Document:

Exhibit10.2

Exhibit 10.2 

Compensation Summary 
(As reported in
Hershey Foods Corporation’s 

 Current Report on Form 8-K, filed 
February 18, 2005) 

        Base
Salaries. On February 14, 2005, the Compensation and Executive Organization Committee
(“Committee”) of the Board of Directors of Hershey Foods Corporation (the
“Company”) approved the base salaries of the executive officers named in the
Company’s 2004 Proxy Statement (“Named Executive Officers”) other than R.
H. Lenny, Chairman of the Board, President and Chief Executive Officer, and on February
15, 2005, the Committee recommended to the Company’s independent directors as a group
the base salary for Mr. Lenny, as follows: 

	        
  Name          	      
    Base Salary      
    

	R. H. Lenny	 	 	$1,070,000      	 
	R. Brace      	 	 	$   380,000      	  
	 F. Cerminara	 	 	$   428,000      	 
	B. H. Snyder	 	 	$   422,100      	 
	 D. J. West     	 	 	$   450,000      	 

        The
independent directors as a group approved the recommended base salary for Mr. Lenny on
February 15, 2005. Base salaries are effective as of January 1, 2005. 

        2004
Annual Incentive Program (AIP) Award. On February 14, 2005, the Committee approved AIP
awards for 2004 under the Company’s Key Employee Incentive Plan (the “Incentive
Plan”) for the Named Executive Officers other than Mr. Lenny, and on February 15,
2005, the Committee recommended to the independent directors as a group an AIP award for
Mr. Lenny, payable in cash, as follows: 

	        
  Name          	Annual    

       Incentive Award            
	R. H. Lenny	 	 	$2,425,000      	 
	R. Brace      	 	 	$   309,173      	  
	 F. Cerminara	 	 	$   446,674      	 
	B. H. Snyder	 	 	$   416,842      	 
	 D. J. West     	 	 	$   445,884      	 

        The
independent directors as a group approved the recommended award for Mr. Lenny on February
15, 2005. 

        Also
on February 14, 2005, the Committee approved the target grants for a 2005 AIP award for
executive officers other than Mr. Lenny, and on February 15, 2005, the Committee
recommended to the independent directors as a group a target grant for Mr. Lenny’s
2005 AIP award. For executive officers

 other than Mr. Lenny, the final award is the
product of the executive officer’s base salary, the applicable target percentage and
a performance score calculated as the sum of a corporate performance score and an
individual score. The corporate performance objectives for executive officers other than
Mr. Lenny are based on earnings per share-diluted, consolidated net sales and consolidated
economic return on invested capital. The range of the target percentages of base salary
used in the 2005 AIP target grants for executive officers other than Mr. Lenny is 50% to
70%. For Mr. Lenny, the Committee recommended to the independent directors that his final
award be based on his performance against certain corporate and individual objectives. Mr.
Lenny’s 2005 AIP corporate objectives are based on consolidated net sales, operating
income, earnings per share-diluted, consolidated economic return on invested capital and
free cash flow. The Committee recommended that Mr. Lenny’s target maximum award for
2005 be set at the maximum award level available to executive officers under the Incentive
Plan, and waived the maximum AIP award specified in Mr. Lenny’s March 12, 2001
Employment Agreement. At the end of the performance period, the Committee will review Mr.
Lenny’s actual performance against his 2005 objectives and recommend to the
independent directors an award which, based upon such performance, may be at or below the
target maximum award. The independent directors as a group approved the Committee’s
recommended 2005 AIP target grant for Mr. Lenny on February 15, 2005. 

        Performance
Stock Unit (PSU) Awards for the 2002-2004 Cycle. On February 14, 2005, the Committee
approved PSU awards under the Incentive Plan for the Named Executive Officers other than
Mr. Lenny, and on February 15, 2005, the Committee recommended to the independent
directors as a group a PSU award under the Incentive Plan for Mr. Lenny, as follows: 

	        
   Name        
   
	Performance

      
    Stock Unit Award        
  
	R. H. Lenny	 	 	$3,105,699      	 
	R. Brace      	 	 	$   575,691      	  
	 F. Cerminara	 	 	$   848,386      	 
	 B. H. Snyder	 	 	$   499,942      	 
	D. J. West    	 	 	$   515,092      	 

        The
independent directors as a group approved the recommended PSU award for Mr. Lenny on
February 15, 2005. The Committee approved the deferral of Mr. Lenny’s PSU award in
units representing shares of Company Common Stock and approved deferral of awards to
Messrs. Brace, Cerminara and Snyder in cash under the terms of the Company’s Deferred
Compensation Plan. 

        Also
on February 14, 2005, the Committee approved contingent target grants of PSUs under the
Incentive Plan for executive officers other than Mr. Lenny, and on February 15, 2005, the
Committee recommended to the independent directors as a group a contingent target grant of
PSUs under the Incentive Plan for Mr. Lenny, for the 2005-2007 PSU performance cycle. PSU
grants are based upon a percentage of the executive officer’s base salary and are
earned based upon the Company’s performance relative to certain performance
objectives over the three-year cycle. The performance objectives for the 2005-2007
performance cycle are as follows: the Company’s earnings per share-diluted growth
(three-year compound annual growth rate) measured against the earnings per share-diluted
growth (three-year compound annual growth rate) of a peer group of 16 food, beverage and
consumer packaged goods companies and the cumulative three-year improvement in the
Company’s economic return on invested

2

 capital measured against an internal target.
The independent directors as a group approved the Committee’s recommended contingent
target PSU grant for Mr. Lenny on February 15, 2005. 

        Stock
Option Grants. The Committee approved stock option grants under the Incentive Plan for
the executive officers other than Mr. Lenny, and recommended to the independent directors
as a group a stock option grant to Mr. Lenny, all such grants to be effective
February 15, 2005. The independent directors as a group ratified the grant of stock
options to Mr. Lenny on February 15, 2005. Stock options were granted subject to certain
Terms and Conditions applicable to all stock options granted under the Incentive Plan,
which Terms and Conditions were filed as Exhibit 10.1 to the Company’s Current Report
on Form 8-K on February 18, 2005. 

        Finally,
on February 15, 2005, the independent directors as a group approved the Committee’s
recommendation to revise its policy regarding Mr. Lenny’s use of the Company’s
aircraft for non-business purposes. The new policy removes dollar limitations applicable
to such use and encourages such use by Mr. Lenny to ensure confidentiality of information
while traveling and to allow Mr. Lenny more time to concentrate on the Company’s
business, maximizing efficiency. 

 

 

 

3Exhibit 10.1

                      P.A.M. TRANSPORTATION SERVICES, INC.
                       AMENDMENT TO 1995 STOCK OPTION PLAN
                      As adopted by the Board of Directors
                               On August 28, 2002

                              ARTICLE I - PURPOSE

The  Board  of Directors of P.A.M. Transportation Services, Inc. (the "Company")
is  amending  the  Company's  1995 Stock Option Plan (as previously amended, the
"Plan")  to  update  it,  and  to improve certain of its provisions so that they
better serve the interests of the Company and its shareholders.

                            ARTICLE II - AMENDMENTS

2.1     Amendment to Section 2(b) of the Plan.
----------------------------------------------
Section 2(b) of the Plan is amended by deleting the present text of Section 2(b)
and  inserting  the  following  new  text  in  its  place:

(b)  "Board of Directors" shall mean the Board of Directors of the Company.

2.2     Amendment to Section 2(g) of the Plan.
----------------------------------------------
Section 2(g) of the Plan is amended by deleting the present text of Section 2(g)
and inserting the following new text in its place:

(g)  "Market  Price"  on a particular date shall mean the average of the highest
and  lowest  sales  prices  of shares of the Common Stock reported on The Nasdaq
Stock  Market  (or any successor exchange or system that is the primary exchange
or system for trading of the Common Stock) on such date, or if there was no sale
of  any  shares of Common Stock reported on The Nasdaq Stock Market (or any such
successor)  on  such  date,  then on the last preceding date on which The Nasdaq
Stock Market (or any such successor) was open for trading and on which shares of
the  Common  Stock  were  traded.  If for any reason it is not practical for the
Market  Price  to  be determined as provided for above in this paragraph, Market
Price  shall  mean  the  fair  market  value  of  the  Company's Common Stock as
determined  by  the  Board  of Directors or the Committee, acting in good faith,
under  any  method consistent with the Code, or Treasury Regulations thereunder,
as  the  Board  of Directors or the Committee shall in its discretion select and
apply  at  the  time  of  the  grant  of  the  option  concerned. Subject to the
foregoing,  the Board of Directors or the Committee, in fixing the market price,
shall  have  full  authority  and discretion and be fully protected by doing so.

2.3     Amendment to Section 5 of the Plan.
-------------------------------------------
Section  5  of  the Plan is amended by deleting the first paragraph of Section 5
and inserting the following new paragraph in its place:

The  Plan shall be administered by the Board of Directors of the Company, or the
Committee.  The  Committee  shall  be comprised of not less than two (2) members
appointed  by the Board of Directors of the Company from among its members, each
of  whom  qualifies as a "Non-Employee Director" as that term is defined in Rule
16b-3  issued  under  the  Securities  Exchange  Act  of  1934,  as amended (the
"Exchange Act").

                  ARTICLE III - EFFECTIVENESS OF THIS AMENDMENT

This  Amendment was adopted by the Board of Directors on August 28, 2002. Except
as specifically amended by this Amendment, the Plan, as previously adopted shall
remain in full force and effect.

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