EX-10.2



 






Exhibit 10.2




LANCE, INC.




2005 Annual Performance Incentive Plan for Officers




	 	 	 	 	 
	Purposes and
Introduction

	 	The primary purposes of the 2005 Annual Performance Incentive Plan for
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
because more pay is “at risk.”
	 
	 	 	 	 
	

	 	For 2005, participants will be eligible to earn incentive awards based
on Corporate Return on Capital Employed (ROCE), Divisional Return on
Net Assets (RONA) and individual performance objectives against
specific goals as described below.
	 
	 	 	 	 
	

	 	•
	 	ROCE is calculated as follows:






	 	 	 
	 
	 	Net Income + Interest
Expense x (1 – Tax Rate)
	
	 	 
	
	 	Average Equity + Average Debt






	 	 	 	 	 
	 

	 	•
	 	RONA is calculated as follows:






	 	 	 
	 
	 	Operating Profit x (1 – Tax Rate)
	
	 	 
	
	 	Average Operating Assets – Average Operating Liabilities






	 	 	 
	 

	 	Tax Rate shall be the actual income tax rate for ROCE and will be the
income tax rate in the operating plan for the applicable operating
unit for RONA.
	 
	 	 
	

	 	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 2005 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.
	 
	 	 
	

	 	Following 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
fiscal 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. Attachment A includes the list of 2005 participants
approved by the Compensation Committee at its January 26, 2005
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 duties of a position change during the year,
or Base Salary is increased significantly, the Target Incentive shall
be revised as appropriate.
	 
	 	 
	

	 	Attachment A lists the Target Incentive and applicable performance
measure for each participant for the 2005 Plan Year. These Target
Incentives will be reviewed and adjusted annually by the Compensation
Committee. 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 financial and
individual performance for the year, as described below).






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	Performance
Measures and Award
Funding

	 	The 2005 financial performance measures for the Company as a whole and
the operating units are shown below. Specific goals and related
payouts are also shown below.
	 
	 	 
	

	 	Each operating unit will fund its own awards.






	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Minimum	 	 	Target	 	 	Maximum	 
	 	Lance, Inc. (ROCE)
	 	 	  *%		 	 	   *%		 	 	   *%	
	 	Lance Co. (RONA)
	 	 	  *%		 	 	   *%		 	 	   *%	
	 	Vista/Tamming (RONA)
	 	 	  *%		 	 	   *%		 	 	   *%	
	 	Award Level Funded
	 	 	50%		 	 	100%		 	 	200%	
	 	[*Targets not required
to be disclosed]
	 	 	 	 	 	 	 	 	 	 	 	 






	 	 	 
	 

	 	Percent of payout will be determined on a straight line basis between
minimum and maximum. There will be no payouts unless the minimum
applicable performance measure is reached and there will be no payouts
if the Company as a whole does not reach the minimum applicable
performance measure.
	 
	 	 
	

	 	The performance measures, specific numerical goals and the role of
individual performance in determining final payouts will be
communicated to each participant at the beginning of the year. Final
Target Incentive Awards will be calculated after the Compensation
Committee has reviewed the Company’s audited financial statements for
2005 and determined the performance level achieved.
	 
	 	 
	

	 	Minimum, Target and Maximum levels will be defined at the beginning of
each year for each performance measure.
	 
	 	 
	

	 	The following definitions for the terms Maximum, Target and Minimum
should help set the goals for each year, as well as evaluate the
payouts:






	 	 	 	 	 
	 

	 	•
	 	Maximum: Excellent; deserves an above-market bonus
	 

	

	 	•
	 	Target: Normal or expected performance; deserves market level
bonus
	 

	

	 	•
	 	Minimum: Lowest level of performance deserving payment above
base salary; deserves below market bonus
	 

	

	 	•
	 	Below minimum: Deserves no additional pay beyond base salary






	 	 	 
	Individual

Performance

	 	Each Officer will receive 100% of his or her Target Incentive Award
based on his or her applicable performance measure except for those
participants listed on Attachment B, who will receive 75% to 90% of
his or her Target Incentive Award based on his or her applicable
performance measure and the remainder based on his or her individual
performance objective listed on






3









 






	 	 	 
	

	 	Attachment B.
	 
	 	 
	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. 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 end of the year, any award will be
forfeited. In the event of death, permanent disability, or normal or
early 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, except that any adjustment for individual
performance will be based on performance prior to the termination of
employment.
	 
	 	 
	Change In

Control

	 	In the event of a Change in Control, pro rata payouts will be made at
the greater of (1) Target 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
	 
	 	 
	

	 	(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






4









 






	 	 	 
	

	 	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 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.






5









 






	 	 	 
	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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Attachment A




	 	 	 	 	 	 	 	 	 
	 	 	 	 	Performance	 	Award	 	Target
	Name	 	Title	 	Measure	 	Percentage	 	Incentive
	 
	 	 	 	 	 	 	 	 
	P. A. Stroup, III

	 	President and Chief
Executive Officer
	 	Lance, Inc.
ROCE
	 	*%
	 	$*
	 
	 	 	 	 	 	 	 	 
	H. D. Fields

	 	Vice President and
President, Vista
Bakery, Inc.
	 	Vista/Tamming

RONA
	 	*%
	 	$*
	 
	 	 	 	 	 	 	 	 
	L. R. Gragnani, Jr.

	 	Vice President - Information Technology/CIO
	 	Lance, Inc.
ROCE
	 	*%
	 	$*
	 
	 	 	 	 	 	 	 	 
	E. D. Leake

	 	Vice President - Human Resources
	 	Lance, Inc.
ROCE
	 	*%
	 	$*
	 
	 	 	 	 	 	 	 	 
	B. C. Preslar

	 	Vice President
- Finance and Chief
Financial Officer
	 	Lance, Inc.
ROCE
	 	*%
	 	$*
	 
	 	 	 	 	 	 	 	 
	F. I. Lewis

	 	Vice President - Sales
	 	Lance Co.
RONA
	 	*%
	 	$*
	 
	 	 	 	 	 	 	 	 
	D. R. Perzinski

	 	Treasurer
	 	Lance, Inc.
ROCE
	 	*%
	 	$*
	 
	 	 	 	 	 	 	 	 
	M. E. Wicklund

	 	Controller and
Assistant Secretary
	 	Lance, Inc.
ROCE
	 	*%
	 	$*






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




 









 








Attachment B




	 	 	 	 	 	 	 
	 	 	 	 	 	 	Individual
	 	 	 	 	Individual	 	Performance
	 	 	 	 	Performance	 	Objective
	Name	 	Title	 	Objective	 	Percentage
	 
	 	 	 	 	 	 
	P. A. Stroup, III

	 	President and Chief
Executive Officer
	 	Lance, Inc. Safety
	 	*%
	 
	 	 	 	 	 	 
	H. D. Fields

	 	Vice President and
President, Vista
Bakery, Inc.
	 	Vista/Tamming Safety
	 	*%
	 
	 	 	 	 	 	 
	E. D. Leake

	 	Vice President - Human Resources
	 	Lance, Inc. Safety
	 	*%
	 
	 	 	 	 	 	 
	F. I. Lewis

	 	Vice President - Sales
	 	Direct Store Delivery Net Sales Growth
	 	*%






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