EXHIBIT 10.2

 

PIERRE FOODS, INC.

 

FISCAL 2007

 

EXECUTIVE INCENTIVE COMPENSATION PLAN

 

1.                                      PURPOSE OF THE PLAN.

 

The purpose of the Pierre Foods, Inc. Fiscal 2007 Executive Incentive
Compensation Plan is to provide certain executives of Pierre Foods, Inc. with
incentive compensation based upon the achievement of financial, business and
other performance criteria.  The Plan is an annual Plan with quarterly partial
interim bonus payments.

 

2.                                      DEFINITIONS.

 

The following capitalized terms used in the Plan have the respective meanings
set forth in this Section:

 

(a)                                  “Award” means a cash bonus award granted
pursuant to the Plan.

 

(b)                                 “Board” means the Board of Directors of the
Company.

 

(c)                                  “Code” means the Internal Revenue Code of
1986, as amended, or any successor thereto.

 

(d)                                 “Committee” means the Compensation Committee
of the Board, or any successor thereto or any other committee designated by the
Board to assume the obligations of the Committee hereunder.

 

(e)                                  “Company” means Pierre Foods, Inc., a North
Carolina corporation.

 

(f)                                    “Direct Contribution” means net sales
less standard cost of goods sold, less direct expenses, including but not
limited to, freight and selling expenses, based upon the Company’s financial
statements, as determined by the Committee with respect to Awards to the
President and CEO, or by the Committee together with the President and CEO in
all other cases.

 

(g)                                 “EBITDA” means earnings before interest,
taxes, depreciation and amortization, based upon the Company’s financial
statements, as determined by the Committee with respect to Awards to the
President and CEO or by the Committee together with the President and CEO in all
other cases.

 

(h)                                 “Effective Date” means the date on which the
Plan takes effect in accordance with Section 12 of the Plan.

 

(i)                                     “Estimated Award” has the meaning
ascribed to it in Section 5(c).

 

(j)                                     “Fiscal 2007” means the Company’s fiscal
year ending March 3, 2007.

 

(k)                                  “Maximum Award” means the maximum Award
which a Participant can earn pursuant to the Plan as set forth on Schedule I.

 

(l)                                     “Participant” means the President and
CEO and such other executives of the Company who are selected by the Committee
together with the President and CEO to participate in the Plan pursuant to
Section 4 of the Plan.

 

(m)                               “Performance Period” means Fiscal 2007.

 

(n)                                 “Plan” means the Pierre Foods, Inc. Fiscal
2007 Executive Incentive Compensation Plan.

 

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(o)                                 “President and CEO” means the President and
Chief Executive Officer of the Company.

 

3.                                      ADMINISTRATION.

 

The Plan shall be administered by the Committee for purposes of any Award
granted to the President and CEO.  For all other Awards, the Plan shall be
administered by the President and CEO with oversight by the Committee.  The
President and CEO shall be a Participant in the Plan and shall have the
authority to select the other executives to be granted Awards under the Plan. 
The Committee, with respect to the President and CEO, and the Committee together
with the President and CEO with respect to all other Participants, shall have
the authority to determine the size and terms of Awards (subject to the
limitations imposed on Awards in Section 5 below), to modify the terms of any
Award that has been granted, to determine the time when Awards will be made, the
amount of any payments pursuant to such Awards, and the Performance Period to
which they relate, to establish performance objectives in respect of such
Performance Periods and to determine whether such performance objectives were
attained.  The Committee with respect to the President and CEO, and the
Committee together with the President and CEO with respect to all other
Participants, is authorized to interpret the Plan, to establish, amend and
rescind any rules and regulations relating to the Plan, and to make any other
determinations that it deems necessary or desirable for the administration of
the Plan.  Any decision of the Committee or the President and CEO, in their
respective roles as administrators of the Plan, in the interpretation and
administration of the Plan, as described herein, shall lie within their sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned.  Determinations made by the Committee or the Committee together with
the President and CEO under the Plan need not be uniform and may be made
selectively among Participants, whether or not such Participants are similarly
situated.

 

4.                                      ELIGIBILITY AND PARTICIPATION.

 

(a)                                  Participants.  The President and CEO shall
be a Participant in the Plan, and shall select the other executives who shall be
Participants for the Performance Period.  Participants shall be selected from
among the employees of the Company and the designation of Participants may be
made individually or by groups or classifications of employees, as the Committee
together with the President and CEO deem appropriate.

 

(b)                                 New Hires; Promotions.  If an employee other
than the President and CEO becomes a Participant after the commencement of the
Performance Period, the Committee together with the President and CEO, in their
sole discretion, shall determine the date on which the Participant will be
entitled to participate in the Plan, the performance objectives, amount of Award
and other terms applicable to such Participant.  New employees (who are
determined to be Participants by the Committee together with the President and
CEO) shall be eligible to participate in the Plan in the first full fiscal
quarter of his or her employment.  If a Participant is transferred or promoted
before the end of the Performance Period, the Committee together with the
President and CEO, in their sole discretion, shall determine whether such
Participant shall be entitled to continue to participate in the Plan, and if so,
the performance objectives, amount of Award and other terms and conditions
applicable to such Participant.  Unless otherwise specifically determined by the
Committee together with the President and CEO, any Participant who is promoted
during the Participation Period shall continue under the Plan as if he or she
was not promoted.

 

5.                                      AWARDS.

 

(a)                                  Performance Objectives.  Awards under the
Plan shall be conditioned on the attainment of written performance objectives. 
Performance objectives and Awards shall be recommended by the President and CEO
and determined and approved by the Committee for the Performance Period and may
include, among other things, objectives relating to EBITDA and Direct
Contribution.  The Committee, with respect to Awards to the President and CEO,
and based upon the recommendation by the President and CEO in all other cases,
shall determine whether and to what extent each performance objective has been
met.  In determining whether and to what extent a performance objective has been
met, the Committee or the Committee together with the President and CEO, as
applicable, may consider such matters as they deem appropriate.

 

(b)                                 Amount Payable.  The amount payable pursuant
to an Award shall be determined by the Committee (upon recommendation by the
President and CEO for all Awards other than Awards to the President and

 

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CEO) in its sole discretion based on the applicable performance objectives and
their determination of whether and to what extent each applicable performance
objective has been met; provided, however, that in no event shall a Participant
be paid more than the Maximum Award applicable to such Participant.  Unless
otherwise specifically determined by the Committee together with the President
and CEO with respect to a Participant, Awards for the Performance Period shall
be based upon a Participant’s salary at the commencement of the Performance
Period.

 

(c)                                  Payment.  As soon as practicable after the
end of each fiscal quarter during the Performance Period, the Company shall
estimate the total Award for the Performance Period that will be payable to each
Participant based upon (i) the actual performance of the Company through the end
of such fiscal quarter and (ii) the projected performance of the Company for the
remainder of the Performance Period (the “Estimated Award”).  Subject to the
terms and conditions of the Plan, for each of the first three fiscal quarters
during the Performance Period, the Company shall pay each Participant an amount
equal to one-fourth (1/4) of seventy-five percent (75%) of the total Estimated
Award for such Participant.  The final payment of the Award shall include the
total Award for the Performance Period less any payments made for each of the
first three fiscal quarters during the Performance Period.  The final payment is
not payable to a Participant if the Participant ceases to be a Participant at
any time prior to the end of the Performance Period.  Following the completion
of the annual audit of the Company’s financial statements and the filing of such
financial statements with the Securities and Exchange Commission, subject to the
terms and conditions of the Plan, a fourth and final payment shall be made to
each Participant reflecting the actual attainment of the performance objectives.

 

(d)                                 Termination of Employment.  If a
Participant’s employment is terminated during the Performance Period for any
reason, the Participant shall forfeit any and all Awards for the Performance
Period.  Payment of Awards to Participants whose employment is terminated
following the end of any fiscal quarter, but prior to the expiration of the
Performance Period, shall be paid at the sole and exclusive discretion of the
Committee together with the President and CEO (or with respect to the President
and CEO, the sole and exclusive discretion of the Committee).  Unless otherwise
specifically determined by the Committee with respect to the President and CEO,
or the Committee together with the President and CEO with respect to any other
Participants, no payments shall be made to any Participant for any quarter in
which the Participant was not an employee for the entire quarter.

 

6.                                      NO RIGHT TO EMPLOYMENT.

 

Neither the Plan nor any action taken hereunder shall be construed as conferring
upon any Participant the right to continued employment by the Company or limit
in any way the Company’s right to terminate any Participant’s employment at will
or in accordance with such employee’s written employment agreement, if any.

 

7                                         NONTRANSFERABILITY OF AWARDS.

 

An Award shall not be transferable or assignable by the Participant other than
by will or by the laws of descent and distribution.

 

8.                                      TAXES; OFFSET OF AWARDS.

 

Prior to the payment of an Award, the Company may withhold, or require the
Participant to remit to the Company, an amount sufficient to pay any federal,
state, and local taxes associated with the Award.  Notwithstanding anything to
the contrary herein, the Committee, in its sole discretion, may reduce any
amounts otherwise payable to any Participant hereunder in order to satisfy any
liabilities owed to the Company by the Participant.   All Awards shall be
considered salary of the Participant for purposes of the Company’s 401(k) Plan.

 

9.                                      ADJUSTMENTS UPON CERTAIN EVENTS;
AMENDMENTS; TERMINATION.

 

The Committee together with the President and CEO shall have the discretion to
decrease, but not increase, the amount of any payment otherwise payable pursuant
to an Award based on such factors as they shall deem appropriate.  In the event
of any material change in the business assets, liabilities or prospects of the
Company, or any division of the Company, the Committee together with the
President and CEO, in their sole discretion and without liability to any person
may make such adjustment, if any, as they deem to be equitable as to any
affected

 

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terms of outstanding Awards (other than with respect to Awards to the President
and CEO).  In addition, the Committee together with the President and CEO may at
any time without notice, amend or alter the performance objectives or any part
thereof with respect to Awards (other than with respect to Awards to the
President and CEO).  The Committee together with the President and CEO may
amend, alter or discontinue the Plan or any part thereof.

 

10.                               MISCELLANEOUS PROVISIONS.

 

The Company is the sponsor and legal obligor under the Plan and shall make all
payments hereunder.  The Company shall not be required to establish any special
or separate fund or to make any other segregation of assets to ensure the
payment of any amounts under the Plan, and the Participants’ rights to the
payment hereunder shall be no greater than the rights of the Company’s unsecured
creditors.  All expenses involved in administering the Plan shall be borne by
the Company.

 

11.                               CHOICE OF LAW.

 

The Plan shall be governed by and construed in accordance with the laws of the
State of Ohio applicable to contracts made and to be performed in the State of
Ohio.

 

12.                               EFFECTIVENESS OF THE PLAN.

 

The Plan shall become effective on the date it is approved by the Board and will
continue in effect until terminated by the Board.

 

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SCHEDULE I

 

MAXIMUM AWARDS

 

 

President and Chief Executive Officer

 

No Cap

 

 

 

All Participants other than

 

No Cap

the President and Chief Executive

 

 

Officer

 

 

 

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