ELOYALTY CORP
SUMMARY OF V.P. COMPENSATION PROGRAM
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<DESCRIPTION>SUMMARY OF V.P. COMPENSATION PROGRAM
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<P align="right"><FONT size="2"><B>Exhibit&nbsp;10.2</B>
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<P align="right"><FONT size="2"><B>August&nbsp;12, 2002</B>
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<P align="center"><FONT size="2"><B>Description of eLoyalty Corporation<BR>
Vice President Compensation Program</B>
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;25, 2002, the Compensation Committee of the Board of Directors of eLoyalty Corporation
approved, and the entire Board of Directors subsequently ratified, a new Vice President Compensation Program (the
&#147;VP Compensation Program&#148;) for eLoyalty&#146;s Vice Presidents, including those who had held the title of Senior Vice
President prior to the Company&#146;s elimination of that title, also in February 2002. All executive officers of the
Company, other than the Chief Executive Officer, are Vice Presidents and participants in the VP Compensation
Program.

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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The VP Compensation Program established five compensation tiers for eLoyalty Vice Presidents. Each
such tier has associated with it a target annual cash compensation amount (consisting of annual base salary
component and a target annual bonus component) and a target equity position in eLoyalty that is the same for each
Vice President within the tier. The target equity position is expressed as a dollar amount and includes all
equity granted by eLoyalty to the Vice President in his or her capacity as an eLoyalty employee, whether in the
form of Common Stock, the right to receive future grants of Common Stock or options to purchase Common Stock.

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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the VP Compensation Program, bonus targets established by the Compensation Committee will be
funded based on overall eLoyalty performance. For each participant, bonuses will be paid based on individual
performance against predetermined personal and team goals. The VP Compensation Program includes limitations
on the funding of cash bonus pools for Vice Presidents, including limits relating to eLoyalty profitability,
requiring that all non-Vice President bonus pools be fully funded before the funding of any Vice President bonus
pool begins, and requiring that bonus pools for Vice Presidents in higher compensation tiers be funded at a
substantially slower rate than the funding of bonus pools for Vice Presidents in lower compensation tiers. Where
established goals are not reached, these elements decrease the likelihood of cash bonuses being paid to Vice
Presidents as a group and decrease the likelihood that any cash bonuses paid to Vice Presidents will reach their
targeted amounts. In addition, those Vice Presidents placed in higher compensation tiers, presumably those most
capable of influencing eLoyalty&#146;s performance, are those least likely to have their cash bonuses fully funded in
the absence of overall strong performance.

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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, eLoyalty expects that equity targets under the VP Compensation Program will be funded
through grants of restricted stock that vest either ratably over five years (for Vice Presidents at the time the
program was adopted) or ratably over four years commencing on the anniversary of the grant date (for newly hired
or promoted Vice Presidents). Non-U.S. Vice Presidents receive an installment stock award that provides for the
issuance, in the aggregate, of the same number of shares of Common Stock as would have been issued to them as
restricted stock had they been U.S. employees, in quarterly
installments corresponding to the vesting of the restricted stock grants. Shares granted under the VP Compensation Plan will be issued under one of eLoyalty&#146;s
stock incentive plans.

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