compolicy.htm


     

    

      
        
           


        

        
            


            
              EXHIBIT
10.3

            

          

          
            

          

        

        
           


        

      


      DARLING
INTERNATIONAL INC. COMPENSATION COMMITTEE

       

      EXECUTIVE
COMPENSATION PROGRAM POLICY STATEMENT

       

       

       

      This
policy is a statement of the plan for implementation of the Executive
Compensation Program (the “Program”) effective
January 15, 2009 for certain executives of Darling International Inc. (the
“Company”),
pursuant to the Company’s 2004 Omnibus Incentive Plan (the “Omnibus Plan”)
approved by its stockholders in May 2005.  This Program supersedes the
prior executive compensation plan, which was adopted under the Omnibus Plan on
June 16, 2005 (the “Prior Program”);
however, the Prior Program will remain in effect in respect of awards heretofore
granted under the Prior Program.  Awards granted to employees under
the Program are intended to be “qualified performance based compensation” under
Article 12 of the Omnibus Plan.

      
 

      Program
Objectives

       

      
        	
                ·  

              	
                Reward
      Company executives for the achievement of specific annual, long-term and
      strategic goals of the Company throughout business
  cycles;

              


      

       

      
        	
                ·  

              	
                Align
      the short and long-term interests of Company executives with the interests
      of stockholders;

              


      

       

      
        	
                ·  

              	
                Attract
      and retain superior executives;

              


      

       

      
        	
                ·  

              	
                Provide
      compensation to Company executives that is competitive with the
      compensation paid to similarly situated executives;
  and

              


      

       

      
        	
                ·  

              	
                Create
      retention incentives for Company executives and provide an opportunity for
      increased equity ownership by Company
  executives.

              


      

      
 

      Eligibility and
Participation

       

      Participants
of the Program (each, a “Program Participant”
and collectively, the “Program
Participants”) include the Company’s chief executive officer
(the “CEO”), the Executive
Vice President, Finance and Administration (the “CFO”), the Company’s
Executive Vice Presidents the (“EVPs”), the three
most highly compensated executive officers, if any, of the Company other than
the CEO, the CFO and the EVPs (together with the CEO, the CFO, and the
EVPs,  the “named executive
officers”) and such other executive officers as the Compensation
Committee of the Board of Directors of the Company (the “Compensation
Committee”) or the CEO may determine from time to time.

       

      Non-employee
directors of the Company will continue to receive formula-based equity
compensation as more fully described below.

       

      Structure and
Implementation

       

      The
elements of compensation for each Program Participant are base salary, annual
incentive bonus and long-term incentive equity awards.

       

       

      
        
          
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      Base Salary: The base salary element
is intended to compensate the Program Participants for services rendered during
each fiscal year.  Base salary ranges will be determined for a Program
Participant based on his/her position and responsibility and should generally be
set at or near the 50th percentile of base salary paid to similarly situated
executives of general industrial companies that have similar total revenue and
market capitalization and/or compete with the Company for management talent
(“Peer
Companies”); provided, that the Compensation Committee shall have
authority to deviate from such percentile target as it deems necessary or
appropriate to achieve the Program objectives.  Salary information of
Peer Companies will be determined by using market data supplied by an outside
global human resources consulting firm or other independent third party
resource.

       

      Annual
Incentives:  The annual incentive bonus element for each
Program Participant will be the possibility of a cash bonus that will be awarded
upon the Program Participant’s achievement of both of two separate
components:  the Company’s realization of certain financial measures,
which will account for 75% of the annual incentive bonus, and the achievement of
specific strategic, operational and personal goals (“SOPs”) designed for
each Plan Participant based on his/her title and roles and responsibilities with
the Company.  The SOPs will account for 25% of the annual incentive
bonus.

       

      The
financial measures component will be based on the Company’s yearly return on
gross investment (“ROGI”), which is
defined as earnings before interest, taxes, depreciation and amortization
divided by the sum of total assets plus accumulated depreciation minus other
liabilities (other than those incurred to financing institutions), including,
but not limited to, accounts payable, accrued expenses, pension liabilities,
other non-current liabilities and deferred income taxes.  The
Company’s yearly ROGI will be calculated as of the end of each fiscal year based
on the Company’s financial statements prepared for and presented in Company’s
Annual Report on Form 10-K; however, from time to time, the calculation of ROGI
will be adjusted in the discretion of the Compensation Committee for excess cash
on hand or in extraordinary circumstances.  A Program Participant will
receive 100% of his/her target payout with respect to the financial measures
component of the annual award if the Company attains an annual ROGI for the
fiscal year equal to the 50th percentile of the Peer Companies ROGI as
calculated by an outside global human resources firm.  The
Compensation Committee will also set a threshold and maximum ROGI for each
Program Participant between which Program Participants will receive a percentage
of target payout between 25% (for achievement of the 25th percentile of the Peer
Companies ROGI (the “ROGI Threshold”)) and
400% (for achievement of the 90th percentile of the Peer Companies ROGI)
depending on the actual ROGI achieved.

       

      The SOPs
component of the annual incentive bonus will be based on both the Company’s
achievement of the ROGI Threshold and a Program Participant’s achievement of
individual SOPs.  A Program Participant may receive between 0% and
100% of his/her target payout with respect to the SOPs component depending on
such participant’s performance for the fiscal year.  Prior to each
fiscal year, the CEO will set individual, objective SOPs for each Program
Participant (other than himself), which objectives will be approved by the
Compensation Committee.  With respect to the CEO, the Compensation
Committee will set and approve the CEO’s SOPs for each fiscal
year.  Following the end of each fiscal year, each Program
Participant’s performance will be evaluated against his/her SOPs by the CEO
(except with respect to his/her own performance), and the Compensation Committee
will determine the percentage of target payout to be awarded to such Program
Participant.  In the case of the CEO, the Compensation Committee will
evaluate the CEO’s performance against his/her SOPs and determine the payout for
the SOPs component of the annual incentive bonus.  Each Program
Participant must achieve a minimum of 75% of his/her SOPs to receive any payout
for the SOPs component of the annual incentive bonus.

       

      
         

        
          
            
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      Long Term
Incentives:  The long term incentive element of compensation
will be awarded to Program Participants in the form of a yearly equity grant,
which will be composed of 75% restricted stock and 25% stock options (together,
the “Grant”);
however, the Company will only award such yearly equity grants if the Company
meets certain financial objective(s) for the relevant prior fiscal year as
determined by the Compensation Committee from time to time.  The
target dollar value of the Grant (the “Target Grant Dollar
Value”) will range from 20% to 70% of the Program Participant’s base
salary.  The Target Grant Dollar Value for each Program Participant,
including the CEO, will be set by the Compensation Committee.  The
actual amount of the award will be based on the Company’s actual trailing
five-year ROGI average and may range from between 50% and 150% of the Target
Grant Dollar Value.  If the Company’s trailing five-year ROGI average
is less than or equal to the 25th percentile of the Peer Companies ROGI, a
Program Participant will be eligible to receive Grants equivalent to 50% of
his/her Target Grant Dollar Value; if the Company’s trailing five-year ROGI
average is between the 25th and 50th percentile of Peer Companies ROGI, a
Program Participant will be eligible to receive Grants equivalent to between 50%
and 100% of his/her Target Grant Dollar Value; if the Company’s trailing
five-year ROGI average is between the 50th and 75th percentile of Peer Companies
ROGI, a Program Participant will be eligible to receive Grants equivalent to
between 100% and 150% of his/her Target Grant Dollar Value; and if the Company’s
trailing five-year ROGI average is over the 75th percentile of Peer Companies
ROGI, a Program Participant will be eligible to receive Grants equivalent to a
maximum amount of 150% of his/her Target Grant Dollar Value.

       

      All
financial and other objectives for individual Grants that are intended to be
treated as "qualified performance-based compensation" under Article 12 of the
Omnibus Plan and Section 162(m) of the Code (as defined in the Omnibus Plan)
will be determined prior to the end of the first quarter of the fiscal year
during which such performance will be determined.

       

      Restricted
stock granted under the Program will account for 75% of the total Grant.
Restricted stock Grants will have no exercise price and will vest over a period
of three years, with 25% vesting immediately upon issuance and 25% vesting on
each of the next three anniversaries of the grant date.  Restricted
stock will be granted on the fourth business day after the Company releases its
annual financial results.  The number of shares of restricted stock
granted will be determined using the Fair Market Value of the Company’s common
stock on the third business day after the Company releases its annual financial
results.

       

      Stock
options granted under the Program will account for 25% of the total Grant. Stock
options will be granted on the fourth business day after the Company releases
its annual financial results.  The exercise price of such stock
options will be the Fair Market Value of the Company’s common stock on the third
business day after the Company releases its annual financial
results.  Stock options will vest over a period of three years with
25% vesting immediately upon issuance and 25% on each of the next three
anniversaries of the grant date.

       

      
         

        
          
            
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      The
Compensation Committee has the discretion to award or withhold Grants or to
provide additional grants outside the Program if it determines that it is in the
best interests of the Company to do so.

       

      Non Employee Director
Grants

       

      Non-Employee
Directors will automatically be granted stock options for 4,000 shares of the
Company’s common stock on the date of their initial election to the Board of
Directors by the stockholders.  The exercise price will be the grant
date Fair Market Value.  Such grants will vest in 25% increments on
the sixth month anniversary of the grant and on each of the first, second and
third annual anniversaries of the date of the grant.

       

      Each
Non-Employee Director will automatically be granted stock options for 4,000
shares of the Company’s common stock if the Company achieves 90% of the 50th
percentile for the Peer Group ROGI for the most recently completed fiscal
year.  Such grant will be made automatically on the fourth business
day after the Company releases its annual financial results. The exercise price
of such stock options will be the Fair Market Value of the Company’s common
stock on the third business day after the Company releases its annual financial
results.  The Non-Employee Director stock options will vest in 25%
increments on the sixth month anniversary of the grant date and on each of the
first, second and third annual anniversaries of the grant date.

       

      Additional
Award

       

      The
Compensation Committee will periodically evaluate the advisability of grants of
long-term incentives to the executives and employees of the
Company.  The Compensation Committee will make such awards as it
determines are appropriate, advisable and in the best interests of the
Company.

       

      Fair Market
Value

       

      For
purposes of this Program, the term “Fair Market Value” has the meaning ascribed
to it in the Omnibus Plan

       

      


       


      
        
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