EXHIBIT 10
SANDERSON FARMS, INC.
BONUS AWARD PROGRAM
(ALL SALARIED EMPLOYEES)
Effective November 1, 2006
Supercedes November 1, 2005

1

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SANDERSON FARMS, INC.
Bonus Award Program
Effective Nov. 1, 2006
I. PURPOSE
          The Board of Directors of Sanderson Farms, Inc. has determined that in
addition to the Company’s existing competitive and equitable total compensation
package, it is desirable to maintain a bonus award program for its salaried
employees. The purposes for such a program include:

  A.   To encourage excellence and high levels of performance.     B.   To
recognize the contributions of the salaried employees to the overall
profitability of the Company.     C.   To encourage all employees from every
division in the Company to cooperate, share information and work together as a
team for the overall benefit of the Company and its shareholders.

II. PARTICIPATION AND MAXIMUM AWARD
          The Executive Committee of Sanderson Farms, Inc. will select and
recognize personnel eligible to participate in the bonus award program, and
reserves the right to review and change the class of eligible employees at any
time. Those now designated include:

  A.   Salaried personnel within the corporate structure of Sanderson Farms,
Inc., Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc.
(Processing Division) and Sanderson Farms, Inc. (Foods Division).     B.   All
salaried management and accounting trainees within the corporate structure.

2

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SANDERSON FARMS, INC.
Bonus Award Program
III. ELIGIBILITY
EMPLOYMENT/PARTICIPATION
          Except in the case of death, disability or retirement, as set forth
below, employees must be employed in a designated position on October 31 of the
applicable fiscal year and must have been employed in a designated position for
a period of nine months prior to the end of the fiscal year to be eligible to
participate in the bonus award program. Base salary for this purpose shall
include regular compensation only, and shall not include bonus award payments
and any other miscellaneous payments that might be treated as income to the
employee.
DEATH, DISABILITY AND RETIREMENT
          If an eligible employee terminates employment with the Company during
the fiscal year before October 31 as a result of death, disability or
retirement, and had been employed in a designated position for a period of at
least nine months, such employee will be eligible to participate in the Bonus
Award Program notwithstanding the fact that the employee is not employed on
October 31, and the base salary paid to such employee during that portion of the
year during which he or she was employed in a designated position will be used
to calculate the amount of such employee’s bonus award.
EXTRAORDINARY CIRCUMSTANCES
          Extraordinary circumstances will be subject to review by the Executive
Committee.

3

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SANDERSON FARMS, INC.
Bonus Award Program
IV. DETERMINATION OF AWARD AND PAYMENT
          Bonus award programs for many corporations focus in some form or
another on the real dollar profits earned by the corporation within a given time
frame. This method of determining bonuses to be paid to employees recognizes
that bonuses should be paid to employees only after a fair and equitable return
has been earned for the shareholders who own the company. With this basic
philosophy in mind, the Board has determined that no bonuses will be paid under
this program unless net return on average stockholders’ equity after
consideration is taken for any bonus paid under this program for the year
exceeds eight percent (8%). After this minimum threshold is met, the Bonus Award
Program will become effective, and bonuses will be paid if the other criteria
described in this program are met.
          In recognition of the fact that one of our primary obligations as
employees of this Company is to our shareholders, the Board of Directors has
determined that net profits made by the consolidated corporations [Sanderson
Farms, Inc., Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc.
(Processing Division) and Sanderson Farms, Inc. (Foods Division)] on a per share
basis for the period November 1 through October 31 of each year will be the
primary basis for bonus awards. The earnings per share for purposes of computing
the bonus awards, as set forth herein, shall be computed net of any bonuses
awarded and net of any extraordinary, non recurring income items. For all
employees of Sanderson Farms other than certain management level employees, this
will be the sole basis for determining bonus awards.
          The audited annual financial statements, on a consolidated basis, of
Sanderson Farms, Inc. will be the measuring tool for the net return to
shareholders portion of the bonus award program. The annual bonus award will be
paid to participants in the bonus award program after the outside auditors have
completed their annual audit of the corporations, which is usually approximately
two (2) months after the end of the fiscal year.

4

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SANDERSON FARMS, INC.
Bonus Award Program
          V. OBJECTIVES AND FORMULAS FOR DETERMINATION OF THE BONUS AWARD
          All salaried employees will receive a bonus if the net income per
share objectives set forth below are met, and if the minimum return on average
stockholders equity for the year is earned. Net income shall be computed net of
any bonuses awarded and net of any extraordinary, non recurring income items not
related to the fiscal year’s operations. The annual audited financial
statements, on a consolidated basis, of Sanderson Farms, Inc., will be the
measuring tool for this portion of the Bonus Award Program. The annual bonus
award will be paid to participants after the outside auditors have completed
their annual audit of the consolidated corporation.
          The earnings per share objectives and the respective percentage of
employees’ bonus dependent upon EPS earned for the fiscal year (November 1 thru
October 31) are as follows:

                  RANK   PER SHARE RETURN*   PERCENTAGE OF AWARD
Best (1st)
  $ 4.34       100.0 %
2nd
  $ 4.28       95.0 %
3rd
  $ 4.22       90.0 %
4th
  $ 4.16       85.0 %
5th
  $ 4.10       80.0 %
6th
  $ 4.04       75.0 %
7th
  $ 3.98       70.0 %
8th
  $ 3.92       65.0 %
9th
  $ 3.86       60.0 %
10th
  $ 3.80       55.0 %
11th
  $ 3.74       50.0 %
12th
  $ 3.68       45.0 %
13th
  $ 3.62       40.0 %
14th
  $ 3.56       35.0 %
15th
  $ 3.50       30.0 %
16th
  $ 3.44       25.0 %
17th
  $ 3.38       20.0 %
18th
  $ 3.32       15.0 %
19th
  $ 3.26       10.0 %
20th
  $ 3.20       5.0 %

 

*   Net of bonus and net of extraordinary, non recurring income items not
related to the fiscal year’s operations. The per share return targets were
calculated using 20,433,578 diluted shares. Adjustments to these targets will be
made to reflect changes in the number of shares outstanding resulting from any
merger, consolidation, reorganization, re-capitalization, re-incorporation,
stock-splits, stock dividend, stock repurchase, or other changes in the
corporate structure of the Company. Furthermore, the target per share return
numbers were calculated based on a target net return on projected sales. The
Company reserves the right to adjust these targets in the event of a substantial
fluctuation in sales pounds or dollars during the year.

5

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The following formula will be utilized to determine the exact dollar amount of a
participant’s bonus award dependent upon EPS performance.

         
A
  =   Gross Award
 
       
S
  =   Base Salary (excluding bonus award payments and other items of
miscellaneous income) of the Participant during that portion of the year in
which he or she was employed in a designated position.
 
       
P
  =   Percentage of award earned based on above schedule
 
       
M
  =   Percent of salary eligible to be earned as a bonus based on EPS
performance.
 
        FORMULA
 
 
       
 
      S X P X M = A

     As with any awards made under this Bonus Award Program, no bonus will be
paid unless total net income return (after bonus) on average stockholders’
equity for the year exceeds eight percent (8%). Net return on average
stockholders’ equity will be computed by taking the average of beginning and
ending stockholders’ equity for the applicable year, and dividing that number
into net income for the year.
     The percent of salary eligible to be earned as a bonus based on EPS
performance (“M” in the above formula) for the fiscal year is 25%.

6

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SANDERSON FARMS, INC.
Bonus Award Program
VI. PARAMETERS
     This bonus award program has been designed to encourage teamwork and
cooperation among all of the divisions of Sanderson Farms, and to ensure that
Sanderson Farms is consistently among the leaders in profitability in the
broiler and prepared foods industry. The program is also designed to pay a bonus
to employees only after the Company has returned to its shareholders a fair and
equitable return.
     1. In the event of extraordinary operating conditions that were unforeseen
when setting the objectives and percentages in this bonus award program, such
circumstances will be considered by the Executive Committee of Sanderson Farms,
Inc. in making awards.
     2. In the event of possible reporting errors affecting the ranking, such
circumstances will be considered by the Executive Committee of Sanderson Farms,
Inc. in making awards.
     3. In the event changes in laws or accounting procedures affect the
ranking, such circumstances will be considered by the Executive Committee of
Sanderson Farms, Inc. in making awards.
     4. The per share return targets were calculated using 20,433,578 diluted
shares. Adjustments to these targets will be made to reflect changes in the
number of shares outstanding resulting from any merger, consolidation,
reorganization, re-capitalization, re-incorporation, stock-splits, stock
dividend, stock repurchase, or other changes in the corporate structure of the
Company. Furthermore, the target per share return numbers were calculated based
on a target net return on projected sales. The Company reserves the right to
adjust these targets in the event of a substantial fluctuation in sales pounds
or dollars during the year.

7

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SANDERSON FARMS, INC.
BONUS AWARD PROGRAM
(DIVISION MANAGERS)
Effective November 1, 2006
Supercedes November 1, 2005

1

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SANDERSON FARMS, INC.
Bonus Award Program
as of November 1, 2006
I. PURPOSE
          The Board of Directors of Sanderson Farms, Inc. has determined that in
addition to the Company’s existing competitive and equitable total compensation
package, it is desirable to maintain a bonus award program for its salaried
employees. The purposes for such a program include:

  A.   To encourage excellence and high levels of performance.     B.   To
recognize the contributions of the salaried employees to the overall
profitability of the Company.     C.   To encourage all employees from every
division in the Company to cooperate, share information and work together as a
team for the overall benefit of the Company and its shareholders.

II. PARTICIPATION AND MAXIMUM AWARD
          The Executive Committee of Sanderson Farms, Inc. will select and
recognize personnel eligible to participate in the bonus award program, and
reserves the right to review and change the class of eligible employees at any
time. Those now designated include:

  A.   Salaried personnel within the corporate structure of Sanderson Farms,
Inc., Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc.
(Processing Division) and Sanderson Farms, Inc. (Foods Division).     B.   All
salaried management and accounting trainees within the corporate structure.

2

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SANDERSON FARMS, INC.
Bonus Award Program
III. ELIGIBILITY
EMPLOYMENT/PARTICIPATION
          Except in the case of death, disability or retirement, as set forth
below, employees must be employed in a designated position on October 31 of the
applicable fiscal year and must have been employed in a designated position for
period of nine months prior to the end of the fiscal year to be eligible to
participate in the bonus award program. Base salary for this purpose shall
include regular compensation only, and shall not include bonus award payments
and any other miscellaneous payments that might be treated as income to the
employee.
DEATH, DISABILITY AND RETIREMENT
          If an eligible employee terminates employment with the Company during
the fiscal year before October 31 as a result of death, disability or
retirement, and had been in a designated position for a period of at least nine
months, such employee will be eligible to participate in the Bonus Award Program
notwithstanding the fact that the employee is not employed on October 31, and
the base salary paid to such employee during that portion of the year during
which he or she was employed in a designated position will be used to calculate
the amount of such employee’s bonus award.
EXTRAORDINARY CIRCUMSTANCES
          Extraordinary circumstances will be subject to review by the Executive
Committee.

3

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SANDERSON FARMS, INC.
Bonus Award Program
IV. DETERMINATION OF AWARD AND PAYMENT
          Bonus award programs for many corporations focus in some form or
another on the real dollar profits earned by the corporation within a given time
frame. This method of determining bonuses to be paid to employees recognizes
that bonuses should be paid to employees only after a fair and equitable return
has been earned for the shareholders who own the company. With this basic
philosophy in mind, the Board has determined that no bonuses will be paid under
this program unless net return on average stockholders’ equity after
consideration is taken for any bonus paid under this program for the year
exceeds eight percent (8%). After this minimum threshold is met, the Bonus Award
Program will become effective, and bonuses will be paid if the other criteria
described in this program are met.
          In recognition of the fact that one of our primary obligations as
employees of this Company is to our shareholders, the Board of Directors has
determined that net profits made by the consolidated corporations [Sanderson
Farms, Inc., Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc.
(Processing Division) and Sanderson Farms, Inc. (Foods Division)] on a per share
basis for the period November 1 through October 31 of each year will be the
primary basis for bonus awards. The earnings per share for purposes of computing
the bonus awards, as set forth herein, shall be computed net of any bonuses
awarded and net of any extraordinary, non recurring income items. For all
employees of Sanderson Farms other than certain management level employees, this
will be the sole basis for determining bonus awards.
          Although the Board has determined that net profits earned for
shareholders of the Company should be the primary method of determining the
bonuses to be paid to employees, the Board has also recognized that certain
management level employees have responsibility for and more direct control over
the operating performance and profitability of the Company. In recognition of
this fact, the Board has concluded that a certain percentage of your bonus
should be determined by evaluating the operating and profitability performance
of the Company relative to its peers and competitors. Therefore, while a portion
of your bonus will be determined by the Company’s earnings per share
performance, a portion will also be determined by evaluating the performance of
the Company as compared to our peers and competitors by Agri Stats for the
poultry division, and certain net income growth targets for managers in the
foods division, all as described herein.
          The audited annual financial statements, on a consolidated basis, of
Sanderson Farms, Inc. will be the measuring tool for the net return to
shareholders portion of the bonus award program. The annual bonus award will be
paid to participants in the bonus award program after the outside auditors have
completed their annual audit of the corporations, which is usually approximately
two (2) months after the end of the fiscal year.
          The Company’s performance relative to its peers and competitors as
reported by Agri Stats will be used to evaluate and determine bonuses paid to
those employees whose bonuses are determined in part by such performance. The
appropriate measuring tool as set forth in this Bonus Award Program as reported
by Agri Stats for the twelve (12) month period ending on October 31 each year
will be used to determine if a bonus has been earned by such employees.

4

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SANDERSON FARMS, INC.
Bonus Award Program
          V. OBJECTIVES AND FORMULAS FOR DETERMINATION OF THE BONUS AWARD
          A. EPS Bonus
          All salaried employees will receive a bonus if the net income per
share objectives set forth below are met, and if the minimum return on average
stockholders equity for the year is earned. Net income shall be computed net of
any bonuses awarded and net of any extraordinary, non recurring income items not
related to the fiscal year’s operations. The annual audited financial
statements, on a consolidated basis, of Sanderson Farms, Inc., will be the
measuring tool for this portion of the Bonus Award Program. The annual bonus
award will be paid to participants after the outside auditors have completed
their annual audit of the consolidated corporation.
          The earnings per share objectives and the respective percentage of
employees’ bonus dependent upon EPS earned for the fiscal year (November 1 thru
October 31) are as follows:

                  RANK   PER SHARE RETURN*   PERCENTAGE OF AWARD
Best (1st)
  $ 4.34       100.0 %
2nd
  $ 4.28       95.0 %
3rd
  $ 4.22       90.0 %
4th
  $ 4.16       85.0 %
5th
  $ 4.10       80.0 %
6th
  $ 4.04       75.0 %
7th
  $ 3.98       70.0 %
8th
  $ 3.92       65.0 %
9th
  $ 3.86       60.0 %
10th
  $ 3.80       55.0 %
11th
  $ 3.74       50.0 %
12th
  $ 3.68       45.0 %
13th
  $ 3.62       40.0 %
14th
  $ 3.56       35.0 %
15th
  $ 3.50       30.0 %
16th
  $ 3.44       25.0 %
17th
  $ 3.38       20.0 %
18th
  $ 3.32       15.0 %
19th
  $ 3.26       10.0 %
20th
  $ 3.20       5.0 %

 

*   Net of bonus and net of extraordinary, non recurring income items not
related to the fiscal year’s operations. The per share return targets were
calculated using 20,433,578 diluted shares. Adjustments to these targets will be
made to reflect changes in the number of shares outstanding resulting from any
merger, consolidation, reorganization, re-capitalization, re-incorporation,
stock-splits, stock dividend, stock repurchase, or other changes in the
corporate structure of the Company. Furthermore, the target per share return
numbers were calculated based on a target net return on projected sales. The
Company reserves the right to adjust these targets in the event of a substantial
fluctuation in sales pounds or dollars during the year.

The following formula will be utilized to determine the exact dollar amount of a
participant’s bonus award dependent upon EPS performance.

5

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A
  =   Gross Award
 
       
S
  =   Base Salary (excluding bonus award payments and other items of
miscellaneous income) of the Participant during that portion of the year in
which he or she was employed in a designated position.
 
       
P
  =   Percentage of award earned based on above schedule
 
       
M
  =   Percent of salary eligible to be earned as a bonus based on EPS
performance.
 
          FORMULA

 
       
 
      S X P X M = A

SANDERSON FARMS, INC.
Bonus Award Program
     As with any awards made under this Bonus Award Program, no bonus will be
paid unless total net income return (after bonus) on average stockholders’
equity for the year exceeds eight percent (8%). Net return on average
stockholders’ equity will be computed by taking the average of beginning and
ending stockholders’ equity for the applicable year, and dividing that number
into net income for the year.
     The percent of salary eligible to be earned as a bonus based on EPS
performance (“M” in the above formula) for the fiscal year is 25%.
               B. Performance Based Bonus
          All processing and production division managers will receive a bonus
based in part upon the Company’s earnings per share performance, in part based
on the Company’s overall corporate Agri Stats performance, and in part based on
the performance of the complexes to which they are assigned (that is, “big bird
debone” complexes (Laurel, Hammond, Hazlehurst and Collins) will be grouped and
“tray pack” complexes (Texas, McComb and Georgia) will be grouped) relative to
the Company’s peers and competitors as reported by Agri Stats. The overall
corporate Agri Stats performance measure will be the Company’s performance
relative to its peers and competitors as reported by Agri Stats in its “bottom
line analysis, per head” report, net of bonus. The performance of the applicable
complexes will be measured by the complexes’ combined performance relative to
its peers and competitors as reported by corporate Agri Stats in its complex
“operational profit analysis, per head” report, net of bonus.
          In the event of significant changes in the number of participants in
any Agri Stats report, the Executive Committee may alter the places in each
award category to reflect the changes in the number of participants.

6

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     These managers will be paid in accordance with the following schedules:

                                                              Corporate        
    Assigned Complex   Agri Stats     Percentage of Salary   Operations Profit  
Bottom Line     Eligible to be Earned   Report   Report     As Bonus Based  
(Per Head)   (Per Head)     On Performance   (Percentage of   (Percentage of    
Factors   Award Earned)   Award Earned)             (Big Bird)   (Tray Pack)    
TARGET           Top 4 Places   Top 2 Places   Top 3 Places
Prod. Div. Managers
    20 %     50 %     50 %     50 %
Proc. Div. Managers
    20 %     50 %     50 %     50 %
By-Products Div. Mgr.
    20 %                     100 %
 
                               
HIGH AVERAGE
          Places 5 thru 7   Places 3 and 4   Places 4 and 5
Prod. Div. Managers
    20 %     33.3 %     33.3 %     33.3 %
Proc. Div. Managers
    20 %     33.3 %     33.3 %     33.3 %
By-Products Div. Mgr.
    20 %                     66.67 %
 
                               
LOW AVERAGE
          Places 8 thru 11   Place 5   Places 6 and 7
Prod. Div. Managers
    20 %     16.7 %     16.7 %     16.7 %
Proc. Div. Managers
    20 %     16.7 %     16.7 %     16.7 %
By-Products Div. Mgr.
    20 %                     33.3 %

          The division manager at the Foods Division will receive a bonus based
in part upon the Company’s earnings per share performance as described on page 5
of this plan, and in part based on the Foods Division’s performance as measured
by “pre-tax operating income,” and the Corporate Agri Stats Bottom Line
Analysis, per head, report as described below. The final results of the Foods
Division will be determined after the Company’s external auditors have completed
their audit at the end of each fiscal year, which is completed approximately two
months after the last day of each fiscal year end.

                              Percentage of                 Salary              
  Eligible to be           Corporate     Earned   Target   Agri Stats     As
Bonus Based   Pre Tax   Bottom Line     On Performance   Operating   Report    
Factors   Income   (Per Head) Target           $14.7 Million   Top 3 Places
Division Mgr. Foods
    20 %     80 %     20 %
 
                       
Average
          $12.6 Million   Places 4 and 5
Division Mgr. Foods
    20 %     53.33 %     13.33 %
 
                       
Low
          $10.5 Million   Places 6 and 7
Division Mgr. Foods
    20 %     26.67 %     6.66 %

7

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          The following formula will be utilized for all employees whose bonus
is to be determined in part by factors other than EPS performance to determine
that portion of the award dependent upon such factors:

         
A
  =   Gross Award
 
       
S
  =   Salary (excluding bonus award payments and other items of miscellaneous
income) of the Participant during that portion of the year in which he or she
was employed in a designated position.
 
       
P
  =   Percentage of award earned based on performance factor
 
       
M
  =   Percentage of salary eligible to be earned and paid as a bonus on
performance factor.
 
       
FORMULA
       
 
        S X P X M = A

8

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SANDERSON FARMS, INC.
Bonus Award Program
VI. PARAMETERS
     This bonus award program has been designed to encourage teamwork and
cooperation among all of the divisions of Sanderson Farms, and to ensure that
Sanderson Farms is consistently among the leaders in profitability in the
broiler and prepared foods industry. The program is also designed to pay a bonus
to employees only after the Company has returned to its shareholders a fair and
equitable return.
     1. In the event of extraordinary operating conditions that were unforeseen
when setting the objectives and percentages in this bonus award program, such
circumstances will be considered by the Executive Committee of Sanderson Farms,
Inc. in making awards.
     2. In the event of possible reporting errors affecting the ranking, such
circumstances will be considered by the Executive Committee of Sanderson Farms,
Inc. in making awards.
     3. In the event changes in laws or accounting procedures affect the
ranking, such circumstances will be considered by the Executive Committee of
Sanderson Farms, Inc. in making awards.
4. The per share return targets were calculated using 20,433,578 diluted shares.
Adjustments to these targets will be made to reflect changes in the number of
shares outstanding resulting from any merger, consolidation, reorganization,
re-capitalization, re-incorporation, stock-splits, stock dividend, stock
repurchase, or other changes in the corporate structure of the Company.
Furthermore, the target per share return numbers were calculated based on a
target net return on projected sales. The Company reserves the right to adjust
these targets in the event of a substantial fluctuation in sales pounds or
dollars during the year.

9

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SANDERSON FARMS, INC.
BONUS AWARD PROGRAM
(EXECUTIVE COMMITTEE)
Effective November 1, 2006
Supercedes November 1, 2005

1

--------------------------------------------------------------------------------

 

SANDERSON FARMS, INC.
Bonus Award Program
Effective Nov. 1, 2006
I. PURPOSE
          The Board of Directors of Sanderson Farms, Inc. has determined that in
addition to the Company’s existing competitive and equitable total compensation
package, it is desirable to maintain a bonus award program for its salaried
employees. The purposes for such a program include:

  A.   To encourage excellence and high levels of performance.     B.   To
recognize the contributions of the salaried employees to the overall
profitability of the Company.     C.   To encourage all employees from every
division in the Company to cooperate, share information and work together as a
team for the overall benefit of the Company and its shareholders.

II. PARTICIPATION AND MAXIMUM AWARD
          The Executive Committee of Sanderson Farms, Inc. will select and
recognize personnel eligible to participate in the bonus award program, and
reserves the right to review and change the class of eligible employees at any
time. Those now designated include:

  A.   Salaried personnel within the corporate structure of Sanderson Farms,
Inc., Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc.
(Processing Division) and Sanderson Farms, Inc. (Foods Division).     B.   All
salaried management and accounting trainees within the corporate structure.

          The maximum bonus award achievable will vary depending on the
employee’s position in the Company.

2

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SANDERSON FARMS, INC.
Bonus Award Program
III. ELIGIBILITY
EMPLOYMENT/PARTICIPATION LEVEL
          Except in the case of death, disability or retirement, as set forth
below, employees must be employed in a designated position on October 31 of the
applicable fiscal year and must have been employed in a designated position for
a period of nine months prior to the end of the fiscal year to be eligible to
participate in the bonus award program. Base salary for this purpose shall
include regular compensation only, and shall not include bonus award payments
and any other miscellaneous payments that might be treated as income to the
employee.
DEATH, DISABILITY AND RETIREMENT
          If an eligible employee terminates employment with the Company during
the fiscal year before October 31 as a result of death, disability or
retirement, and had been employed in a designated position for a period of at
least nine months, such employee will be eligible to participate in the Bonus
Award Program notwithstanding the fact that the employee is not employed on
October 31, and the base salary paid to such employee during that portion of the
year during which he or she was employed in a designated position will be used
to calculate the amount of such employee’s bonus award.
EXTRAORDINARY CIRCUMSTANCES
          Extraordinary circumstances will be subject to review by the Executive
Committee.

3

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SANDERSON FARMS, INC.
Bonus Award Program
IV. DETERMINATION OF AWARD AND PAYMENT
          Bonus award programs for many corporations focus in some form or
another on the real dollar profits earned by the corporation within a given time
frame. This method of determining bonuses to be paid to employees recognizes
that bonuses should be paid to employees only after a fair and equitable return
has been earned for the shareholders who own the company. With this basic
philosophy in mind, the Board has determined that no bonuses will be paid under
this program unless net return on average stockholders’ equity after
consideration is taken for any bonus paid under this program for the year
exceeds eight percent (8%). After this minimum threshold is met, the Bonus Award
Program will become effective, and bonuses will be paid if the other criteria
described in this program are met.
          In recognition of the fact that one of our primary obligations as
employees of this Company is to our shareholders, the Board of Directors has
determined that net profits made by the consolidated corporations [Sanderson
Farms, Inc., Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc.
(Processing Division) and Sanderson Farms, Inc. (Foods Division)] on a per share
basis for the period November 1 through October 31 of each year will be the
primary basis for bonus awards. The earnings per share for purposes of computing
the bonus awards, as set forth herein, shall be computed net of any bonuses
awarded and net of any extraordinary, non recurring income items. For all
employees of Sanderson Farms other than those management level employees
specifically described in this program, this will be the sole basis for
determining bonus awards.
          Although the Board has determined that net profits earned for
shareholders of the Company should be the primary method of determining the
bonuses to be paid to employees, the Board has also recognized that certain
management level employees have responsibility for and more direct control over
the operating performance and profitability of the Company. In recognition of
this fact, the Board has concluded that a certain percentage of such employees’
bonus should be determined by evaluating the operating and profitability
performance of the Company relative to its peers and competitors. Therefore,
while a portion of such employees’ bonus will be determined by the Company’s
earnings per share performance, a portion of such employees’ bonus will also be
determined by evaluating the performance of the Company as compared to our peers
and competitors by Agri Stats for the poultry division, and certain net income
growth targets for managers in the foods division, all as described herein.
          The audited annual financial statements, on a consolidated basis, of
Sanderson Farms, Inc. will be the measuring tool for the net return to
shareholders portion of the bonus award program. The annual bonus award will be
paid to participants in the bonus award program after the outside auditors have
completed their annual audit of the corporations, which is usually approximately
two (2) months after the end of the fiscal year.
          The Company’s performance relative to its peers and competitors as
reported by Agri Stats will be used to evaluate and determine bonuses paid to
those employees whose bonuses are determined in part by such performance. The
appropriate measuring tool as set forth in this Bonus Award Program as reported
by Agri Stats for the twelve (12) month period ending on October 31 each year
will be used to determine if a bonus has been earned by such employees.

4

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SANDERSON FARMS, INC.
Bonus Award Program
          V. OBJECTIVES AND FORMULAS FOR DETERMINATION OF THE BONUS AWARD
          A. All salaried employees
          All salaried employees will receive a bonus if the net income per
share objectives set forth below are met, and if the minimum return on average
stockholders equity for the year is earned. Net income shall be computed net of
any bonuses awarded and net of any extraordinary, non recurring income items not
related to the fiscal year’s operations. The annual audited financial
statements, on a consolidated basis, of Sanderson Farms, Inc., will be the
measuring tool for this portion of the Bonus Award Program. The annual bonus
award will be paid to participants after the outside auditors have completed
their annual audit of the consolidated corporation.
          The earnings per share objectives and the respective percentage of
employees’ bonus dependent upon EPS earned for the fiscal year (November 1 thru
October 31) are as follows:

                  RANK   PER SHARE RETURN*   PERCENTAGE OF AWARD
Best (1st)
  $ 4.34       100.0 %
2nd
  $ 4.28       95.0 %
3rd
  $ 4.22       90.0 %
4th
  $ 4.16       85.0 %
5th
  $ 4.10       80.0 %
6th
  $ 4.04       75.0 %
7th
  $ 3.98       70.0 %
8th
  $ 3.92       65.0 %
9th
  $ 3.86       60.0 %
10th
  $ 3.80       55.0 %
11th
  $ 3.74       50.0 %
12th
  $ 3.68       45.0 %
13th
  $ 3.62       40.0 %
14th
  $ 3.56       35.0 %
15th
  $ 3.50       30.0 %
16th
  $ 3.44       25.0 %
17th
  $ 3.38       20.0 %
18th
  $ 3.32       15.0 %
19th
  $ 3.26       10.0 %
20th
  $ 3.20       5.0 %

 

*   Net of bonus and net of extraordinary, non recurring income items not
related to the fiscal year’s operations. The per share return targets were
calculated using 20,433,578 diluted shares. Adjustments to these targets will be
made to reflect changes in the number of shares outstanding resulting from any
merger, consolidation, reorganization, re-capitalization, re-incorporation,
stock-splits, stock dividend, stock repurchase, or other changes in the
corporate structure of the Company. Furthermore, the target per share return
numbers were calculated based on a target net return on projected sales. The
Company reserves the right to adjust these targets in the event of a substantial
fluctuation in sales pounds or dollars during the year.

5

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The following formula will be utilized to determine the exact dollar amount of a
participant’s bonus award dependent upon EPS performance.

         
A
  =   Gross Award
 
       
S
  =   Base Salary (excluding bonus award payments and other items of
miscellaneous income) of the Participant during that portion of the year in
which he or she was employed in a designated position.
 
       
P
  =   Percentage of award earned based on above schedule
 
       
M
  =   Percent of salary eligible to be earned as a bonus based on EPS
performance.
 
            FORMULA

 
                S X P X M = A

6

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SANDERSON FARMS, INC.
Bonus Award Program
     As with any awards made under this Bonus Award Program, no bonus will be
paid unless total net income return (after bonus) on average stockholders’
equity for the year exceeds eight percent (8%). Net return on average
stockholders’ equity will be computed by taking the average of beginning and
ending stockholders’ equity for the applicable year, and dividing that number
into net income for the year.
     For all employees other than those specifically set forth below, the
percent of salary eligible to be earned as a bonus based on EPS performance (“M”
in the above formula) is 25%. The management level employees set forth below
shall be eligible to earn a bonus based on EPS performance equal to the percent
of their salary as set forth below (“M” in the above formula):

         
CEO
    75 %
 
       
CFO,
    50 %
COO/President
    50 %
Dir.-Sales
    35 %
Dir.-Production
    35 %
Dir.-Processing
    35 %

          B. Executive Committee
     Bonus awards under this Bonus Award Program for the Chief Executive
Officer, Chief Financial Officer, Chief Operating Officer and President,
Director of Marketing, Director of Production, Director of Processing, Director
of Development, the Controller, the Director of Administration, the Director of
Technical Services, the Director of Sales and the Chief Financial Analyst will
be granted based on a combination of earnings per share performance and general
corporate performance as measured against the Company’s peers and competitors as
reported by Agri Stats. For purposes of calculating bonuses awarded and paid to
individuals in these positions based on operating performance, the corporate
Agri Stats measure will be as reported in Agri Stats’ “bottom line analysis, per
head” report, net of bonus. Awards made to these individuals based on the
operating performance factor will be as follows:

7

--------------------------------------------------------------------------------

 

                      Percentage of Salary   Corporate Agri Stats     Eligible
to be Earned as   Bottom Line     Bonus on Operating   Report (per head)    
Performance Factors   (Percentage of Award Earned)
 
               
TARGET
          TOP 3 PLACES
CEO
    75 %     100 %
CFO, COO,
    50 %     100 %
Dir. Sales, Dir. Proc.
    35 %     100 %
Dir.Prod.
    35 %     100 %
Controller, Dir. Admn.,
    25 %     100 %
Dir.Tech Svcs.
    25 %     100 %
Dir. Devlop., Chief Analyst
    25 %     100 %
 
               
HIGH AVERAGE
          PLACES FOUR AND FIVE
CEO
    75 %     66 2/3 %
CFO, COO,
    50 %     66 2/3 %
Dir.-Sales,
    35 %     66 2/3 %
Dir.-Prod., Dir.-Proc.
    35 %     66 2/3 %
Controller, Dir.-Admin.,
    25 %     66 2/3 %
Dir-Tech Svcs.
    25 %     66 2/3 %
Dir. Develop.,Chief Analyst
    25 %     66 2/3 %
 
               
LOW AVERAGE
          PLACES SIX AND SEVEN
 
               
CEO
    75 %     33 1/3 %
CFO, COO,
    50 %     33 1/3 %
Dir.-Sales,
    35 %     33 1/3 %
Dir.-Prod., Dir.-Proc.,
    35 %     33 1/3 %
Controller, Dir.-Admin,
    25 %     33 1/3 %
Dir-Tech Svcs.
    25 %     33 1/3 %
Dir. Develop.,Chief Analyst
    25 %     33 1/3 %

          In the event of significant changes in the number of participants in
any Agri Stats report, the Executive Committee may alter the places in each
award category to reflect the changes in the number of participants.
          The following formula will be utilized for all employees whose bonus
is to be determined in part by factors other than EPS performance to determine
that portion of the award dependent upon such factors:

         
A
  =   Gross Award
 
       
S
  =   Base Salary (excluding bonus award payments and other items of
miscellaneous income) of the Participant during that portion of the year in
which he or she was employed in a designated position.
 
       
P
  =   Percentage of award earned based on performance factor
 
       
M
  =   Percentage of salary eligible to be earned and paid as a bonus on
performance factor.
 
          FORMULA

 
       
 
                S X P X M = A

8

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SANDERSON FARMS, INC.
Bonus Award Program
VI. PARAMETERS
     This bonus award program has been designed to encourage teamwork and
cooperation among all of the divisions of Sanderson Farms, and to ensure that
Sanderson Farms is consistently among the leaders in profitability in the
broiler and prepared foods industry. The program is also designed to pay a bonus
to employees only after the Company has returned to its shareholders a fair and
equitable return.
     1. In the event of extraordinary operating conditions that were unforeseen
when setting the objectives and percentages in this bonus award program, such
circumstances will be considered by the Executive Committee of Sanderson Farms,
Inc. in making awards.
     2. In the event of possible reporting errors affecting the ranking, such
circumstances will be considered by the Executive Committee of Sanderson Farms,
Inc. in making awards.
     3. In the event changes in laws or accounting procedures affect the
ranking, such circumstances will be considered by the Executive Committee of
Sanderson Farms, Inc. in making awards.
     4. The per share return targets were calculated using 20,433,578 diluted
shares. Adjustments to these targets will be made to reflect changes in the
number of shares outstanding resulting from any merger, consolidation,
reorganization, re-capitalization, re-incorporation, stock-splits, stock
dividend, stock repurchase, or other changes in the corporate structure of the
Company. Furthermore, the target per share return numbers were calculated based
on a target net return on projected sales. The Company reserves the right to
adjust these targets in the event of a substantial fluctuation in sales pounds
or dollars during the year.

9

--------------------------------------------------------------------------------

 

SANDERSON FARMS, INC.
BONUS AWARD PROGRAM
(GENERAL OFFICE PERFORMANCE AWARDS PARTICIPANTS)
Effective November 1, 2006
Supercedes November 1, 2005

1

--------------------------------------------------------------------------------

 

SANDERSON FARMS, INC.
Bonus Award Program
Effective Nov. 1, 2006
I. PURPOSE
     The Board of Directors of Sanderson Farms, Inc. has determined that in
addition to the Company’s existing competitive and equitable total compensation
package, it is desirable to maintain a bonus award program for its salaried
employees. The purposes for such a program include:

  A.   To encourage excellence and high levels of performance.     B.   To
recognize the contributions of the salaried employees to the overall
profitability of the Company.     C.   To encourage all employees from every
division in the Company to cooperate, share information and work together as a
team for the overall benefit of the Company and its shareholders.

II. PARTICIPATION AND MAXIMUM AWARD
     The Executive Committee of Sanderson Farms, Inc. will select and recognize
personnel eligible to participate in the bonus award program, and reserves the
right to review and change the class of eligible employees at any time. Those
now designated include:

  A.   Salaried personnel within the corporate structure of Sanderson Farms,
Inc., Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc.
(Processing Division) and Sanderson Farms, Inc. (Foods Division).     B.   All
salaried management and accounting trainees within the corporate structure.

2

--------------------------------------------------------------------------------

 

SANDERSON FARMS, INC.
Bonus Award Program
III. ELIGIBILITY
EMPLOYMENT/PARTICIPATION
     Except in the case of death, disability or retirement, as set forth below,
employees must be employed in a designated position on October 31 of the
applicable fiscal year and must have been employed in a designated position for
a period of nine months prior to the end of the fiscal year to be eligible to
participate in the bonus award program. Base salary for this purpose shall
include regular compensation only, and shall not include bonus award payments
and any other miscellaneous payments that might be treated as income to the
employee.
DEATH, DISABILITY AND RETIREMENT
     If an eligible employee terminates employment with the Company during the
fiscal year before October 31 as a result of death, disability or retirement,
and had been employed in a designated position for a period of at least nine
months, such employee will be eligible to participate in the Bonus Award Program
notwithstanding the fact that the employee is not employed on October 31, and
the base salary paid to such employee during that portion of the year during
which he or she was employed in a designated position will be used to calculate
the amount of such employee’s bonus award.
EXTRAORDINARY CIRCUMSTANCES
     Extraordinary circumstances will be subject to review by the Executive
Committee.

3

--------------------------------------------------------------------------------

 

SANDERSON FARMS, INC.
Bonus Award Program
IV. DETERMINATION OF AWARD AND PAYMENT
     Bonus award programs for many corporations focus in some form or another on
the real dollar profits earned by the corporation within a given time frame.
This method of determining bonuses to be paid to employees recognizes that
bonuses should be paid to employees only after a fair and equitable return has
been earned for the shareholders who own the company. With this basic philosophy
in mind, the Board has determined that no bonuses will be paid under this
program unless net return on average stockholders’ equity after consideration is
taken for any bonus paid under this program for the year exceeds eight percent
(8%). After this minimum threshold is met, the Bonus Award Program will become
effective, and bonuses will be paid if the other criteria described in this
program are met.
     In recognition of the fact that one of our primary obligations as employees
of this Company is to our shareholders, the Board of Directors has determined
that net profits made by the consolidated corporations [Sanderson Farms, Inc.,
Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc. (Processing
Division) and Sanderson Farms, Inc. (Foods Division)] on a per share basis for
the period November 1 through October 31 of each year will be the primary basis
for bonus awards. The earnings per share for purposes of computing the bonus
awards, as set forth herein, shall be computed net of any bonuses awarded and
net of any extraordinary, non recurring income items. For all employees of
Sanderson Farms other than certain management level employees, this will be the
sole basis for determining bonus awards.
     Although the Board has determined that net profits earned for shareholders
of the Company should be the primary method of determining the bonuses to be
paid to employees, the Board has also recognized that certain management level
employees have responsibility for and more direct control over the operating
performance and profitability of the Company. In recognition of this fact, the
Board has concluded that a certain percentage of your bonus should be determined
by evaluating the operating and profitability performance of the Company
relative to its peers and competitors. Therefore, while a portion of your bonus
will be determined by the Company’s earnings per share performance, a portion of
your bonus will also be determined by evaluating the performance of the Company
as compared to our peers and competitors by Agri Stats for managers in the
poultry division, and based on certain net income growth targets for managers in
the foods division, all as described herein.
     The audited annual financial statements, on a consolidated basis, of
Sanderson Farms, Inc. will be the measuring tool for the net return to
shareholders portion of the bonus award program. The annual bonus award will be
paid to participants in the bonus award program after the outside auditors have
completed their annual audit of the corporations, which is usually approximately
two (2) months after the end of the fiscal year.
     The Company’s performance relative to its peers and competitors as reported
by Agri Stats will be used to evaluate and determine bonuses paid to those
employees whose bonuses are determined in part by such performance. The
appropriate measuring tool as set forth in this Bonus Award Program as reported
by Agri Stats for the twelve (12) month period ending on October 31 each year
will be used to determine if a bonus has been earned by such employees.

4

--------------------------------------------------------------------------------

 

SANDERSON FARMS, INC.
Bonus Award Program
     V. OBJECTIVES AND FORMULAS FOR DETERMINATION OF THE BONUS AWARD
     A. EPS Performance
     All salaried employees will receive a bonus if the net income per share
objectives set forth below are met, and if the minimum return on average
stockholders equity for the year is earned. Net income shall be computed net of
any bonuses awarded and net of any extraordinary, non recurring income items not
related to the fiscal year’s operations. The annual audited financial
statements, on a consolidated basis, of Sanderson Farms, Inc., will be the
measuring tool for this portion of the Bonus Award Program. The annual bonus
award will be paid to participants after the outside auditors have completed
their annual audit of the consolidated corporation.
     The earnings per share objectives and the respective percentage of
employees’ bonus dependent upon EPS earned for the fiscal year (November 1 thru
October 31) are as follows:

                  RANK   PER SHARE RETURN*   PERCENTAGE OF AWARD
Best (1st)
  $ 4.34       100.0 %
2nd
  $ 4.28       95.0 %
3rd
  $ 4.22       90.0 %
4th
  $ 4.16       85.0 %
5th
  $ 4.10       80.0 %
6th
  $ 4.04       75.0 %
7th
  $ 3.98       70.0 %
8th
  $ 3.92       65.0 %
9th
  $ 3.86       60.0 %
10th
  $ 3.80       55.0 %
11th
  $ 3.74       50.0 %
12th
  $ 3.68       45.0 %
13th
  $ 3.62       40.0 %
14th
  $ 3.56       35.0 %
15th
  $ 3.50       30.0 %
16th
  $ 3.44       25.0 %
17th
  $ 3.38       20.0 %
18th
  $ 3.32       15.0 %
19th
  $ 3.26       10.0 %
20th
  $ 3.20       5.0 %

 

*   Net of bonus and net of extraordinary, non recurring income items not
related to the fiscal year’s operations. The per share return targets were
calculated using 20,433,578 diluted shares. Adjustments to these targets will be
made to reflect changes in the number of shares outstanding resulting from any
merger, consolidation, reorganization, re-capitalization, re-incorporation,
stock-splits, stock dividend, stock repurchase, or other changes in the
corporate structure of the Company. Furthermore, the target per share return
numbers were calculated based on a target net return on projected sales. The
Company reserves the right to adjust these targets in the event of a substantial
fluctuation in sales pounds or dollars during the year.

5

--------------------------------------------------------------------------------

 

The following formula will be utilized to determine the exact dollar amount of a
participant’s bonus award dependent upon EPS performance.

             
 
  A   =   Gross Award
 
           
 
  S   =   Base Salary (excluding bonus award payments and other items of
miscellaneous income) of the Participant during that portion of the year in
which he or she was employed in a designated position.
 
           
 
  P   =   Percentage of award earned based on above schedule
 
           
 
  M   =   Percent of salary eligible to be earned as a bonus based on EPS
performance.
 
                    FORMULA
 
           
 
          S X P X M = A

     As with any awards made under this Bonus Award Program, no bonus will be
paid unless total net income return (after bonus) on average stockholders’
equity for the year exceeds eight percent (8%). Net return on average
stockholders’ equity will be computed by taking the average of beginning and
ending stockholders’ equity for the applicable year, and dividing that number
into net income for the year.
     The percent of salary eligible to be earned as a bonus based on EPS
performance (“M” in the above formula) for the fiscal year is 25%.

6

--------------------------------------------------------------------------------

 

          B. Performance Based Bonus
     Bonus awards under this Bonus Award Program for the Nutritionist,
Veterinarian, Assistant to Director of Live Production, Corporate Chill Pack
Coordinator and Quality Assurance Manager will be granted based on a combination
of earnings per share performance and general corporate performance as measured
against the Company’s peers and competitors as reported by Agri Stats. For
purposes of calculating bonuses awarded and paid to individuals in these
positions based on operating performance, the corporate Agri Stats measure will
be as reported in Agri Stats’ “bottom line analysis, per head, report.” Awards
made to these individuals based on the operating performance factor will be as
follows:

                      Percentage of Salary   Corporate Agri Stats     Eligible
to be Earned as   Bottom Line     Bonus on Operating   Report (Per Head)    
Performance Factors   (Percentage of Award Earned) TARGET           Top Three
Places
Corp. Mgr. of Sales
    20 %     100 %
Corp. Processing Mgr.
    20 %     100 %
Corp. Production Mgr.
    20 %     100 %
Nutritionist
    15 %     100 %
Veterinarian
    15 %     100 %
Corp. Live Prod. Asst.
    15 %     100 %
Quality Assurance Mgr
    15 %     100 %
Corp. Maint. Mgr.
    15 %     100 %
 
               
HIGH AVERAGE
          Places Four and Five
Corp. Mgr. of Sales
    20 %     66 2/3 %
Corp. Processing Mgr.
    20 %     66 2/3 %
Corp. Production Mgr.
    20 %     66 2/3 %
Nutritionist
    15 %     66 2/3 %
Veterinarian
    15 %     66 2/3 %
Corp. Live Prod. Asst
    15 %     66 2/3 %
Quality Assurance Mgr
    15 %     66 2/3 %
Corp. Maint. Mgr.
    15 %     66 2/3 %
 
               
LOW AVERAGE
          Places Six and Seven
Corp. Mgr. of Sales
    20 %     33 1/3 %
Corp. Processing Mgr.
    20 %     33 1/3 %
Corp. Production Mgr.
    20 %     33 1/3 %
Nutritionist
    15 %     33 1/3 %
Veterinarian
    15 %     33 1/3 %
Corp. Live Prod. Asst.
    15 %     33 1/3 %
Quality Assurance Mgr
    15 %     33 1/3 %
Corp. Maint. Mgr.
    15 %     33 1/3 %

     In the event of significant changes in the number of participants in any
Agri Stats report, the Executive Committee may alter the places in each award
category to reflect the changes in the number of participants.
     All poultry sales managers will receive a bonus based in part upon the
Company’s earnings per share performance, in part based on the Company’s overall
corporate Agri Stats performance, and in part based on the performance of the
complexes to which they are assigned (that is, “big bird debone” complexes
(Laurel, Hammond, Hazlehurst and Collins) will be grouped and “tray pack”
complexes (Georgia, Texas and McComb) will be grouped) relative to the Company’s
peers and competitors as reported by Agri Stats. The overall corporate Agri
Stats performance measure will be the Company’s performance relative to its
peers and competitors as reported by Agri

7

--------------------------------------------------------------------------------

 

Stats in its “bottom line analysis, per head” report. The performance of the
applicable complexes will be measured by the complexes’ combined performance
relative to its peers and competitors as reported by corporate Agri Stats in its
complex “operations profit analysis, per head” report.

8

--------------------------------------------------------------------------------

 

     These managers will be paid in accordance with the following schedule:

                                      Percentage of                   Corporate
    Salary   Assigned Complex   Agri Stats     Eligible to be   Operations
Profit   Bottom Line     Earned   Report   Report     As Bonus Based   (Per
Head) Agri Stats   (Per Head)     On Performance   (Percentage of   (Percentage
of     Factors   Award Earned)   Award Earned)             (Big Bird)   (Tray
Pack)     TARGET           Top 4 Places   Top 2 Places   Top 3 Places
Manager Export Sales
    20 %     0 %     0 %     100.0 %
Mgr. Debone/MDM Sales
    20 %     50 %     50 %     50 %
Manager of Marketing
    15 %     0 %     0 %     100.0 %
Corp. Export Sales Mgr.
    15 %     0 %     0 %     100.0 %
Corp. Sales Managers
    15 %     50 %     50 %     50 %
Corp. Debone Sales Cord.
    15 %     50 %     50 %     50 %
Corp. Chill Pack Sales Cord.
    15 %     50 %     50 %     50 %
 
                               
HIGH AVERAGE
          Places 5 thru 7   Places 3 and 4   Places 4 and 5
Manager Export Sales
    20 %     0 %     0 %     66.67 %
Mgr. Debone/MDM Sales
    20 %     33.3 %     33.3 %     33.3 %
Manager of Marketing
    15 %     0 %     0 %     66.67 %
Corp. Export Sales Mgr.
    15 %     0 %     0 %     66.67 %
Corp. Sales Managers
    15 %     33.3 %     33.3 %     33.3 %
Corp. Debone Sales Cord.
    15 %     33.3 %     33.3 %     33.3 %
Corp. Chill Pack Sales Cord.
    15 %     33.3 %     33.3 %     33.3 %
 
                               
LOW AVERAGE
          Places 8 thru 11   Place 5   Places 6 and 7
Manager Export Sales
    20 %     0 %     0 %     33.3 %
Mgr. Debone/MDM Sales
    20 %     16.7 %     16.7 %     16.7 %
Manager of Marketing
    15 %     0 %     0 %     33.3 %
Corp. Export Sales Mgr
    15 %     0 %     0 %     33.3 %
Corp. Sales Managers
    15 %     16.7 %     16.7 %     16.7 %
Corp. Debone Sales Cord.
    15 %     16.7 %     16.7 %     16.7 %
Corp. Chill Pack Sales Coed.
    15 %     16.7 %     16.7 %     16.7 %

     In the event of significant changes in the number of participants in any
Agri Stats report, the Executive Committee may alter the places in each award
category to reflect the changes in the number of participants.
     The Foods Sales Managers and other Foods managers set forth below will
receive a bonus based in part upon the Company’s earnings per share performance
as described on pages 5 and 6 of this plan, and in part based on the Foods
Division’s performance as measured by “pre-tax net operating income,” and the
Corporate Agri Stats Bottom Line Analysis, per head, report, as described below.
The final results of the Foods Division will be determined after the Company’s
external auditors have completed their audit at the end of each fiscal year,
which is completed approximately two months after the last day of each fiscal
year end.

9

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                              Percentage of                 Salary Eligible    
      Corporate     to be earned   Target   Agri Stats     as bonus based   Pre
Tax   Bottom Line     on Performance   Operating   Report     Factors   Income  
(Per Head) Target           $14.7 Million   Top 3 Places
Manager Foods Div. Sales
    20 %     80 %     20 %
Foods Sales Manager
    15 %     80 %     20 %
Prod. Development Mgr.
    10 %     80 %     20 %
Research and Development Chef
    10 %     80 %     20 %
Products Application Manager
    10 %     80 %     20 %
 
                       
Average
          $12.6 Million   Places 4 and 5
Manager Foods Div. Sales
    20 %     53.33 %     13.33 %
Foods Sales Manager
    15 %     53.33 %     13.33 %
Prod. Development Manager
    10 %     53.33 %     13.33 %
Research and Development Chef
    10 %     53.33 %     13.33 %
Products Application Manager
    10 %     53.33 %     13.33 %
 
                       
Low
          $20.5 Million   Places 6 and 7
Manager Food Div. Sales
    20 %     26.33 %     6.66 %
Food Sales Manager
    15 %     26.33 %     6.66 %
Prod. Development Manager
    10 %     26.33 %     6.66 %
Research and Development Chef
    10 %     26.33 %     6.66 %
Products Application Manager
    10 %     26.33 %     6.66 %

     In the event of significant changes in the number of participants in any
Agri Stats report, the Executive Committee may alter the places in each award
category to reflect the changes in the number of participants.
     The following formula will be utilized for all employees whose bonus is to
be determined in part by factors other than EPS performance to determine that
portion of the award dependent upon such factors:

             
 
  A   =   Gross Award
 
           
 
  S   =   Base Salary (excluding bonus award payments and other items of
miscellaneous income) of the Participant during that portion of the year in
which he or she was employed in a designated position.
 
           
 
  P   =   Percent age of award earned based on performance factor
 
           
 
  M   =   Percentage of salary eligible to be earned and paid as a bonus on
performance factor.
 
           
 
          FORMULA
 
           
 
          S X P X M = A

10

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SANDERSON FARMS, INC.
Bonus Award Program
VI. PARAMETERS
     This bonus award program has been designed to encourage teamwork and
cooperation among all of the divisions of Sanderson Farms, and to ensure that
Sanderson Farms is consistently among the leaders in profitability in the
broiler and prepared foods industry. The program is also designed to pay a bonus
to employees only after the Company has returned to its shareholders a fair and
equitable return.
     1. In the event of extraordinary operating conditions that were unforeseen
when setting the objectives and percentages in this bonus award program, such
circumstances will be considered by the Executive Committee of Sanderson Farms,
Inc. in making awards.
     2. In the event of possible reporting errors affecting the ranking, such
circumstances will be considered by the Executive Committee of Sanderson Farms,
Inc. in making awards.
     3. In the event changes in laws or accounting procedures affect the
ranking, such circumstances will be considered by the Executive Committee of
Sanderson Farms, Inc. in making awards.
     4. The per share return targets were calculated using 20,433,578 diluted
shares. Adjustments to these targets will be made to reflect changes in the
number of shares outstanding resulting from any merger, consolidation,
reorganization, re-capitalization, re-incorporation, stock-splits, stock
dividend, stock repurchase, or other changes in the corporate structure of the
Company. Furthermore, the target per share return numbers were calculated based
on a target net return on projected sales. The Company reserves the right to
adjust these targets in the event of a substantial fluctuation in sales pounds
or dollars during the year.

11

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SANDERSON FARMS, INC.
BONUS AWARD PROGRAM
(PRODUCTION, PROCESSING AND FOODS PERFORMANCE AWARD PARTICIPANTS)
Effective November 1, 2006
Supercedes November 1, 2005

1

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SANDERSON FARMS, INC.
Bonus Award Program
Effective Nov. 1, 2006
I. PURPOSE
     The Board of Directors of Sanderson Farms, Inc. has determined that in
addition to the Company’s existing competitive and equitable total compensation
package, it is desirable to maintain a bonus award program for its salaried
employees. The purposes for such a program include:

  A.   To encourage excellence and high levels of performance.     B.   To
recognize the contributions of the salaried employees to the overall
profitability of the Company.     C.   To encourage all employees from every
division in the Company to cooperate, share information and work together as a
team for the overall benefit of the Company and its shareholders.

II. PARTICIPATION AND MAXIMUM AWARD
     The Executive Committee of Sanderson Farms, Inc. will select and recognize
personnel eligible to participate in the bonus award program, and reserves the
right to review and change the class of eligible employees at any time. Those
now designated include:

  A.   Salaried personnel within the corporate structure of Sanderson Farms,
Inc., Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc.
(Processing Division) and Sanderson Farms, Inc. (Foods Division).     B.   All
salaried management and accounting trainees within the corporate structure.

2

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SANDERSON FARMS, INC.
Bonus Award Program
III. ELIGIBILITY
EMPLOYMENT/PARTICIPATION
     Except in the case of death, disability or retirement, as set forth below,
employees must be employed in a designated position on October 31 of the
applicable fiscal year and must have been employed in a designated position for
a period of nine months prior to the end of the fiscal year to be eligible to
participate in the bonus award program. Base salary for this purpose shall
include regular compensation only, and shall not include bonus award payments
and any other miscellaneous payments that might be treated as income to the
employee.
DEATH, DISABILITY AND RETIREMENT
     If an eligible employee terminates employment with the Company during the
fiscal year before October 31 as a result of death, disability or retirement,
and had been employed in a designated position for a period of at least nine
months, such employee will be eligible to participate in the Bonus Award Program
notwithstanding the fact that the employee is not employed on October 31, and
the base salary paid to such employee during that portion of the year during
which he or she was employed in a designated position will be used to calculate
the amount of such employee’s bonus award.
EXTRAORDINARY CIRCUMSTANCES
     Extraordinary circumstances will be subject to review by the Executive
Committee.

3

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SANDERSON FARMS, INC.
Bonus Award Program
IV. DETERMINATION OF AWARD AND PAYMENT
     Bonus award programs for many corporations focus in some form or another on
the real dollar profits earned by the corporation within a given time frame.
This method of determining bonuses to be paid to employees recognizes that
bonuses should be paid to employees only after a fair and equitable return has
been earned for the shareholders who own the company. With this basic philosophy
in mind, the Board has determined that no bonuses will be paid under this
program unless net return on average stockholders’ equity after consideration is
taken for any bonus paid under this program for the year exceeds eight percent
(8%). After this minimum threshold is met, the Bonus Award Program will become
effective, and bonuses will be paid if the other criteria described in this
program are met.
     In recognition of the fact that one of our primary obligations as employees
of this Company is to our shareholders, the Board of Directors has determined
that net profits made by the consolidated corporations [Sanderson Farms, Inc.,
Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc. (Processing
Division) and Sanderson Farms, Inc. (Foods Division)] on a per share basis for
the period November 1 through October 31 of each year will be the primary basis
for bonus awards. The earnings per share for purposes of computing the bonus
awards, as set forth herein, shall be computed net of any bonuses awarded and
net of any extraordinary, non recurring income items. For all employees of
Sanderson Farms other than certain management level employees, this will be the
sole basis for determining bonus awards.
     Although the Board has determined that net profits earned for shareholders
of the Company should be the primary method of determining the bonuses to be
paid to employees, the Board has also recognized that certain management level
employees have responsibility for and more direct control over the operating
performance and profitability of the Company. In recognition of this fact, the
Board has concluded that a certain percentage of your bonus should be determined
by evaluating the operating and profitability performance of the Company
relative to its peers and competitors. Therefore, while a portion of your bonus
will be determined by the Company’s earnings per share performance, a portion of
your bonus will also be determined by evaluating the performance of the Company
as compared to our peers and competitors by Agri Stats for poultry division
managers, and based on certain net income growth targets for managers in the
foods division, all as described herein.
     The audited annual financial statements, on a consolidated basis, of
Sanderson Farms, Inc. will be the measuring tool for the net return to
shareholders portion of the bonus award program. The annual bonus award will be
paid to participants in the bonus award program after the outside auditors have
completed their annual audit of the corporations, which is usually approximately
two (2) months after the end of the fiscal year.
     The Company’s performance relative to its peers and competitors as reported
by Agri Stats will be used to evaluate and determine bonuses paid to those
employees whose bonuses are determined in part by such performance. The
appropriate measuring tool as set forth in this Bonus Award Program as reported
by Agri Stats for the twelve (12) month period ending on October 31 each year
will be used to determine if a bonus has been earned by such employees.

4

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SANDERSON FARMS, INC.
Bonus Award Program
     V. OBJECTIVES AND FORMULAS FOR DETERMINATION OF THE BONUS AWARD
     A. EPS Bonus
     All salaried employees will receive a bonus if the net income per share
objectives set forth below are met, and if the minimum return on average
stockholders equity for the year is earned. Net income shall be computed net of
any bonuses awarded and net of any extraordinary, non recurring income items not
related to the fiscal year’s operations. The annual audited financial
statements, on a consolidated basis, of Sanderson Farms, Inc., will be the
measuring tool for this portion of the Bonus Award Program. The annual bonus
award will be paid to participants after the outside auditors have completed
their annual audit of the consolidated corporation.
     The earnings per share objectives and the respective percentage of
employees’ bonus dependent upon EPS earned for the fiscal year (November 1 thru
October 31) are as follows:

                  RANK   PER SHARE RETURN*   PERCENTAGE OF AWARD
Best (1st)
  $ 4.34       100.0 %
2nd
  $ 4.28       95.0 %
3rd
  $ 4.22       90.0 %
4th
  $ 4.16       85.0 %
5th
  $ 4.10       80.0 %
6th
  $ 4.04       75.0 %
7th
  $ 3.98       70.0 %
8th
  $ 3.92       65.0 %
9th
  $ 3.86       60.0 %
10th
  $ 3.80       55.0 %
11th
  $ 3.74       50.0 %
12th
  $ 3.68       45.0 %
13th
  $ 3.62       40.0 %
14th
  $ 3.56       35.0 %
15th
  $ 3.50       30.0 %
16th
  $ 3.44       25.0 %
17th
  $ 3.38       20.0 %
18th
  $ 3.32       15.0 %
19th
  $ 3.26       10.0 %
20th
  $ 3.20       5.0 %

 

*   Net of bonus and net of extraordinary, non recurring income items not
related to the fiscal year’s operations. The per share return targets were
calculated using 20,433,578 diluted shares. Adjustments to these targets will be
made to reflect changes in the number of shares outstanding resulting from any
merger, consolidation, reorganization, re-capitalization, re-incorporation,
stock-splits, stock dividend, stock repurchase, or other changes in the
corporate structure of the Company. Furthermore, the target per share return
numbers were calculated based on a target net return on projected sales. The
Company reserves the right to adjust these targets in the event of a substantial
fluctuation in sales pounds or dollars during the year.

5

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     The following formula will be utilized to determine the exact dollar amount
of a participant’s bonus award dependent upon EPS performance.

             
 
  A   =   Gross Award
 
           
 
  S   =   Base Salary (excluding bonus award payments and other items of
miscellaneous income) of the Participant during that portion of the year in
which he or she was employed in a designated position.
 
           
 
  P   =   Percentage of award earned based on above schedule
 
           
 
  M   =   Percent of salary eligible to be earned as a bonus based on EPS
performance.
 
           
 
          FORMULA
 
           
 
                S X P X M = A

6

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          As with any awards made under this Bonus Award Program, no bonus will
be paid unless total net income return (after bonus) on average stockholders’
equity for the year exceeds eight percent (8%). Net return on average
stockholders’ equity will be computed by taking the average of beginning and
ending stockholders’ equity for the applicable year, and dividing that number
into net income for the year.
          The percent of salary eligible to be earned as a bonus based on EPS
performance (“M” in the above formula) for the fiscal year is 25%.
     B. Performance Based Bonus
          All production unit managers, processing shift managers, processing
managers, packing managers and shipping/preprice managers will receive a bonus
based in part upon the Company’s earnings per share performance, in part based
on the Company’s overall corporate Agri Stats performance, and in part based on
the performance of the complexes to which they are assigned (for example, “big
bird debone” complexes (Laurel, Hammond, Hazlehurst and Collins) will be grouped
and “tray pack” complexes (McComb, Collins and Georgia) will be grouped)
relative to the Company’s peers and competitors as reported by Agri Stats. The
overall corporate Agri Stats performance measure will be the Company’s
performance relative to its peers and competitors as reported by Agri Stats in
its “bottom line analysis, per head” report, net of bonus. The performance of
the applicable complexes will be measured by the complexes’ combined performance
relative to its peers and competitors as reported by corporate Agri Stats in its
complex “operational profit analysis, per head” report, net of bonus.
          These managers will be paid in accordance with the following schedule:

                                      Percentage of                   Corporate
    Salary   Assigned Complex   Agri Stats     Eligible to be   Operations
Profit   Bottom Line     Earned   Report   Report     As Bonus Based   (Per
Head)   (Per Head)     On Performance   (Percentage of   (Percentage of    
Factors   Award Earned)   Award Earned)         (Big Bird)   (Tray Pack)    
TARGET       Top 4 Places   Top 2 Places   Top 3 Places
Prod. Unit Mgrs.
    10 %     50 %     50 %     50 %
Proc. Plant Mgrs.
    10 %     50 %     50 %     50 %
Proc. Shift Mgrs.
    10 %     50 %     50 %     50 %
Processing Mgrs.
    10 %     50 %     50 %     50 %
Packing Mgrs.
    10 %     50 %     50 %     50 %
Ship/Preprice/Mgrs.
    10 %     50 %     50 %     50 %
 
                               
HIGH AVERAGE
          Places 5 thru 7   Places 3 and 4   Places 4 and 5
Prod. Unit Mgrs.
    10 %     33.3 %     33.3 %     33.3 %
Proc. Plant Mgrs.
    10 %     33.3 %     33.3 %     33.3 %
Proc. Shift Mgrs.
    10 %     33.3 %     33.3 %     33.3 %
Processing Mgrs.
    10 %     33.3 %     33.3 %     33.3 %
Packing Mgrs.
    10 %     33.3 %     33.3 %     33.3 %
Ship/Preprice/Mgrs.
    10 %     33.3 %     33.3 %     33.3 %
 
                               
LOW AVERAGE
          Places 8 thru 11   Place 5   Places 6 and 7
Prod. Unit Mgrs.
    10 %     16.7 %     16.7 %     16.7 %
Proc. Plant Mgrs.
    10 %     16.7 %     16.7 %     16.7 %
Proc. Shift Mgrs.
    10 %     16.7 %     16.7 %     16.7 %
Processing Mgrs.
    10 %     16.7 %     16.7 %     16.7 %
Packing Mgrs.
    10 %     16.7 %     16.7 %     16.7 %

7

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     In the event of significant changes in the number of participants in any
Agri Stats report, the Executive Committee may alter the places in each award
category to reflect the changes in the number of participants.
     At the Foods Division, the Production Manager will receive a bonus based in
part upon the Company’s earnings per share performance as described on pages 5
and 6 of this plan, and in part based on the Foods Division’s performance as
measured by “pre-tax net operating income,” and the Corporate Agri Stats Bottom
Line Analysis, per head, report. The final results of the Foods Division will be
determined after the Company’s external auditors have completed their audit at
the end of each fiscal year, which is completed approximately two months after
the last day of each fiscal year end.

                              Percentage of                 Salary Eligible    
      Corporate     to be earned   Target   Agri Stats     as bonus based   Pre
Tax   Bottom Line     on Performance   Operating   Report     Factors   Income  
(Per Head) Target           $14.7 Million   Top 3 Places
Production Manager
    10 %     80 %     20 %
 
                       
Average
          $12.6 Million   Places 4 and 5
Production Manager
    10 %     53.33 %     13.33 %
 
                       
Low
          $10.5 Million   Places 6 and 7
Production Manager
    10 %     26.67 %     6.66 %

     The following formula will be utilized for all employees whose bonus is to
be determined in part by factors other than EPS performance to determine that
portion of the award dependent upon such factors:

             
 
  A   =   Gross Award
 
           
 
  S   =   Base Salary (excluding bonus award payments and other items of
miscellaneous income) of the Participant during that portion of the year in
which he or she was employed in a designated position.
 
           
 
  P   =   Percentage of award earned based on performance factor
 
           
 
  M   =   Percentage of salary eligible to be earned and paid as a bonus on
performance factor.
 
                FORMULA
 
           
 
          S X P X M = A

8

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SANDERSON FARMS, INC.
Bonus Award Program
VI. PARAMETERS
     This bonus award program has been designed to encourage teamwork and
cooperation among all of the divisions of Sanderson Farms, and to ensure that
Sanderson Farms is consistently among the leaders in profitability in the
broiler and prepared foods industry. The program is also designed to pay a bonus
to employees only after the Company has returned to its shareholders a fair and
equitable return.
     1. In the event of extraordinary operating conditions that were unforeseen
when setting the objectives and percentages in this bonus award program, such
circumstances will be considered by the Executive Committee of Sanderson Farms,
Inc. in making awards.
     2. In the event of possible reporting errors affecting the ranking, such
circumstances will be considered by the Executive Committee of Sanderson Farms,
Inc. in making awards.
     3. In the event changes in laws or accounting procedures affect the
ranking, such circumstances will be considered by the Executive Committee of
Sanderson Farms, Inc. in making awards.
     4. The per share return targets were calculated using 20,433,578 diluted
shares. Adjustments to these targets will be made to reflect changes in the
number of shares outstanding resulting from any merger, consolidation,
reorganization, re-capitalization, re-incorporation, stock-splits, stock
dividend, stock repurchase, or other changes in the corporate structure of the
Company. Furthermore, the target per share return numbers were calculated based
on a target net return on projected sales. The Company reserves the right to
adjust these targets in the event of a substantial fluctuation in sales pounds
or dollars during the year.

9