Exhibit 10.2
LANCE, INC.
2006 Annual Performance Incentive Plan for Officers

     
Purposes and
  The primary purposes of the 2006 Annual Performance Incentive Plan for
Introduction
  Officers are to:

  •   Motivate behaviors that lead to the successful achievement of specific
sales, financial and operations goals that support Lance’s stated business
strategy.     •   Emphasize link between participants’ performance and rewards
for meeting predetermined, specific goals.     •   Focus participant’s attention
on operational effectiveness from both an earnings and an investment
perspective.     •   Promote the performance orientation at Lance and
communicate to employees that greater responsibility carries greater rewards.

For 2006, participants will be eligible to earn incentive awards based on
performance measures for the Branded and Private label portions of the Company’s
business. Branded is defined as that portion that is not Private Label,
corporate or intercompany activity. Private Label is defined as the combined
business of Vista Bakery, Inc. and Tamming Foods Ltd., excluding intercompany
activity.
The following performance indicators for the Company will be used based on the
performance measures listed on Exhibits A and B attached hereto:

  1.   Net Sales Dollars is defined as sales and other operating revenue, net of
returns, allowances, discounts and other sales deduction items.     2.   Gross
Margin Percentage is defined as Net Sales less cost of goods sold.     3.  
Operating Profit Dollars is defined as earnings before interest and taxes,
excluding any gain or loss on asset disposal and excluding other net income or
loss.     4.   AR and Inventory Days is defined as the sum of accounts
receivables days outstanding plus inventory days outstanding.

 

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  5.   Lost Time Accident Rate is defined as the number of lost time accidents
per 100 employees.     6.   Corporate EPS is defined as the fully diluted
earnings per share of the Company for the 2006 fiscal year, excluding special
items, which are significant one-time income or expense items.

To achieve the maximum motivational impact, plan goals and the awards that will
be received for meeting those goals will be communicated to participants as soon
as practical after the 2006 Plan is approved by the Compensation Committee of
the Board of Directors.
Each participant will be assigned a Target Incentive, stated as a percent of
Base Salary. The Target Incentive Award, or a greater or lesser amount, will be
earned at the end of the Plan Year based on the attainment of predetermined
goals.
Base Salary shall be the annual rate of base compensation for the Plan Year
which is set no later than April of such Plan Year.
Not later than 75 days after fiscal year-end, 100% of the awards earned will be
payable to participants in cash.

     
Plan Year
  The period over which performance will be measured is the Company’s 2006
fiscal year (the “Plan Year”).
 
   
Eligibility and Participation
  Eligibility in the Plan is limited to Officers of Lance who are key to Lance’s
success. The Compensation Committee of the Board of Directors will review and
approve participants nominated by the President and Chief Executive Officer.
Participation in one year does not guarantee participation in a following year,
but instead will be reevaluated and determined on an annual basis.
 
   
 
  Participants in the Plan may not participate in any other annual incentive
plan (e.g., sales incentives, etc.) offered by Lance or its affiliates.
Exhibit C includes the list of 2006 participants approved by the Compensation
Committee at its April 27, 2006 meeting.
 
   
Target Incentive
Awards
  Each participant will be assigned a Target Incentive expressed as a percentage
of his or her Base Salary. Participants may be assigned Target Incentives by
position, by salary level or based on other factors as determined by the
Compensation Committee.
 
   
 
  Target Incentives will be reevaluated at least every other year, if not
annually. If the job responsibilities of a position change during the year, or
Base Salary is increased significantly, the Target Incentive shall be revised

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  as appropriate.
 
   
 
  Exhibit C lists the Target Incentive and applicable performance measures for
each participant for the Plan Year. Target Incentives will be communicated to
each participant as close to the beginning of the year as practicable, in
writing. Final awards will be calculated by multiplying each participant’s
Target Incentive by the appropriate percentage (based on performance for the
year, as described below).
 
   
Performance Measures and Award Funding
  The 2006 performance measures for the Company and for Branded and Private
Label are attached hereto. Specific goals and related payouts are also attached
hereto.

                  Threshold   Target   Maximum Award Level Funded   *%   *%   *%

 
[*Targets not required to be disclosed]
Percent of payout will be determined on a straight line basis from Threshold to
Target and from Target to Maximum. There will be no payout unless the Threshold
for the applicable performance indicator is reached.
The performance measures and specific performance indicator goals will be
communicated to each participant as soon as practicable after they have been
established. Final Target Incentive Awards will be calculated after the
Compensation Committee has reviewed the Company’s audited financial statements
for 2006 and determined the performance level achieved.
Threshold, Target and Maximum levels will be defined at the beginning of each
year for each performance indicator.
The following definitions for the terms Maximum, Target and Threshold should
help set the goals for each year, as well as evaluate the payouts:

  •   Maximum: Excellent; deserves an above-market incentive     •   Target:
Normal or expected performance; deserves market-level incentive     •  
Threshold: Lowest level of performance deserving payment above base salary;
deserves below-market incentive

     
Individual
Performance
  Each Officer will receive *% of his or her Target Incentive Award based on
Branded performance measures and *% of his or her Target Incentive Award based
on Private Label performance measures except that the President of Vista Bakery
Inc. will receive *% of his Target Incentive

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  Award based on Branded performance measures and *% of his Target Incentive
Award based on Private Label performance measures.
 
   
 
  [*Targets not required to be disclosed.]
 
   
Form and Timing of Payments
  Final award payments will be made in cash as soon as practicable after award
amounts are approved by the Compensation Committee of the Board of Directors,
generally within 75 days after the end of the Company’s 2006 fiscal year. All
awards will be rounded to the nearest $100.
 
   
Change in Status
  An employee hired into an eligible position during the year may participate in
the Plan for the balance of the year on a pro rata basis.
 
   
Certain Terminations of Employment
  In the event a participant voluntarily terminates employment or is terminated
involuntarily before the payment date, any Award will be forfeited. In the event
of death, permanent disability or retirement, the award will be paid on a pro
rata basis at the higher of the Target Incentive or actual performance after the
end of the Plan Year. Awards otherwise will be calculated on the same basis as
for other participants. For purposes hereof, “retirement” means the
participant’s termination of employment with the Company either (i) after
attainment of age 65 or (ii) after attainment of age 55 with the prior consent
of the Compensation Committee.
 
   
Change In
Control
  In the event of a Change in Control, pro rata payouts will be made at the
greater of (1) Target Incentives or (2) actual results for the year-to-date,
based on the number of days in the Plan Year preceding the Change in Control.
Payouts will be made within 30 days after the relevant transaction has been
completed.
 
   
 
  “Change in Control” means, and shall be deemed to have occurred upon, the
first to occur of any of the following events:
 
   
 
  (i)      Any Outside Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing twenty-five percent (25%)
or more of the combined voting power of the Company’s then outstanding
securities; or
 
   
 
  (ii)      During any period of two (2) consecutive years (not including any
period prior to the date hereof), individuals who at the beginning of such
period constitute the Board (and any new Director, whose nomination for election
by the Company’s stockholders was approved by a vote of at least two-thirds
(2/3) of the Directors then in office who either were Directors at the beginning
of the period or whose nomination for election was so approved) cease for any
reason to constitute a majority of the members of the Board; or

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  (iii)      The stockholders of the Company approve: (i) a plan of complete
liquidation of the Company; or (ii) an agreement for the sale or disposition of
all or substantially all of the Company’s assets other than a sale or
disposition of all or substantially all of the Company’s assets to an entity at
least sixty percent (60%) of the combined voting power of the voting securities
of which are owned by the stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such sale or
disposition; or
 
   
 
  (iv)      The stockholders of the Company approve a merger, consolidation, or
reorganization of the Company with or involving any other corporation, other
than a merger, consolidation, or reorganization that would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at least sixty percent
(60%) of the combined voting power of the voting securities of the Company (or
such surviving entity) outstanding immediately after such merger, consolidation,
or reorganization.
 
   
 
  However, in no event shall a “Change in Control” be deemed to have occurred
with respect to a Participant if that Participant is part of a purchasing group
which consummates the Change in Control transaction. A Participant shall be
deemed “part of a purchasing group” for purposes of the preceding sentence if
the Participant is an equity participant in the acquiring company or group or
surviving entity (the “Purchaser”) except for ownership of less than one percent
(1%) of the equity of the Purchaser.
 
   
 
  “Beneficial Owner” has the meaning ascribed to such term in Section 13(d) of
the Exchange Act and Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
 
   
 
  “Board” means the Board of Directors of the Company.
 
   
 
  “Director” means a member of the Board.
 
   
 
  “Member of the Van Every Family” means (i) a lineal descendant of Salem A. Van
Every, Sr., including adopted persons as well as persons related by blood,
(ii) a spouse of an individual described in clause (i) of this Paragraph or
(iii) a trust, estate, custodian and other fiduciary or similar account for an
individual described in clause (i) or (ii) of this Paragraph.
 
   
 
  “Outside Person” means any Person other than (i) a Member of the Van Every
Family, (ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or (iii) a corporation owned directly or indirectly
by the stockholders of the Company in substantially the same

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  proportions as their ownership of the Company.
 
   
 
  “Participant” means an employee of the Company who is granted an Award under
this Plan.
 
   
Withholding
  The Company shall withhold from award payments any Federal, foreign, state or
local income or other taxes required to be withheld.
 
   
Communications
  Progress reports should be made to participants quarterly showing the
year-to-date performance results and the percentage of Target Incentives that
would be earned if results remain at that level for the entire year.
 
   
Executive Officers
  Notwithstanding any provisions to the contrary above, participation, Target
Incentive Awards and prorations for executive officers, including the President
and Chief Executive Officer, shall be approved by the Compensation Committee.
 
   
Governance
  The Compensation Committee of the Board of Directors of Lance, Inc. is
ultimately responsible for the administration and governance of the Plan.
Actions requiring Committee approval include final determination of plan
eligibility and participation, identification of performance measures,
performance objectives and final award determination. The Committee retains the
discretion to adjust any award due to extraordinary events such as acquisitions,
dispositions, required accounting adjustments or similar events; anomalies
affecting the calculations under a performance measure or where fairness to
participants or the Company require an adjustment. The decisions of the
Committee shall be conclusive and binding on all participants.

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Exhibit A
Branded Performance Measures
($ in millions, except Corporate EPS)

                                  Performance Indicator   Weight   Threshold  
Target   Maximum
Net Sales Dollars*
    * *%   $ * *   $ * *   $ * *  
Gross Margin Percentage*
    * *%   $ * *   $ * *   $ * *  
Operating Profit Dollars*
    * *%   $ * *   $ * *   $ * *  
AR and Inventory Days*
    * *%   $ * *   $ * *   $ * *  
Lost Time Accident Rate*
    * *%   $ * *   $ * *   $ * *  
Corporate EPS*
    * *%   $ * *   $ * *   $ * *

 

*Excludes special items related to Tom’s integration.   [**Targets not required
to be disclosed.]

 

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Exhibit B
Private Label Performance Measures
($ in millions, except Corporate EPS)

                                  Performance Indicator   Weight   Threshold  
Target   Maximum
Net Sales Dollars
    * *%   $ * *   $ * *   $ * *  
Gross Margin Percentage
    * *%   $ * *   $ * *   $ * *  
Operating Profit Dollars
    * *%   $ * *   $ * *   $ * *  
AR and Inventory Days
    * *%   $ * *   $ * *   $ * *  
Lost Time Accident Rate
    * *%   $ * *   $ * *   $ * *  
Corporate EPS*
    * *%   $ * *   $ * *   $ * *

 

*Excludes special items related to Tom’s integration.   [**Targets not required
to be disclosed.]

 

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Exhibit C

                          Performance   Award   Target Name   Title   Measures  
Percentage   Incentive
David V. Singer
  President and Chief   Branded *%   *%   $*
 
  Executive Officer   Private Label *%        
 
               
R. D. Puckett
  Executive Vice   Branded *%   *%   $*
 
  President, Chief   Private Label *%        
 
  Financial Officer,            
 
  Treasurer and            
 
  Secretary            
 
               
H. D. Fields
  Vice President and   Branded *%   *%   $*
 
  President, Vista   Private Label *%        
 
  Bakery, Inc.            
 
               
L. R. Gragnani, Jr.
  Vice President   Branded *%   *%   $*
 
  - Information   Private Label *%        
 
  Technology/CIO            
 
               
E. D. Leake
  Vice President   Branded *%   *%   $*
 
  - Human Resources   Private Label *%        
 
               
B. W. Thompson
  Vice President   Branded *%   *%   $*
 
  - Supply Chain   Private Label *%        
 
               
F. I. Lewis
  Vice President   Branded *%   *%   $*
 
  - Sales   Private Label *%        
 
               
M. E. Wicklund
  Controller and   Branded *%   *%   $*
 
  Assistant Secretary   Private Label *%        

 
[*Award targets omitted for participants as targets not required to be
disclosed.]