Exhibit 10.6


 


HORMEL FOODS CORPORATION

NONEMPLOYEE DIRECTOR DEFERRED STOCK PLAN

(Plan Adopted October 4, 1999; Amended and Restated Effective January 1,
2008)


 


1.                                       Introduction.


 


1.1.          Plan History.  The Hormel Foods Corporation Nonemployee
Director Deferred Stock Plan (the “Plan”) was first adopted October 4,
1999 and first restated November 24, 2003 (collectively, the “Prior Plan
Documents”).  The Plan was again amended
and restated September 18, 2006 to comply with Section 409A of the
Internal Revenue Code, but only with respect to deferred compensation credited
under the Plan which relates all or in part to services performed on or after January 1,
2005 (“Non-Grandfathered Deferrals”). 
Deferred compensation credited under the Plan which relates entirely to
services performed on or before December 31, 2004 continues to be governed
by the terms of the Prior Plan Documents (“Grandfathered Deferrals”).  With respect to Non-Grandfathered Deferrals,
the Plan is hereby amended and restated, effective January 1, 2008, to
bring the Plan into compliance with final Treasury regulations issued under Section 409A
of the Internal Revenue Code, and to allow Participants, during a limited
period ending December 31, 2008, an opportunity to change the form of
payment for distribution elections from one form of payment permitted under the
Plan to a different form of payment permitted under the Plan for all amounts
credited to the Plan that are subject to Section 409A of the Code (with
special transition rules issued by the IRS and the U.S. Department of
Treasury in connection with the implementation of Section 409A of the
Code).


 


1.2.          Purpose.  The purpose of the Plan is to provide an
opportunity for nonemployee members of the Board of Directors (the “Board”) of
Hormel Foods Corporation (the “Company”) to increase their ownership of the
Common Stock, par value $.0586 per share, of the Company (“Common Stock”), and
thereby align their interest in the long-term success of the Company with that
of the other stockholders of the Company. 
This will be accomplished by allowing each participating director to
elect voluntarily to defer all or a portion of his or her retainer and meeting
fees into the right to receive shares of Common Stock at a later date pursuant
to elections made by such director under this Plan.


 


2.                                       Eligibility.  Individuals who are members of the Board of
the Company (“Directors”) and who are not also officers or other employees of
the Company or its subsidiaries are eligible to participate in this Plan (“Eligible
Directors”).


 


3.                                       Administration.  This Plan will be administered by the
Compensation Committee of the Board (the “Committee”), which is composed solely
of two or more Nonemployee Directors (as defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).  All questions of interpretation of this Plan
will be determined by the Committee, and each determination, interpretation or
other action that the Committee makes or takes pursuant to the provisions of
this Plan will be conclusive and binding for all purposes and on all
persons.  The Committee will not be
liable for any action or determination made in good faith with respect to this
Plan.


 


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4.                                       Election
to Defer Receipt of Retainer and Fees.


 


4.1.          Election to Defer
Cash Compensation.  Each Eligible
Director who decides to participate in this Plan (a “Participating Director”)
may irrevocably elect to defer receipt of cash equal to 25%, 50%, 75% or 100%
of the annual cash retainer (“Retainer”) payable to that Director for services
to be rendered as a Director in the “Plan Year” (as defined below) following
such election and 25%, 50%, 75% or 100% of the meeting fees payable for
attendance at Board meetings or meetings of Committees of the Board (“Meeting
Fees”) otherwise payable to such Director for services performed after the
effective date of the Deferral Election (as defined in Section 4.2).  As of the date of adoption of this amended
and restated Plan, Eligible Directors are customarily paid the Retainer
one-half on February 1 and one-half on August 1 of each year, and
Meeting Fees are paid on the day of the meeting.  As used herein, “Plan Year” means the
12-month period which runs from January 1 through December 31.  The amounts to be deferred will be in the
form of Common Stock units credited to an account for the Participating
Director (a “Deferred Stock Account”). 
No shares of Common Stock will be issued to a Participating Director
until he or she receives a payment under the Plan pursuant to Section 6.


 


4.2.          Manner of Making
Deferral Election.  A Participating
Director may elect to defer payment of Retainer and Meeting Fees pursuant to
this Plan by filing, no later than December 31 of each year (or by such
earlier date as the Committee shall determine), an irrevocable election with
the Committee on a form provided for that purpose (“Deferral Election”).  The Deferral Election shall be effective with
respect to the Retainer and Meeting Fees otherwise payable for services
performed during the following Plan Year unless the Participating Director
shall revoke or change the election in accordance with the procedure set forth
in Section 4.6.  The Deferral
Election form shall specify an amount to be deferred expressed as a percentage
of the Participating Director’s Retainer and Meeting Fees.


 


4.3.          Credits to
Deferred Stock Account for Deferrals. 
On the last business day of each calendar quarter of the Plan Year (the “Credit
Date”), a Participating Director shall receive a credit to his or her Deferred
Stock Account.  The amount credited shall
be in the form of stock units in a number equal to the number of shares of
Common Stock (rounded to the nearest one-hundredth of a share) determined by
dividing (i) the product of an amount equal to the Retainer and Meeting
Fees specified for deferral that would otherwise have been paid to the
Participating Director for the applicable calendar quarter multiplied by 105%
by (ii) the Fair Market Value of one share of Common Stock on the Credit
Date.


 


4.4.          Dividend Credit.  Each time a dividend is paid on the Common
Stock, the Participating Director shall receive a credit of stock units to his
or her Deferred Stock Account equal to either the number of shares (if a stock
dividend is paid) or that number of shares of Common Stock (rounded to the
nearest one-hundredth of a share) having a Fair Market Value on the dividend
payment date (if a cash dividend is paid) equal to the amount of the dividend
that would have been payable on the number of shares of Common Stock equal to
the number of stock units credited to the Participating Director’s Deferred
Stock Account on the dividend record date.


 


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4.5.          Fair Market Value.  For purposes of converting dollar amounts
into shares of Common Stock, the Fair Market Value of each share of Common
Stock shall be equal to the closing price of one share of the Company’s Common
Stock on the New York Stock Exchange-Composite Transactions (or such other
principal stock exchange on which the Common Stock may then be listed) on the
last business day of the applicable calendar quarter of the Plan Year for
credits under Section 4 or the applicable payment date pursuant to Section 6.


 


4.6.          Change in
Election.  Prior to the first day of
the Plan Year for which a Deferral Election is to become effective, each
Participating Director may irrevocably elect in writing to change a Deferral
Election, either to change the percentage of such Director’s Retainer and
Meeting Fees to be deferred or to discontinue making deferrals and currently
receive the entire Retainer and Meeting Fees in cash (an “Amended Election”).  Once a Deferral Election becomes effective as
of the first day of a Plan Year, such election shall be irrevocable, and an
Amended Election may only be made with respect to Retainer and Meeting Fees
paid for services performed on or after the first day of the Plan Year
commencing after the date of receipt of such Amended Election by the Company.


 


4.7.          Termination of Service
as a Director.  If a Participating
Director leaves the Board before the conclusion of any Plan Year calendar
quarter, he or she will be paid the quarterly installment of the Retainer and
Meeting Fees entirely in cash, notwithstanding that a Deferral Election or
Amended Election is on file with the Committee. 
The date of termination of a Participating Director’s service as a
Director of the Company will be deemed to be the date of termination recorded
on the personnel or other records of the Company or the Board.


 


5.                                       Shares
Available for Issuance.


 


5.1.          Maximum Number of
Shares Available.  Subject to
adjustment pursuant to Section 5.2, the maximum number of shares of Common
Stock that shall be available for issuance under this Plan shall be 300,000.  Shares issuable under this Plan may be either
authorized but unissued shares, shares held in the treasury of the Company or
shares acquired on the open market or otherwise.


 


5.2.          Adjustments to
Shares.  In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend, an appropriate adjustment will
be made in the number and/or kind of securities available for issuance under
this Plan to prevent either the dilution or the enlargement of the rights of
the Eligible Directors and Participating Directors.


 


6.                                       Deferral
Payment.


 


6.1.          Deferral Payment
Election.  At the time of making the
Deferral Election, each Participating Director shall also complete a deferral
payment election specifying one of the payment options described in Sections
6.2 and 6.3, and the year following separation from service (as that term is
defined under Section 409A of the Internal Revenue Code) in which amounts
credited to the Participating Director’s Deferred Stock Account shall be paid
in a lump sum pursuant to Section 6.2, or in which installment payments
shall commence pursuant to 


 


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Section 6.3.  The deferral payment election shall be
irrevocable as to all amounts credited to the Participating Director’s Deferred
Stock Account.  The Participating
Director may change the deferral payment election by means of a subsequent
deferral payment election in writing that will take effect for deferrals
credited for Plan Years after the date the Company receives such subsequent
deferral payment election.


 


6.2.          Payment of
Deferred Stock Accounts in a Lump Sum. 
Unless a Participating Director elects to receive payment of his or her
Deferred Stock Account in installments as described in Section 6.3,
credits to a Participating Director’s Deferred Stock Account shall be payable
in full on February 15 of the year following the Participating Director’s
separation from service (or the first business day thereafter) or such other
later date as elected by the Participating Director pursuant to Section 6.1.  All payments shall be made in shares of
Common Stock, with one share of Common Stock issued for each stock unit
credited to the Participating Director’s Deferred Stock Account, plus cash in
lieu of any fractional share.


 


6.3.          Payment of
Deferred Stock Accounts in Installments. 
A Participating Director may elect to have his or her Deferred Stock
Account paid in annual installments commencing the year following separation
from service or commencing in a later year as elected by the Participating
Director pursuant to Section 6.1. 
All payments shall be made in shares of Common Stock, with one share of
Common Stock issued for each stock unit credited to the Participating Directors
Deferred Stock Account, plus cash in lieu of any fractional share.  All installment payments shall be made
annually on February 15 of each year (or the first business day
thereafter).  The amount of each
installment payment shall be computed as the number of shares credited to the
Participating Director’s Deferred Stock Account on the relevant installment
payment date, multiplied by a fraction, the numerator of which is one and the
denominator of which is the total number of installments elected (not to exceed
ten) minus the number of installments previously paid.  Amounts paid prior to the final installment
payment shall be rounded to the nearest whole number of shares; the final
installment payment shall be for the whole number of stock units then credited
to the Participating Director’s Deferred Stock Account, together with cash in
lieu of any fractional share.


 


6.4.          Change of Control.  Notwithstanding the foregoing, in the event
of a Participating Director’s separation from service within six months
following a Change of Control (as defined in Section 11), credits to a
Participating Director’s Deferred Stock Account shall be paid in a lump sum
(notwithstanding any prior election to the contrary) to the Participating
Director or the Participating Director’s beneficiary or estate, as the case may
be, in whole shares of Common Stock (together with cash in lieu of a fractional
share).


 


6.5.          Specified
Employees.  Notwithstanding the
foregoing, if a Participating Director is a “specified employee” (as that term
is defined under Section 409A), the Director’s Deferred Stock Account
following separation from service shall be payable no earlier than six months
after such separation from service.


 


6.6.          Transition
Benefits.  Participants shall be
afforded an opportunity to change the form of payment for distribution
elections from one form of payment permitted under the Plan to a different form
of payment permitted under the Plan for all amounts credited to the Plan that
are subject to Section 409A of the Code (i.e.,
generally, amounts deferred or 


 


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contributed into
the Plan on or after January 1, 2005). 
Such change must be made on or before December 31, 2008 and must
comply in all other respects with special transition rules issued by the
IRS and the U.S. Department of Treasury in connection with the implementation
of Section 409A of the Code.


 


7.                                       Limitation
on Rights of Eligible and Participating Directors.


 


7.1.          Service as a
Director.  Nothing in this Plan will
interfere with or limit in any way the right of the Company’s Board or its
stockholders to remove an Eligible Director or Participating Director from the
Board.  Neither this Plan nor any action taken
pursuant to it will constitute or be evidence of any agreement or
understanding, express or implied, that the Company’s Board or its stockholders
have retained or will retain an Eligible Director or Participating Director for
any period of time or at any particular rate of compensation.


 


7.2.          Nonexclusivity of
the Plan.  Nothing contained in this
Plan is intended to effect, modify or rescind any of the Company’s existing
compensation plans or programs or to create any limitations on the Board’s
power or authority to modify or adopt compensation arrangements as the Board
may from time to time deem necessary or desirable.


 


8.                                       Plan
Amendment, Modification and Termination. 
The Board may suspend or terminate this Plan at any time.  The Board may amend this Plan from time to
time in such respects as the Board may deem advisable in order that this Plan
will conform to any change in applicable laws or regulations or in any other
respect that the Board may deem to be in the Company’s best interests.  If there is a termination of the Plan with
respect to all Participants, the Board shall have the right, in its sole
discretion, and notwithstanding any elections made by the Participant, to amend
the Plan to immediately pay all benefits in a lump sum following such Plan
termination, to the extent permissible under Section 409A of the Internal
Revenue Code.


 


9.                                       Effective
Date and Duration of the Plan.  This
Plan shall become effective as of the date the Board approves this Plan and
will continue until the earlier to occur of (i) the termination of the
Plan by Board or (ii) the tenth anniversary of the date of approval of
this Plan by the Board.


 


10.                                 Participants
Are General Creditors of the Company. 
The Participating Directors and beneficiaries thereof shall be general,
unsecured creditors of the Company with respect to any payments to be made
pursuant to this Plan and shall not have any preferred interest by way of
trust, escrow, lien or otherwise in any specific assets of the Company.  Although the Company expects to set aside
monies or other assets to meet its obligations hereunder (there being no
obligation to do so), the same shall, nevertheless, be regarded as a part of
the general assets of the Company subject to the claims of its general
creditors, and neither any Participating Director nor any beneficiary thereof
shall have a legal, beneficial or security interest therein.


 


11.                                 Change
of Control.  “Change of Control”
means the occurrence of a “change in the ownership of the Company,” “change in
effective control of the Company,” and/or a “change in the ownership of a
substantial portion of the Company’s assets” as defined under Treasury
Regulation § 1.409A-3(i)(5).


 


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12.                                 Miscellaneous.


 


12.1.        Securities Law and
Other Restrictions.  Notwithstanding
any other provision of  this Plan or
any Deferral Election or Amended Election delivered pursuant to this Plan, the
Company will not be required to issue any shares of Common Stock under this
Plan and a Participating Director may not sell, assign, transfer or otherwise
dispose of shares of Common Stock issued pursuant to this Plan, unless (a) there
is in effect with respect to such shares a registration statement under the
Securities Act of 1933, as amended (the “Securities Act”) and any applicable
state securities laws or an exemption from such registration under the
Securities Act and applicable state securities laws and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
that the Committee, in its sole discretion, deems necessary or advisable.  The Company may condition such issuance, sale
or transfer upon the receipt of any representations or agreements from the
parties involved, and the placement of any legends on certificates representing
shares of Common Stock, as may be deemed necessary or advisable by the Company,
in order to comply with such securities law or other restriction.


 


12.2.        Governing Law.  The validity, construction, interpretation,
administration and effect of this Plan and any rules, regulations and actions
relating to this Plan will be governed by and construed exclusively in
accordance with the internal laws (without regard to conflict of laws
principles) of the State of Delaware.


 


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