EXHIBIT 10.1 HORMEL FOODS CORPORATION 2005 LONG-TERM INCENTIVE PLANExecutive Compensation Plan Agreement |
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EXHIBIT 10.1
HORMEL FOODS CORPORATION
2005 LONG-TERM INCENTIVE PLAN
ARTICLE I. ESTABLISHMENT
On November 22, 2004, the Compensation Committee of the Board of Directors of HORMEL FOODS CORPORATION, a Delaware corporation (the “Company”), approved and adopted an incentive plan for executives as described herein, which plan shall be known as the “HORMEL FOODS CORPORATION 2005 LONG-TERM INCENTIVE PLAN” (the “Plan”). The Plan shall be effective as of October 31, 2005, subject to its approval by the stockholders of the Company, and no payments shall be made pursuant to the Plan until after the Plan has been approved by the stockholders of the Company.
ARTICLE II. PURPOSE
The purpose of the Plan is to advance the long-term interests of the Company and its stockholders by attracting and retaining key employees, and by stimulating the efforts of such employees to contribute to the continued success and growth of the business of the Company.
ARTICLE III. ADMINISTRATION
3.1 Composition of the Committee. The Plan shall be
administered by the Compensation Committee of the Company’s Board of
Directors, or a subcommittee thereof (the “Committee”), which shall
consist of members appointed from time to time by the Board of Directors and
shall comprise not less than such number of directors as shall be required to
permit the Plan to satisfy the requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”). The
Committee administering the Plan shall be composed solely of “outside
directors” within the meaning of Section 162(m) of the Code.
3.2 Power and Authority of the Committee. The
Committee shall have full power and authority, subject to all the applicable
provisions of the Plan and applicable law, to (a) establish, amend, suspend,
terminate or waive such rules and regulations and appoint such agents as it
deems necessary or advisable for the proper administration of the Plan, (b)
construe, interpret and administer the Plan and any instrument or agreement relating
to, or Award (as defined below in Section 3.4) made under, the Plan, and
(c) make all other determinations and take all other actions necessary or
advisable for the administration of the Plan. Unless otherwise expressly
provided in the Plan, each determination made and each action taken by the
Committee pursuant to the Plan or any instrument or agreement relating to, or
Award made under, the Plan (x) shall be within the sole discretion of the
Committee, (y) may be made at any time and (z) shall
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be final, binding and conclusive for all purposes on all persons, including, but not limited to, holders of Awards, and their legal representatives and beneficiaries, and employees of the Company or of any “Affiliate” of the Company. For purposes of the Plan and any instrument or agreement relating to, or Award made under, the Plan, the term “Affiliate” shall mean any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company and any entity in which the Company has a significant equity interest, in each case as determined by the Committee in its sole discretion.
3.3 Delegation. The Committee may delegate its
powers and duties under the Plan to one or more officers of the Company or any
Affiliate or a committee of such officers, subject to such terms, conditions
and limitations as the Committee may establish in its sole discretion;
provided, however, that the Committee shall not delegate its power to (a) amend
the Plan as provided in Article IX hereof, or (b) make determinations
regarding Awards.
3.4 Qualified Performance-Based Compensation. An
opportunity to receive compensation pursuant to the Plan (hereinafter referred
to as an “Award(s)”) is intended to be “qualified
performance-based compensation” within the meaning of Section 162(m)
of the Code. The following requirements shall apply to all Awards made
under the Plan:
a.
The right to receive payment pursuant to
an Award shall be determined solely on account of the attainment of the
preestablished, objective performance goals selected by the Committee in
connection with the grant of the Award. Such goals shall be based solely on
cumulative total return to stockholders compared to preselected peer groups as
described below in Section 5.2. While the amount of Award(s) may
vary among Participants (as defined below in Section 4.2), the goals
established by the Committee shall apply to all Participants in the same
manner.
b.
The performance period determined by the
Committee during which the achievement of the performance goal or goals
selected by the Committee with respect to any Award is to be measured (the
“Performance Period”) is expected to be approximately three (3)
years, and shall, in no case, be less than 24 months.
c.
The maximum amount which may be paid to
any Participant pursuant to any Award with respect to any Performance Period
shall not exceed the fair market value of three hundred thousand (300,000)
shares of the voting common stock of the Company, determined in the manner
provided in Section 5.2 for determining “fair market value” at
the end of the Performance Period.
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d.
Not later than 90 days after the
beginning of each Performance Period selected by the Committee for an Award,
it shall:
(i)
designate the Performance Period and all
Participants for such Performance Period;
(ii)
designate the Peer Group (as defined
below in Section 5.2); and
(iii) establish the objective performance factors for all
Participants for that Performance Period on the basis of cumulative total
return to stockholders compared to preselected peer groups.
e.
Following the close of each Performance
Period and prior to payment of any amount to any Participant under the Plan,
the Committee must certify in writing as to the attainment of the performance
factors upon which any payments to Participants for that Performance Period are
to be based.
f.
Each of the foregoing provisions, and all
of the other terms and conditions of the Plan as it applies to any Award, shall
be interpreted in such a fashion so as to qualify all compensation paid
thereunder as “qualified performance-based compensation” within the
meaning of Section 162(m) of the Code.
ARTICLE IV. ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. The Plan is unfunded and is maintained by the Company for a select group of management or highly compensated employees. In order to be eligible to participate in the Plan, an employee of the Company or of its Affiliates must be selected by the Committee. In determining the employees who will participate in the Plan, the Committee may take into account the nature of the services rendered by the respective employees, their present and potential contributions to the success of the Company and such other factors as the Committee, in its sole discretion, shall deem
