Exhibit 10.2
FORM OF TARGET AWARD NOTIFICATION LETTER (FISCAL 2015)
UNDER FARMER BROS. CO. 2005 INCENTIVE COMPENSATION PLAN

Dear ______________:
The Compensation Committee (“Committee”) has chosen you to be a participant in
the Farmer Bros. Co. 2005 Incentive Compensation Plan (the “Plan”) for fiscal
2015. Your target award for fiscal 2015 is equal to ________% of your annual
base salary (“Target Bonus Percentage”). If your base salary changes during the
year, your target award will be the indicated percentage of twelve (12) times
your average monthly base salary for fiscal 2015. Your target award was
determined by the Committee based on your expected total compensation, job
responsibilities, expected job performance, and the terms of your employment
agreement[, as amended].
In general, your bonus for fiscal 2015 will be determined primarily by measuring
the Company’s financial performance and your achievement of individual goals
which the Committee has assigned to you. The method for determining your bonus
is described below.

Company Financial Performance
 
In calculating your bonus under the Plan, Company financial performance will be
weighted at 90%. Company financial performance will be gauged by the level of
achievement of modified net income and modified operating cash flow, in each
case as determined from the Company’s audited financial statements. “Modified
net income” is defined as net income (GAAP) before taxes and excluding any gains
or losses from sales of assets. “Modified operating cash flow” is defined as net
income from operations (GAAP) after taking into account adjustments for the
following items: (i) depreciation and amortization, (ii) provision for doubtful
accounts, (iii) changes in: (a) accounts and notes receivable, (b) inventories,
(c) income tax receivables, (d) prepaid expenses, (e) other assets, (f) accounts
payable, and (g) accrued payroll, expenses and other current liabilities.
Subject to the Committee’s discretion under the Plan, threshold modified net
income equal to no less than $XXX million must be achieved in fiscal 2015 to
earn any bonus payout under the Plan. Assuming this threshold is reached, then a
percentage of achievement ranging from 90% to 200% will be assigned for each of
modified net income and modified operating cash flow, respectively, in
proportion to the level of modified net income and modified operating cash flow,
respectively, achieved in relation to the targets for such amounts for fiscal
2015. Target modified net income for fiscal 2015 is $XXX million and target
modified operating cash flow for fiscal 2015 is $XXX million. Following that
calculation of achievement for each of modified net income and operating cash
flow, an overall Company financial performance achievement percentage will be
calculated by giving modified net income percentage achievement 80% weight and
giving modified operating cash flow 20% weight. This resulting figure is the
“Company Overall Achievement Percentage.”
 
Individual Performance

In calculating your bonus under the Plan, individual performance will be
weighted at 10%. The Committee has approved the following items for fiscal 2015,
as a non-exclusive list of individual goals for the fiscal year, including the
proposed weighting to be considered for such individual
goals:______________________________________________________________________________
____________________________________________________________________________________________________________
____________________________________________________________________________________________________________

The foregoing goals are not an exclusive list. The Committee may take the
foregoing into account as well as other factors and give each of them weight (or
ignore them as factors) as it shall reasonably determine and will consider the
proposed weight given to each of those listed goals. After the end of the fiscal
year, the Committee will evaluate those listed goals as well as other reasonable
factors it considers to be germane to your performance for the year and assign a
value of up to 10% with respect to your level of overall individual performance.
Your individual performance achievement will then be multiplied by the Company
Overall Achievement Percentage, and the resulting figure is the “Individual
Overall Achievement Percentage.”

Bonus Determination

After the end of the fiscal year and promptly upon availability of the Company’s
audited financial statements, the Committee will determine the Company’s level
of modified net income and modified operating cash flow and the resulting
Company Overall Achievement Percentage, as set forth above.

At such time, the Committee will also determine your percentage of individual
performance achievement and resulting Individual Overall Achievement Percentage.

The Company Overall Achievement Percentage and the Individual Overall
Achievement Percentage will be added together and multiplied by your Target
Bonus Percentage. The product will be further multiplied by your fiscal 2015
annual base salary. The result will be the amount of your preliminary bonus
award for fiscal 2015. The preliminary bonus award is subject to adjustment,
upward or downward, by the Compensation Committee in its discretion. The
Committee also has the discretion to alter the Company

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financial performance measures and individual goals during the fiscal year and
to decline to award any bonus should the Committee determine such actions to be
warranted by a change in circumstances. Accordingly, no bonus is earned unless
and until an award is actually made by the Committee after fiscal year-end.

Example

Assume that your annual base salary for fiscal 2015 is $250,000 and did not
change during the year, your target award is 40% of your annual base salary and
that Company financial performance is to be weighted at 90% and individual goals
are to be weighted at 10%. Assume that the percentage of achievement of the
modified net income Company financial performance measure is 150% and the
percentage of achievement of the modified operating cash flow Company financial
performance measure is 120%, thus the Company Overall Achievement Percentage
would be (150% x 80%) + (120% x 20%)= 144%. Assume, further, that the Committee
determined the level of achievement for your individual performance to be 8%,
which when multiplied by the Company Overall Achievement Percentage of 144%
would make your Individual Overall Achievement Percentage become (144% x
8%)=11.5%, your bonus would be determined as follows: (90% x 144%) + (11.5%) =
141.1%.

The preliminary bonus is the product of your total achievement percentage
multiplied by your Target Bonus Percentage multiplied by your base salary. In
the above example, the preliminary bonus amount is $141,100 (141.1% x 40% x
$250,000). The Committee has discretion to change your preliminary bonus amount
to arrive at your final bonus amount. However, absent extraordinary
circumstances, the Committee does not intend to exercise discretion to award
bonuses if modified net income is not achieved at a level of at least 90% of the
target established by the Committee.

The Committee intends that the bonus structure described above will encourage
teamwork among key management personnel as well as individual achievement. The
Company and individual goals are not intended to be easily achievable. The
Committee can determine to pay awards on a current or deferred basis, or partly
on each. Please promptly contact the Committee in the event circumstances
dictate re-examination of goals assigned by the Committee.

All awards are governed by the Plan provisions which control any inconsistency
with this letter.

Please let me know if you have any questions. We wish you great success for
fiscal 2015!
 
Very truly yours,

Jeanne Farmer Grossman
Compensation Committee Chair