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.


 

















 


(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


 

















 


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


 

















 


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.


 

















 


SCHEDULE
I


 


MAXIMUM
AWARDS


 


 


	
  President and Chief Executive Officer

  	
   

  	
  No Cap

  
	
   

  	
   

  	
   

  
	
  All Participants other than

  	
   

  	
  No Cap

  
	
  the President and Chief Executive

  	
   

  	
   

  
	
  Officer