Long-Term Performance Program
Award Agreement
(Fiscal Years 2010-2011)
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 2010 and
Fiscal Year 2011 (April 30, 2010 through April 27,
2011).
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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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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 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
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2
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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 : (1)
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Represents one half of the Target Award
Opportunity
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(b)
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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 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
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3
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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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3.
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Payment of Performance
Award .
Unless the MD&CC offered a deferral election satisfying the
requirements of Code Section 409A with respect to your Award,
and you made such a deferral election, your Award, if earned, will
be paid as soon as administratively practicable after the last day
of the Performance Period, (but in no event later than March
15 th of the calendar year following the
calendar year in which occurs the last day of the Performance
Period), subject to Paragraphs 4 and 5 below.
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(a)
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If
your employment with the Company began
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