Exhibit 10.8
THE HERSHEY
COMPANY
DIRECTORS’ COMPENSATION
PLAN
(Amended and
Restated
Effective as of December 2,
2008)
1
PURPOSE
The purposes of the Directors’
Compensation Plan (“Plan”) are to provide Directors of
The Hershey Company (“Company”) with payment
alternatives for the retainer and fees payable for services as
members of the Board of Directors (“Board”) of the
Company or as a chair of any committee thereof (together,
“Director Fees”), to provide Directors the opportunity
to elect to receive all or a portion of the Directors Fees in
Deferred Stock Units (“DSUs”), each representing an
obligation of the Company to issue one share of Common Stock of the
Company, $1.00 par value per share (“Common Stock”),
and to promote the identification of interests between such
Directors and the stockholders of the Company by paying a portion
of each Director’s compensation in Restricted Stock Units
(“RSUs”), each RSU representing an obligation of the
Company to issue one share of Common Stock. The Plan is intended to
comply with Internal Revenue Code (“Code”) section 409A
and official guidance issued thereunder (collectively,
“Section 409A”). Notwithstanding anything herein to the
contrary, this Plan shall be interpreted, operated and administered
in a manner consistent with this intention.
2
ELIGIBILITY
Any Director of the Company who is
not an employee of the Company or any of its subsidiaries shall be
eligible to participate in the Plan. Except as the context may
otherwise require, references in this Plan to a
“Director” shall mean only those directors of the
Company who are participants in the Plan.
3
PAYMENT
(a) Director Fees. A Director
shall be entitled to Director Fees, in such amounts as shall be
determined by the Board, for services on the Board and as a chair
of any committee of the Board. Pursuant to Section 4 hereof, a
Director may elect to have payment of Directors Fees made currently
in cash and/or Common Stock or deferred for subsequent payment in
cash or Common Stock; provided that if paid currently, fees payable
for services as a chair of any committee of the Board shall be
payable only in cash. Any shares of Common Stock payable under this
Section 3(a) shall be paid by the issuance to the Director of
a number of shares of
1
Common Stock equal to the cash amount of the
retainer so payable divided by the Fair Market Value of one share
of the Common Stock, as defined in Section 12 hereof. Any
fractional share of Common Stock resulting from such payment shall
be rounded to the nearest whole share. The Company shall issue
share certificates to the Director for the shares of Common Stock
acquired or, if requested in writing by the Director and permitted
under such plan, the shares acquired shall be added to the
Director’s account under the Company’s Automatic
Dividend Reinvestment Plan. As of the date on which the part or
whole of the retainer is payable in shares of Common Stock, the
Director shall be a stockholder of the Company with respect to such
shares. Unless otherwise elected in Section 4, any remaining
Director Fees shall be payable in cash.
(b) Restricted Stock Units. A
Director shall also be entitled to receive RSUs, in such amounts as
shall be determined by the Board, for services on the Board.
Beginning January 1, 2008 and thereafter, unless otherwise
directed by the Board, RSUs having a value of $30,000 (or such
other amount as the Board shall from time to time determine) shall
be awarded to each Director on the first day of January, April,
July and October. The number of full and fractional RSUs so awarded
shall be determined by dividing $30,000 (or such other amount) by
the average of the per share closing price of the Common Stock on
the New York Stock Exchange as published in The Wall Street
Journal (or such other reliable publication as the Board or its
delegates may determine) for the last three trading days of the
month preceding the date of the award. Directors whose membership
on the Board commences after January 1, 2008 on a day which is not
the first day of any January, April, July or October, shall be
awarded a pro rata number of RSUs with respect to the quarter
during which the Director joined the Board equal to the number of
RSUs awarded to each Director who was a member of the Board on the
first day of the applicable quarter, multiplied by a fraction, the
numerator of which equals the number of days remaining in the
quarter after the first day on which such Director became a member
of the Board, and the denominator being the total number of days in
the quarter. A Restricted Stock Unit Account shall be established
on the books of the Company in the name of each Director. During
the period of the Director’s membership on the Board, the
Director’s Restricted Stock Unit Account shall be subject to
credits, adjustment and substitution to reflect any dividend or
other distribution on the outstanding Common Stock or any split or
consolidation or other change affecting the Common Stock. Any such
credit, adjustment or substitution shall be made in a manner
similar to that set forth in Section 6(a) and 6(b) with
respect to Deferred Stock Compensation Accounts. RSUs awarded prior
to January 1, 2008 shall vest upon termination of the
Director’s membership on the Board by reason of retirement,
death or disability, or such other circumstances as the Board, in
its sole discretion, shall at any time determine (provided that a
termination of a Director’s membership on the Board following
a Change in Control (as defined in the Company’s Executive
Benefits Protection Plan (Group 3A), the (“EBPP”) shall
be considered a retirement for this purpose). RSUs not vested upon
or within 120 days following the Director’s termination of
membership on the Board, as aforesaid, shall be forfeited as of
11:59 p.m. (Eastern Time) on the 120th day following such
Director’s termination of membership on the Board, as
aforesaid. The balance of the Director’s Restricted Stock
Unit Account which becomes vested upon termination of the
Director’s membership shall be paid in a lump sum in
accordance with Section 7(c). RSUs awarded for periods after
2007 (together with credits, adjustments or substitutions
attributable thereto, “Post-2007 RSUs”) shall vest upon
the first anniversary of the day upon which such Post-2007 RSUs
were awarded, or such other date or dates as set forth by the Board
at the time of the award; provided, that the vesting of such
Post-2007 RSUs shall be accelerated to the date of termination of
the Director’s membership on
2
the Board by reason
of retirement, death or disability, or for any reason following a
Change in Control (as defined in the EBPP), or such other
circumstances as the Board, in its sole discretion, shall at any
time determine. For purposes of this Plan, termination of a
director’s membership on the Board at anytime following the
director’s 60 th birthday shall be deemed a
retirement. The portion of a Director’s Restricted Stock Unit
Account attributable to Post-2007 RSUs which becomes vested in
accordance with the second preceding sentence shall, unless
deferred by the Director into the Director’s Deferred Stock
Compensation Account pursuant to an election made under
Section 4, be paid in a lump sum in accordance with
Section 7(c). If payment hereunder would result in the
issuance of a fractional share of Common Stock, such fractional
share shall not be issued and cash in lieu of such fractional share
shall be paid to the Director based upon the average of the per
share closing price of the Common Stock on the New York Stock
Exchange as published in The Wall Street Journal (or such
other reliable publication as the Board or its delegates may
determine) for the three trading days immediately preceding the
date of payment. The Company shall issue share certificates to the
Director, or the Director’s designated beneficiary, for the
shares of Common Stock represented by the Director’s vested
RSUs, or if requested in writing by the Director and permitted
under such plan, the shares to be distributed shall be added to the
Director’s account under the Company’s Automatic
Dividend Reinvestment Plan. As of the date on which the Director is
entitled to receive payment of shares of Common Stock, a Director
shall be a stockholder of the Company with respect to such
shares.
4
ELECTIONS
(a) Director Fee Payment and RSU
Payment Alternatives. A Director may elect any one of the
following alternatives with respect to payment of Director Fees and
with respect to payment of Post-2007 RSUs:
(1) to receive currently full
payment of Director Fees in cash and/or Common Stock, as set forth
in Section 3(a) above, on the date or dates on which the
Director Fees are payable;
(2) to defer payment of all or a
portion of the Director Fees for subsequent payment in cash (a
“Cash Deferral Election”);
(3) to defer payment of all or a
portion of the Director Fees for subsequent payment in shares of
Common Stock (a “Stock Deferral Election”);
or
(4) to defer payment of all or a
portion of the Post-2007 RSUs for subsequent payment in shares of
Common Stock (also a “Stock Deferral Election”);
or
(5) a combination of (2),
(3) and (4).
(b) General Section 409A
Definitions. For purposes of this Plan, the following words
shall have the meanings set forth below:
|
|
(1)
|
“Change in Control
Event” means an event described in IRS regulations
or
|
3
|
|
other guidance under Code section
409A(a)(2)(A)(v).
|
|
|
(2)
|
“Separation
from Service” or “Separate from Service” means a
“separation from service” within the meaning of Code
section 409A(a)(2)(A)(i).
|
(c) Filing and Effectiveness of
Elections . The election by a Director to receive payment of
Director Fees other than as set forth in Section 4(a)(1) on
the date on which the Director Fees are otherwise payable, or to
receive payment of shares of Common Stock attributable to the
Post-2007 RSUs other than on the date which the shares are
otherwise payable is made by filing with the Secretary of the
Company a Notice of Election in the form prescribed by the Company
(an “Election”). In order to be effective for any
calendar year, an Election must be received by the Secretary of the
Company on or before December 31 of the preceding calendar
year, except that if a Director files a Notice of Election on or
before 30 days subsequent to the Director’s initial election
to the office of Director, the Election shall be effective on the
date of filing with respect to Director Fees and Post-2007 RSUs
payable for any portion of the calendar year which remains at the
date of such filing. An Election may not be modified or terminated
after the beginning of a calendar year for which it is effective.
Unless modified or terminated by filing a new Notice of Election on
or before December 31 immediately preceding the calendar year
for which such modification or termination is effective, an
Election shall be effective for and apply to Director Fees payable
for each subsequent calendar year. Director Fees earned or
Post-2007 RSUs which vest at any time for which an Election is not
effective shall be paid as set forth in Section 4(a)(1) on the
date when the Director Fees or Section 7 on the date the
shares attributable to such Post-2007 RSUs are otherwise payable,
as applicable. Any Election shall terminate on the date a Director
Separates from Service. In addition to establishing the amount of
each year’s deferral, a Director may elect from the following
time and form of payment alternatives:
(1) Change in
Control Event. Notwithstanding any provision in the Plan to the
contrary, a Director may make an Election each year to have the
portion of his or her Deferred Cash Compensation Account and
Deferred Stock Compensation Account (collectively referred to
hereafter as the “Account Balance”) related to amounts
deferred under such Election (and earnings thereon) distributed in
the form selected on the first business day next succeeding the
59 th day following the earlier of:
(x) the date of a Change in Control Event; or (y) the
date of the Director’s Separation from Service.
(2) Installment Form
of Payment. Notwithstanding any provision in the Plan to the
contrary, a Director may make an Election each year to have the
portion of the Account Balance related to amounts deferred under
such Election (and earnings thereon) distributed in annual
installments over a period of up to 15 years with payments
commencing on the first business day next succeeding the 59
th
day following the
applicable payment date.
(d) Cash Deferral Elections.
Director Fees deferred pursuant to a Cash Deferral Election shall
be deferred and paid as provided in Sections 5 and 7.
(e) Stock Deferral Elections.
Director Fees and Post-2007 RSUs deferred pursuant to a Stock
Deferral Election shall be deferred and paid as provided in
Sections 6 and 7.
4
(f) Special
Transition Period Election. Notwithstanding any Elections prior
to 2009 or Plan provisions to the contrary, a Director may elect
during 2008 to receive all amounts, if any, attributable to
Elections made prior to 2009 and credited to his or her Account
Balance in the form selected on the first business day next
succeeding the 59 th day following the earlier of:
(1) the date of the Director’s Separation from Service;
or (2) the date of a Change in Control Event. Any such
transition period Election must become irrevocable on or before
December 31, 2008 and must be made in accordance with the
transition rules under Section 409A and the procedures and
distribution rules established by the Board.
5
DEFERRED CASH COMPENSATION
ACCOUNT
(a) General. The amount of
any Director Fees deferred in accordance with a Cash Deferral
Election shall be credited on the date on which such Director Fees
are otherwise payable to a deferred cash compensation account
maintained by the Company in the name of the Director (a
“Deferred Cash Compensation Account”). A separate
Deferred Cash Compensation Account shall be maintained for each
calendar year for which a Director has elected a different number
of payment installments or as otherwise may be agreed between the
Director and the Company.
(b) Adjustment for Earnings or
Losses. The amount in the Director’s Deferred Cash
Compensation Account shall be adjusted to reflect net earnings,
gains or losses in accordance with the provisions of The Hershey
Company Deferred Compensation Plan relating to Investment Credits
and Investment Options. The adjustment for earnings, gains or
losses shall be equal to the amount determined under (1) below
as follows:
(1) Deemed Investment
Options . The total amount determined by multiplying the
rate earned (positive or negative) by each fund available (taking
into account earnings distributed and share appreciation (gains) or
depreciation (losses) on the value of shares of the fund) for the
applicable period by the portion of the balance in the
Director’s Deferred Cash Compensation Account as of the end
of each such period, respectively, which is deemed to be invested
in such fund pursuant to paragraph (2) below. Subject to
elimination, modification or addition by the Board, the funds
available for the Director’s election of deemed investments
pursuant to paragraph (2) below shall be one or more of the
funds available (excluding Common Stock) under the Investment
Options of The Hershey Company Deferred Compensation
Plan.
(2) Deemed Investment
Elections .
(A) The Director shall designate, on
a form prescribed by the Company, the percentage of the deferred
Director Fees that are to be deemed to be invested in the available
funds under paragraph (1) above. Said designation shall be
effective on a date specified therein and remain in effect and
apply to all subsequent deferred Director Fees until changed as
provided below.
5
(B) A Director may elect to change,
on a calendar year basis (or on such other basis as permitted from
time to time by the Board), the deemed investment election under
paragraph (A) above with respect to future deferred
Direct
