8-K

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 Current Report
                       Pursuant to Section 13 or 15 (d) of
                       The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  September 20, 2002


                                GSE Systems, Inc.

             (Exact name of registrant as specified in its charter)
Delaware                          0-26494               52-1868008
- --------------------------- --------------- ---------------------------
(State or other jurisdiction     (Commission         (I.R.S. employer
   of incorporation)             file number)        identification no.)

9189 Red Branch Road, Columbia, MD                21045
- ------------------------------------------------- -----------
(Address of principal executive offices)          (zip code)


Registrant's telephone number, including area code: (410) 772-3500

- -------------------------------------------------------------------------------

(Former name or former address, if changed since last report)



Item 5.  Other Events

The following information is deemed by registrant to be of importance to
security holders.

(a)  On August 28, 2002,  the registrant  established an Executive  Compensation
     Plan for Jerry Jen for 2002.  Mr. Jen was appointed  President on March 27,
     2001.  The  Executive  Compensation  Plan  for 2002 is  similar  to the one
     established  for Mr. Jen in 2001, as modified to reflect the company's 2002
     financial forecast.

(b)  On August 30, 2002, the  registrant  accepted the  resignations  of Messrs.
     Feldman and Greenberg as executive employees. Messrs. Feldman and Greenberg
     will  continue to receive  annualized  payments of  $120,000  and  $60,000,
     respectively,  in their  capacity  as  Executive  Director I and  Executive
     Director II,  respectively,  through  December  31, 2002.  The term for all
     Executive  Directors  I  (Messrs.   Feldman  and  Pedersen)  and  Executive
     Directors  II (Messrs.  Moore and  Greenberg)  will expire on December  31,
     2002. Notwithstanding,  Messrs. Feldman, Pedersen, Moore and Greenberg will
     continue to serve as directors of the company in accordance with applicable
     law.  Effective  January  1, 2003,  Messrs.  Feldman,  Pedersen,  Moore and
     Greenberg will receive the company's  standard  compensation  for directors
     (unless otherwise modified by the independent  directors or shareholders in
     accordance with applicable law).

Item 7. Financial Statements, Pro Forma Information and Exhibits

     (c) Exhibits

          10.1 Exhibit  Executive  Compensation Plan for President Jerry Jen for
          2002.

          10.2 Exhibit GSE Board Resolution for Executive Director Status

                                   SIGNATURES

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

                                                      GSE Systems, Inc.

Date: September 20, 2002                              By: /s/Jeffery G. Hough

EX-10

                                      Exhibit 10.1

                     PRESIDENT'S EXECUTIVE COMPENSATION PLAN

Introduction

This document  establishes the Executive  Compensation Plan for the President of
GSE Systems, Inc. ("GSE").

 Objective

Pursuant to direction from the Board of Directors and the Compensation
Committee, GSE is implementing an Executive Compensation Plan for the President
that is designed to reinforce the President's responsibility to provide the
leadership necessary to improve GSE's operating and financial performance. The
Board of Directors and the Compensation Committee believe that, in addition to
his annual salary, the President should be rewarded through an annual incentive
compensation plan for the attainment of superior levels of profitability and
growth. This Executive Compensation Plan has been developed to (1) focus
attention on the achievement of GSE's strategic financial goals and objectives,
(2) provide the President with an opportunity to participate in the growth of
GSE's financial results by linking the President's total compensation to his
leadership impact and the creation of economic value to shareholders, and (3)
provide a measure of variable compensation that recognizes and rewards
outstanding performance.

Effective Date

This Executive Compensation Plan is effective for fiscal year 2002. Thereafter,
this Executive Compensation Plan may be extended and/or modified, in whole or in
part, by the Board of Directors or the Compensation Committee in its sole
discretion.

Annual Executive Compensation Plan

The Executive Compensation Plan consists of (1) annual salary, (2) a bonus, and
(3) the potential 100% vesting of the annual stock options granted to the
President by the Board of Directors or Compensation Committee. The incentive
compensation consists of items (2) and (3). The amount of stock options granted
to the President in 2002 is 25,000 priced as of July 1, 2002. Items (2) and (3)
may be awarded based on GSE's achievement of its annual financial forecast
(i.e., EBIT), as follows:

                     GSE Fiscal Year 2002 Financial Forecast

                  Power             Process        New Business          Total

         Sales   $29,579,000      $21,800,000       $980,000       $52,359,000

         EBIT     $2,207,000       $1,287,000       ($526,000)      $2,968,000

                                  Annual Salary

Annual Salary Effective April 1, 2002: $200,000

                             Incentive Compensation

(1)      Bonus

     If GSE achieves 100% or more of EBIT = bonus payment of $50,000

     If GSE achieves  less than 100%,  but more than 80% of EBIT = bonus payment
     of prorated portion

     If GSE achieves 80% or less of EBIT = no bonus payment

(2)      Options

     If GSE achieves 100% or more of EBIT = all options vest at 100%

     If GSE achieves less than 100%, but more than 80% of EBIT = prorated
     portion of options vest at 100% (any unvested options are
     forfeited/cancelled)

     If GSE  achieves  80% or less of EBIT = no vesting  (unvested  options  are
     forfeited/cancelled)

General

This Executive Compensation Plan constitutes the entire and exclusive
understanding between GSE and the President with respect to the subject matter
hereof. This Executive Compensation Plan supersedes any prior proposals,
representations, agreements or other understandings, oral or written, regarding
the annual incentive compensation plan for GSE's President.

                   EXECUTIVE COMPENSATION PLAN ACKNOWLEDGEMENT

     I hereby acknowledge that I received a copy of my Executive Compensation
     Plan. I understand that this document provides the basis for my annual
     salary and incentive compensation.

     Signature of President:_____________________________________

     Name of President:    _____________________________________

     Date:                 _____________________________________

EX-10

                                  Exhibit 10.2



     RESOLUTION  OF THE BOARD OF  DIRECTORS  OF GSE  SYSTEMS,  INC. BY UNANIMOUS
                       WRITTEN CONSENT IN LIEU OF A MEETING

The undersigned, constituting all of the Board of Directors (the "Board") of GSE
Systems, Inc., a corporation duly incorporated under the laws of the State of
Delaware (the "Company"), taking action without a meeting pursuant to Section
141(f) of the Delaware General Corporation Law and Section 3.8 of the Company's
Bylaws, hereby waive all required notices and consent in writing to the adoption
of the following resolutions, effective August 30, 2002:

WHEREAS,  the Company  previously entered into executive  employment  agreements
with Messrs. Feldman, Pedersen,  Greenberg and Moore (hereinafter the "Executive
Employment Agreement(s)"); and

WHEREAS,  these Executive Employment Agreements provided for payments to Messrs.
Feldman and Pedersen of $120,000 annually, and to Messrs. Greenberg and Moore of
$60,000 annually; and

WHEREAS, these Executive Employment Agreements have a termination date of
December 31, 2002, unless terminated earlier by the executive employee or the
Company (through its Board); and

WHEREAS,  Messrs.  Pedersen and Moore resigned as executive employees on January
25, 2002; and

WHEREAS, in March 2002, the independent directors, by the affirmative votes of a
majority of such independent directors, approved the establishment of Executive
Director I status for Mr. Pedersen at the annual rate of $120,000 for a term
through the earlier of (i) December 31, 2005, or (ii) his death, resignation or
removal from the board in accordance with applicable law; and

WHEREAS, in March 2002, the independent directors, by the affirmative votes of a
majority of such independent directors, also approved the establishment of
Executive Director II status for Mr. Moore at the annual rate of $60,000 for the
same term; and

WHEREAS, at the Board meeting on August 21, 2002, Mr. Feldman, after a
discussion of the material facts surrounding the background of this matter,
requested that his status and Mr. Greenberg's status be converted from executive
employees to Executive Director I and Executive Director II status, respectively
(hereinafter the "Status Conversion"); and

WHEREAS, the full Board, including the independent directors, agreed to this
Status Conversion based on the stipulation that the term for all Executive
Directors I and Executive Directors II expire on December 31, 2002 (hereinafter
the "Term Expiration"); and





WHEREAS, as further consideration for the Status Conversion, Messrs. Pedersen
and Moore agreed to the Term Expiration, which reduces the term of their
Executive Director I and Executive Director II status from December 31, 2005 to
December 31, 2002; and

WHEREAS, upon the Board's execution of these resolutions, Messrs. Feldman and
Greenberg hereby exercise their rights to terminate their status as executive
employees pursuant to their Executive Employment Agreement without any further
action; and

WHEREAS, Messrs. Feldman and Greenberg will receive the annualized payments of
$120,000 and $60,000 as Executive Director I and Executive Director II,
respectively, until the Term Expiration; and

WHEREAS,  notwithstanding  the Status  Conversion  or the Term  Expiration,  the
Company  will  continue  to honor the terms of the Option for  Messrs.  Feldman,
Pedersen,   Greenberg  and  Moore  previously   granted  under  their  Executive
Employment Agreements; and

WHEREAS, neither the Status Conversion nor the Term Expiration will effect the
status of Messrs. Feldman, Pedersen, Greenberg and Moore as directors of the
Company or their assignment to any committees thereof; and

WHEREAS, the full Board, including the independent directors, has determined
that it is fair to the Company to accept the resignation of Messrs. Feldman and
Greenberg as executive employees, to accept the Status Conversion, and to accept
the Term Expiration.

NOW THEREFORE, BE IT RESOLVED that the Board hereby agrees to accept the (i)
resignation of Messrs. Feldman and Greenberg as executive employees, (ii) Status
Conversion, and (iii) Term Expiration.

FURTHER RESOLVED, that the Board hereby directs the Company to take all
necessary and appropriate actions to implement the foregoing resolution.

                                 WRITTEN CONSENT

The undersigned Directors, constituting all of the members of the Board of
Directors of GSE Systems, Inc., hereby take the actions specified above by
unanimous written consent in lieu of a meeting (hereinafter the "Written
Consent"). This Written Consent may be executed in any number of counterparts,
and such signatures may be by means of facsimile or other means of transmission.





IN WITNESS WHEREOF, this Written Consent has been executed by the undersigned as
of the date first above written.

DIRECTORS:


- ------------------
Jerome I. Feldman


- ------------------
George J. Pedersen


- ------------------
Sheldon L. Glashow


- ------------------
Scott N. Greenberg


- ------------------
Joseph W. Lewis


- ------------------
John A. Moore, Jr.


- -----------------
Roger L. Hagengruber


- ------------------
Jerry Jen