Long-Term Performance Program
Award Agreement
(Fiscal Years 2009-2010)
Dear
<<RECIPIENT NAME>> :
H. J.
Heinz Company is pleased to confirm that, effective as of
<<DATE>>, you have been granted an award under the
Long-Term Performance Program in accordance with the terms and
conditions of the Second Amended and Restated H. J. Heinz
Company Fiscal Year 2003 Stock Incentive Plan, as amended from time
to time (the “Plan”). This award is also made under and
pursuant to this letter agreement (“Agreement”), the
terms and conditions of which shall govern and control in the event
of a conflict with the terms and conditions of the Plan. For
purposes of this Agreement, the “Company” shall refer
to H. J. Heinz Company and its Subsidiaries. Unless otherwise
defined in this Agreement, all capitalized terms used in this
Agreement shall have the same defined meanings as in the
Plan.
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1.
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Award . The target value of the award to
you under this Agreement is equal to $ <<VALUE>> (the
“Target Award Opportunity”). The maximum award
opportunity for the Performance Period is equal to twice this
amount (the “Maximum Award Opportunity”), subject to
prorating pursuant to Paragraph 3 below. Your actual award
will be paid as a percentage of your Target Award Opportunity, as
determined pursuant to Paragraph 2 below (the
“Award”). The “Performance Period” means
the two consecutive fiscal year periods of Fiscal Year 2009 and
Fiscal Year 2010 (May 1, 2008 through April 28,
2010).
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2.
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Performance Goals
. The Award will be
determined based upon the level of success the Company achieves
during the Performance Period relative to the performance goals
established by the Management Development and Compensation
Committee of the Company’s Board of Directors
(“MD&CC”) as set forth below:
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(a)
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Earnings Per Share
(EPS) Funding Metric . The Maximum Award Opportunity, as
determined by the MD&CC, will be available at the end of the
Performance Period, if the Company meets or exceeds a two-year
cumulative EPS threshold of $5.26, adjusted to eliminate the
after-tax effects of any charges that may be excluded when
determining Performance Measures under the Plan. The Award will
then be determined subject to the ROIC metric and the TSR metric
defined below, and the MD&CC’s discretion to adjust the
Award below the Maximum Award Opportunity. If the target EPS goal
is not achieved, the Award will not be paid.
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(b)
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After–Tax Return on Invested
Capital (ROIC) Metric. Fifty percent (50%) of your Target
Award Opportunity will be determined by the Company’s
performance against the ROIC target metric established by the
MD&CC (“ROIC Target”). For each fiscal year in the
Performance
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Period, a ROIC value will be
calculated, as adjusted to eliminate the after-tax effects of any
charges that may be excluded when determining Performance Measures
under the Plan (“ROIC Value”). Each ROIC Value will
consist of after-tax operating profit as defined by the Company
divided by average invested capital. Average invested capital is
defined as the five quarter average of net debt, as defined by the
Company, plus total shareholder equity as set forth on the
financial statements of the Company for the five most recent fiscal
quarters. At the end of the Performance Period, the ROIC Values for
each fiscal year in the Performance Period will be averaged (the
“ROIC Average”) and the ROIC Average will be compared
to the ROIC Target.
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The
payout percentage for the ROIC metric for the Performance Period is
as follows:
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Percent of ROIC
Target
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Percent of Target
Award
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Performance
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Achieved
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Opportunity Earned
(1)
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>120
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%
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100
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%
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120
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%
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100
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%
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100
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%
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50
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%
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80
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%
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12.5
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%
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<80
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%
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0
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%
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Note :
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(1) Represents one-half of the Target Award
Opportunity
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(c)
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Total Shareholder Return
(TSR) Metric. Fifty percent (50%) of your Target
Award Opportunity will be determined by the Company’s
two-year TSR growth rate (the “TSR Value”) compared to
the two-year TSR growth rates of each of the companies in the TSR
Peer Group other than the Company. The following companies comprise
the TSR Peer Group: Archer Daniels Midland, Campbell Soup Company,
ConAgra Foods Inc., Dean Foods Company, General Mills, Inc., H.J.
Heinz Company, The Hershey Company, Kellogg Company, Kraft Foods
Inc., McCormick & Company, Incorporated, Sara Lee Corporation,
and Tyson Foods, Inc. (each a “TSR Peer Company”). Each
of the TSR Peer Companies’ two-year TSR growth rates will be
calculated by using the following values:
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(i)
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Starting Value. The average of each
TSR Peer Company’s stock price for the 60 trading days prior
to the first day of a Performance Period (the “Starting
Value”); and
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(ii)
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Ending Value. The average of each
TSR Peer Company’s stock price for the 60 trading days prior
to and including the last day of a
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Performance Period plus all
dividends paid over the Performance Period (the “Ending
Value”).
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(iii)
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TSR
Value. Dividing the Ending Value by the Starting Value minus one
and multiplied by 100 (the “TSR Value”).
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(iv)
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TSR
Percentile Ranking. Arraying all of the TSR Peer Companies,
including the Company, from lowest TSR Value, which is given a
ranking of 1, to highest TSR Value, then dividing the
Company’s ranking by the total number of TSR Peer Companies
(the “TSR Percentile Ranking”).
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The
Company’s TSR Percentile Ranking will determine the
percentage of the Target Award Opportunity earned as
follows:
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Percentage of Target
Award
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Company’s TSR Percentile
Ranking
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Opportunity Earned
(1)
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100.0
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%
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87.5
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%
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75.0
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%
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62.5
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%
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50.0
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%
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37.5
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%
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25.0
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%
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12.5
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%
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0.0
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%
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(1)
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Represents
one-half of the Target Award Opportunity.
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