Document:

Exhibit 10.3

 

Exhibit 10.3

LANCE, INC.

2007 Three-Year Performance Incentive Plan for Officers

	 	 	 
	Purposes and
Introduction

	 	The 2007 Three-Year Performance Incentive Plan for Officers provides for
Performance Awards under the Lance, Inc. 2007 Key Employee Incentive Plan
(the “Incentive Plan”). Except as otherwise expressly defined herein,
capitalized terms shall be as defined in the Incentive Plan.
	 
	 	 
	 
	 	The primary purposes of the 2007 Three-Year Performance Incentive Plan for
Officers (the “2007 Plan”) are to:
	 
	 	 
	 

	 	• Align executives’ interests with those of stockholders by linking a
substantial portion of compensation to the Company’s average Return on
Capital Employed (ROCE) over three fiscal years based on the Company’s
2007-2009 Operating Plan.
	 
	 	 
	 

	 	• Provide a way to attract and retain key executives and managers who
are critical to Lance’s future success.
	 
	 	 
	 

	 	• Provide competitive total compensation for executives and managers
commensurate with Company performance.
	 
	 	 
	 

	 	To achieve the maximum motivational impact, performance measures, Plan
goals and the awards that will be received for meeting those goals will be
communicated to participants as soon as practical after the 2007 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 Awards, or a greater or lesser
amount, will be granted after the end of the three fiscal years, 2007
through 2009 (the “Performance Period”), based on the attainment of
predetermined goals.
	 
	 	 
	 

	 	For 2007, participants will be eligible to earn incentive awards based on
the Company’s three-year average ROCE against specific goals as described
below.
	 
	 	 
	 

	 	• ROCE is calculated for each fiscal year during the Performance
Period as follows:
	 
	 	 
	 

	 	(Net Income + Interest
Expense) x (1 — Tax Rate)

Average Equity + Average Net Debt

 

	 	 	 
	 

	 	Tax Rate for ROCE shall be the Company’s actual total effective income tax
rate.
	 
	 	 
	 

	 	Average Net Debt shall be the Company’s average debt less average cash.
	 
	 	 
	 

	 	Average amounts for ROCE shall be calculated on a 12-month basis.
	 
	 	 
	 

	 	Base salary shall be the annual rate of base compensation for the 2007
fiscal year which is set no later than April of such fiscal year; provided
that for any award intended to satisfy the Performance-Based Exception,
base salary shall be the annual rate of base compensation for the fiscal
year which is set no later than March 31 of such fiscal year.
	 
	 	 
	Performance Period

	 	The period over which performance will be measured is the Company’s three
fiscal years, 2007 through 2009.
	 
	 	 
	Eligibility and
Participation

	 	Eligibility in the Plan is limited to Executive Officers and managers who
are key to Lance’s success. The Compensation Committee will review and
approve participants nominated by the President and Chief Executive
Officer. Participation in the 2007 Plan does not guarantee participation
in any subsequent long-term incentive plans but will be reevaluated and
determined on an annual basis.
	 
	 	 
	 

	 	Attachment A includes the list of 2007 Plan participants approved by the
Compensation Committee on February 8, 2007.
	 
	 	 
	Target Incentives and
Performance Measures

	 	Each participant will be assigned a Target Incentive expressed as a
percentage of his or her base salary. Participants may be assigned to a
Performance Tier by position, by salary level or based on other factors as
determined by the President and Chief Executive Officer. If the duties of
a participant change significantly during the Performance Period, the
President and Chief Executive Officer, with the approval of the
Compensation Committee, may change the Target Incentive for such
participant for the remaining portion of the Performance Period on a pro
rata basis.
	 
	 	 
	 

	 	The 2007 through 2009 financial performance measure for the Company as a
whole is shown below. Specific goals and related payouts are also shown
below.
	 
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Threshold	 	 	Target	 	 	Maximum	 
	 
	 	Lance, Inc. average ROCE	 	 	11.0	%	 	 	12.0	%	 	 	14.0	%
	 
	 	Award Level Funded	 	 	50	%	 	 	100	%	 	 	400	%

2

 

	 	 	 
	 

	 	Percent of payout will be determined on a straight line basis between
Threshold and Target and between Target and Maximum. There will be no
payouts unless the Threshold performance measure is reached.
	 
	 	 
	 

	 	The performance measure will be communicated to each participant as soon as
practicable after it has been established. Final Target Incentive Awards
will be calculated after the Compensation Committee has reviewed the
Company’s audited financial statements for 2007 through 2009 and determined
the performance level achieved.
	 
	 	 
	 

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

	 	• Maximum: Excellent; deserves payout above Target
	 
	 	 
	 

	 	• Target: Normal or expected performance; deserves Target payout
	 
	 	 
	 

	 	• Threshold: Lowest level of performance deserving a payout
	 
	 	 
	 

	 	Attachment A lists the Target Incentives for each participant for the 2007
Plan as determined by the Compensation Committee. Target Incentives will
be communicated to each participant as close to the beginning of the year
as practicable, in writing. Target Incentives will be calculated by
multiplying each participant’s base salary by the appropriate Performance
Tiers and percentages, as described below.

	 	 	 	 	 
	 	 	 	 	Percentage of Base Salary
	 	 	Performance Tier	 	for 2007-2009 Target Incentives
	 
	 	1

2

3
	 	30%

25%

20%

	 	 	 
	 

	 	Final awards will be calculated, paid and granted after the Compensation
Committee has reviewed the Company’s audited financial statements for 2007
through 2009 and determined the performance levels achieved.
	 
	 	 
	Awards

	 	Each participant shall receive cash equal to 50% in value of his or her
award and 50% in value will be in shares of Common Stock, except that the
President and Chief Executive Officer will receive cash equal to 100% in
value of his award and no shares of Common Stock.

3

 

	 	 	 
	 

	 	The number of shares of the Company’s Common Stock granted will equal the
applicable dollar value divided by the closing price for the Company’s
Common Stock on the date of grant. The shares of Common Stock will be
fully vested on the date of grant.
	 
	 	 
	 

	 	For purposes of the 2007 Plan, the date of grant of shares of Common Stock
will be the date established by the Compensation Committee after the
applicable performance level has been determined.
	 
	 	 
	Form and Timing of
Awards

	 	Awards will be made as soon as practicable after performance measures are
calculated and approved by the Compensation Committee. All awards will be
rounded to the nearest multiple of $100 or up to the next whole share, as
the case may be.
	 
	 	 
	Change In Status

	 	An employee hired into an eligible position during the Performance Period
may participate in the 2007 Plan for the balance of the Performance Period
on a pro rata basis.
	 
	 	 
	Certain
Terminations of
Employment

	 	In the event a participant voluntarily terminates employment (other than
Retirement) or is terminated involuntarily before the end of the
Performance Period, the participant shall not receive any award hereunder.
In the event of death, Disability or Retirement before the end of the
Performance Period, any award will be determined after the end of the
Performance Period based on actual performance and paid out on a pro rata
basis all in cash.
	 
	 	 
	 
	 	If the participant’s employment terminates after the end of the Performance
Period but before the applicable grant date, then the participant will
receive the award based on the performance results and paid out all in
cash.
	 
	 	 
	Change In Control

	 	In the event of a Change in Control, pro rata payouts will be made all in
cash at the greater of (1) Target Incentive or (2) actual results for the
completed fiscal years preceding the Change in Control, with such pro
ration based on the number of days in the Performance Period preceding the
Change in Control. Payouts will be made within 30 days after the relevant
transaction has been completed.
	 
	 	 
	Withholding

	 	The Company shall withhold from awards any Federal, foreign, state or local
income or other taxes required to be withheld.
	 
	 	 
	Communications

	 	Progress reports should be made to participants annually, showing
performance results.

4

 

	 	 	 
	Executive Officers

	 	Notwithstanding any provisions to the contrary above, participation, awards
and prorations for Executive Officers, including the President and Chief
Executive Officer, shall be approved by the Compensation Committee.
	 
	 	 
	Stockholder 

Approval

	 	The 2007 Plan and the awards hereunder are made pursuant to the Incentive
Plan, which is subject to approval by the Company’s stockholders at the
Annual Meeting of Stockholders to be held on April 26, 2007. Any award
made under the 2007 Plan before the Incentive Plan is approved by the
Company’s stockholders is conditioned upon such approval and will be null
and void if the Incentive Plan is not so approved.
	 
	 	 
	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 and
goals, final award components and determination and amendments to the Plan.
The Committee shall adjust any award due to extraordinary events such as
acquisitions, dispositions, required accounting adjustments or similar
events, all as specified in
Section 11(d) of the Incentive Plan. The
decisions of the Committee shall be conclusive and binding on all
participants.

5

 

Attachment A

2007 Three-Year Performance Incentive Plan for Officers

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Award	 	Target
	Name	 	Title	 	Percentage	 	Incentive
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	David V. Singer
	 	President and Chief Executive Officer	 	 	30	%	 	$	165,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	R. D. Puckett
	 	Executive Vice President, Chief
Financial Officer and Secretary	 	 	25	%	 	$	91,875	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Glenn A. Patcha
	 	Senior Vice President — Sales and Marketing	 	 	*	%	 	$	*	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	E. D. Leake
	 	Vice President — Human Resources	 	 	25	%	 	$	56,250	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	F. I. Lewis
	 	Vice President — Sales	 	 	25	%	 	$	66,300	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	B. W. Thompson
	 	Vice President — Supply Chain	 	 	25	%	 	$	68,750	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	M. E. Wicklund
	 	Controller and Assistant Secretary	 	 	*	%	 	$	*	 

	*	 	Amounts are omitted for participants other than the Chief Executive Officer, the Chief
Financial Officer and the executive officers who were named in the Summary Compensation Table
of the Company’s Proxy Statement for the 2007 Annual Meeting of Stockholders.Exhibit 10.4

 

LANCE, INC.

2007 Annual Performance Incentive Plan for Officers

	 	 	 	 	 	 	 
	Purposes and
Introduction

	 	The 2007 Annual Performance Incentive Plan provides for Performance
Awards under the Lance, Inc. 2007 Key Employee Incentive Plan (the
“Incentive Plan”). Except as otherwise expressly defined herein,
capitalized terms shall be as defined in the Incentive Plan.
	 
	 	 	 	 	 	 
	 

	 	The primary purposes of the 2007 Annual Performance Incentive Plan for
Officers (the “2007 Plan”) 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 2007, participants will be eligible to earn incentive awards based
on the performance measures listed on Exhibit A hereto and defined as
follows:
	 
	 	 	 	 	 	 
	 

	 	 	1.	 	 	Corporate Earnings Per Share (“Corporate EPS”) is defined as the
fully diluted earnings per share of the Company for the 2007 fiscal
year, excluding special items, which are significant one-time income or
expense items.
	 
	 	 	 	 	 	 
	 

	 	 	2.	 	 	Net Sales Dollars is defined as sales and other operating revenue,
net of returns, allowances, discounts and other sales deduction items.
	 
	 	 	 	 	 	 
	 

	 	 	3.	 	 	Economic Profit is defined as net operating profit after income
taxes, less cost of capital charge of 9.0% on average capital employed.
	 
	 	 	 	 	 	 
	 

	 	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 2007 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; provided that
for any award intended to satisfy the Performance-Based Exception, base
salary shall be the annual rate of base compensation for the Plan Year
which is set no later than March 31 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 2007
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 B includes the list of 2007 participants approved
by the Compensation Committee at its February 8, 2007 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 as appropriate.
	 
	 	 
	 

	 	Exhibit B lists the Target Incentive 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).

2

 

	 	 	 
	Performance
Measures and Award
Funding

	 	The 2007 performance measures are on Exhibit A attached hereto.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Threshold	 	 	Target	 	 	Maximum	 
	 
	 	Award Level Funded	 	 	50	%	 	 	100	%	 	 	200	%

	 	 	 	 	 
	 

	 	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 measure is reached.
The payout for Net Sales Dollars will not exceed Threshold unless
Corporate EPS equals or exceeds Threshold.
	 
	 	 	 	 
	 

	 	The performance measures 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 2007 and
determined the performance level achieved.
	 
	 	 	 	 
	 

	 	Threshold, Target and Maximum levels will be defined at the beginning of
each Plan Year for each performance measure.
	 
	 	 	 	 
	 

	 	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 45% of his or her Target Incentive Award based
on Corporate Earnings Per Share, 35% of his or her Target Incentive
Award based on Net Sales Dollars and 20% of his or her Target Incentive
Award based on Economic Profit.
	 
	 	 	 	 
	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
2007 fiscal year. All awards will be rounded to the nearest $100.
	 
	 	 	 	 
	Change in Status

	 	An employee hired into an eligible position during the Plan Year may
participate in the Plan for the balance of the Plan Year on a pro rata
basis.
	 
	 	 	 	 
	Certain
Terminations of
Employment

	 	In the event a participant voluntarily terminates employment (other than
Retirement) or is terminated involuntarily before the payment date, any
Award will be forfeited. In the event of death, Disability or
Retirement, the award will be paid on a pro rata basis at the higher of
the Target Incentive

3

 

	 	 	 
	 

	 	or actual performance after the end of the Plan
Year. Awards otherwise will be calculated on the same basis as for
other participants.
	 
	 	 
	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.
	 
	 	 
	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.
	 
	 	 
	Stockholder Approval

	 	The 2007 Plan and the awards hereunder are made pursuant to the
Incentive Plan, which is subject to approval by the Company’s
stockholders at the Annual Meeting of Stockholders to be held on April
26, 2007. Any award made under the 2007 Plan before the Incentive Plan
is approved by the Company’s stockholders is conditioned upon such
approval and will be null and void if the Incentive Plan is not so
approved.
	 
	 	 
	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 shall adjust any award due to extraordinary events such as
acquisitions, dispositions, discontinued operations, required accounting
adjustments or similar events; all as specified in Section 11(d) of the
Incentive Plan. The decisions of the Committee shall be conclusive and
binding on all participants.

4

 

Exhibit A

Performance Measures

($ in millions, except Corporate EPS)

	 	 	 	 	 	 	 	 	 
	Performance Measure	 	Weight	 	Threshold	 	Target	 	Maximum
	 

	Corporate EPS*
	 	45%
	 	$0.70
	 	$0.80
	 	$1.11
	 

	Net Sales Dollars*
	 	35%
	 	$**
	 	$**
	 	$**
	 

	Economic Profit*
	 	20%
	 	$**
	 	$**
	 	$**

 

			
	*	 	Excludes special items and discontinued operations
	 
	**	 	These performance objectives are omitted because they are based on our confidential and
competitively sensitive business plans and we believe disclosure of the objectives would
likely result in substantial harm to our competitive positions. We view the target
performance objectives to be achievable if we generally meet our operating plans for 2007.

 

Exhibit B

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Award	 	Target
	Name	 	Title	 	Percentage	 	Incentive
	 

	David V. Singer

	 	President and Chief Executive
Officer
	 	 	100	%	 	$	550,000	 
	 
	 	 	 	 	 	 	 	 	 	 
	R. D. Puckett

	 	Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
	 	 	50	%	 	$	183,750	 
	 
	 	 	 	 	 	 	 	 	 	 
	G. A. Patcha

	 	Senior Vice President —
Sales and Marketing
	 	 	*	%	 	$	*	 
	 
	 	 	 	 	 	 	 	 	 	 
	E. D. Leake

	 	Vice President — Human Resources
	 	 	50	%	 	$	112,500	 
	 
	 	 	 	 	 	 	 	 	 	 
	B. W. Thompson

	 	Vice President — Supply Chain
	 	 	50	%	 	$	137,500	 
	 
	 	 	 	 	 	 	 	 	 	 
	F. I. Lewis

	 	Vice President — Sales
	 	 	50	%	 	$	132,600	 
	 
	 	 	 	 	 	 	 	 	 	 
	H. D. Fields

	 	Vice President — Corporate
	 	 	*	%	 	$	*	 
	 
	 	 	 	 	 	 	 	 	 	 
	M. E. Wicklund

	 	Controller and Assistant Secretary
	 	 	*	%	 	$	*	 

 

			
	*	 	Amounts are omitted for participants other than the Chief Executive Officer, Chief Financial
Officer and the Executive Officers who are named in the Summary Compensation Table of the
Company’s Proxy Statement for the 2007 Annual Meeting of Stockholders.

6

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