Ex-10.1



 






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.



 









 





     (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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