Annual Cash Incentive Plan for Fiscal Year 2011



 Exhibit 10.6 
 Exhibit I 
 COMPENSATION COMMITTTEE APPROVAL FOR BONUS PLANS FOR FY2011 

The Compensation Committee of Annie’s Board of Directors has approved the following: 
 A new Bonus Plan for FY 2011 providing for a bonus pool of approximately $1.3 million if certain Company financial performance goals related to EBIT ($12.5 MM) and Net Sales ($105 MM) are achieved, along
with personal performance goals (see Schedule II). At 100% achievement, current employees are eligible for awards aggregating $1.25MM. Higher awards are payable in the event the specified goals are exceeded. 

May 25, 2010 
  

	
	/s/ Brian T. Murphy
	Brian T. Murphy
	For and on behalf of Annie’s Inc. Compensation Committee

  

	CC:	Molly F Ashby 


	    	Timothy Fallon 


	    	Stephen L Palmer 








 Exhibit II FY2011 Bonus Award Plan 

 

																													
	 Financial Metrics
	  	 	 	  	YOY	 	 	 	 	  	YOY	 	 	FY2011 Goal	 	 	FY2010 Est	 	  	 	 
	 	  	AH	 	  	incr.	 	 	AN	 	  	incr.	 	 	Total	 	 	Total	 	  	AN	 
	 Gross Sales
	  	$	105.7	  	  	 	16.3	% 	 	$	25.0	  	  	 	-2.9	% 	 	$	130.6	  	 				  			
	 Net Sales
	  	$	84.7	  	  	 	14.3	% 	 	$	20.3	  	  	 	-4.0	% 	 	$	105.0	  	 	$	95.2	  	  	$	20.9	  
	 Net Sales/Gross Sales
	  				  				 				  				 	 	80.4	% 	 				  			
	 Operating Income
	  				  				 				  				 	$	12.5	  	 	$	7.7	  	  			
	 Net Income
	  				  				 				  				 	$	10.4	  	 				  			

 All Bonus Awards subject to EBIT of not less than 9 % of Net Sales 

Actual Net Sales Achievement is increased by an additional $1 for every $ by which AN Net Sales exceed $20.3MM and decreased by an additional $ for each
$ shortfall. No double dip on the AN override for overachievment. 
 Payout is subject to adjustment at discretion of the Compensation Committee
if the Net Sales/Gross Sales Conversion Ratio is less than 79.7%. 

 



					
	 Net Sales Target
	  	$105.0 MM	  	
	 Assumed $ pool at 100% achievement
	  		  	$554,660
	
	Above achievement levels illustrated below, Bonus Pool is increased by $22,000 for each $500,000 increment in Net
Sales

  

															
	Net Sales	 	 	 	 	  	%	 	 	$	 
	 Achievement
	 	 	(MM)	 	  	Payout	 	 	Payout	 
	 	103.5	% 	 	$	108.68	  	  	 	135.0	% 	 	$	748,791	  
	 	103.0	% 	 	$	108.16	  	  	 	130.0	% 	 	$	721,058	  
	 	102.5	% 	 	$	107.63	  	  	 	125.0	% 	 	$	693,325	  
	 	102.0	% 	 	$	107.11	  	  	 	120.0	% 	 	$	665,592	  
	 	101.5	% 	 	$	106.58	  	  	 	115.0	% 	 	$	637,859	  
	 	101.0	% 	 	$	106.06	  	  	 	110.0	% 	 	$	610,126	  
	 	100.5	% 	 	$	105.53	  	  	 	105.0	% 	 	$	582,393	  
	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
	 	100.0	% 	 	$	105.01	  	  	 	100.0	% 	 	$	554,660	  
	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
	 	99.5	% 	 	$	104.48	  	  	 	95.0	% 	 	$	526,927	  
	 	99.0	% 	 	$	103.96	  	  	 	89.0	% 	 	$	493,647	  
	 	98.5	% 	 	$	103.43	  	  	 	82.0	% 	 	$	454,821	  
	 	98.0	% 	 	$	102.91	  	  	 	74.0	% 	 	$	410,448	  
	 	97.5	% 	 	$	102.38	  	  	 	66.0	% 	 	$	366,076	  
	 	97.0	% 	 	$	101.86	  	  	 	58.0	% 	 	$	321,703	  
	 	96.5	% 	 	$	101.33	  	  	 	51.0	% 	 	$	282,877	  
	 	96.0	% 	 	$	100.81	  	  	 	44.0	% 	 	$	244,050	  
	 	95.5	% 	 	$	100.28	  	  	 	37.0	% 	 	$	205,224	  
	 	95.0	% 	 	$	99.76	  	  	 	31.0	% 	 	$	171,945	  
	 	94.5	% 	 	$	99.23	  	  	 	24.0	% 	 	$	133,118	  
	 	94.0	% 	 	$	98.71	  	  	 	17.0	% 	 	$	94,292	  
	 	93.5	% 	 	$	98.18	  	  	 	10.0	% 	 	$	55,466	  
	 	93.0	% 	 	$	97.66	  	  	 	5.0	% 	 	$	27,733	  
	 	92.5	% 	 	$	97.13	  	  	 	0.0	% 	 	$	0	  

 


									
	 EBIT Target
	  	$	12.5 MM	  	  			
	 Assumed $ Pool at 100% achievement
	  				  	$	747,925	  
	
	 EBIT is net of Bonus Actually Earned
	   

	
	 Planned Bonus Pool is assumed to be $1.3 MM
	   



 

															
	EBIT	 	 	EBIT	 	  	%	 	 	$	 
	 Achievement
	 	 	$ MM	 	  	Payout	 	 	Payout	 
	 	120	% 	 	$	15.00	  	  	 	135.0	% 	 	$	1,009,699	  
	 	115	% 	 	$	14.38	  	  	 	130.0	% 	 	$	972,303	  
	 	110	% 	 	$	13.75	  	  	 	120.0	% 	 	$	897,510	  
	 	104	% 	 	$	13.00	  	  	 	110.0	% 	 	$	822,718	  
	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
	 	100	% 	 	$	12.5	  	  	 	100.0	% 	 	$	747,925	  
	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
	 	98	% 	 	$	12.25	  	  	 	97.0	% 	 	$	725,487	  
	 	96	% 	 	$	12.00	  	  	 	94.0	% 	 	$	703,050	  
	 	94	% 	 	$	11.75	  	  	 	90.0	% 	 	$	673,133	  
	 	92	% 	 	$	11.50	  	  	 	86.0	% 	 	$	643,216	  
	 	90	% 	 	$	11.25	  	  	 	80.0	% 	 	$	598,340	  
	 	88	% 	 	$	11.00	  	  	 	73.0	% 	 	$	545,985	  
	 	86	% 	 	$	10.75	  	  	 	66.0	% 	 	$	493,631	  
	 	84	% 	 	$	10.50	  	  	 	58.0	% 	 	$	433,797	  
	 	82	% 	 	$	10.25	  	  	 	50.0	% 	 	$	373,963	  
	 	80	% 	 	$	10.00	  	  	 	40.0	% 	 	$	299,170	  
	 	78	% 	 	$	9.75	  	  	 	30.0	% 	 	$	224,378	  
	 	76	% 	 	$	9.50	  	  	 	20.0	% 	 	$	149,585	  

 
 








 Exhibit II FY2011 Bonus Award Plan (continued) 

Summary of Plan Payout by Group at 100% achievement and Factor Weights by Group 

 

																																					
	 	  	Approx
Target
% Salary	 	 	Planned
Salary
FY 2011	 	  	Proposed
Bonus Pool
FY
2011	 	  	  
 Factor Weights
	 
	 	  	 	  	  	Net Sales	 	 	 	 	  	EBIT	 	 	 	 	  	of which:Discretionary	 
	 Exec Team
	  	 	38.8	% 	 	$	1,075,000	  	  	$	417,500	  	  	 	40.0	% 	 	$	167,000	  	  	 	60.0	% 	 	$	250,500	  	  	 	20.0	% 	 	$	83,500	  
	 Tier II
	  	 	22.4	% 	 	$	1,475,776	  	  	$	330,994	  	  	 	40.0	% 	 	$	132,398	  	  	 	60.0	% 	 	$	198,596	  	  	 	30.0	% 	 	$	99,298	  
	 Tier III
	  	 	11.3	% 	 	$	789,571	  	  	$	89,152	  	  	 	40.0	% 	 	$	35,661	  	  	 	60.0	% 	 	$	53,491	  	  	 	40.0	% 	 	$	35,661	  
	 Sales
	  	 	20.9	% 	 	$	1,606,278	  	  	$	336,259	  	  	 	50.0	% 	 	$	168,129	  	  	 	50.0	% 	 	$	168,129	  	  	 	10.0	% 	 	$	33,626	  
	 Goal Based
	  	 	9.0	% 	 	$	1,428,195	  	  	$	128,680	  	  	 	40.0	% 	 	$	51,472	  	  	 	60.0	% 	 	$	77,208	  	  	 	40.0	% 	 	$	51,472	  
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
		  				 	$	6,374,820	  	  	$	1,302,585	  	  				 	$	554,660	  	  				 	$	747,925	  	  				 	$	303,557	  








 Exhibit III 
 Mark Mortimer - Additional Bonus Award Plan FY 2011 
  

													
	Measurement Period	  	YTD July 4
months	 	 	YTD Oct 7
months	 	 	Total
Potential
Bonus	 
	 Measure #1
	  				 				 			
	 Company Net Sales - AOP FY2011
	  	$	31,013,719	  	 	$	57,959,177	  	 			
				
	 Achievement Threshold
	  	$	31,323,719	  	 	$	59,697,952	  	 			
				
		  	 	1.0	% 	 	 	3.0	% 	 			
				
	 Bonus amount
	  	$	5,000	  	 	$	15,000	  	 	$	20,000	  
				
	 Minimum Company Total Sales Conversion Ratio
	  	 	81.4	% 	 	 	80.8	% 	 			
		
	To be eligible, the Total Company Sales Conversion Ratio (Net Sales/Gross Sales) as reflected in the Company’s internal financial statements for the relevant
measurement period must exceed the Minimum Company Total Sales Conversion Ratio	    	 			
				
	 Measure #2
	  				 				 			
	 Grocery Channel Net Sales AOP FY2011
	  	$	10,859,257	  	 	$	20,830,596	  	 			
				
	 Achievement Threshold
	  	$	11,945,183	  	 	$	22,913,656	  	 			
				
	 Level of over achievement implied
	  	 	10.0	% 	 	 	10.0	% 	 			
				
	 Bonus amount
	  	$	5,000	  	 	$	10,000	  	 	$	15,000	  
				
	 Minimum Grocery Channel Sales Conversion Ratio
	  	 	78.9	% 	 	 	77.6	% 	 			
	
	To be eligible, the Grocery Channel Sales Conversion Ratio (Net Sales/Gross Sales) as reflected in the Company’s internal financial statements for the relevant
measurement period must exceed the Minimum Grocery Channel Sales Conversion Ratio	   
				
	 Total Bonus Potential
	  				 				 	$	35,000	  
		
	Bonus awards are earned only if the achievement threshold is attained or exceeded. No pro-ration below the threshold.	  	 			
		
	Bonus to be paid within 60 days after the end of the relevant measurement period, subject to continued employment and to approval of the Compensation
Committee	   	 			
		
	Any bonus(es) paid pursuant to this Additional Bonus Plan is (are) in addition to any other bonuses earned under the Company’s regular FY2011 Bonus Plan	   	 			








 Exhibit IV 
 Steven Jackson, Larry Waldman - Additional Bonus Award Plan for FY 2011 
 Target

 If actual FY2011 COGS as reported in the Company’s audited financial statements including any variances stated therein are less than
FY2011 Pro-Forma COGS, the total bonus amount payable under this Additional Bonus Plan will be equal to 10% of such difference. 
 This bonus
amount shall be shared equally between Steven Jackson and Larry Waldman, and shall be paid upon completion of the Company’s FY2011 Audited Financial Statements, subject to 1) review and approval of the Compensation Committee of the Board, 2)
continued employment of Mr. Jackson and Mr. Waldman on the date of payment and 3) other conditions generally applicable to Company Bonus Awards. 
  

	*	FY2011 Pro Forma COGS are defined as the product of 4/1/2010 standard case cost per item multiplied by actual FY2011 cases per item minus all Budgeted FY2011
Manufacturing Variances** 

  

							
	 Standard COGS
	  	$	67,268,093	  	 	Standard Costs at 4/1/2010 AOP Cases per item
			
	Budgeted FY2011 Manufacturing Variances are as follows:	  				 	
	 Physical Inventory
	  	($	25,000	) 	 	Budgeted Shrink/Count Adjustments
	 Freight In
	  	($	750,000	) 	 	Inbound Freight on Materials
	 Manufacturing Variances
	  	($	375,000	) 	 	Budgeted Negative Variances
	 PPV Quantity
	  	$	1,114,996	  	 	Cost reduction Improvement planned (of which $428 is rollover)
	 Obsolete
	  	($	300,000	) 	 	Budgeted inventory write-offs/disposals
	 Standard Cost Adjustment
	  	$	275,000	  	 	Budgeted price increases
	 MFG variance - vendor discounts
	  	$	1,150,000	  	 	Budgeted promotional discounts to be taken for prompt/early payment
			
	 Total Budgeted FY2011 Manufacturing Variances
	  	$	1,089,996	  	 	Favorable Variance
			
	 For reference only:
	  				 	
	 AOP COGS
	  	$	66,178,097	  	 	
			
	 Example:
	  				 	
	 If Case Mix is unchanged and Actual COGS =
	  	$	65,500,000	  	 	
	 Planned COGS including planned favorable variances
	  	$	66,178,097	  	 	
	 Net savings
	  	$	678,097	  	 	
	 10% of savings
	  	$	67,810	  	 	
			
	 Share of Pool
	  				 	
	 Jackson
	  	$	33,905	  	 	
	 Waldman
	  	$	33,905	  	 	

 Any Additional Bonus Awards are in addition to bonuses paid pursuant to the FY2011 Bonus Plan