to the extent such deferred compensation is not subject to a substantial risk of forfeiture. These amounts would also be subject to income and payroll withholding tax penalties and interest to the extent such taxes were not timely paid or withheld.

     The Company believes that all of its employment and severance arrangements and benefit plans meet the requirements of Section 409A to allow for deferral without immediate taxation, penalty or interest.

     Effective July 1, 2005, the Company adopted FAS 123(R), “Share-Based Payment” (now known as FASB ASC Topic 718 Compensation—Stock Compensation), which requires all share-based compensation to be recognized as an expense in the Company’s financial statements over the requisite service period based on the grant-date fair value of the award. See Note 4 of the Summary Compensation Table for further information.

     The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) in this proxy statement with management, including the Chief Executive Officer. Based on such review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2010 and the Proxy Statement for the 2010 Annual Meeting of Stockholders.

     None of the members of the Compensation Committee is or has been an officer or an employee of the Company. In addition, during fiscal 2010, none of the Company’s executive officers served on the board of directors or compensation committee (or committee performing equivalent functions) of any other company that had one or more executive officers serving on the Company’s Compensation Committee.

Summary Compensation Table

     The table below lists the total compensation of our named executive officers in fiscal years 2010, 2009 and 2008.

     The following table presents information on plan-based awards granted to the named executive officers in fiscal 2010.

     The named executive officers, with the exception of Mr. Andrews who joined the Company as Interim Chief Financial Officer effective April 5, 2010, are all participants in the Company’s Executive Severance Plan as described above in the Compensation Discussion and Analysis section entitled “Post-Employment Benefits.”

     The following table provides information on the current holdings of stock options and stock awards by the named executive officers as of June 30, 2010. Market value for stock options is calculated by taking the difference between the closing price of our common stock on NASDAQ on the last trading day of the fiscal year ($4.10 on June 30, 2010) and the option exercise price and multiplying it by the number of options. Market value of shares or units of stock that have not vested is determined by multiplying the number of shares by the closing price of our common stock on NASDAQ on the last trading day of the fiscal year.

     The following table provides information on stock option exercises by and the vesting of stock awards of the named executive officers during fiscal 2010.

     The following section describes potential payments and benefits to the named executive officers under the Company’s compensation and benefit plans and arrangements upon termination of employment or a change in control of the Company as of June 30, 2010.

     In addition, certain of the Company’s benefit plans and arrangements contain provisions regarding acceleration of vesting and payment upon specified termination events. See “—Company Share-Based Plans” below.

     As of fiscal year end 2010, the Company’s named executive officers held equity awards issued under the Energy Conversion Devices, Inc. 1995 Non-Qualified Stock Option Plan (1995 Plan), the 2000 Non-Qualified Stock Option Plan (2000 Plan) and the Energy Conversion Devices, Inc. 2006 Stock Incentive Plan (2006 Plan).

     Under the 1995 Plan, if an employee ceases to be engaged in performing services for the Company for any reason, the stock options shall terminate on the earlier of the fixed termination date set forth in the option or, unless otherwise determined by the Compensation Committee, one year after such termination of services. Under the 2006 Plan, the Compensation Committee shall determine the effect of termination of employment upon equity awards. The termination provisions applicable to such equity awards outstanding at fiscal year-end 2010 are as detailed below.

     If an employee’s continuous service is terminated for any reason other than death, disability, retirement (termination after age 65) or for cause:

	•		any outstanding stock options that are exercisable as of the employee’s termination date may be exercised until the earlier of (1) 90 days under the 2000 Plan or 6 months under the 2006 Plan following such termination or such date determined by the Compensation Committee in its sole discretion and (2) the expiration of the term of the stock option; and
	•		any outstanding stock options that are not exercisable as of the employee’s termination date will be terminated.

     If an employee’s continuous service is terminated for cause, as determined in the sole discretion of the Compensation Committee:

	•		all outstanding stock options will be terminated; however, under the 2006 Plan, the Compensation Committee, in its sole discretion, may permit the exercises of stock options until the earlier of 30 days following such termination and the expiration of the term of the stock option; and
	•		if the employee has delivered a notice to exercise any outstanding stock options prior to the employee’s termination date but the corresponding shares of ECD common stock have not been delivered, the Company is not obligated to deliver the corresponding shares.

     If an employee’s continuous service is terminated due to death, disability or retirement, all outstanding stock options will vest and be exercisable until the earlier of:

	•		the expiration of the term of the stock option; and
	•		in the case of death or disability, 12 months following the date of the employee’s termination or such date determined by the Compensation Committee in its sole discretion; or
	•		in the case of retirement, three years following the date of the employee’s retirement.

     All unvested restricted shares will be forfeited upon the termination of employment for any reason. Notwithstanding the foregoing, the Compensation Committee, in its sole discretion, may fully vest such restricted shares or provide for different treatment upon termination of employment based on the reason of such termination if it determines that different treatment would be in the best interest of the Company.

     All unvested restricted stock units will be forfeited upon the termination of employment for any reason other than death, disability or retirement. Upon death, disability or retirement, all unvested restricted stock units shall become fully vested.

     All unearned performance shares will be forfeited upon the termination of employment for any reason other than retirement, death or disability on or after specified date(s) for each award. If an employee terminates employment on or after such specified date(s) due to retirement, death or disability, then he will be entitled to receive a pro-rated amount of the shares he would otherwise have earned based on the performance achieved during the restriction period, pro-rated to reflect the actual time of employment during such restriction period, i.e. by multiplying the number of shares that would have been earned by a fraction the numerator of which is the number of full or partial months of employment during the restriction period and the denominator of which is the number of months in the restriction period.

     For equity awards granted in FY2008 and after, upon a change in control, all options, performance shares, restricted stock and restricted stock unit awards to the extent converted into substitute equity awards shall continue to vest according to their original vesting schedules. However, if the substitute equity is not publicly traded, then the awards shall become immediately vested upon the change in control. If an employee’s employment is terminated other than for Cause by the Company or by the employee for Good Reason within one (1) year following a change in control, stock options and restricted stock units shall immediately vest and the options shall remain exercisable through the earlier of (i) six (6) months post-termination of employment, or (ii) expiration of the term of the stock option. For performance shares, if an employee’s employment is terminated following a change in control other than for Cause by the company or by the employee for Good Reason, the shares shall be paid by December 31 following the end of the restriction period. For purposes of the foregoing, “Cause” will exist as detailed in an employee’s written employment agreement, or, if the employee has no written employment agreement, if the employee (a) is convicted of, pleads guilty to, or confesses to any felony or act of fraud, misappropriation or embezzlement which has a material adverse effect on the Company, (b) engages in a fraudulent act to the material damage or prejudice of the Company or in conduct or activities materially damaging to the property, business or reputation of the Company, as determined by the Committee in good faith in its sole discretion, (c) materially acts or omits involving malfeasance or negligence in the performance of the employee’s duties to the Company to the material detriment of the

Company, as determined by the Committee in good faith in its sole discretion, which is not corrected by the employee within 30 days after written notice of any such action or omission, (d) fails to comply in any material respect with any written policies or directives of the Company, or materially violates the Company’s Code of Business Conduct, as determined by the Committee in good faith in its sole discretion, which is not corrected by the employee within 30 days after written notice of such failure, or (e) materially breaches any noncompetition agreement with the Company, as determined by the Committee in good faith in its sole discretion; and, “Good Reason” means, without the consent of the employee, (a) any material diminution in the employee’s base pay, (b) any material diminution in the employee’s authority, duties or responsibilities, or (c) a material change in the employee’s office location, i.e., a change of more than 50 miles.

     For options and restricted stock granted prior to FY2008, upon a change in control, all options and restricted stock awards would vest and the Compensation Committee has the discretion to determine whether and to what extent an award holder will receive, in exchange for the options and restricted stock awards, a cash payment or a substitute equity award of the acquiring company. The Company will be deemed to undergo a “change in control” in the event of certain acquisitions of 40% or more of the Company’s common stock, a change in a majority of the Board, the consummation of a reorganization, merger or consolidation or sale or disposition of all or substantially all of the Company’s assets (unless, among other conditions, the Company’s stockholders receive 60% or more of the stock of, and voting power in, the surviving company), or the consummation of the Company’s complete liquidation or dissolution.

     The executive officers participate in the Executive Severance Plan under which the executives are entitled to certain payments upon specified terminations, as described in the Compensation Discussion and Analysis under the heading “Post-Employment Benefits.” The following table estimates the potential payments and benefits to the named executive officers upon termination of employment or a change in control, assuming such event occurs on June 30, 2010. These estimates do not reflect the actual amounts that would be paid to such persons, the amounts of which would only be known at the time the persons become eligible for payment and would be payable only if the specified event occurs.

     The table assumes the acceleration of all share-based awards as of June 30, 2010, except in respect of termination for cause or resignation without good reason, and reflects the intrinsic value of such acceleration, which is (1) for each unvested stock option, $4.10 less the exercise price, if lesser, and (2) for each unvested share of restricted stock, restricted stock units or performance shares, $4.10, which represents the closing price of ECD common stock on NASDAQ on June 30, 2010, the last trading day of fiscal 2010.

     The following items are not reflected in the table set forth below:

	•		Accrued and unpaid salary, bonus and vacation.
	•		Vested stock option gains.
	•		Costs of COBRA or any other mandated governmental assistance program to former employees.
	•		Welfare benefits provided to all salaried employees.
	•		Amounts outstanding under the Company’s 401(k) plan.
	•		Disability insurance proceeds and term life insurance proceeds, excluding any supplemental benefits with premiums paid solely by the employee.