EXHIBIT 10.1

As Adopted by the Board of Directors 3/09/05

PIERRE FOODS, INC.

FISCAL 2006
EXECUTIVE INCENTIVE COMPENSATION PLAN

1. PURPOSE OF THE PLAN.

     The purpose of the Pierre Foods, Inc. Fiscal 2006 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.

 

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     (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 2006” means the Company’s fiscal year ending March 4, 2006.

     (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 2006.

     (n) “Plan” means the Pierre Foods, Inc. Fiscal 2006 Executive Incentive
Compensation Plan.

     (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

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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 together with the Committee, 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 CEO) in its sole discretion
based on the applicable performance objectives and their determination of
whether and to what extent

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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.

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     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 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.

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     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

     
All Participants other than the Vice Presidents of the Company’s Sales Divisions
  Unlimited    
Vice Presidents of the Company's Sales Divisions
  EBITDA Award — Unlimited
Direct Contribution Award — 50% of Salary

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