Exhibit 10.1

 

ADVANCEPIERRE FOODS HOLDINGS, INC.

 

INDEPENDENT DIRECTOR COMPENSATION POLICY

 

EFFECTIVE AUGUST 18, 2016

 

Non-employee members of the board of directors (the “Board”) of AdvancePierre
Foods Holdings, Inc. (the “Company”) shall be eligible to receive cash and
equity-based compensation as set forth in this Independent Director Compensation
Policy (this “Policy”).  The cash compensation and equity-based grants
(“Awards”) described in this Policy pertain to shares of the Common Stock of the
Company (“Shares”) and shall be paid or be made, as applicable, automatically
and without further action of the Board, to each member of the Board who is not
an employee of the Company or any parent or subsidiary of the Company (each, an
“Independent Director”) who may be eligible to receive such cash compensation or
Awards, unless such Independent Director declines the receipt of such cash
compensation or Awards by written notice to the Company.  This Policy shall
remain in effect until it is revised or rescinded by further action of the
Board.

 

For purposes of this Policy, “Fair Market Value” means the closing selling price
per Share on the New York Stock Exchange Composite Transactions Tape on the
determination date, provided that if there are no sales of Shares reported on
such date, the Fair Market Value of a Share on such date will be deemed equal to
the closing selling price of a Share on such Composite Tape for the last
preceding date on which sales of Shares were reported.

 

1.                                      Components.

 

Independent Directors’ compensation will comprise an annual cash retainer (the
“Annual Cash Retainer”) component and a stock-settled restricted share unit
(“RSU”) component, as discussed below.

 

2.                                      Annual Cash Retainer for Independent
Directors.

 

(a)                                 Retainer Amounts.  Each Independent Director
shall be eligible to receive an Annual Cash Retainer prorated for any partial
year and payable quarterly in arrears, comprising $70,000 for service on the
Board and, for any Independent Director serving as:

 

(i)                                     chairman of the Board, an additional
annual retainer of $60,000 for such service;

 

(ii)                                  chairman of the Audit Committee of the
Board, an additional annual retainer of $15,000 for such service;

 

(iii)                               members (including the chairman of the Audit
Committee) of the Audit Committee, an additional annual retainer of $6,000 for
such service;

 

(iv)                              chairman of the Compensation Committee of the
Board, an additional annual retainer of $12,500 for such service;

 

(v)                                 members (including the chairman of the
Compensation Committee) of the Compensation Committee, an additional annual
retainer of $6,000 for such service;

 

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(vi)                              chairman of the Nominating and Corporate
Governance Committee of the Board, an additional annual retainer of $10,000 for
such service; and

 

(vii)                           members (including the chairman of the
Nominating and Corporate Governance Committee) of the Nominating and Corporate
Governance Committee, an additional annual retainer of $5,000 for such service.

 

(b)                                 Elective Stock Grants.  Each Independent
Director may elect to receive Shares in lieu of all or a portion of such
Independent Director’s Annual Cash Retainer for the one-year period beginning on
the date of the annual meeting of the Company’s stockholders (the “Annual Grant
Date”) next following the date of such written election.  Such Shares will be
granted on or as close as commercially reasonable to the Annual Grant Date and
such election will be irrevocable thereafter.

 

(c)                                  Proration.  The Annual Cash Retainer (or
Shares issued in lieu thereof, as applicable) shall be shall be prorated for any
partial year and shall be paid by the Company in quarterly installments in
arrears or more frequently as deemed advisable by the officers of the Company
for administrative or other reasons.

 

3.                                      Annual RSU Retainer for Independent
Directors.  The RSUs described in this Section 3 shall be granted under and
shall be subject to the terms and provisions of the AdvancePierre Foods
Holdings, Inc. 2009 Omnibus Equity Incentive Plan, as may be amended from time
to time (the “2009 Plan”) and subject to the execution and delivery of award
agreements, including any exhibits attached thereto, in substantially the same
forms previously approved by the Board, setting forth such terms as the 2009
Plan may require.

 

(a)                                 Initial RSU Grant.  A person who is
initially elected or appointed to the Board and who is an Independent Director
at the time of such initial election or appointment shall be eligible to receive
a grant of RSUs in an amount equal to (x) $120,000, divided by (y) the Fair
Market Value of one Share on such date, rounding up to the nearest whole number
of shares (each, an “Initial Award”).

 

(b)                                 Subsequent RSU Grant.  On each Annual Grant
Date, all Independent Directors automatically shall be eligible to receive a
grant of RSUs in an amount equal to (x) $120,000, divided by (y) the Fair Market
Value of one Share on such date (each, a “Subsequent Award”).  An Independent
Director elected for the first time to the Board on an Annual Grant Date shall
only receive an Initial Award in connection with such election, and shall not
receive a Subsequent Award on such Annual Grant Date as well.

 

(c)                                  Initial RSU Grant for Mid-Year Service
Commencement.  An Independent Director who is first appointed to the Board or
begins to serve in such capacity between Annual Grant Dates shall be granted, on
the date that such person is first appointed to the Board or begins to serve as
an Independent Director, a number of RSUs determined by (i) dividing
(x) $120,000, by (y) the Fair Market Value of one Share on such date, and
(ii) multiplying such quotient by a fraction the numerator of which is the
number of whole months between the date of grant and the next Annual Grant Date
and the denominator of which is twelve (12), and (iii) rounding the result up to
the nearest whole number of Shares.

 

(d)                                 Termination of Employment of Employee
Directors.  Members of the Board who are employees of the Company or any parent
or subsidiary of the Company who subsequently terminate their employment with
the Company and any parent or subsidiary of the Company (as applicable) and
remain on the Board as Independent Directors will not receive an Initial Award
grant pursuant to Section 3(a), but to the extent that they are otherwise
eligible, will be eligible to receive, after termination from employment with
the Company and any parent or subsidiary of the Company (as applicable),
Subsequent Awards as described in Section 3(b).

 

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(e)                                  Terms of RSUs Granted to Independent
Directors.

 

(i)                                     Vesting.  RSUs granted to Independent
Directors shall vest and become exercisable in three (3) annual installments of
one-third (1/3) of the Shares subject to each such grant on the same day of each
one-year period of service as an Independent Director following the date of
grant, such that each grant shall be 100% vested on the third (3rd) anniversary
of the date of grant, subject to the Independent Director’s continuing service
on the Board through such dates.

 

(ii)                                  Acceleration.  Notwithstanding anything to
the contrary in this Section 3(e) and or the 2009 Plan, all Initial Awards and
Subsequent Awards granted to an Independent Director pursuant to this Policy
shall vest in full upon the first to occur of such Independent Director’s death
or upon a Change in Control (as defined below).  For purposes of this
Section 3(e)(ii), a “Change in Control” shall have the meaning ascribed to such
term in the award agreement pursuant to which such Initial Award or Subsequent
Award is granted or, in the absence of such definition, shall mean (1) the sale
or other transfer of the Company to an Independent Third Party (as defined
below) or “group” (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended) of Independent Third Parties pursuant to which such party or
parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances (without regard to the occurrence of any contingency)
to elect a majority of the Company’s board of directors (whether by merger,
consolidation or sale or transfer of the Company’s capital stock) or (2) all or
substantially all of the Company’s assets determined on a consolidated basis;
provided, however, that such Change in Control constitutes a “change in control
event” within the meaning of Section 409A(a)(2)(A)(v) of the Internal Revenue
Code.  “Independent Third Party” means any person or entity who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
common stock on a fully-diluted basis (a “5% Owner”), who is not controlling,
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendant (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other persons.

 

(iii)                               Effect of Termination of Board Service on
Awards.  To the extent any RSUs have not vested at the time of an Independent
Director’s cessation of Board service for reasons other than “Cause” (as defined
in the 2009 Plan), such RSUs shall continue vesting pursuant to the terms
thereof.  To the extent any RSUs have not vested at the time of an Independent
Director’s cessation of Board service for Cause, such RSUs shall be deemed
forfeited and canceled for no consideration.

 

(iv)                              Dividend Equivalents.  Independent Directors
shall be entitled to cash dividends subject to the Initial Award and Subsequent
Awards (whether vested or unvested at such time), provided that such rights
shall prospectively terminate immediately as to any RSUs that are forfeited
pursuant to Section 3(e)(iii) above.

 

(v)                                 Deferral Program.  Independent Directors may
elect to defer commencement of the settlement of Initial Awards and Subsequent
Awards pursuant to the terms thereof in compliance with the provisions of
Section 409A of the Internal Revenue Code of 1986, as amended.

 

4.                                      Amendment or Termination of the Policy. 
The Board reserves the right to amend or terminate the Policy at any time or
waive any of the provisions generally or specifically.

 

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5.                                      Administration of the Policy.  The
Policy shall be administered by the Board or a Board committee as may be
delegated by the Board.   The Board has the power to (i) interpret and construe
the Policy and (ii) designate persons, including a Board committee, to carry out
its responsibilities under the Policy and to perform such administrative duties
as it deems necessary or advisable, subject to applicable law and such
limitations, restrictions and conditions as determined by the Board.  A majority
of the Board (or an applicable Board committee) will constitute a quorum at any
meeting of the Board (or applicable Board committee), and all determinations of
the Board (or applicable Board committee) shall be made by a majority of its
members.  Any determination of the Board (or applicable Board committee or other
designee) under the Policy may be made without notice or a meeting of the Board
(or applicable Board committee) by a written consent signed by all members of
the Board.  No member of any Board committee or the Board shall be personally
liable for any action or determination made in good faith with respect to the
Policy or to any settlement of any dispute between an Independent Director and
the Company.  Any decision or action taken by the Board (or an applicable Board
committee or other designee) with respect to the administration or
interpretation of the Policy will be conclusive and binding upon all persons.

 

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