complimitreplace_plan.htm


    Exhibit
      10.1

    
 

    THE
      HERSHEY COMPANY

    COMPENSATION
      LIMIT REPLACEMENT PLAN

    (Generally
      Effective as of January 1, 2007)

    


    I.             PURPOSE
      OF PLAN

     

    The
      purpose of The Hershey Company Compensation Limit Replacement Plan (hereinafter
      called the "Plan") is to ensure that the amount of future retirement benefits
      of
      executives of The Hershey Company (hereinafter called the "Company") are
      not reduced by federally regulated limits on the amount of compensation that
      may
      be included in the calculation of retirement benefits payable from the Company’s
      qualified Retirement Plan.

     

    II.            DEFINITIONS

     

    The
      following words and phrases as used in this Plan shall have the following
      meanings unless a different meaning is plainly required by the
      context:

     

    
      	
               

            	
              (a)

            	
              "Average
                Annual Earnings” as of any date during a Participants' employment with an
                Employer means the average of the Participant's Earnings for the
                five (5)
                calendar years preceding such date of
                calculation.

            


    

     

    
      	
               

            	
              (b)

            	
              "Code"
                means the Internal Revenue Code of 1986, as amended from time to
                time.

            


    

     

    
      	
               

            	
              (c)

            	
              "Committee"
                means the Compensation and Executive Organization Committee of the
                Company’s Board of Directors.

            


    

     

    
      	
               

            	
              (d)

            	
              "Company's
                Retirement Plan" means The Hershey Company Retirement Plan, as in
                effect
                from time to time and any successor plan
                thereto.

            


    

     

    
      	
               

            	
              (e)

            	
              "Credits"
                means the sum of the Participant's Basic Credits, Prior Service Credits,
                Supplemental Prior Service Credits, and Periodic Adjustment
                Credits.

            


    

     

    
      	
               

            	
              (f)

            	
              "DB
                SERP" means the Hershey Company Supplemental Executive Retirement
                Plan,
                which provides a nonqualified, defined benefit
                pension.

            


    

    


    
      	
               

            	
              (g)

            	
              "DC
                SERP" means the Defined Contribution Supplemental Executive Retirement
                Plan benefit of The Hershey Company Deferred Compensation
                Plan.

            


    

    


    
      	
               

            	
              (h)

            	
              "Earnings,"
                for purposes of this Plan, shall have the same meaning as provided
                in
                Section 1.18 of the Company's Retirement Plan, as such section may
                be
                amended from time to time, except that such Earnings shall not be
                subject
                to the compensation limits of Section 401(a)(17) of the
                Code.

            


    

     

    
      	
               

            	
              (i)

            	
              "Excess
                Account" as of a determination date equals the excess
                of:

            


    

     

    
      	
               

            	
              1.

            	
              the
                sum of the Credits to the Participant's Accounts (including Grandfather
                benefits) for all years ending on or before
                the

            


    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              determination
                date, including years prior to the Effective Date, that would have
                been
                made under Article 4 of the Company's Retirement Plan, if Earnings
                and
                Average Annual Earnings defined in this Plan were used in such
                calculation, over

            


    

    


    
      	
               

            	
              2.

            	
              the
                sum of the Credits to the Participant's Account (including
                Grandfather benefits) in all years ending on the determination date,
                including years prior to the Effective Date, under Article 4 of the
                Company's Retirement Plan.

            


    

    


    Notwithstanding
      the foregoing, for purposes of determining the Excess Account of any Participant
      eligible for the DC SERP, the Credits to the Participant’s Accounts determined
      under subsections 1 and 2 above for periods of participation in DC SERP shall
      be
      determined by assuming pay-based credits equal 3% of "Earnings" (as defined
      in
      this Plan or under the Company’s Retirement Plan, as applicable).

    


    
      	
               

            	
              (j)

            	
              "Effective
                Date" means January 1, 2007.

            


    

    


    
      	
               

            	
              (k)

            	
              "For
                Cause" means the willful engaging by the Participant in illegal conduct
                or
                gross misconduct which is materially and demonstrably injurious to
                the
                Company.

            


    

    


    For
      purposes of this definition, no act or failure to act, on the part of the
      Participant shall be considered "willful" unless it is done, or omitted to
      be
      done, by the Participant in bad faith and without reasonable belief that the
      Participant's action or omission was in the best interest of the Company. Any
      act or failure to act, based on prior approval given by the Board of Directors
      of the Company (the "Board") or upon the instruction or with the approval of
      the
      Chief Executive Officer or the Employee's superior or based upon the advice
      of
      counsel for the Company shall be conclusively presumed to be done, or omitted
      to
      be done, by the Participant in good faith and in the best interest of the
      Company.

    


    
      	
               

            	
              (l)

            	
              "Participant"
                means an employee of the Company who becomes eligible to receive
                a benefit
                under this Plan in accordance with the provisions of Paragraph
                III.

            


    

    


    All
      of
      the capitalized terms used in this Plan and not defined herein shall have the
      same meaning as in the Company's Retirement Plan, as may be amended from time
      to
      time.

     

    III.           ELIGIBILITY

    


    
      	
               

            	
              (a)

            	
              A
                U.S. paid executive who is an employee of the Company shall be a
                participant in this Plan if (i) he is an active participant in the
                Company's Retirement Plan on or after January 1, 1995, and (ii) his
                pension benefit, determined on the basis of the provisions of the
                Company's Retirement Plan without regard to the
                limitations

            


    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              of
                Section 415 or Section 401(a)(17) of the Code, would exceed the
                benefit payable from the Company's Retirement Plan with regard to
                such
                limits. An employee of the Company hired on or after the Effective
                Date
                shall not be a participant in this
                Plan.

            


    

     

    
      	
               

            	
              (b)

            	
              In
                the event that a Participant in this Plan becomes eligible to participate
                in the DB SERP, the Participant shall no longer be eligible to participate
                in this Plan or to receive a benefit hereunder, even for periods
                prior to
                his participation in the DB SERP.

            


    

     

    
      	
               

            	
              (c)

            	
              In
                the event that an employee who is a participant in the DB SERP becomes
                ineligible to participate in the DB SERP or terminates employment
                prior to
                meeting the criteria required to receive benefits under the DB SERP,
                such
                employee shall become eligible to participate in this Plan, and to
                receive
                a benefit hereunder for all years in which he would have been a
                Participant, but for his participation in the DB
                SERP.

            


    

     

    
      	
               

            	
              (d)

            	
              Any
                employee who terminated employment during 1994 and would have qualified
                as
                a Participant and earned a benefit under this Plan had it been adopted
                prior to the employee's termination date shall be considered a Participant
                in this Plan, and shall be entitled to receive a benefit under Section
                IV
                hereof.

            


    

     

    IV.           BENEFITS

    


    
      	
               

            	
              (a)

            	
              Retirement

            


    

     

    An
      employee who qualifies as a Participant and who retires or whose employment
      is
      otherwise terminated other than For Cause on or after his "Early Retirement
      Date" (as determined under the Company's Retirement Plan)  shall be
      entitled under this Plan to receive a retirement benefit equal to the lump
      sum
      value of his Excess Account, determined as of the Participant's date of
      termination of employment with the Company.

     

    
      	
               

            	
              (b)

            	
              Termination

            


    

     

    An
      employee who qualified as a Participant and who terminates employment other
      than
      For Cause prior to his Early Retirement Date but after becoming fully vested
      under the terms of the Company's Retirement Plan shall be entitled to a benefit
      equal to the lump sum value of his Excess Account as of the employee's date
      of
      termination of employment with the Company.

     

    
      	
               

            	
              (c)

            	
              Pre-retirement
                Death

            


    

     

    If
      a
      Participant dies prior to his Early Retirement Date, the Designated Beneficiary
      of the Participant shall be entitled to the lump sum value of the Participant's
      Excess Account as of the date of Participant's death.

     


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (d)

            	
              Disability

            


    

     

    If
      a
      Participant becomes Disabled prior to his Normal Retirement Date and while
      employed by the Company, the employee shall, to the extent his pension benefit,
      determined on the basis of the provisions of the Company's Retirement Plan,
      without regard to the limitations of Section 415 or Section 401(a)(17) of the
      Code, would exceed the benefit payable from the Company's Retirement Plan with
      regard to such limits, continue to accrue credits to his Excess Account during
      the period the Participant is disabled up until his Normal Retirement Date.
      The
      pay credits, if any, during this period will be determined based on the method
      described in Section 5.2 of the Company's Retirement Plan.

    


    V.           DISTRIBUTION
      AND FORM OF PAYMENT

    


    (a)           Form
      of Payment

    


    Benefits
      payable under Sections IV(a), IV(b), and IV(c) of this Plan shall be payable
      in
      a lump sum cash payment as soon as administratively practicable following the
      earliest of the date of a Participant’s (i) retirement, (ii) termination of
      employment, or (ii) death prior to his termination from
      employment.  Amounts payable under this Plan may be deferred under the
      Hershey Company Deferred Compensation Plan pursuant to the deferral election
      rules contained in that Plan.

    


    (b)           Distribution
      to Key Employees

    


    In
      the
      case of a Separation from Service of a Key Employee, a lump sum cash payment
      payable under Sections IV(a) or IV(b) of this Plan may not be made before the
      date which is six (6) months after the date of the Key Employee’s Separation
      from Service (or, if earlier, the date of death of the Key Employee)
      (hereinafter called the "Waiting Period").  The lump sum cash payment
      that is otherwise payable to a Key Employee under Sections IV(a) or IV(b) of
      this Plan shall accrue interest during the Waiting Period at a rate equal to
      the
      HRA Crediting Rate.

    


    (c)           Definitions

    


    For
      purposes of this Section V:

    


    
      	
               

            	
              (i)

            	
              "Key
                Employee" means a "specified employee" as determined by the Employee
                Benefits Committee of the Company using the standards set out under
                Code
                section 409A(a)(2)(B)(i) (i.e., a key employee (as defined under
                Code
                section 416(i) without regard to paragraph (5) thereof) of a corporation
                any stock in which is publicly traded on an established securities
                market
                or otherwise) and applicable Treasury regulations and other guidance
                under
                Code section 409A);

            


    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (ii)

            	
              "Separation
                from Service" means a termination of employment within the meaning
                of Code
                section 409A and applicable Treasury regulations and other guidance
                under
                Code section 409A; and

            


    

    


    
      	
               

            	
              (iii)

            	
              "HRA
                Crediting Rate" means a periodic adjustment percentage equal to the
                average of one-year Treasury Constant Maturities as published in
                the
                Federal Reserve Statistical Release H.15(519) of the Board of
                Governors of the Federal Reserve System, measured on the first business
                day of October, November and December of the year immediately preceding
                the Plan Year.  The average rate shall be calculated and rounded
                to the nearest one-hundredth of a percentage
                point.  Notwithstanding the preceding sentence, the periodic
                adjustment percentage shall not exceed twelve (12) percent and shall
                not
                be less than three (3) percent in any Plan
                Year.

            


    

     

    VI.           CHANGE
      IN CONTROL

     

    
      	
               

            	
              (a)

            	
              Upon
                the occurrence of a Change In Control, a Participant shall have a
                vested
                right to receive, upon his retirement or other termination of employment
                with the Company and notwithstanding his Years of Service, the value
                of
                his Excess Account as of his date of retirement or other termination
                of
                employment. In addition, a Participant shall have a vested right
                to
                receive the value of his Excess Account, notwithstanding his Years
                of
                Service, if such Participant's employment with the Company was terminated,
                (i) at the request of a third party who has taken steps reasonably
                calculated to effect a Change In Control, or (ii) in connection with
                or in
                anticipation of a Change In
                Control.

            


    

     

    
      	
               

            	
              (b)

            	
              For
                purposes of this Paragraph, a "Change In Control"
                means:

            


    

    


    
      	
               

            	
              1.

            	
              The
                acquisition or holding by any Person of beneficial ownership (within
                the
                meaning of Section 13(d) under the Exchange Act of shares of the
                Common
                Stock and/or the Class B Common Stock of the Company representing
                25% or
                more of either (i) the total number of then outstanding shares of
                both
                Common Stock and Class B Common Stock of the Company (the "Outstanding
                Company Stock") or (ii) the combined voting power of the then outstanding
                voting securities of the Company entitled to vote generally in the
                election of directors (the "Outstanding Company Voting Power"), provided
                that, at the time of such acquisition or holding of beneficial ownership
                of any such shares, the Hershey Trust does not beneficially own more
                than
                50% of the Outstanding Company Voting Power; and provided, further,
                that
                any such acquisition or holding of beneficial ownership of shares
                of
                either Common Stock or Class B Common Stock of the Company by any
                of the
                following entities shall not by itself constitute such a Change In
                Control
                hereunder: (i) the Hershey Trust; (ii) any trust established by the
                Company, or by any Subsidiary, for the benefit of the Company and/or
                its
                employees or those of any Subsidiary;
                or (iii) any employee benefit plan (or related trust) sponsored or
                maintained by the Company or by any Subsidiary;
                or

            


    

     


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    
      	
               

            	
              2.

            	
              The
                approval by the stockholders of the Company of any merger, reorganization,
                recapitalization, consolidation or other form of business combination
                (a
                "Business Combination") if, following consummation of such Business
                Combination, the Hershey Trust does not beneficially own more than
                50% of
                the total voting power of all outstanding voting securities of the
                surviving entity or entities; or

            


    

    


    
      	
               

            	
              3.

            	
              The
                approval by the stockholders of the Company of (i) any sale or other
                disposition of all or substantially all of the assets of the Company,
                other than to a corporation as to which the Hershey Trust beneficially
                owns more than 50% of the total voting power of all outstanding voting
                securities, or (ii) a liquidation or dissolution of the
                Company.

            


    

     

    
      	
               

            	
              (c)

            	
              For
                purposes of this Paragraph:  (i) "Hershey Trust" means either or
                both of (a) the Hershey Trust Company, a Pennsylvania corporation,
                as
                trustee of the Milton Hershey School, or any successor of the Hershey
                Trust Company as such trustee, and (b) the Milton Hershey School,
                a
                Pennsylvania not-for-profit corporation; (ii) "Exchange Act" shall
                mean
                the Securities Exchange Act of 1934 and the rules and regulations
                promulgated thereunder; and (iii) "Person" shall have the meaning
                given in
                Section 3(a)(9) of the Exchange Act, as modified and used in Sections
                13(d)(3) and 14(d) thereof.

            


    

     

    
      	
              VII.

            	
              ADMINISTRATION
                OF THE PLAN

            


    

     

    The
      Committee is charged with the administration of the Plan. It shall have full
      power and authority to construe and interpret the Plan. Its decisions shall
      be
      final, conclusive and binding on all parties.

    


    
      	
              VIII.

            	
                 
                PAYMENT OF BENEFITS

            


    

     

    Nothing
      contained in the Plan and no action taken pursuant to the provisions of the
      Plan
      shall create or be construed to create a trust of any kind, or a fiduciary
      relationship between the Company and the Participant, his spouse or any other
      person. Benefits under the Plan shall be paid out of the general assets of
      the
      Company. No person other than the Company shall by virtue of the provisions
      of
      the Plan have any interest in such assets. To the extent that any person
      acquires a right to receive payments from the Company under the Plan, such
      right
      shall be no greater than the right of any unsecured general creditor of the
      Company. The right of the Participant or any other person to the payment of
      benefits under the Plan shall not be assigned, transferred, pledged, or
      encumbered; such payments and the right thereto are expressly declared to be
      non-assignable and non-transferable. No payments hereunder shall be subject
      to
      the claim of the creditor of the Participant nor of any other person entitled
      to
      payments hereunder. Any payments required to be made pursuant to the Plan to
      a
      person who is under legal disability may be made by the Company
      to or for the benefit of such person in such of the following ways as the
      Committee shall determine:


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    


    
      	
               

            	
              (a)

            	
              directly
                to such person,

            


    

    
      	
               

            	
              (b)

            	
              to
                the legal representative of such
                person,

            


    

    
      	
               

            	
              (c)

            	
              to
                a near relative of such person to be used for the latter's benefit,
                or

            


    

    
      	
               

            	
              (d)

            	
              directly
                in payment of expenses of support, maintenance or education of such
                person.

            


    

    


    The
      Company shall not be required to see the application by any third party of
      any
      payments made pursuant to the Plan.

     

    
      	
              IX.

            	
              EFFECTIVE
                DATE OF PLAN

            


    

    


    Except
      as
      specifically provided herein, this amendment and restatement of the Plan
      shall be effective January 1, 2007.

    


    
      	
              X.

            	
              AMENDMENT,
                SUSPENSION, OR TERMINATION OF THE
                PLAN

            


    

    


    The
      Board
      of Directors of the Company may, at any time, suspend or terminate the Plan.
      The
      Board may also, from time to time, amend the Plan in such respects as it may
      deem advisable in order that benefits provided hereunder may conform to any
      change in the law or in other respects which the Board deems to be in the best
      interest of the Company. No such amendment shall adversely affect any right
      of
      any Participant or his spouse to benefits hereunder that have become payable
      (i.e. the Participant has five Years of Service with the Company) prior to
      the
      effective date of the amendment without the consent of such Participant or
      spouse. Any benefits payable under the terms of the Plan at the time of
      termination of the Plan shall remain in effect according to their original
      terms, or such alternate terms as may be in the best interests of both parties
      and agreed to by the Participant or his surviving spouse.

     

    IN
      WITNESS WHEREOF, The Hershey Company has caused The Hershey Company
      Compensation Limit Replacement Plan to be adopted as of the 3rd day of
      October,
      2006.

    
 

    
      	 	
              THE
                HERSHEY COMPANY

            
	 	
               

              By:    
                /s/ Marcella K.
                Arline                

            
	 	
                       
                Marcella K. Arline

                       
                Senior Vice President, Chief People
                Officer

            


    

    



    
      
        
        

      

      
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