Document:

Ex-10.2

 

Exhibit 10.2

LANCE, INC.

2006 Annual Performance Incentive Plan for Officers

	 	 	 
	Purposes and

	 	The primary purposes of the 2006 Annual Performance Incentive Plan for
	Introduction

	 	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.

For 2006, participants will be eligible to earn incentive awards based
on performance measures for the Branded and Private label portions of
the Company’s business. Branded is defined as that portion that is not
Private Label, corporate or intercompany activity. Private Label is
defined as the combined business of Vista Bakery, Inc. and Tamming Foods
Ltd., excluding intercompany activity.

The following performance indicators for the Company will be used based
on the performance measures listed on Exhibits A and B attached hereto:

	 	1.	 	Net Sales Dollars is defined as sales and other operating revenue,
net of returns, allowances, discounts and other sales deduction items.
	 
	 	2.	 	Gross Margin Percentage is defined as Net Sales less cost of goods
sold.
	 
	 	3.	 	Operating Profit Dollars is defined as earnings before interest and
taxes, excluding any gain or loss on asset disposal and excluding other
net income or loss.
	 
	 	4.	 	AR and Inventory Days is defined as the sum of accounts receivables
days outstanding plus inventory days outstanding.

 

 

	 	5.	 	Lost Time Accident Rate is defined as the number of lost time
accidents per 100 employees.
	 
	 	6.	 	Corporate EPS is defined as the fully diluted earnings per share of
the Company for the 2006 fiscal year, excluding special items, which are
significant one-time income or expense items.

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 2006 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.

Not later than 75 days after fiscal 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 2006
fiscal year (the “Plan 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. Exhibit C includes the list of 2006 participants approved
by the Compensation Committee at its April 27, 2006 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 responsibilities of a position change during the
year, or Base Salary is increased significantly, the Target Incentive
shall be revised

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	 	as appropriate.

	 
	 	 
	 

	 	Exhibit C lists the Target Incentive and applicable performance measures
for each participant for the Plan Year. 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 performance for the year, as described below).
	 
	 	 
	Performance
Measures and Award
Funding

	 	The 2006 performance measures for the Company and for Branded and
Private Label are attached hereto. Specific goals and related payouts
are also attached hereto.

	 	 	 	 	 	 	 
	 	 	Threshold	 	Target	 	Maximum
	Award Level Funded
	 	*%
	 	*%
	 	*%

 

[*Targets not required to be disclosed]

Percent of payout will be determined on a straight line basis from
Threshold to Target and from Target to Maximum. There will be no payout
unless the Threshold for the applicable performance indicator is
reached.

The performance measures and specific performance indicator goals will
be communicated to each participant as soon as practicable after they
have been established. Final Target Incentive Awards will be calculated
after the Compensation Committee has reviewed the Company’s audited
financial statements for 2006 and determined the performance level
achieved.

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

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

	 	•	 	Maximum: Excellent; deserves an above-market incentive
	 
	 	•	 	Target: Normal or expected performance; deserves market-level
incentive
	 
	 	•	 	Threshold: Lowest level of performance deserving payment above
base salary; deserves below-market incentive

	 	 	 
	Individual

Performance

	 	Each Officer will receive *% of his or her Target Incentive Award based
on Branded performance measures and *% of his or her Target Incentive
Award based on Private Label performance measures except that the
President of Vista Bakery Inc. will receive *% of his Target Incentive

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	 	Award based on Branded performance measures and *% of his Target
Incentive Award based on Private Label performance measures.
	 
	 	 
	 

	 	[*Targets not required to be disclosed.]
	 
	 	 
	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, generally within 75 days after the end of the Company’s
2006 fiscal year. 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 payment date, any Award will be
forfeited. In the event of death, permanent disability or 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. For purposes hereof, “retirement” means the participant’s
termination of employment with the Company either (i) after attainment
of age 65 or (ii) after attainment of age 55 with the prior consent of
the Compensation Committee.
	 
	 	 
	Change In

Control

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

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	 	(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 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

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	 	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.
	 
	 	 
	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.

6

 

Exhibit A

Branded Performance Measures

($ in millions, except Corporate EPS)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Indicator	 	Weight	 	Threshold	 	Target	 	Maximum
	Net Sales Dollars*
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*
	 
	Gross Margin Percentage*
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*
	 
	Operating Profit Dollars*
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*
	 
	AR and Inventory Days*
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*
	 
	Lost Time Accident Rate*
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*
	 
	Corporate EPS*
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*

 

			
	*Excludes special items related to Tom’s integration.
	 
	[**Targets not required to be disclosed.]

 

 

Exhibit B

Private Label Performance Measures

($ in millions, except Corporate EPS)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Indicator	 	Weight	 	Threshold	 	Target	 	Maximum
	Net Sales Dollars
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*
	 
	Gross Margin Percentage
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*
	 
	Operating Profit Dollars
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*
	 
	AR and Inventory Days
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*
	 
	Lost Time Accident Rate
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*
	 
	Corporate EPS*
	 	 	*	*%	 	$	*	*	 	$	*	*	 	$	*	*

 

			
	*Excludes special items related to Tom’s integration.
	 
	[**Targets not required to be disclosed.]

 

 

Exhibit C

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Performance	 	Award	 	Target
	Name	 	Title	 	Measures	 	Percentage	 	Incentive
	David V. Singer
	 	President and Chief	 	Branded   *%	 	*%	 	$*
	 
	 	Executive Officer	 	Private Label *%	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	R. D. Puckett
	 	Executive Vice	 	Branded   *%	 	*%	 	$*
	 
	 	President, Chief	 	Private Label *%	 	 	 	 
	 
	 	Financial Officer,	 	 	 	 	 	 
	 
	 	Treasurer and	 	 	 	 	 	 
	 
	 	Secretary	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	H. D. Fields
	 	Vice President and	 	Branded   *%	 	*%	 	$*
	 
	 	President, Vista	 	Private Label *%	 	 	 	 
	 
	 	Bakery, Inc.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	L. R. Gragnani, Jr.
	 	Vice President	 	Branded   *%	 	*%	 	$*
	 
	 	- Information	 	Private Label *%	 	 	 	 
	 
	 	Technology/CIO	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	E. D. Leake
	 	Vice President	 	Branded   *%	 	*%	 	$*
	 
	 	- Human Resources	 	Private Label *%	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	B. W. Thompson
	 	Vice President	 	Branded   *%	 	*%	 	$*
	 
	 	- Supply Chain	 	Private Label *%	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	F. I. Lewis
	 	Vice President	 	Branded   *%	 	*%	 	$*
	 
	 	- Sales	 	Private Label *%	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	M. E. Wicklund
	 	Controller and	 	Branded   *%	 	*%	 	$*
	 
	 	Assistant Secretary	 	Private Label *%	 	 	 	 

 

[*Award targets omitted for participants as targets not required to be disclosed.]Ex-10.3

 

Exhibit 10.3

RESTRICTED STOCK UNIT AWARD AGREEMENT AMENDMENT

     THIS RESTRICTED STOCK UNIT AWARD AGREEMENT AMENDMENT (the “Amendment”) is made and entered
into as of the 27th day of April, 2006, by and between LANCE, INC., a North Carolina corporation
(the “Company”), and DAVID V. SINGER (the “Executive”).

Statement of Purpose

     The Company and Executive entered into a Restricted Stock Unit Award Agreement dated May 11,
2005 (the “RSU Agreement”). The purpose of this Amendment is to re-designate certain “Cash-Settled
Units” under the RSU Agreement as “Stock-Settled Units.”

     NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the
parties hereto hereby agree that the RSU Agreement is amended effective as of the date hereof as
follows:

     1. Consistent with the provisions of Section 2 of the RSU Agreement, 150,000 “Cash-Settled
Units” under the RSU Agreement (excluding any related “Dividend Units”) are hereby re-designated as
“Stock-Settled Units” under the RSU Agreement; provided, however, that such 150,000
re-designated Stock-Settled Units shall be provided under the Lance, Inc. 1997 Incentive Equity
Plan rather than the Lance, Inc. 2003 Key Employee Stock Plan.

     2. The following sentence is added immediately after the first sentence of Section 11(b) of
the RSU Agreement:

“In that regard, consistent with the provisions of the Lance, Inc. 1997 Incentive
Equity Plan and the Lance, Inc. 2003 Key Employee Stock Plan, Executive may satisfy
such withholding requirements by causing the Company to withhold shares of Common
Stock otherwise payable hereunder sufficient to meet minimum withholding obligations
for Tax-Related Items.”

     3. Except as expressly or by necessary implication amended hereby, the RSU Agreement shall
remain in full force and effect.

     IN WITNESS WHEREOF, the Company has caused this Amendment to be signed by its duly authorized
officer, and Executive has hereunto set his hand, all as of the day and year first above written.

	 	 	 	 	 
	 	“Company”

Lance, Inc.

 	 
	 	By    /s/ Earl D. Leake
 	 
	 	Earl D. Leake 	 
	 	Vice President 	 
	 
	 	“Executive”

 	 
	 	  /s/ David V. Singer
 	 
	 	David V. Singer

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