Annual Cash Incentive Plan for Fiscal Year 2010



 Exhibit 10.5 
 Annie’s Inc. 
 2010 Cash Bonus Plan 

(April 2009 – March 2010) 
 Sales Team, Non-Executives, Executive Team 
  

 
 Annie’s Inc. cash annual incentive bonus pool
for FY2010 will be allocated across five groups: Sales Team, Tier II, Tier III, Goal Based, and Executive Team (including the CEO). The bonus payout metrics for each group are based on a combination of Company financial targets for FY 2010 and
discretionary individual performance goals as determined by executive management and the Compensation Committee. 
 Payout of the cash
annual incentive bonus is subject to: 
  

	 	1.	Issuance of Annie’s, Inc. audited financial statements for FY 2010. Bonuses are anticipated to be paid on or before July 31, 2010 (within 150 days following
Fiscal Year End). 

  

	 	2.	Must be employed as an Annie’s employee at the time of pay-out. Those on continuation payments or acting as consultants are not eligible. 


 

	 	3.	Eligible compensation for the bonus calculation is base wages paid between April 1, 2009 and March 31, 2010. Employment started subsequent to April 1,
2009 (new employees) will be pro-rated based upon base wages paid from the start day until March 31, 2010. Employees in a probationary period as determined in their employment letter are not eligible until successful completion of the
probationary period. When the probationary period is successfully completed the bonus will be pro-rated back to the hire date. 

  

	 	4.	Disability or other unpaid leave will NOT be included as base wages nor will credit be provided for FY 2010 bonus calculations. 


 

	 	5.	Individuals under the direction of a Performance Improvement Plan (“PIP”) are ineligible to participate unless otherwise determined by the Human Resources
department and executive management. 

  

	 	6.	Income from operations (“EBIT”) of 6.4% or better as a percentage of Net Sales. 


  
  

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	 	7.	Net Sales of $21.0 million or better on the Annie’s Natural’s Brand. 


 

	 	8.	The Compensation Committee shall administer the Plan and has the sole authority and discretion to determine eligibility, achievements of targets, amounts of awards
(including discretionary awards), and the interpretation of Plan provisions. The determinations of the Compensation Committee shall be final. 

  

	 	9.	Eligibility to participate in the plan does not assure that any employee will actually receive an award. The Compensation Committee may award discretionary bonuses in
excess of targeted amounts or to individuals otherwise ineligible on such terms and conditions as it may specify. 

  

	 	10.	The Bonus Plan is subject to modification at any time by the Compensation Committee without notice. 


Other terms and conditions may be included in individual notices to employees and amended only in writing by the CEO or COO with the prior approval of
the Compensation Committee. 

  
  

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 Annie’s Inc 
 FY 2010 Annual Cash Incentive Plan 
  

Summary Schedule: Consolidated 2010 Cash Bonus Plan 

 

																													
	FY2010 Plan	  	 	Approved June 8, 2009	  
								
	 Financial Metrics
	  	AH	 	  	YOY	 	 	AN	 	  	YOY	 	 	Total	 	  	FY09	 	  	YOY incr	 
	 	  	  	incr.	 	 	  	incr.	 	 	  	 	 	  	 	 
	 Gross Sales
	  	$	91.9	  	  	 	7.6	% 	 	$	28.3	  	  	 	0.1	% 	 	$	120.2	  	  	$	113.8	  	  	 	5.7	% 
	 Net Sales
	  	$	76.9	  	  	 	10.0	% 	 	$	23.8	  	  	 	4.1	% 	 	$	100.7	  	  	$	92.8	  	  	 	8.6	% 
	 Operating Income
	  				  				 				  				 	$	8.0	  	  	$	2.8	  	  			
	 Net Income
	  				  				 				  				 	$	6.4	  	  	$	1.1	  	  			
								
	 Assumes Bonus Accrual of $1.301 = Target
	  				  				 				  				 				  				  			

 Compensation Plan 
 All Bonus Awards subject to EBIT of not less than 6.4 % of Net Sales 
  

																																			
	  
	 Net Sales Target
	   
	 	$	100.7 MM	  	 				 				 				 			
	  
	 Bonus subject to min. Net Sales for AN
	   
	 	$	21.00 MM	  	 				 				 				 			
				 				 				 				 				 	 	Assumed $ pool	  	 				 	$	499,579	  	 			
	  
  
	  
 Net Sales
	  
   
	 				 				 				 				 				 				 				 			
	YOY Grwth	 	 	 	 	 	 	 	 	 	 	 	Incr Sales	 	 	 	 
	Achievement (MM)	 	 	Payout	 	 	 	 	 	$ Payout	 	 	Increment	 	 	at CM = 18%	 	 	 	 
	 	110%	  	 	$	110.77	  	 	 	19.4	% 	 	 	175.0	% 	 				 	$	874,263	  	 	$	124,895	  	 	$	906,300	  	 	 	13.8	% 
	 	105%	  	 	$	105.74	  	 	 	14.0	% 	 	 	150.0	% 	 				 	$	749,368	  	 	$	99,916	  	 	$	362,520	  	 	 	27.6	% 
	 	103%	  	 	$	103.72	  	 	 	11.8	% 	 	 	130.0	% 	 				 	$	649,453	  	 	$	149,874	  	 	$	543,780	  	 	 	27.6	% 
	 	100%	  	 	$	100.7	  	 	 	8.6	% 	 	 	100.0	% 	 				 	$	499,579	  	 	$	99,916	  	 	$	181,260	  	 	 	55.1	% 
	 	99%	  	 	$	99.69	  	 	 	7.5	% 	 	 	80.0	% 	 				 	$	399,663	  	 	$	99,916	  	 	$	181,260	  	 	 	55.1	% 
	 	98%	  	 	$	98.69	  	 	 	6.4	% 	 	 	60.0	% 	 				 	$	299,747	  	 	$	99,916	  	 	$	181,260	  	 	 	55.1	% 
	 	97%	  	 	$	97.68	  	 	 	5.3	% 	 	 	40.0	% 	 				 	$	199,832	  	 	$	99,916	  	 	$	181,260	  	 	 	55.1	% 
	 	96%	  	 	$	96.67	  	 	 	4.2	% 	 	 	20.0	% 	 				 	$	99,916	  	 	$	49,958	  	 	$	181,260	  	 	 	27.6	% 
	 	95%	  	 	$	95.67	  	 	 	3.1	% 	 	 	10.0	% 	 				 	$	49,958	  	 	$	49,958	  	 				 			
						
	  
	 EBIT target
	   
	 	$	8.0 MM	  	 				 				 				 			
	  
	 EBIT is net of Bonus Actually Earned
	   
	 				 	 	Assumed $ Pool	  	 				 	$	797,470	  	 			
							
	Achievement EBIT	 	 	Payout	 	 	 	 	 	$ Payout	 	 	EBIT Payout
Increment	 	 	EBIT
Increase	 	 	 	 
	 	120%	  	 	$	9.60	  	 	 	160.0	% 	 				 				 	$	1,275,951	  	 	$	239,241	  	 	$	800,000	  	 	 	29.9	% 
	 	110%	  	 	$	8.80	  	 	 	130.0	% 	 				 				 	$	1,036,711	  	 	$	239,241	  	 	$	800,000	  	 	 	29.9	% 
	 	100%	  	 	$	8.0	  	 	 	100.0	% 	 				 				 	$	797,470	  	 	$	119,620	  	 	$	320,000	  	 	 	37.4	% 
	 	96%	  	 	$	7.68	  	 	 	85.0	% 	 				 				 	$	677,849	  	 	$	119,620	  	 	$	320,000	  	 	 	37.4	% 
	 	92%	  	 	$	7.36	  	 	 	70.0	% 	 				 				 	$	558,229	  	 	$	119,620	  	 	$	320,000	  	 	 	37.4	% 
	 	88%	  	 	$	7.04	  	 	 	55.0	% 	 				 				 	$	438,608	  	 	$	119,620	  	 	$	320,000	  	 	 	37.4	% 
	 	84%	  	 	$	6.72	  	 	 	40.0	% 	 				 				 	$	318,988	  	 	$	119,620	  	 	$	320,000	  	 	 	37.4	% 
	 	80%	  	 	$	6.40	  	 	 	25.0	% 	 				 				 	$	199,367	  	 	$	199,367	  	 				 			

  

																																					
	 	  	Approx
Target
% Salary	 	 	Planned
Salary
FY 2010	 	  	Proposed
Bonus Pool
FY 2010	 	  	Factor Weights	 
	 	  	 	  	  	 	 	 	 	 	  	 	 	 	 	 	  	Of 
which:
Discretionary	 
	 	  	 	  	  	Net Sales	 	  	EBIT	 	  
	 Exec Team
	  	 	35.0	% 	 	$	940,000	  	  	$	329,000	  	  	 	33.3	% 	 	$	109,557	  	  	 	66.7	% 	 	$	219,443	  	  	 	20.0	% 	 	$	65,800	  
	 Tier II
	  	 	23.6	% 	 	$	1,514,000	  	  	$	357,065	  	  	 	33.3	% 	 	$	118,903	  	  	 	66.7	% 	 	$	238,162	  	  	 	30.0	% 	 	$	107,120	  
	 Tier III
	  	 	11.7	% 	 	$	583,975	  	  	$	68,221	  	  	 	33.3	% 	 	$	22,718	  	  	 	66.7	% 	 	$	45,504	  	  	 	40.0	% 	 	$	27,289	  
	 Sales
	  	 	21.7	% 	 	$	1,864,670	  	  	$	404,912	  	  	 	50.0	% 	 	$	202,456	  	  	 	50.0	% 	 	$	202,456	  	  	 	10.0	% 	 	$	40,491	  
	 Goal Based
	  	 	9.0	% 	 	$	1,532,711	  	  	$	137,850	  	  	 	33.3	% 	 	$	45,945	  	  	 	66.7	% 	 	$	91,904	  	  	 	40.0	% 	 	$	55,140	  
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
		  				 	$	6,435,356	  	  	$	1,297,049	  	  				 	$	499,579	  	  				 	$	797,470	  	  				 	$	295,839	  

 Note: The above schedule for “EBIT” includes an annual bonus accrual of $1.3MM at the $8.0MM target. Actual
results will be measured against the EBIT target using actual bonus amounts achieved. Income from operation / “EBIT” is defined as [Net Income + interest expense + income taxes]. 

  
  

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 Annie’s Inc 
 FY 2010 Annual Cash Incentive Plan 
  
 5. Executive Team Cash Bonus Plan 
 For FY 2010, the Executive Team Bonus Pool, based upon
current staffing, totals $329,000. 
 The Executive Team consists of John Foraker, Steven Jackson, Mark Mortimer, and Sarah Bird. 

An Executive Team member’s cash bonus will be determined based upon achievement of Company performance measures of Consolidated
Net Sales and Income from Operations (“EBIT”) and individual performance. For each Executive Team member, Company achievement of each performance goal will be weighted 1/3rd and 2/3rd, respectively, in calculating the maximum available cash bonus. For all Executive Team members other than the CEO,
twenty percent (20%) of this maximum will be payable solely based upon the CEO’s evaluation of an Executive Team member’s individual performance. For the CEO, twenty percent (20%) of this maximum will be payable solely based upon
the Compensation Committee’s evaluation of the CEO’s individual performance. 
  

					
	 Consolidated Net Sales
	 	  	  	 Income from Operations (“EBIT”)

	 33.3%
	 		  	66.7%

 The payouts of each of the performance measures are described more fully below: 

 

																													
	 Last
	  	First	  	 Business Title
	  	 Department
	  	 Bonus Tier
	  	Bonus
Target %	 	 	Net Sales
Metric ($$)	 	  	EBIT Metirc
(Inc. from
Ops.) ($$)	 	  	Of 
which...$$
discretionary	 	  	 Total Target
 Bonus $$
	 
	 Bird
	  	Sarah	  	Sr. Vice President of Marketing	  	G & A	  	Exec Team	  	 	35	% 	 	$	20,979	  	  	$	42,021	  	  	$	12,600	  	  	$	63,000	  
	 Foraker
	  	John	  	CEO	  	G & A	  	Exec Team	  	 	35	% 	 	$	32,634	  	  	$	65,366	  	  	$	19,600	  	  	$	98,000	  
	 Jackson
	  	Steven	  	COO	  	G & A	  	Exec Team	  	 	35	% 	 	$	27,389	  	  	$	54,861	  	  	$	16,450	  	  	$	82,250	  
	 Mortimer
	  	Mark	  	Senior Vice President - Sales	  	G & A	  	Exec Team	  	 	35	% 	 	$	28,555	  	  	$	57,195	  	  	$	17,150	  	  	$	85,750	  
										
		  		  	Subtotal	  		  	Exec Team	  				 	$	109,557	  	  	$	219,443	  	  	$	65,800	  	  	$	329,000	  


  
  

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 Annie’s Inc 
 FY 2010 Annual Cash Incentive Plan 
  
 Sliding performance scale for Net Sales and Income from Operations is located in the Summary 
 Consolidated Bonus Pool Amount (will be adjusted for eligible participants at time of payment): 
  

																																					
	 	  	Approx
Target
% Salary	 	 	Planned
Salary FY
2010	 	  	Proposed
Bonus Pool
FY 2010	 	  	Net Sales	 	  	Factor Weights
EBIT	 	  	Of which:
Discretionary	 
	 Exec Team
	  	 	35.0	% 	 	$	940,000	  	  	$	329,000	  	  	 	33.3	% 	 	$	109,557	  	  	 	66.7	% 	 	$	219,443	  	  	 	20.0	% 	 	$	65,800	  
	 Tier II
	  	 	23.6	% 	 	$	1,514,000	  	  	$	357,065	  	  	 	33.3	% 	 	$	118,903	  	  	 	66.7	% 	 	$	238,162	  	  	 	30.0	% 	 	$	107,120	  
	 Tier III
	  	 	11.7	% 	 	$	583,975	  	  	$	68,221	  	  	 	33.3	% 	 	$	22,718	  	  	 	66.7	% 	 	$	45,504	  	  	 	40.0	% 	 	$	27,289	  
	 Sales
	  	 	21.7	% 	 	$	1,864,670	  	  	$	404,912	  	  	 	50.0	% 	 	$	202,456	  	  	 	50.0	% 	 	$	202,456	  	  	 	10.0	% 	 	$	40,491	  
	 Goal Based
	  	 	9.0	% 	 	$	1,532,711	  	  	$	137,850	  	  	 	33.3	% 	 	$	45,945	  	  	 	66.7	% 	 	$	91,904	  	  	 	40.0	% 	 	$	55,140	  
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
		  				 	$	6,435,356	  	  	$	1,297,049	  	  				 	$	499,579	  	  				 	$	797,470	  	  				 	$	295,839	  

 7. Effect of Acquisitions on Bonus Targets 
 If the Company acquires a business during the year, the bonus targets and payouts will be modified, as approved by the Compensation Committee, to appropriately reflect the expectations for the financial
performance of the business acquired. 
 8. Final Plan Administration 
 The Compensation Committee shall administer the Plan and has the sole authority and discretion to determine eligibility, achievements of targets, amounts of awards (including discretionary awards), and
the interpretation of Plan provisions. The determinations of the Compensation Committee shall be final. 
 9. Participant Eligibility

 Eligibility to participate in the plan does not assure that any employee will actually receive an award. The Compensation Committee may
award discretionary bonuses in excess of targeted amounts or to individuals otherwise ineligible on such terms and conditions as it may specify. 
  

	
	Approved: June 8, 2009
	
	 /s/ Brian T. Murphy

	Brian T. Murphy
	On behalf of the Compensation Committee


  
  

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