Document:

Exhibit 10.6 - 9.28.2013

Exhibit 10.6

THE HILLSHIRE BRANDS COMPANY
2012 LONG-TERM INCENTIVE STOCK PLAN
FORM OF RESTRICTED STOCK UNIT GRANT NOTICE AND AGREEMENT

[INSERT PARTICIPANT NAME]
 
This Restricted Stock Unit (RSU) Grant Notice and Agreement (this “Agreement”), made as of August 30, 2013 (the “Award Date”), by and between The Hillshire Brands Company, a Maryland corporation (the “Company”), and you is evidence of an award made pursuant to The Hillshire Brands Company 2012 Long-Term Incentive Stock Plan (the “Plan”), which is incorporated into this Agreement by reference. A copy of the Plan has been provided to you and is also available from the Company’s Compensation Department.  Capitalized terms used but not defined herein have the meanings specified in the Plan.
 
1.    Restricted Stock Unit Award.  Subject to the restrictions, limitations, terms and conditions specified in the Plan and this Agreement, the Company hereby awards to you as of the Award Date:
______ Restricted Stock Units (RSUs)
which are considered Stock Awards under the Plan (the “Award”).   The vesting of the Award is based on your continued service with the Company or any of its subsidiaries (collectively, the “Hillshire Companies”) from the Award Date through August 31, 2016, subject to the terms and conditions set forth in this Agreement.  The RSUs will vest 100% on August 31, 2016 (the “Vesting Date”), and shall be settled in shares of common stock of the Company (“Shares”). For the avoidance of doubt, your period of continuous employment for purposes of vesting excludes any severance period.
 
2.    Acceptance of Terms and Conditions.  By electronically acknowledging and accepting this Award, you agree to be bound by all of the terms and conditions contained in this Agreement, the Plan, the Non-Competition, Non-Solicitation and Confidentiality Agreement, and any and all conditions established by the Company in connection with Awards issued under the Plan, and understand that this Award neither confers any legal or equitable right (other than those rights constituting the Award itself) against the Company directly or indirectly, nor does it give rise to any cause of action at law or in equity against the Company.  In order to vest in the Award described in this Agreement, you must have accepted the Award within 45 calendar days after receipt of this Agreement.

3.    Dividend Equivalents.  Subject to the restrictions, limitations and conditions as described in the Plan, dividend equivalents payable on the RSUs will be credited (in cash, without interest) on your behalf at the time that dividends are otherwise paid to owners of the Company’s common stock.  Dividend equivalents will be settled and paid at the same time as the vested RSUs are settled pursuant to the terms of this Agreement. 

4.    Distribution of the Award.  If the distribution is subject to tax withholding, such taxes will be settled by withholding cash and/or a number of shares with a market value not less than the amount of such taxes. Any cash from dividend equivalents remaining after withholding taxes are paid will be paid in cash to you. The net number of shares of the Company to be distributed will be delivered to your electronic stock plan account on or as soon as practicable after the Vesting Date.   If withholding of taxes is not required, none will be taken and the gross number of shares and dividend equivalents will be distributed to you in accordance with this paragraph 4. You are personally responsible for the proper reporting and payment of all taxes related to the settlement of the Award.

5.    Death, Total Disability or Retirement.  If you cease active employment (i.e., cease to be coded as active on the payroll system) with the Hillshire Companies, because of your death or because you become Totally Disabled (as defined under the appropriate long-term disability benefit plan of the Hillshire Companies, if applicable), the Award shall vest immediately and be distributed to you or your estate as soon as 

FY14-16 RSU Award 

practical.  In the case of your attaining age 55 or older and if you have at least 10 years of service with the Hillshire Companies when your employment terminates, or in the case of your attaining age 65, regardless of service, the Award will continue to vest after your termination.  These provisions apply only to the Award under this Agreement; other awards may have different provisions.

6.    Involuntary Termination, Voluntary Termination and Non-Severance Event Termination.  The following provisions apply only to the Award granted under this Agreement; other awards may have different provisions

(a)    Involuntary Termination.  If your employment with the Hillshire Companies is terminated and you are eligible to receive severance benefits under The Hillshire Brands Company Severance Plans for Corporate Officers, the Severance Pay Plan, the Severance Pay Plan for Key Executives, the Severance Pay Plan for Certain Events or any other written severance plan of the Hillshire Companies (collectively, a “Severance Event Termination”), you will be eligible to receive a prorated portion of the non-vested shares determined by multiplying the number of shares subject to the Award by a fraction, the numerator of which is the number of complete months of your active service from Award Date through the date your employment terminates (not including the severance period), and the denominator of which is the number of months from Award Date through the Vesting Date. 

In the event that the division, business unit or business segment of the Company to which at least 80% of your time is dedicated or from which you are on leave of absence is sold, closed, spun off or otherwise divested and, as a result of such transaction, your employment with the Hillshire Companies is terminated, the Committee shall have discretion regarding the treatment of your Award upon the consummation of such transaction, which treatment may include without limitation acceleration of vesting and settlement of all or a portion of the Award or substitution of the Award.  The decision of the Committee regarding any such treatment shall be final, binding and conclusive.  

(b)    Voluntary Termination and Non-Severance Event Termination.  If your employment terminates for reasons other than those described above (i.e., you voluntarily terminate employment with the Hillshire Companies or your employment is terminated by the Hillshire Companies such that you are not eligible for severance pay under any of the severance plans of the Hillshire Companies), then the Award shall be canceled on the date your employment terminates, with no pro-rata vesting. 

7.    Change of Control.

(a)    Acceleration of Vesting Prior to the Vesting Date.  If you have a Qualifying Termination, all restrictions and forfeiture conditions on the RSUs shall automatically lapse upon your Qualifying Termination; provided, however, that if the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash or if you have a Qualifying Termination within six (6) months preceding a Change of Control, then the restrictions and forfeiture conditions on the RSUs shall lapse immediately prior to the Change of Control.  Such RSUs shall be settled or paid within ten (10) business days after the date such restrictions and forfeiture conditions lapse unless the transaction giving rise to the Change of Control is an offer to purchase all of the Company’s outstanding voting stock for cash, in which case such RSUs shall be settled or paid in the same manner and at the same time as cash consideration is paid to holders of shares of outstanding common stock of the Corporation.  Notwithstanding the foregoing, if you are or could become eligible for retirement vesting pursuant to Section 5 of this Agreement prior to the Vesting Date, your RSUs shall be settled or paid upon your separation from service (if your separation from service occurs before the Vesting Date), but only if your separation from service occurs within two (2) years following a “change in control event,” within the meaning of Section 409A of the Code, and in all other circumstances your RSUs shall be settled or paid upon your Vesting Date (or such earlier date as may be permitted under Section 409A of the Code).

(b)    Definition of Cause.  For purposes of this Agreement, “Cause” shall mean a determination by the Company that you have willfully engaged in conduct materially injurious to the Company 

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FY 14-16 RSU Award

or have committed a crime involving dishonesty, moral turpitude or other disreputable behavior, including, but not limited to, a violation of the Company’s Global Business Standards.

(c)    Definition of Change of Control.  For purposes of this Agreement, “Change of Control” shall have the meaning set forth in the Plan.

(d)    Definition of Good Reason.  For purposes of this Agreement, “Good Reason” shall have the meaning set forth in the Company’s Severance Plans for Corporate Officers, if you are a participant therein, or otherwise, “Good Reason” shall mean any of the following actions, if taken without your written consent: (i) a material diminution in your base salary; (ii) a material diminution in your authority, duties or responsibilities; (iii) a requirement by the Company that you move your place of employment more than 50 miles from your place of employment prior to such move; or (iv) a material breach by the Company of any material agreement between the Company and you.  Your employment with the Company may be terminated for Good Reason only if (A) you provide written notice to the Company of the occurrence of the Good Reason event (as described above) within 90 days after you have knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which you believe constitute Good Reason, (B) the Company fails to correct the circumstances constituting “Good Reason” within 30 days after such notice, and (C) you resign within 120 days after the initial existence of such circumstances.

(e)    Definition of Qualifying Termination.  For purposes of this Agreement, a “Qualifying Termination” shall mean either of the following events:

		
	(i)
	any termination of your employment by the Company for reasons other than Cause within six (6) months preceding or within two (2) years following a Change of Control; or

		
	(ii)
	a voluntary termination by you for Good Reason within two (2) years following a Change of Control pursuant to a written notice of termination that you deliver to the Company.

     8.    Non-Competition/Non-Solicitation/Confidentiality.  As a condition to your receipt of this RSU grant, you must electronically accept a Non-Competition, Non-Solicitation and Confidentiality Agreement within 45 calendars days after receipt of this Agreement.  Please carefully read the Non-Competition, Non-Solicitation and Confidentiality Agreement in its entirety and feel free to have your lawyer review it prior to accepting it.   

9.     Adjustment of the Award.   In the event of any change in the capital structure of the Company (including but not limited to a stock dividend, stock split, reverse stock split, combination or exchange of securities, merger, consolidation, recapitalization, spin-off, split off, liquidation or other distribution of any or all of the assets of the Company to stockholders, other than normal cash dividends) or any change in any rights attendant to any class of authorized securities of the Company (an “Adjustment Event”), the Committee shall make proportionate adjustments with respect to the number and class of securities subject to the Award to reflect such Adjustment Event and to maintain the Award’s intrinsic and fair value; provided, that the Committee shall retain discretion with respect to how any such proportionate adjustments shall be made. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

10.    Forfeiture/Adjustment.  

               (a)  Misconduct.  If you engage in any activity contrary or harmful to the interests of the Hillshire Companies, including but not limited to: (i) competing, directly or indirectly (either as owner, employee or agent), with any of the businesses of the Hillshire Companies, (ii) violating any policies of the Hillshire Companies, (iii) soliciting any present or future employees or customers of the Hillshire Companies to terminate such employment or business relationship(s) with the Hillshire Companies, (iv) disclosing or misusing any confidential information regarding the Hillshire Companies, or (v) participating in any activity not approved by 

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FY 14-16 RSU Award

the Board of Directors of the Company which could reasonably be foreseen as contributing to or resulting in a Change of Control of the Company (such activities to be collectively referred to as “wrongful conduct”), then (A) the Award, to the extent it remains restricted, shall terminate automatically on the date on which you first engaged in such wrongful conduct, and (B) if the wrongful conduct occurred within six months following the Vesting Date, you shall pay to the Company in cash any financial gain you realized from the vesting of the RSU.  For purposes of this paragraph 10, financial gain shall equal the Fair Market Value of the Shares on the Vesting Date multiplied by the number of RSUs actually distributed pursuant to the Award, reduced by any taxes paid in countries other than the United States which taxes are not otherwise eligible for refund from the taxing authorities.  

                            (b)    Clawback.  The Award and the Shares delivered pursuant to this Agreement are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

(c)    Offset.  By accepting this RSU, you consent to and authorize the Hillshire Companies to deduct from any amounts payable by the Hillshire Companies to you, any amounts you owe to the Company under this paragraph 10. This right of set-off is in addition to any other remedies the Company may have against you for breach of this Agreement or the Non-Competition, Non-Solicitation and Confidentiality Agreement electronically accepted by you pursuant to paragraph 8. 

11.    Rights as a Stockholder.  You will have no rights as a stockholder with respect to any of the RSUs subject to the Award until and unless you receive shares of the Company following vesting of these RSUs.

12.    Conformity with the Plan.  The Award is intended to conform in all respects with, and is subject to, all applicable provisions of the Plan.

13.    Interpretations.  Any dispute, disagreement or question which arises under, or as a result of, or in any way relates to the interpretation, construction or application of the Plan or this Agreement will be determined and resolved by the Committee or its delegate. Such determination or resolution by the Committee or its delegate will be final, binding and conclusive for all purposes.

14.    Employment Rights.  Nothing in the Plan or this Agreement confers on you any right to continue in the employ of the Hillshire Companies or in any way affects the Hillshire Companies’ right to terminate your employment without prior notice any time for any reason.

15.    Consent to Transfer Personal Data.  By accepting this Award, you voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described in this paragraph.  You are not obliged to consent to such collection, use, processing and transfer of personal data.  The Hillshire Companies hold certain personal information about you, that may include your name, home address and telephone number, fax number, email address, sex, beneficiary information, age, language skills, date of birth, social security number or other employee identification number, job title, employment or severance contract, current wage and benefit information, tax-related information, plan or benefit enrollment forms and elections, option or benefit statements, any shares of stock or directorships in the Company, details of all options or any other entitlements to shares of stock awarded, canceled, purchased, vested, unvested or outstanding in your favor, for the purpose of managing and administering the Plan (“Data”).  The Hillshire Companies will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of your participation in the Plan, and the Hillshire Companies may further transfer Data to any third parties assisting the Hillshire Companies in the implementation, administration and management of the Plan.  These recipients may be located throughout the world, including the United States.  You authorize them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on your behalf to a broker or other 

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FY 14-16 RSU Award

third party with whom you may elect to deposit any shares of stock acquired pursuant to the Plan.  You may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting the Company.

16.    Miscellaneous.  

(a)    Modification.  The Award is documented by the minutes of the Committee and or as approved by the CEO for non-corporate officers, which records are the final determinant of the number of RSUs granted and the conditions of this grant.  The Committee may amend or modify the Award in any manner to the extent that the Committee would have had the authority under the Plan initially to grant such RSUs, provided that no such amendment or modification shall impair your rights under this Agreement without your consent.  Except as in accordance with the two immediately preceding sentences and paragraph 17, this Agreement may be amended, modified or supplemented only by an instrument in writing signed by both parties hereto.

(b)    Governing Law.  All matters regarding or affecting the relationship of the Company and its stockholders shall be governed by the General Corporation Law of the State of Maryland.  All other matters arising under this Agreement shall be governed by the internal laws of the State of Illinois, including matters of validity, construction and interpretation.  You and the Company agree that all claims in respect of any action or proceeding arising out of or relating to this Agreement shall be heard or determined in any state or federal court sitting in Chicago, Illinois, and you agree to submit to the jurisdiction of such courts, to bring all such actions or proceedings in such courts and to waive any defense of inconvenient forum to such actions or proceedings.  A final judgment in any action or proceeding so brought shall be conclusive and may be enforced in any manner provided by law.

(c)    Successors and Assigns.  Except as otherwise provided herein, this Agreement will bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not.

(d)    Severability.  Whenever feasible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

(e)    Transferability.  The Award is not transferable or assignable other than (i) by will or the laws of descent and distribution, (ii) pursuant to the beneficiary designation procedures approved by the Committee, or (iii) pursuant to an assignment or transfer without consideration to a Permitted Assignee under the Plan, if permitted by the Committee.  Your interests in the RSUs are not subject to your debts or other obligations and, except as may be required by the tax withholding provisions of applicable law, may not be voluntarily sold, transferred, alienated, assigned or encumbered, except as provided in this paragraph.

17.    Amendment.  Notwithstanding anything in the Plan or this Agreement to the contrary, the Award may be amended by the Company without the consent of you, including but not limited to modifications to any of the rights granted to you under the Award, at such time and in such manner as the Company may consider necessary or desirable to reflect changes in law.

18.    Section 409A.  This Agreement is intended to be exempt from  Section 409A of the Internal Revenue Code of 1986, as amended, pursuant the short-term deferrals exception described in Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent possible, and any vested RSUs shall be distributed no later than the later of (1) the 15th day of the third month of the calendar year following the calendar year in which your right to the vested RSUs ceased being subject to a substantial risk of forfeiture, and (2) the 15th day of the third month of the Company’s fiscal year following the Company’s fiscal year in which your right to the vested RSUs ceased being subject to a substantial risk of forfeiture.  Notwithstanding any other provision in this Agreement, if you are a “specified employee,” as defined in Section 409A of the Code, as of the date of your separation from service, then to the extent any amount payable to you (i) constitutes the payment of nonqualified 

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deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon your separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of your separation from service, such payment shall be delayed until the earlier to occur of (a) the first business day following the six-month anniversary of the separation from service and (b) the date of your death.

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FY 14-16 RSU AwardExhibit 10.7 - 9.28.2013

Exhibit 10.7

THE HILLSHIRE BRANDS COMPANY 
ANNUAL INCENTIVE PLAN FOR 
FISCAL YEAR 2014

The Hillshire Brands Company Annual Incentive Plan for Fiscal Year 2014 (the “FY14 AIP”) contains certain capitalized terms which have special meaning under the FY14 AIP.  Such terms are defined when they first appear in the FY14 AIP or in Attachment 1.  
Purpose 
The objective of the FY14 AIP is to advance the interests of The Hillshire Brands Company (“Hillshire Brands” or the “Company”) by: 
		
	a)
	Rewarding financial performance of Hillshire Brands that contributes to increased stockholder value;  

		
	b)
	Measuring the effectiveness of Hillshire Brands operating performance, sales and capital management and marketing investments; and 

		
	c)
	Continuing to provide significant rewards to eligible employees of Hillshire Brands for exceptional performance.  

Incentive Opportunity and Performance Objectives 
Attachment 2 shows the FY14 AIP Target and Maximum bonus payout opportunities at the various salary bands.  Notwithstanding the bonus opportunity levels set forth in Attachment 2, during the Incentive Plan Year, the Committee may, in its sole discretion, adjust the target payout levels applicable to certain Participants.
The following applies to the FY14 AIP generally:
		
	•
	The performance measures for the Incentive Plan Year which have been approved by the Committee (the “Performance Measures”) are:

		
	•
	Net Sales – 16.67% of target bonus opportunity

		
	•
	Operating Income –16.67% of target bonus opportunity

		
	•
	Average Working Capital – 16.66% of target bonus opportunity

		
	•
	Market Share Increase – 10% of target bonus opportunity

		
	•
	MAP Spend as a Percentage of Sales – 10% of target bonus opportunity

		
	•
	Percentage of Net Sales from Innovation – 10% of target bonus opportunity

		
	•
	Fuel Growth through Efficiency Savings – 10% of target bonus opportunity

		
	•
	Gross Productivity Savings – 10% of target bonus opportunity

		
	•
	The specific performance goals within the approved Performance Measures for the Incentive Plan Year which have been approved by the Committee (the “Performance Goals”) are 

The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

described below under the section heading “Performance Goals and Incentive Award Payout Levels.”
		
	•
	When expressed as a percentage of target bonus opportunity, the weighting of each Performance Measure is the same for each salary band, as may be applicable during the Incentive Plan Year.  A summary of Performance Measures and the corresponding incentive opportunities for Participants are shown in Attachment 3.  

		
	•
	The maximum payout opportunity is 150% of target bonus opportunity, and threshold payout opportunity is 25% of target bonus opportunity.

Performance Period 
All objectives are measured over the Incentive Plan Year, unless otherwise indicated by the Committee.
Performance Levels 
Maximum – A high level of performance exceeding targeted performance and requiring “stretch” achievement of the Performance Goal beyond the Annual Operating Plan (“AOP”) level. 
Midpoint – Midpoint level of performance equivalent to achievement at the AOP level. 
Threshold – Performance that just achieves an acceptable level of results warranting incentive recognition.  

2
    

The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

Performance Goals and Incentive Award Payout Levels

	
					
	Measure
	Weighting
	Threshold (25%)
	Target (100%)
	Maximum (150%)

	Net Sales
	16.67%
	(1)
	(1)
	(1)

	Operating Income
	16.67%
	(1)
	(1)
	(1)

	Average Working Capital
	16.66%
	(1)
	(1)
	(1)

	Market Share Increase
	10%
	(1)
	(1)
	(1)

	MAP Spend as a % of Sales
	10%
	(1)
	(1)
	(1)

	% of Net Sales from Innovation
	10%
	(1)
	(1)
	(1)

	Fuel Growth through Efficiency Savings
	10%
	(1)
	(1)
	(1)

	Gross Productivity Savings
	10%
	(1)
	(1)
	(1)

		
	(1)
	The specific performance goals for fiscal year 2014 were approved by the Committee and are contained in the minutes of the meeting at which the FY14 AIP was approved. 

Attachment 4 graphically displays the payout curve for all eight Performance Goals.  Straight-line interpolation is used for calculating results between performance levels.
Incentive Award Payments 
Incentive award payments are distributed as soon as practicable after the Incentive Plan Year results have been reported by the Company and the individual awards requiring the review and approval of the Committee have been approved by the Committee.  Except as otherwise provided in the FY14 AIP, a Participant must be an employee of Hillshire Brands on the incentive payment date in order to be eligible to receive any incentive award. 
Administrative Provisions 
The Committee and the Chief Executive Officer shall administer the FY14 AIP jointly and their determinations and decisions shall be final, conclusive and binding on all persons, and shall be given the maximum deference permitted by law.  The Chief Human Resources Officer, or anyone serving in the equivalent position, and Chief Financial Officer of the Company will be responsible for the administrative procedures governing the FY14 AIP, including ensuring the existence of approved performance measures and specific performance goals and the presentation to the Committee for its approval at the end of the Incentive Plan Year of the performance results under the FY14 AIP.  The following administrative procedures shall govern:
		
	a)
	The Committee will approve individual incentive awards for all corporate officers, those executives in salary band Senior Vice President I and above.  The Chief Executive Officer of the Company and his or her direct reports may approve all other incentive awards.

		
	b)
	Any awards earned under the FY14 AIP will be paid in cash.  

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The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

		
	c)
	An individual performance modifier from 0 to 150% will be applied to the incentive payment based on an employee’s performance rating. 

		
	d)
	In the Committee’s sole discretion, a newly hired employee who begins participation during the Incentive Plan Year may be eligible for a Pro-rated Incentive Award from the date of entry into the FY14 AIP.  The newly hired employee should have been actively employed in a bonus-eligible role by the first working day of the last fiscal quarter of the Incentive Plan Year in order to receive consideration for a Pro-rated Incentive Award.

		
	e)
	Employees promoted into an AIP-eligible position will become a Participant in the FY14 AIP for the current Incentive Plan Year effective with the date of the promotion and will be eligible to receive a Pro-rated Incentive Award.

		
	f)
	If an employee transfers into an AIP-eligible role with more than one fiscal calendar quarter remaining in the Incentive Plan Year and meets the eligibility requirements as described in the FY14 AIP, the employee will become a Participant in the FY14 AIP for the current Incentive Plan Year effective with the date of the transfer and will be eligible to receive a Pro-rated Incentive Award.  If an employee transfers into an AIP-eligible role with less than one fiscal calendar quarter remaining from another incentive plan (e.g., a sales incentive plan) in the Incentive Plan Year, the Participant is not eligible to participate in the FY14 AIP for the current Incentive Plan Year.

		
	g)
	If a Participant transfers out of an AIP-eligible role with less than one fiscal calendar quarter remaining in the Incentive Plan Year to a role eligible for another incentive plan (e.g., the Hillshire Brands sales incentive plan), the Participant will remain a part of the FY14 AIP for the entire Incentive Plan Year and the incentive award payable to such Participant will not be pro-rated.  If a Participant transfers out of an AIP-eligible role with more than one calendar quarter remaining in the Incentive Plan Year, the Participant will only be eligible to receive a Pro-rated Incentive Award based on their AIP-eligible earnings attributable to the time they were employed in the FY14 AIP-eligible role.

		
	h)
	In the case of death, Disability or retirement during the Incentive Plan Year, a Participant or the Participant’s estate is eligible for a Pro-rated Incentive Award. 

		
	i)
	A Participant who is involuntarily terminated during the Incentive Plan Year and receives severance pay under a Hillshire Brands severance plan is eligible for a Pro-rated Incentive Award.

		
	j)
	Unless otherwise approved by the Committee or the Chief Executive Officer of Hillshire Brands, as applicable, and subject in any case to subparagraph (k), any Participant who voluntarily terminates, or who is involuntarily terminated and does not receive severance pay, regardless of the Participant’s eligibility for retirement status, during the Incentive Plan Year will not be entitled to any incentive award attributable to the Incentive Plan Year. 

		
	k)
	In the event that the division, business unit or business segment of Hillshire Brands to which at least 80% of a Participant’s time is dedicated or from which the Participant is on leave of absence is sold, closed, spun off or otherwise divested and, as a result of such transaction, the Participant’s employment with Hillshire Brands is terminated, as of the closing date of such transaction the Participant will be entitled to a Pro-rated Incentive Award. 

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The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

		
	l)
	Notwithstanding anything contained in the FY14 AIP to the contrary, a Participant may be entitled to receive either an increased or reduced incentive award payment, or no incentive award payment whatsoever, attributable to the Incentive Plan Year upon the occurrence of any of the following events:  

1)  If any Participant engages in any activity contrary or harmful to the interests of the Company, including but not limited to: (i) competing, directly or indirectly (either as owner, employee or agent), with any of the businesses of the Company, (ii) violating any Company policy, (iii) soliciting any present or future employees or customers of the Company to terminate such employment or business relationships(s) with the Company, (iv) disclosing or misusing any confidential information regarding the Company, or (v) participating in any activity not approved by the Board which could reasonably be foreseen as contributing to or resulting in a Change of Control of the Company (as defined in the Hillshire Brands 2012 Long-Term Incentive Stock Plan), then the Participant will not be entitled to any incentive award attributable to the Incentive Plan Year. 
2)  This paragraph (l)(2) applies only to those Participants who are “officers” of the Company, as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934 during the Incentive Plan Year and who participate in any Hillshire Brands Executive Management Long-Term Incentive Program (each such Participant, an “Officer Participant”).  If an Officer Participant receives an incentive award payment that was predicated upon the Company achieving certain Performance Measures (the “Original Payout”) and, within two years after the date of such Original Payout, the Company restates its financial statements due to material noncompliance with the financial reporting requirements under the securities laws (such restated financial statements, the “Restated Financials”), then the amount of the incentive award payment for such Officer Participant shall be recalculated based on the Restated Financials (such recalculated amount, the “Restated Amount”).  If the Original Payout is greater than the Restated Amount, then the Company shall be entitled to recoup from such Officer Participant, and such Officer Participant shall pay to the Company, in cash, an amount equal to (i) the Original Payout, less (ii) the Restated Amount.  If the Restated Amount is greater than the Original Payout, then the Company shall pay to the Officer Participant an amount equal to (x) the Restated Amount, less (y) the Original Payout.  Any such payment or recoupment shall be due and payable within 90 days after the date on which the Company files the Restated Financials with the Securities and Exchange Commission.  If an Officer Participant elected to defer part or all of their Original Payout pursuant to the Hillshire Brands Executive Deferred Compensation Plan, then the Officer Participant’s account under such Deferred Compensation Plan automatically shall be credited or charged so that the amount deferred in connection with such incentive award payment equals the Restated Amount.  No interest will be due to or paid by the Company or the Officer Participant to the other with respect to any true up payment.  Notwithstanding the foregoing, the Committee may determine, in its discretion and based on the circumstances leading to the filing of the Restated Financials, that recoupment or payment under this paragraph (l)(2) of the Restated Amount is not practical and may elect to forego the application of this paragraph (l)(2).
		
	m)
	Performance results under the FY14 AIP will be measured in accordance with the Definitions in Attachment 1. 

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The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

		
	n)
	Business and individual performance results and Eligible Earnings will be used to determine the incentive award payment. 

		
	o)
	Except as noted otherwise in the FY14 AIP, any Participant who is entitled to receive an award to the extent that Performance Goals are met must be actively employed on the date that incentive awards are distributed in order to receive payment. 

		
	p)
	Hillshire Brands reserves the right to offset against any incentive award payment owed by Hillshire Brands to a terminating or terminated Participant any amounts to which Hillshire Brands has a “claim of right.” 

		
	q)
	The terms of the FY14 AIP shall be construed and paid in such manner as to satisfy the short-term deferral exception to the application of Section 409A of the U.S. Internal Revenue Code of 1986, as amended from time to time (the “Code”), as set forth in Subsections (a)(4) and (b)(4) of Treasury Regulations Section 1.409A-1.  In the event that any incentive award does not qualify for treatment as an exempt short-term deferral, it is intended that such amount will be paid in a manner that satisfies the requirements of Section 409A of the Code.  The FY14 AIP shall be interpreted and construed accordingly

		
	r)
	Nothing herein shall be construed as an agreement or commitment to employ any Participant or to employ a Participant for any fixed period of time or constitute a commitment by Hillshire Brands that any Participant will continue to receive an incentive award or will continue as a Participant in the FY14 AIP. 

		
	s)
	The Committee reserves the right to amend, modify, interpret or terminate the FY14 AIP or awards to be paid under the FY14 AIP, in whole or in part, at any time for any reason.  Specifically, an individual’s target bonus opportunity may be modified during the Incentive Plan Year in the Committee’s discretion and the performance criteria may be adjusted by the Committee for extraordinary and similar items that prevent undue and/or unintended gain or loss. 

		
	t)
	The Committee may delegate certain administrative responsibilities to the Chief Executive Officer except for the following: 

1)  Any actions affecting the Chief Executive Officer, and other elected officers of Hillshire Brands, as applicable,
2)  Approval of corporate Performance Goals and certification of performance results relative to such standards following the end of the Incentive Plan Year, and
3)  Approval of any substantive changes or amendments to the FY14 AIP.
		
	u)
	A Participant’s rights and interests under the FY14 AIP, including any amounts payable under the FY14 AIP, may not be assigned, pledged, or transferred, except in the event of the Participant's death when payment is made to the Participant’s estate.

		
	v)
	The Company shall have the right to withhold from any incentive award, any federal, state or local income and/or payroll taxes required by law to be withheld and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy 

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The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

obligations for the payment of withholding taxes and other tax obligations relating to an incentive award.
		
	w)
	Nothing contained in the FY14 AIP, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and any Participant, beneficiary or legal representative or any other person.  To the extent that a person acquires a right to receive a payment under the FY14 AIP, such right shall be no greater than the right of an unsecured general creditor of the Company.  All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the FY14 AIP.  The FY14 AIP is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA).

		
	x)
	The FY14 AIP shall be construed, administered and enforced in accordance with the laws of Illinois without regard to conflicts of law.

		
	y)
	In the event that any provision of the FY14 AIP shall be considered illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the FY14 AIP, but shall be fully severable, and the FY14 AIP shall be construed and enforced as if such illegal or invalid provision had never been contained therein.

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The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

Special Provisions Related to the Hillshire Brands Performance-Based Incentive Plan
Notwithstanding any provision of the FY14 AIP to the contrary, with respect to each Participant who is covered by the Hillshire Brands Performance-Based Incentive Plan (the “PBIP”), formerly the Sara Lee Corporation Performance-Based Incentive Plan, any incentive award under the FY14 AIP is:
		
	•
	Intended to qualify as performance-based compensation deductible by the Company under the qualified performance-based compensation exception to Section 162(m) of the Code;

		
	•
	Subject to all of the terms and conditions of the PBIP, which for such Participants is incorporated into the FY14 AIP by this reference, including (a) the dollar limit on awards of incentive compensation pursuant to the PBIP (the “PBIP Maximum”), which may reduce the incentive award that otherwise would have been payable to a Participant under the FY14 AIP if he or she was not covered by the PBIP, and (b) the Committee’s discretionary authority to reduce the amount of any incentive award below the PBIP Maximum; and

		
	•
	The exclusive award of incentive compensation pursuant to the inter-related PBIP and FY14 AIP for the Incentive Plan Year.

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The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

Attachment 1 
DEFINITIONS
		
	a.
	Average Working Capital is a 13-point average of Core Working Capital as of the period-end for fiscal year 2013 Period 12 and the period-end balances for each of the twelve periods of fiscal year 2014. 

		
	b.
	Board means the Hillshire Brands Board of Directors, as constituted from time to time. 

		
	c.
	Brand Dollar Sales means sales dollars as tracked by IRI for Hillshire Brand’s Seven Key Brands sold through the tracked multioutlet channels which include grocery, drug, Target, K Mart, Wal-Mart, Sam’s Club, BJ’s Club stores, Dollar Stores and military commissaries.

		
	d.
	Category Dollar Sales means sales dollars as tracked by IRI for Hillshire Brand’s Categories sold through the tracked multioutlet channels.  The Categories are hot dogs, corn dogs, breakfast sausage, frozen protein breakfast, mainstream lunchmeat, smoked sausage and super premium smoked sausage.

		
	e.
	Committee is the Compensation and Employee Benefits Committee or other committee appointed by the Board. 

		
	f.
	Core Working Capital means the Company’s net accounts receivable plus net inventories less accounts payable, excluding intercompany receivable and intercompany accounts.

		
	g.
	Direct Lean Savings is defined as decreases in procurement driven and business unit driven costs.

		
	h.
	Disability means a Participant meets the conditions set forth in the definition of disability under the Hillshire Brands sponsored long term disability plan as determined by the Committee.

		
	i.
	Eligible Earnings mean regular salary or wages paid to the Participant from June 30, 2013 through June 28, 2014.  It does not include allowances, reimbursements, commissions, other incentives, severance, lump sums, awards, deferred compensation and compensation attributable to the exercise of stock options or other forms of long-term incentive compensation. 

		
	j.
	Fuel Growth through Efficiency Savings means obtaining operating income benefits by improving productivity, pricing and trade promotion effectiveness, and reducing general and administrative costs.

		
	k.
	Gross Productivity Savings means obtaining operating income benefits through Plant Indirect Lean Savings, Direct Lean Savings, Logistics Lean Savings and Operating Leverage.

		
	l.
	Incentive Plan Year is the Company’s fiscal year 2014 starting on June 30, 2013 and ending on June 28, 2014. 

		
	m.
	Innovation is defined as a new customer or consumer benefit that has a commercial impact.

9
    

The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

		
	n.
	IRI stands for Information Resources, Inc. which is a market research company which provides clients with consumer, shopper, and retail market intelligence and analysis focused on the consumer packaged goods industry.

		
	o.
	Logistics Lean Savings means decreasing distribution costs.

		
	p.
	MAP Spend as a Percentage of Sales means the marketing, advertising and promotional expenses for Hillshire Brands divided by Net Sales.

		
	q.
	Market Share Increase means Brand Dollar Sales for one of the Seven Key Brands over the Category Dollar Sales for that brand for fiscal year 2014 less Brand Dollar Sales for that brand over the Category Dollar Sales for that brand for fiscal year 2013.  This measure is applicable for Hillshire Brands’ Seven Key Brands.

		
	r.
	Net Sales means that portion of the Company’s Adjusted Net Sales, as disclosed in the Company’s earnings press releases and filings with the SEC, as may be further adjusted by the Committee to (i) include or exclude the results of businesses acquired and/or divested during the measurement period, to the extent such results were included or excluded in the Company’s annual operating plan, (ii) adjust for currency exchange rates used in the Company’s annual operating plan, and/or (iii) prevent undue and/or unintended gain or loss. 

		
	s.
	Operating Leverage is defined as the spreading of fixed costs against pounds produced.

		
	t.
	Operating Income means the Company's net sales minus: the cost of sales; selling, general and administrative expenses; net charges for exit activities, asset and business dispositions; and impairment charges. 

		
	u.
	Participant means individuals who are regularly employed by Hillshire Brands in salary bands Manager through Chief Executive Officer.  Except as directed in writing by the Committee, the following individuals are not eligible to participate in the FY14 AIP in any manner: (i) employees of Aidells Sausage Company, Inc., Golden Island Jerky Company, Inc., or any other subsidiary of Hillshire Brands, and (ii) employees of Hillshire Brands in salary bands Manager through Senior Manager who are eligible for a sales incentive plan.

		
	v.
	Percent of Sales from Innovation means the dollar value of Retail sales of products which resulted from Innovation divided by Net Sales.

		
	w.
	Plant Indirect Lean Savings means obtaining positive material and operating variances at the Company’s manufacturing locations.

		
	x.
	Pro-rated Incentive Award means an amount equal to the incentive award otherwise payable to the Participant for an Incentive Plan Year in which the Participant was actively employed by the Company for only a portion thereof, multiplied by a fraction, the numerator of which is the number of days the Participant worked during the Incentive Plan Year (i.e., was coded as active on the payroll system) and the denominator of which is the total number of days in the Incentive Plan Year.  Any such pro-rated incentive award will be distributed at the same time as incentive awards are distributed to actively employed Participants.

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The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

		
	y.
	Retail is defined as the segment of the Company’s business that sells a variety of packaged meat and frozen bakery products primarily to supermarkets, warehouse clubs and national chain customers in North America.

		
	z.
	Seven Key Brands means Ball Park Hot Dogs, State Fair Corn Dogs, Jimmy Dean Breakfast Sausage, Jimmy Dean Frozen Breakfast, Hillshire Farm Lunchmeat, Hillshire Farm Smoked Sausage and Aidells Smoked Sausage.

		
	aa.
	Significant Items mean those items that are reported by the Company in its annual report in the table entitled “Impact of Significant Items on Income from Continuing Operations, Net Income and Diluted Earnings Per Share” and that meet the Controller’s criteria for materiality and that are not indicative of our core operating results.  Significant items vary each year and may include items such as charges for exit activities, impairment charges, tax costs and benefits resulting from the disposition of a business, gains or losses on the sale of discontinued operations and changes in tax valuation allowances.

11
    

The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

Attachment 2 
 
TARGETS AND MAXIMUMS 
	
					
	Salary Bands
	 
	Target %
	 
	Maximum %

	CEO
	 
	100.00%
	 
	150.00%

	SVPII
	 
	80.00%
	 
	120.00%

	SVPI
	 
	70.00%
	 
	105.00%

	VPII
	 
	55.00%
	 
	82.50%

	VPI
	 
	55.00%
	 
	82.50%

	DIR
	 
	35.00%
	 
	52.50%

	SMGR
	 
	15.00%
	 
	22.50%

	MGR
	 
	10.00%
	 
	15.00%

 

12
    

The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

Attachment 3 
 
PERFORMANCE MEASURES AND WEIGHTINGS 
	
										
	Performance Measures as a % of Target Annual Incentive Opportunity

	Salary Band
	Net Sales
	Operating Income
	Working Capital
	Market Share Increase
	MAP Spend as a % of Sales
	% of Sales from Innovation
	Fuel Growth via Efficiencies
	Gross Productivity Savings
	Target Annual Incentive Opportunity

	 
	16.67%
	16.67%
	16.66%
	10.00%
	10.00%
	10.00%
	10.00%
	10.00%
	100.00%

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	Chief Executive Officer
	16.67%
	16.67%
	16.66%
	10.00%
	10.00%
	10.00%
	10.00%
	10.00%
	100.00%

	Senior Vice President II
	13.34%
	13.33%
	13.33%
	8.00%
	8.00%
	8.00%
	8.00%
	8.00%
	80.00%

	Senior Vice President I
	11.67%
	11.67%
	11.66%
	7.00%
	7.00%
	7.00%
	7.00%
	7.00%
	70.00%

	Vice President II
	9.17%
	9.17%
	9.16%
	5.50%
	5.50%
	5.50%
	5.50%
	5.50%
	55.00%

	Vice President I
	9.17%
	9.17%
	9.16%
	5.50%
	5.50%
	5.50%
	5.50%
	5.50%
	55.00%

	Director
	5.84%
	5.83%
	5.83%
	3.50%
	3.50%
	3.50%
	3.50%
	3.50%
	35.00%

	Senior Manager
	2.50%
	2.50%
	2.50%
	1.50%
	1.50%
	1.50%
	1.50%
	1.50%
	15.00%

	Manager
	1.67%
	1.67%
	1.66%
	1.00%
	1.00%
	1.00%
	1.00%
	1.00%
	10.00%

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The Hillshire Brands Company
Annual Incentive Plan for Fiscal Year 2014 

Attachment 4 

PAYOUT CURVE FOR ALL PERFORMANCE MEASURES

14

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