Document:

EX-10.7

Exhibit 10.7

GENERAL MILLS, INC.

2006 Compensation Plan for Non-Employee Directors

1. PURPOSE

     The General Mills, Inc. 2006 Compensation Plan for Non-Employee Directors (the “Plan”) is
hereby amended and restated, effective September 25, 2006, by General Mills, Inc. The amended and
restated Plan incorporates previously adopted amendments since it was first adopted and adds
provisions deemed necessary or advisable to comply with Code section 409A and the regulations
thereunder. The purpose of the Plan is to provide a compensation program which will attract and
retain qualified individuals not employed by General Mills, Inc. and its subsidiaries (the
“Company”) to serve on the Board of Directors of the Company (the “Board”) and to further align the
interests of non-employee directors with those of the stockholders by providing that a portion of
compensation will be linked directly to increases in stockholder value.

2. EFFECTIVE DATE, DURATION OF PLAN

     This Plan shall become effective as of September 25, 2006 subject to the approval of the Plan
by the stockholders. The Plan will terminate on September 30, 2011 or such earlier date as
determined by the Board or the Compensation Committee of the Board (the “Committee”); provided that
no such termination shall affect rights earned or accrued under the Plan prior to the date of
termination.

3. DEFINITIONS

     Wherever used in this Plan, the following terms have the meanings set forth below:

     “Board” means the Board of Directors of the Company.

     “Change of Control” has the meaning set forth in Section 11.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Committee” has the meaning set forth in Section 2.

     “Common Stock” means Company common stock ($.10 par value).

     “Company” means General Mills, Inc. and its subsidiaries.

 

 

     “Deferred Compensation Account” has the meaning set forth in Section 6(d).

     “Election Form” means a written form provided by the Committee pursuant to which a
Participant may elect the form and timing of distributions with respect to his or her retainer,
Stock Units and dividend equivalents under the Plan.

     “Fair Market Value” means the average of the intraday high and low price of the
national market composite price of the Common Stock on the applicable date. Notwithstanding this
definition, effective January 1, 2007, “Fair Market Value” means the closing price on the
New York Stock Exchange of the Common Stock on the applicable date.

     “Key Employee” means a Participant treated as a “specified employee” as of his
Separation from Service under Code section 409A(a)(2)(B)(i), i.e., a key employee (as defined in
Code section 416(i) without regard to paragraph (5) thereof) of the Company or its affiliates if
the Company’s or its affiliate’s stock is publicly traded on an established securities market or
otherwise. Key Employees shall be determined in accordance with Code section 409A using a December
31 identification date. A listing of Key Employees as of an identification date shall be effective
for the 12-month period beginning on the April 1 following the identification date.

     “Option” has the meaning set forth in Section 7(a).

     “Participant” has the meaning set forth in Section 4.

     “Plan” means the General Mills, Inc. 2006 Compensation Plan for Non-Employee Directors
as set forth herein and as amended.

     “Plan Year” has the meaning set forth in Section 6(a).

     “Separation from Service” or “Separate from Service” means a “separation from
service” within the meaning of Code section 409A.

     “Stock Unit Account” has the meaning set forth in Section 8(a).

     “Stock Units” has the meaning set forth in Section 8(a).

4. PARTICIPATION

     Each member of the Board who is not an employee of the Company at the date compensation is
earned or accrued shall be eligible to participate in the Plan unless prohibited from participating
by the terms of their employment (a “Participant”).

 

 

5. COMMON STOCK SUBJECT TO THE PLAN

     (a) General. The Common Stock to be issued under this Plan is to be made available
from the authorized but unissued Common Stock, shares of Common Stock held in the treasury, or
Common Stock purchased on the open market or otherwise. Subject to the provisions of the next
succeeding paragraphs, the maximum aggregate number of shares authorized to be issued under the
Plan shall be 700,000 and the maximum number of shares authorized to be issued under the Plan in a
single Plan Year shall be 160,000.

     Upon forfeiture or termination of Stock Units prior to vesting, the shares of Common Stock
subject thereto shall again be available for awards under the Plan.

     (b) Adjustments for Corporate Transactions. If a corporate transaction has occurred
affecting the Common Stock such that an adjustment to outstanding awards is required to preserve
(or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then
in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the
number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares
subject to outstanding awards; (iii) the number of shares credited to a Stock Unit Account; and
(iv) the exercise price of outstanding Options provided that the number of shares of Common Stock
subject to any Option denominated in Common Stock shall always be a whole number. For this purpose
a corporate transaction includes, but is not limited to, any dividend or other distribution
(whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other
securities or other property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or
other securities of the Company, issuance of warrants or other rights to purchase Common Stock or
other securities of the Company, or other similar corporate transaction. Notwithstanding anything
in this Section to the contrary, an adjustment to an Option under this Section 5(b) shall be made
in a manner that will not result in the grant of a new Option under Code Section 409A.

6. RETAINER

     (a) General. Each non-employee director shall be entitled to receive a retainer with
respect to each one-year board term, beginning the day of each annual stockholders’ meeting and
ending the day before the succeeding annual stockholders’ meeting (the “Plan Year”) in an amount
determined from time to time by the Board. Retainers shall be earned and paid at the end of each of
the Company’s fiscal quarters.

     (b) Normal Payment Terms. The normal payment terms for retainers are cash in a lump
sum. In the absence of an affirmative election to the contrary, the

 

 

retainer (or the portion not subject to such elections) shall be paid 10 business days
following the last day of each quarterly period described above in (a).

     (c) Deferral Elections. Each Participant may elect an alternative form (lump sum vs.
installments) in which a retainer may be delivered and the timing for such delivery, pursuant to
the terms of Section 9. Participants shall make such election by filing an irrevocable Election
Form with the Committee before the calendar year in which a Plan Year begins. The election shall
apply to amounts earned in a quarterly period described in (a) above that begins during the Plan
Year. Notwithstanding the foregoing, in the first year in which a non-employee director becomes
eligible to participate in the Plan, an election may be made with respect to services to be
performed subsequent to the election, to the extent permitted under Code section 409A. Such an
election must be made on an Election Form within 30 days after the date the non-employee director
becomes eligible to participate in the Plan.

     (d) Deferred Cash Alternative. For each Participant who affirmatively elects to defer
receipt of his or her retainers in the form of deferred cash, the Company shall establish a
separate account (a “Deferred Compensation Account”) and credit such deferred cash compensation
into that Account as of the date the amounts would otherwise be paid. A separate Deferred
Compensation Account shall be established for each Plan Year a Participant makes such a deferral
election. Earnings, gains and losses shall be credited to each such Deferred Compensation Account
based on the rate earned by the fund or funds selected by the Participant from among funds or
portfolios established under the General Mills, Inc. 401(k) Savings Plan or any other qualified
benefit plan maintained by the Company which the Minor Amendment Committee, or its delegate, in its
discretion, may from time to time establish. Distributions from a Deferred Compensation Account
shall be made in accordance with Section 9.

     The Company has established a Supplemental Benefits Trust with Wells Fargo Bank Minnesota,
N.A. as trustee to hold assets of the Company under certain circumstances as a reserve for the
discharge of the Company’s obligations as to Deferred Compensation Accounts under the Plan and
certain other deferred compensation plans of the Company. In the event of a Change of Control, the
Company shall be obligated to immediately contribute such amounts to the trust as may be necessary
to fully fund all Deferred Compensation Accounts payable under the Plan. Any Participant in the
Plan shall have the right to demand and secure specific performance of this provision. All assets
held in the trust remain subject only to the claims of the Company’s general creditors whose claims
against the Company are not satisfied because of the Company’s bankruptcy or insolvency (as those
terms are defined in the trust agreement). No Participant has any preferred claim on, or beneficial
ownership interest in, any assets of the trust before the assets are paid to the Participant and
all rights

 

 

created under the trust, as under the Plan, are unsecured contractual claims of the
Participant against the Company.

     (e) Common Stock Alternative. Each Participant may affirmatively elect to receive all
or a specified percentage of his or her retainers for a Plan Year in shares of Common Stock, which,
if elected, will be issued 10 business days following the last day of each quarterly period during
the Plan Year described above in (a). Only whole numbers of shares will be issued, with any
fractional share amounts paid in cash. For purposes of computing the number of shares earned each
quarter during the Plan Year, the value of each share shall be equal to the Fair Market Value on
the third Business Day preceding the last day of each quarter described above in (a) during the
Plan Year. For the purposes of this Plan, “Business Day” shall mean a day on which the New York
Stock Exchange is open for trading.

     (f) Death. Notwithstanding any other provision of the Plan, if a Participant dies
during a Plan Year, the balance of the amount due for the full quarter in which death occurs shall
be payable in full to the Participant’s estate, in cash, 60 days following the date of death.

7. NON-QUALIFIED STOCK OPTIONS

     (a) Grant of Options. Each non-employee director on the effective date of the Plan
(or, if first elected after the effective date of the Plan, on the date the non-employee director
first attends a Board meeting) shall be awarded an option (an “Option”) to purchase shares of
Common Stock, in an amount determined from time to time by the Board, or its delegate. As of the
close of business on each successive annual stockholders’ meeting after the date of the original
award, each Participant who is re-elected to the Board shall be granted an additional Option to
purchase shares of Common Stock. All Options granted under the Plan shall be non-statutory options
not entitled to special tax treatment under Code section 422.

     (b) Option Exercise Price. The per share price to be paid by the Participant at the
time an Option is exercised shall be 100% of the Fair Market Value on the date of grant, or on the
last date preceding the date of grant on which the Common Stock was traded.

     (c) Term of Option. Each Option shall expire ten (10) years from the date of grant.

     (d) Exercise and Vesting of Option. Each Option will vest on the date of the annual
stockholders’ meeting next following the date the Option is granted. Upon vesting, a Participant
shall be given the full ten (10) year term to exercise the Option without regard to whether he or
she continues to serve on the Board. If, for any reason, a Participant ceases to serve on the Board
prior to the date an

 

 

Option vests, such Option shall be forfeited and all further rights of the Participant to or
with respect to such Option shall terminate. Notwithstanding the foregoing, if a Participant should
die during his or her term of service on the Board, any vested Option may be exercised by the
person designated in such Participant’s last will and testament or, in the absence of such
designation, by the Participant’s estate, and any unvested Options shall fully vest and become
exercisable upon death for the remainder of the Option’s full term.

     (e) Method of Exercise. A Participant exercising an Option shall give notice to the
Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M.
CST/CDT on the day of exercise, which must be a business day, at the executive offices of the
Company. The exercise price shall be paid to the Company at the time of such exercise, subject to
any applicable rule or regulation adopted by the Committee:

          (i) in cash (including check, draft, money order or wire transfer made payable to the order
of the Company);

          (ii) through the tender of shares of Common Stock owned by the Participant (by either actual
delivery or attestation); or

          (iii) by a combination of (i) and (ii) above.

To determine the amount of the payment, Common Stock delivered pursuant to (ii) or (iii) shall have
a value equal to the Fair Market Value of the Common Stock on the date of exercise.

     (f) Non-transferability. Except as provided by rule adopted by the Committee, an
Option shall be non-assignable and non-transferable by a Participant other than by will or the laws
of descent and distribution. A Participant shall forfeit any Option assigned or transferred,
voluntarily or involuntarily, other than as permitted under this subsection.

8. STOCK UNITS

     (a) Awards. On the effective date of the Plan (or, if a Participant is first elected
after the effective date of the Plan, on the date the Participant first attends a Board meeting)
and at the close of business on each successive annual stockholders’ meeting, each Participant
shall be awarded the right to receive shares of Common Stock (“Stock Units”), subject to vesting as
provided in Section 8(b). Only a Participant who is re-elected to the Board shall be entitled to a
grant under this Section 8(a) of Stock Units awarded at the close of business on an annual meeting
date after the date of the original grant to Participants. A separate Stock Unit Account will be
established for the Participant each time an award of Stock Units is made.

 

 

     The maximum aggregate number of shares authorized to be issued under the Plan upon vesting of
Stock Unit awards shall be 175,000. Participants receiving Stock Units will have no rights as
stockholders of the Company with respect to allocations made to their Stock Unit Account(s), except
the right to receive dividend equivalent allocations under Section 8(d).

     Stock Units may not be sold, transferred, assigned, pledged or otherwise encumbered or
disposed of until such time as share certificates for Common Stock are issued to the Participants.

     (b) Vesting of Stock Units. A Participant’s interest in the Stock Units shall vest on
the date of the annual stockholders’ meeting next following the date of the award of the Stock
Units. If, for any reason, a Participant ceases to serve on the Board prior to the date the
Participant’s interest in a grant of Stock Units vests, such Stock Units shall be forfeited and all
further rights of the Participant to or with respect to such Stock Units shall terminate.
Notwithstanding the foregoing, a Participant who dies while serving on the Board prior to the
vesting of Stock Units shall fully vest in such Stock Units, effective as of the date of death.

     (c) Election Concerning Receipt of Common Stock. Each Participant receiving an award
of Stock Units under Section 8(a) may elect the time and form (lump sum vs. installments) of
distribution of Common Stock attributable to such Stock Units, pursuant to the terms of Section 9.
If no affirmative election is made, all Stock Units shall be paid in shares of Common Stock 10 days
following vesting.

     (d) Dividend Equivalents. The Participant may also elect to have dividend equivalents
payable on Stock Units paid currently in cash or reinvested in Stock Units. If the amounts are
reinvested, on each dividend payment date for the Common Stock, the Company will credit each Stock
Unit Account with an amount equal to the dividends that would have been paid had the Stock Units
been actual shares of Common Stock, which shall be used to “purchase” additional Stock Units at a
price equal to the Fair Market Value on the dividend date. Such additional Stock Units shall be
distributed at the same time and in the same form as the rest of the Stock Unit Account balance. If
the Participant fails to make an election, the dividend equivalent amounts shall be paid in cash
currently.

     (e) Timing of Elections. In order to make an election under Sections 8(c) and/or 8(d)
with respect to Stock Units awarded for a Plan Year, a Participant shall file an irrevocable
Election Form with the Committee before the calendar year in which the Plan Year begins.
Notwithstanding the foregoing, in the first year in which a non-employee director becomes eligible
to participate in the Plan, a deferral election may be made with respect to services to be
performed subsequent to the election, to the extent permitted under Code section 409A.

 

 

Such an election must be made on an Election Form within 30 days after the date the
non-employee director becomes eligible to participate in the Plan.

9. DISTRIBUTION PROVISIONS FOR DEFERRED CASH AND STOCK UNITS

     The following distribution provisions shall apply to Deferred Compensation Accounts and Stock
Unit Accounts:

     (a) Timing. Distributions from Deferred Compensation Accounts shall normally commence
at Separation from Service, however, a Participant may affirmatively elect a specified date for
commencement, provided said date is not later than age 75. The same rule applies to Stock Units
which have been deferred beyond the vesting period described in Section 8(b). Elections as to the
timing of benefit commencement shall be made in accordance with Sections 6 and 8, as appropriate.

     Notwithstanding the above or any other provision of this Plan, distributions may not be made
to a Key Employee upon a Separation from Service before the date which is six months after the date
of the Key Employee’s Separation from Service (or, if earlier, the date of death of the Key
Employee). Any payments that would otherwise be made during this period of delay shall be
accumulated and paid on the first day of the seventh month following the Participant’s Separation
from Service (or, if earlier, the first day of the month after the Participant’s death).

     (b) Form of Distribution. Distributions shall normally be made in a lump sum.
However, a Participant may affirmatively elect to receive substantially equal annual installments
over a period of up to 10 years. Such elections shall be made in accordance with Sections 6 and 8,
as appropriate.

     (c) Manner of Distribution. Amounts credited to Deferred Compensation Accounts shall
be paid in cash. Amounts credited to Stock Unit Accounts shall be paid in Common Stock based on the
number of Stock Units credited to the Stock Unit Account and paid in cash equal to any dividend
equivalent amounts which had not been used to “purchase” additional Stock Units.

     (d) Distribution Upon Death. Notwithstanding any elections by a Participant or
provisions of the Plan to the contrary, if a Participant dies before full distribution of a
Deferred Compensation Account or Stock Unit Account, such accounts shall be distributed to the
Participant’s estate in a lump sum 60 days following the date of death.

     (e) Permitted Payment Delay To Avoid Violations of Law. Notwithstanding any provision
of this Plan to the contrary, any distribution to a Participant under the Plan shall be delayed
upon the Committee’s reasonable anticipation that the making of the payment would violate Federal
securities laws or other applicable

 

 

law; provided, that any payment delayed pursuant to this Section 9(e) shall ultimately be paid
in accordance with Code section 409A.

     (f) Payment Acceleration. If amounts deferred under the Plan must be included in a
Participant’s income under Code section 409A prior to the scheduled distribution of such amounts,
distribution of such amount shall be made immediately to the Participant.

10. CHANGE OF CONTROL

     Notwithstanding any elections by a Participant or provisions of the Plan to the contrary, upon
the occurrence of a Change of Control, all Options and Stock Units shall fully and immediately
vest, and shall be exercisable or paid pursuant to the terms of the Plan that are otherwise
applicable. If the Change of Control is also a “change in control” as defined under Code section
409A(a)(2)(A)(v) and official guidance thereunder, all Stock Unit Accounts shall be distributed in
a single payment 30 days following such Change of Control.

11. ADMINISTRATION

     The Plan shall be administered by the Committee. The Committee shall have full power to
interpret the Plan, formulate additional details and regulations for carrying out the Plan and
amend, modify or terminate the Plan as from time to time it deems proper and in the best interests
of the Company, provided that after a Change of Control no amendment, modification of or action to
terminate the Plan may be made which would affect compensation earned or accrued prior to such
amendment, modification or termination without the written consent of a majority of Participants
determined as of the day before a Change of Control. Any decision or interpretation adopted by the
Committee shall be final and conclusive. A “Change of Control” means:

     (a) The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act)
of voting securities of the Company where such acquisition causes such Person to own 20% or more of
the combined voting power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (1), the following acquisitions shall not be deemed
to result in a Change of Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any
acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and
(iii) of subsection (3) below; and provided, further, that if any Person’s beneficial ownership of
the

 

 

Outstanding Company Voting Securities reaches or exceeds 20% as a result of a transaction
described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership
of additional voting securities of the Company, such subsequent acquisition shall be treated as an
acquisition that causes such Person to own 20% or more of the Outstanding Company Voting
Securities; or

     (b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

     (c) Consummation of a reorganization, merger, statutory share exchange or consolidation or
similar transaction involving the Company or any of its subsidiaries, sale or other disposition of
all or substantially all of the assets of the Company, or the acquisition of assets or stock of
another entity by the Company or any of its subsidiaries, (each a “Business Combination”);
excluding, however, such a Business Combination pursuant to which (i) all or substantially all of
the individuals and entities who were the beneficial owners of the Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation that as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership, immediately prior to such
Business combination of the Outstanding Company Voting Securities, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such Business Combination
or the combined voting power of the then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business Combination; or

 

 

     (d) Approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.

12. GOVERNING LAW

     The validity, construction and effect of the Plan and any such actions taken under or relating
to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable
Federal law.

13. NOTICES

     Unless otherwise notified, all notices under this Plan shall be sent in writing to the
Company, attention Corporate Compensation, P.O. Box 1113, Minneapolis, Minnesota 55440. All
correspondence to the Participants shall be sent to the address which is their recorded address as
listed on the election forms.

14. PLAN TERMINATION

     Upon termination of the Plan, distribution of Deferred Compensation Accounts and Stock Unit
Accounts shall be made as described in Section 9, unless the Committee determines in its sole
discretion that all such amounts shall be distributed upon termination in accordance with the
requirements under Code section 409A.Upon termination of the Plan, no further deferrals of
retainers, Stock Units or dividend equivalent amounts shall be permitted; however, earnings, gains
and losses shall continue to be credited to the Deferred Compensation Account balances in
accordance with Section 6 until the Deferred Compensation Account balances are fully distributed.

15. COMPLIANCE WITH CODE SECTION 409A

     It is intended that this Plan shall comply with the provisions of Code section 409A and the
Treasury regulations relating thereto so as not to subject the Participants to the payment of
additional taxes and interest under Code section 409A. In furtherance of this intent, this Plan
shall be interpreted, operated and administered in a manner consistent with these intentions.EX-10.8

Exhibit 10.8

GENERAL MILLS, INC.

2007 STOCK COMPENSATION PLAN

	1.	 	PURPOSE OF THE PLAN
	 
	 	 	The purpose of the General Mills, Inc. 2007 Stock Compensation Plan (the “Plan”) is to attract
and retain able individuals by rewarding employees of General Mills, Inc., its subsidiaries
and affiliates (defined as entities in which General Mills, Inc. has a significant equity or
other interest) (collectively, the “Company”) and to align the interests of employees with
those of the stockholders of the Company. The Company shall include any successors to General
Mills, Inc. or any future parent corporations or similar entities.
	 
	2.	 	EFFECTIVE DATE AND DURATION OF PLAN
	 
	 	 	This Plan shall become effective as of September 24, 2007, subject to the approval of the
stockholders of the Company at the Annual Meeting on September 24, 2007. Awards may be made
under the Plan until December 31, 2009.
	 
	3.	 	ELIGIBLE PERSONS
	 
	 	 	Only persons who are employees of the Company shall be eligible to receive grants of Stock
Options, Restricted Stock, Restricted Stock Units, and/or Stock Appreciation Rights (each
defined below) and become “Participants” under the Plan. The Compensation Committee of the
Company’s Board of Directors (the “Committee”) shall exercise the discretionary authority to
determine from time to time the employees of the Company who are eligible to participate in
this Plan.
	 
	4.	 	AWARD TYPES

	 	(a)	 	Stock Option Awards. Under this Plan, the Committee may award Participants options
(“Stock Options”) to purchase a fixed number of shares of common stock ($.10 par value)
of the Company (“Common Stock”). The grant of a Stock Option entitles the Participant to
purchase shares of Common Stock at an “Exercise Price” established by the Committee which
shall not be less than 100% of the Fair Market Value of the Common Stock on the date of
grant, and may exceed the Fair Market Value on the grant date, at the Committee’s
discretion. “Fair Market Value” shall equal the closing price on the New York Stock
Exchange of the Company’s Common Stock on the applicable date.
	 
	 	(b)	 	Restricted Stock Awards. The Committee may grant Participants, subject to certain
restrictions, shares of Common Stock (“Restricted Stock”) or the right to receive shares
of Common Stock or cash (“Restricted Stock Units”).
	 
	 	(c)	 	Stock Appreciation Rights. The Committee may also award Participants Stock
Appreciation Rights. A Stock Appreciation Right is a right to receive, upon exercise of
that right, an amount, which may be paid in cash, shares of Common Stock, or a
combination thereof in the complete discretion of the Committee, equal to the difference
between the Fair Market Value of one share of Common Stock as of the date of exercise and
the Fair Market Value of one share of Common Stock on the date of grant.

	 	 	Stock Options, Restricted Stock, Restricted Stock Units and Stock Appreciation Rights are
sometimes referred to as “Awards”. To the extent any Award is subject to section 409A of the
Internal Revenue Code of 1986, as amended (“Code section 409A”), the terms and administration
of such Award shall comply therewith and IRS guidance thereunder. If any provision of the
Plan would otherwise conflict with or frustrate this intent, that provision will be
interpreted and deemed amended so as to avoid the conflict. Further, for purposes of the
limitations on nonqualified deferred compensation under section 409A, each payment of
compensation under this Plan shall be treated as a separate payment of compensation for
purposes of applying the section 409A deferral election rules and the exclusion from section
409A for certain short-term deferral amounts.

1

 

	5.	 	COMMON STOCK SUBJECT TO THE PLAN

	 	(a)	 	Maximum Shares Available for Delivery. Subject to Section 5(c), the maximum number
of shares of Common Stock available for Awards to Participants under the Plan shall be
10,000,000. Stock Options and Stock Appreciation Rights awarded shall reduce the number
of shares available for Awards by one share for every one share granted; provided that
Stock Appreciation Rights that may be settled only in cash shall not reduce the number of
shares available for Awards. Awards of Restricted Stock and Restricted Stock Units
settled in shares of Common Stock shall reduce the number of shares available for Award
by one share for every one share awarded, up to 25 percent of the total number of shares
available; beyond that, Restricted Stock and Restricted Stock Units settled in shares of
Common Stock shall reduce the number of shares available for Award by five shares for
every one share awarded. Restricted Stock Units that may be settled only in cash shall
not reduce the number of shares available for Awards.
	 
	 	 	 	The Company will repurchase a number of shares of Common Stock in the public market at
least equal to the number of shares of Common Stock issued under this Plan.
	 
	 	 	 	In addition, any Common Stock covered by a Stock Option or Stock Appreciation Right
granted under the Plan which is forfeited prior to the end of the vesting period shall
be deemed not to be granted for purposes of determining the maximum number of shares of
Common Stock available for Awards under the Plan. In the event a Stock Appreciation
Right is settled for cash, the number of shares deducted against the maximum number of
shares provided in Section 5(a) shall be restored and again be available for Awards.
However, if (i) any Stock Option or Stock Appreciation Right that is exercised through
the delivery of Common Stock in satisfaction of the Exercise Price, and (ii) withholding
tax requirements arising upon exercise of any Stock Option or Stock Appreciation Right
are satisfied through the withholding of Common Stock otherwise deliverable in
connection with such exercise, the full number of shares of Common Stock underlying any
such Stock Option or Stock Appreciation Right, or portion thereof being so issued shall
count against the maximum number of shares available for grants under the Plan.
	 
	 	 	 	Upon forfeiture or termination of Restricted Stock or Restricted Stock Units prior to
vesting, the shares of Common Stock subject thereto shall again be available for Awards
under the Plan.
	 
	 	(b)	 	Individual Share Limits. The number of shares of Common Stock subject to Stock
Options and Stock Appreciation Rights or shares of Common Stock available for Restricted
Stock or Restricted Stock Unit Awards granted under the Plan to any single Participant
shall not exceed, in the aggregate, 1,000,000 shares and/or units per fiscal year. This
per-Participant limit shall be construed and applied consistently with Code section
162(m) and the regulations thereunder.
	 
	 	(c)	 	Adjustments for Corporate Transactions. If a corporate transaction has occurred
affecting the Common Stock such that an adjustment to outstanding Awards is required to
preserve (or prevent enlargement of) the benefits or potential benefits intended at the
time of grant, then in such manner as the Committee deems equitable, an appropriate
adjustment shall be made to (i) the number and kind of shares which may be awarded under
the Plan; (ii) the number and kind of shares subject to outstanding Awards; (iii) the
number of shares credited to an account; (iv) the share limits imposed under the Plan;
and if applicable; (v) the Exercise Price of outstanding Options and Stock Appreciation
Rights provided that the number of shares of Common Stock subject to any Option or Stock
Appreciation Right denominated in Common Stock shall always be a whole number. For this
purpose a corporate transaction includes, but is not limited to, any dividend or other
distribution (whether in the form of cash, Common Stock, securities of a subsidiary of
the Company, other securities or other property), recapitalization, stock split, reverse
stock split, combination of shares, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase or exchange of Common Stock or other securities of the

2

 

	 	 	 	Company, issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction. Notwithstanding
anything in this paragraph to the contrary, an adjustment to an Option or Stock
Appreciation Right under this paragraph shall be made in a manner that will not result
in the grant of a new Option or Stock Appreciation Right under Code section 409A.
	 
	 	(d)	 	Limits on Distribution. Distribution of shares of Common Stock or other amounts
under the Plan shall be subject to the following:

	 	(i)	 	Notwithstanding any other provision of the Plan, the Company shall have
no liability to deliver any shares of Common Stock under the Plan or make any other
distribution of benefits under the Plan unless such delivery or distribution would
comply with all applicable laws (including, without limitation, the requirements of
the Securities Act of 1933), and the applicable requirements of any securities
exchange or similar entity.
	 
	 	(ii)	 	To the extent that the Plan provides for issuance of stock certificates
to reflect the issuance of shares of Common Stock or Restricted Stock, the issuance
may be effected on a non-certificated basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange.

	 	(e)	 	Stock Deposit Requirements and other Restrictions. The Committee, in its
discretion, may require as a condition to the grant of Awards, the deposit of Common
Stock owned by the Participant receiving such grant, and the forfeiture of such grant, if
such deposit is not made or maintained during the required holding period. Such shares of
deposited Common Stock may not be otherwise sold or disposed of during the applicable
holding period or restricted period. The Committee may also determine whether any shares
issued upon exercise of a Stock Option or Stock Appreciation Right shall be restricted in
any manner.

	6.	 	STOCK OPTIONS AND STOCK APPRECIATION RIGHTS TERMS AND TYPE

	 	(a)	 	General. Stock Options granted under the Plan shall be Non-Qualified Stock Options
governed by Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”). The
term of any Stock Option and Stock Appreciation Right granted under the Plan shall be
determined by the Committee, provided that said term shall not exceed 10 years and one
month.
	 
	 	(b)	 	No Reload Rights. Neither Stock Options nor Stock Appreciation Rights granted under
this Plan shall contain any provision entitling the optionee or right-holder to the
automatic grant of additional options or rights in connection with any exercise of the
original option or right.
	 
	 	(c)	 	No Repricing. Subject to Section 5(c), outstanding Stock Options and Stock
Appreciation Rights granted under this Plan shall under no circumstances be repriced.

	7.	 	GRANT, EXERCISE AND VESTING OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

	 	(a)	 	Grant. Subject to the limits otherwise imposed by the terms of this Plan, the
Committee has discretionary authority to determine the size of a Stock Option or Stock
Appreciation Right Award, which may be tied to meeting performance-based requirements.
	 
	 	(b)	 	Exercise. Except as provided in Sections 11 and 12 (Change of Control and
Termination of Employment), each Stock Option or Stock Appreciation Right may be
exercised only in accordance with the terms and conditions of the Stock Option grant or
Stock Appreciation Right and during the periods as may be established by the Committee. A
Participant exercising a Stock Option or Stock Appreciation Right shall give notice to
the Company of such exercise and of the number of shares elected to be purchased prior to
4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive
offices of the Company.
	 
	 	(c)	 	Vesting. Stock Options and Stock Appreciation Rights shall not be exercisable
unless vested. Subject to Sections 11 and 12 Stock Options and Stock Appreciation Rights
shall be fully vested only after four years of the Participant’s continued employment
with the Company following the date of the grant.

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	 	(d)	 	Payment of Exercise Price. The Exercise Price for Stock Options shall be paid to
the Company at the time of such exercise, subject to any applicable rule or regulation
adopted by the Committee:

	 	(i)	 	in cash (including check, draft, money order or wire transfer made
payable to the order of the Company);
	 
	 	(ii)	 	through the tender of shares of Common Stock owned by the Participant
(by either actual delivery or attestation);
	 
	 	(iii)	 	by a combination of (i) and (ii) above; or
	 
	 	(iv)	 	by authorizing a third party broker to sell a sufficient number of shares of Common Stock acquired upon exercise of the Stock Option and remit to the
Company such sales proceeds to pay the entire Exercise Price and any tax
withholding resulting from the exercise.

	 	 	 	For determining the amount of the payment, Common Stock delivered pursuant to (ii) or
(iii) shall have a value equal to the Fair Market Value of the Common Stock on the date
of exercise.

	8.	 	RESTRICTED STOCK AND RESTRICTED STOCK UNITS
	 
	 	 	Restricted Stock and Restricted Stock Units may be awarded on either a discretionary or
performance-based method.

	 	(a)	 	Discretionary Awards. With respect to discretionary Awards of Restricted Stock and
Restricted Stock Units, the Committee shall:

	 	(i)	 	Select Participants to whom Awards will be made;
	 
	 	(ii)	 	Subject to the otherwise applicable Plan limits, determine the number
of shares of Restricted Stock or the number of Restricted Stock Units to be awarded
to a Participant;
	 
	 	(iii)	 	Determine the length of the restricted period, which shall be no less
than four years;
	 
	 	(iv)	 	Determine the purchase price, if any, to be paid by the Participant for
Restricted Stock or Restricted Stock Units;
	 
	 	(v)	 	Determine whether Restricted Stock Unit Awards will be settled in
shares of Common Stock or cash; and
	 
	 	(vi)	 	Determine any restrictions other than those set forth in this Section.

	 	(b)	 	Performance-Based Awards. With respect to Awards of performance-based Restricted
Stock and Restricted Stock Units, the intent is to grant such Awards so as to satisfy the
requirements for “qualified performance-based compensation” under Code Section 162(m).
Performance-based Awards are subject to the following:

	 	(i)	 	The Committee has exclusive authority to determine which Participants
may be awarded performance-based Restricted Stock and Restricted Stock Units and
whether any Restricted Stock Unit Awards will be settled in shares of Common Stock,
cash, or a combination thereof.
	 
	 	(ii)	 	In order for any Participant to be awarded Restricted Stock or
Restricted Stock Units for a Performance Period (defined below), the net earnings
from continuing operations excluding items identified and disclosed by the Company
as non-recurring or special costs and after taxes (“Net Earnings”) of the Company
for such Performance Period must be greater than zero.
	 
	 	(iii)	 	At the end of the Performance Period, if the Committee determines that
the requirement of Section 8(b)(ii) has been met, each Participant eligible for a
performance-based Award shall be deemed to have earned an Award equal in value to
the Maximum Amount, or such lesser amount as the Committee shall determine in its
discretion to be

4

 

	 	 	 	appropriate. The Committee may base this determination of grant size on
performance-based criteria and in no case shall this have the effect of increasing
an Award payable to any other Participant. For purposes of computing the value of
Awards, each Restricted Stock or Restricted Stock Unit shall be deemed to have a
value equivalent to the Fair Market Value of one share of Common Stock on the date
the Award is granted.

	 	(iv)	 	In addition to the limitation on the number of shares of Common Stock
available for Awards under section 5(b) hereof, in no event shall the total value
of the performance-based Restricted Stock or Restricted Stock Unit Award granted to
any Participant for any one Performance Period exceed 0.5 percent of the Company’s
Net Earnings for that Performance Period (such amount is the “Maximum Amount”).
	 
	 	(v)	 	The Committee shall determine the length of the restricted period
which, subject to Sections 11 and 12, shall be no less than four years.
	 
	 	(vi)	 	“Performance Period” means a fiscal year of the Company, or such other
period as the Committee may from time to time establish.

	 	 	Subject to the restrictions set forth in this Section, each Participant who receives
Restricted Stock shall have all rights as a stockholder with respect to such shares, including
the right to vote the shares and receive dividends and other distributions.
	 
	 	 	Each Participant who is awarded Restricted Stock Units that are settled in shares of Common
Stock shall be eligible to receive, at the expiration of the applicable restricted period (or
such later time as provided herein), one share of Common Stock for each Restricted Stock Unit
awarded, and the Company shall issue to each such Participant that number of shares of Common
Stock. Each Participant who is awarded Restricted Stock Units that are settled in cash shall
receive an amount equal to the Fair Market Value of a share of Common Stock on the date the
applicable restricted period ends, multiplied by the number of Units awarded. Participants who
receive Restricted Stock Units shall have no rights as stockholders with respect to such
Restricted Stock Units until such time as share certificates for Common Stock are issued to
the Participants (if applicable); provided, however, that as of the first day of each quarter,
during the applicable restricted period for all Restricted Stock Units awarded hereunder, the
Company shall pay to each such Participant an amount equal to the sum of all dividends and
other distributions paid by the Company during the prior quarter on that equivalent number of
shares of Common Stock.
	 
	 	 	The Committee may in its discretion permit a Participant to defer receipt of any Common Stock
or cash issuable upon the lapse of any restriction of Restricted Stock or Restricted Stock
Units, subject to such rules and procedures as it may establish. In particular, the Committee
shall establish rules relating to such deferrals intended to comply with the requirements of
Code section 409A, including without limitation, the time when a deferral election can be
made, the period of the deferral, and the events that would result in payment of the deferred
amount.
	 
	9.	 	TRANSFERABILITY OF AWARDS
	 
	 	 	Except as otherwise provided by rules of the Committee, no Stock Options or Stock Appreciation
Right shall be transferable by a Participant otherwise than (i) by the Participant’s last will
and testament or (ii) by the applicable laws of descent and distribution, and such Stock
Options or Stock Appreciation Right shall be exercised during the Participant’s lifetime only
by the Participant or his or her guardian or legal representative. Except as otherwise
provided in Section 8, no shares of Restricted Stock and no Restricted Stock Units shall be
sold, exchanged, transferred, pledged or otherwise disposed of during the restricted period.
	 
	10.	 	TAXES
	 
	 	 	The Company has the right to withhold amounts from Awards to satisfy tax obligations as it
deems appropriate. Whenever the Company issues Common Stock under the Plan, unless it decides
to satisfy the withholding obligations through additional withholding on salary or other
wages, it may require the recipient to remit to the Company an amount sufficient to satisfy
any Federal, state, local or foreign tax withholding requirements prior to the delivery of
such Common Stock, or the Company may in its discretion withhold from the shares to be
delivered shares sufficient to satisfy all

5

 

	 	 	or a portion of such tax withholding requirements; provided however, except as otherwise
provided by the Committee, that the total tax withholding where shares are used to satisfy
such tax obligations shall not exceed the Company’s minimum statutory withholding obligations
(based on minimum statutory withholding rates for Federal, state and foreign tax purposes,
including payroll taxes, that are applicable to such supplemental taxable income).

	11.	 	CHANGE OF CONTROL

	 	(a)	 	Each of the following (i) through (iv) constitutes a “Change of Control”:

	 	(i)	 	The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the 1934 Act), (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
voting securities of the Company where such acquisition causes such Person to own
20% or more of the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the
“Outstanding Voting Securities”); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not be deemed to result in a
Change of Control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation controlled
by the Company or (D) any acquisition by any corporation pursuant to a transaction
that complies with clauses (A), (B) and (C) of subsection (iii) below; and
provided, further, that if any Person’s beneficial ownership of the Outstanding
Voting Securities reaches or exceeds 20% as a result of a transaction described in
clause (A) or (B) above, and such Person subsequently acquires beneficial ownership
of additional voting securities of the Company, such subsequent acquisition shall
be treated as an acquisition that causes such Person to own 20% or more of the
Outstanding Voting Securities; or
	 
	 	(ii)	 	Individuals who, as of the date hereof, constitute the Board of
Directors (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board; or
	 
	 	(iii)	 	Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially all of the assets
of the Company, or the acquisition of assets or stock of another entity by the
Company or any of its subsidiaries (each, a “Business Combination”);
excluding however, such a Business Combination pursuant to which (A) all or
substantially all of the individuals and entities who were the beneficial owners of
the Outstanding Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination of
the Outstanding Company Securities, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or

6

 

	 	 	 	indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the Business Combination and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or

	 	(iv)	 	Approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.

	 	(b)	 	If, within two years after a Change of Control a Participant experiences an
involuntary separation from service initiated by the Company for reasons other than
“cause” (for this purpose cause shall have the same meaning as that term has in Section
4.2(b)(ii) of Plan B of the General Mills Separation Pay and Benefits Program for
Officers), or a separation from service for “good reason” actually entitling the employee
to certain separation benefits under Section 4.2(a)(ii) of Plan B of the General Mills
Separation Pay and Benefits Program for Officers, the following applies:

	 	(i)	 	All of his or her outstanding Stock Options and Stock Appreciation
Rights shall fully vest immediately and remain exercisable for the one-year period
beginning on the date of his or her separation from service.
	 
	 	(ii)	 	All shares of Restricted Stock and Restricted Stock Units shall fully
vest and be settled immediately (subject to a proper deferral election made with
respect to the Award); provided, however, that any Section 409A Restricted Stock
Units (not subject to a proper deferral election) shall be settled on the
Participant’s separation from service (within the meaning of Code section 409A) or
in the case of a Participant who is a “specified employee” (within the meaning of
Code section 409A) on the first day of the seventh month following the month of the
Participant’s separation from service.

	 	(c)	 	If, pending a Change of Control, the Committee determines the Common Stock will
cease to exist without an adequate replacement security that preserves Participants’
economic rights and positions, then, by action of the Committee, the following shall
occur:

	 	(i)	 	All Stock Options and Stock Appreciation Rights shall become
exercisable immediately prior to the consummation of the Change of Control in such
manner as is deemed fair and equitable by the Committee.
	 
	 	(ii)	 	The restrictions on all shares of Restricted Stock shall lapse and
Restricted Stock Units shall vest immediately prior to consummation of the Change
of Control.
	 
	 	(iii)	 	If the Change of Control constitutes a “change in control” event as
described in IRS regulations or other guidance under Code section 409A(a)(2)(A)(v),
Participants’ Restricted Stock Units shall be settled upon the Change of Control.
	 
	 	(iv)	 	If the Change of Control does not constitute a “change in control”
event as described in IRS regulations or other guidance under Code section
409A(a)(2)(A)(v), Restricted Stock Units that are not Section 409A Restricted Stock
Units and on which a deferral election was not made shall be settled upon the
Change of Control. However, the Section 409A Restricted Stock Units, or Restricted
Stock Units for which a proper deferral election was made, shall be settled in cash
equal to the Fair Market Value of the Restricted Stock Units at the time of the
Change of Control, plus interest at a rate of Prime plus 1% from the Change of
Control to the date of payment, which shall be the time the original restriction
period would have closed, or the date elected pursuant to the proper deferral
election, as applicable.

	 	(d)	 	With respect to any outstanding Awards as of the date of any Change of Control
which require the deposit of owned Common Stock as a condition to obtaining rights, the
deposit requirement shall be terminated as of the date of the Change of Control.

7

 

	12.	 	TERMINATION OF EMPLOYMENT

	 	(a)	 	Resignation or Termination for Cause. If the Participant’s employment by the
Company is terminated by either

	 	(i)	 	the voluntary resignation of the Participant, or
	 
	 	(ii)	 	a Company discharge due to Participant’s illegal activities, poor work
performance, misconduct or violation of the Company’s Code of Conduct, policies or
practices,

	 	 	 	then the Participant’s Stock Options and Stock Appreciation Rights shall terminate three
months after such termination (but in no event beyond the original full term of the Stock
Options or Stock Appreciation Rights) and no Stock Options or Stock Appreciation Rights shall
become exercisable after such termination, and all shares of Restricted Stock and Restricted
Stock Units which are subject to restriction on the date of termination shall be forfeited.
	 
	 	(b)	 	Other Termination. If the Participant’s employment by the Company terminates
involuntarily at the initiation of the Company for any reason other than specified in
Sections 11, 12 (a), (d) or (e), the following rules shall apply:

	 	(i)	 	In the event that, at the time of such involuntary termination, the sum
of the Participant’s age and years of service with the Company equals or exceeds
70, the Participant’s outstanding Stock Options and Stock Appreciation Rights shall
continue to become exercisable according to the schedule established at the time of
grant unless otherwise provided in the applicable Award agreement, the restriction
on all shares of Restricted Stock shall lapse and Restricted Stock Units shall vest
and be paid (or deferred, as appropriate) immediately. Stock Options and Stock
Appreciation Rights shall remain exercisable for the remaining full term of such
Awards.
	 
	 	(ii)	 	In the event that, at the time of such involuntary termination, the sum
of the Participant’s age and years of service with the Company is less than 70, the
Participant’s outstanding unexercisable Stock Options and Stock Appreciation
Rights, and unvested Restricted Stock and Restricted Stock Units, shall become
exercisable or vest and paid or deferred immediately, as the case may be, as of the
date of termination, in a pro-rata amount based on the full months of employment
completed during the full vesting period from the date of grant to the date of
termination with such newly-vested Stock Options and Stock Appreciation Rights, and
Stock Options and Stock Appreciation Rights exercisable on the date of termination,
remaining exercisable for the lesser of one year from the date of termination and
the original full term of the Stock Option and/or Stock Appreciation Right. All
other Stock Options, Stock Appreciation Rights, shares of Restricted Stock and
Restricted Stock Units shall be forfeited as of the date of termination. Provided,
however, that if the Participant is an executive officer of the Company, the
Participant’s outstanding Stock Options and Stock Appreciation Rights which, as of
the date of termination are not yet exercisable, shall become exercisable effective
as of the date of such termination and, with all outstanding Stock Options and
Stock Appreciation Rights already exercisable on the date of termination, shall
remain exercisable for the lesser of one year following the date of termination and
the original full term of the Stock Option or Stock Appreciation Right, and all
shares of Restricted Stock and Restricted Stock Units shall vest as of the date of
termination and be paid or deferred immediately.

	 	 	Notwithstanding the foregoing, any Section 409A Restricted Stock Units that vest under this
Section 12(b) shall be paid on the Participant’s separation from service (within the meaning
of Code section 409A), or in the case of a Participant who is a specified employee (within the
meaning of Code section 409A) shall be paid on the first day of the seventh month following
the month of separation from service.

	 	(c)	 	Death. If a Participant dies while employed by the Company, any Stock Option or
Stock Appreciation Right previously granted under this Plan shall fully vest and become
exercisable upon death and may be exercised by the person designated in such
Participant’s last will and

8

 

	 	 	 	testament or, in the absence of such designation, by the Participant’s estate. Stock
Options and Stock Appreciation Rights shall remain exercisable for the remaining full
term of such Awards.

	 	 	A Participant who dies while employed by the Company during any applicable restricted period,
shall fully vest in such shares of Restricted Stock or Restricted Stock Units, effective as of
the date of death. Such shares or cash shall be paid as of the first day of the month
following death.

	 	(d)	 	Retirement. The Committee shall determine, at the time of grant, the treatment of
Awards upon the retirement of the Participant. Unless other terms are specified in the
original Award, if the termination of employment is due to a Participant’s retirement on
or after age 55 and completion of five years of eligibility service under the General
Mills Pension Plan, the Participant may exercise a Stock Option or Stock Appreciation
Right pursuant to the original terms and conditions of such Awards, and shall fully vest
in, and be paid or have deferred, all shares of Restricted Stock or shares or cash
attributable to Restricted Stock Units effective as of the date of employment termination
as a retiree. However, the Restricted Stock Units without a proper deferral election that
vest under this Section 12(d) shall be payable on the Participant’s separation from
service (within the meaning of Code section 409A) or in the case of a Participant who is
a specified employee (within the meaning of Code section 409A) shall be paid on the first
day of the seventh month following the month of separation from service.
	 
	 	 	 	A Restricted Stock Unit that could vest upon retirement under this Section 12(d) at any
time within the Award’s restricted period shall be referred to as a “Section 409A
Restricted Stock Unit”.
	 
	 	 	 	Notwithstanding the above, the terms of this Section 12(d) shall not apply to a
Participant who, prior to a Change of Control, is terminated for cause as described in
Section 12(a)(ii); said Participant shall be treated as provided in Section 12(a).
	 
	 	(e)	 	Spin-offs. If the termination of employment is due to the cessation, transfer, or
spin-off of a complete line of business of the Company, the Committee, in its sole
discretion, shall determine the vesting treatment of all outstanding Awards under the
Plan. Such treatment shall be consistent with Code section 409A, and in particular will
take into account whether a separation from service has occurred within the meaning of
section 409A.

	13.	 	ADMINISTRATION OF THE PLAN

	 	(a)	 	Administration. The authority to control and manage the operations and
administration of the Plan shall be vested in the Committee in accordance with this
Section.
	 
	 	(b)	 	Selection of Committee. The Committee shall be selected by the Board, and shall
consist of two or more outside, disinterested members of the Board who, in the judgment
of the Board, are qualified to administer the Plan as contemplated by Rule 16b-3 of the
Securities and Exchange Act of 1934 (or any successor rule), Code section 162(m) and the
regulations thereunder (or any successors thereto), and any rules and regulations of a
stock exchange on which Common Stock is traded.
	 
	 	(c)	 	Powers of Committee. The authority to manage and control the operations and
administration of the Plan shall be vested in the Committee, subject to the following:

	 	(i)	 	Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the eligible Company employees those
persons who shall receive Awards, to determine the time or times of receipt, to
determine the types of Awards and the number of shares covered by the Awards, to
establish the terms, conditions, performance criteria, restrictions, and other
provisions of such Awards, and (subject to the restrictions imposed by Section 14)
to cancel or suspend Awards. In making such determinations, the Committee may take
into account the nature of services rendered by the individual, the individual’s
present and potential contribution to the Company’s success and such other factors
as the Committee deems relevant.

9

 

	 	(ii)	 	The Committee will have the authority and discretion to establish terms
and conditions of Awards as the Committee determines to be necessary or appropriate
to conform to applicable requirements or practices of jurisdictions outside of the
United States.
	 
	 	(iii)	 	The Committee will have the authority and discretion to interpret the
Plan, to establish, amend, and rescind any rules and regulations relating to the
Plan, to determine the terms and provisions of any agreements made pursuant to the
Plan, and to make all other determinations that may be necessary or advisable for
the administration of the Plan.
	 
	 	(iv)	 	Any interpretation of the Plan by the Committee and any decision made
by it under the Plan is final and binding.

	 	(d)	 	Delegation by Committee. Except to the extent prohibited by applicable law or the
applicable rules of a stock exchange, the Committee may allocate all or any portion of
its responsibilities and powers to any one or more of its members and may delegate all or
any part of its responsibilities and powers to any person or persons selected by it. Any
such allocation or delegation may be revoked by the Committee at any time.

	14.	 	AMENDMENTS OF THE PLAN
	 
	 	 	The Committee may from time to time prescribe, amend and rescind rules and regulations
relating to the Plan. Subject to the approval of the Board of Directors, where required, the
Committee may at any time terminate, amend, or suspend the operation of the Plan, provided
that no action shall be taken by the Board of Directors or the Committee without the approval
of the stockholders which would:

	 	(a)	 	except as provided in Section 5(c), materially increase the number of shares which
may be issued under the Plan;
	 
	 	(b)	 	permit granting of Stock Options or Stock Appreciation Rights at less than Fair
Market Value;
	 
	 	(c)	 	except as provided in Section 5(c), permit the repricing of outstanding Stock
Options or Stock Appreciation Rights; or
	 
	 	(d)	 	amend the maximum shares set forth in Section 5(b) which may be granted to any
single Participant.

	 	 	No termination, modification, suspension, or amendment of the Plan shall alter or impair the
rights of any Participant pursuant to an outstanding Award, in any material respect, without
the consent of the Participant. There is no obligation for uniformity of treatment of
Participants under the Plan.
	 
	15.	 	FOREIGN JURISDICTIONS
	 
	 	 	The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the
intent of the Plan, as it may deem necessary or desirable to make available tax or other
benefits of the laws of any foreign jurisdiction, to employees of the Company who are subject
to such laws and who receive Awards under the Plan.
	 
	16.	 	NON-ALIENATION OF RIGHTS AND BENEFITS.
	 
	 	 	Subject to Section 9 and the rights of the Company established under the Plan’s terms, no
right or benefit under the Plan shall be subject to alienation, sale, assignment, pledge, or
encumbrance and any attempt to do so shall be void. No right or benefit under the Plan be
subject to the debts, contracts, liabilities or torts of the person entitled to such rights or
benefits.
	 
	17.	 	LIMITATION OF LIABILITY OR OBLIGATION OF THE COMPANY.
	 
	 	 	Nothing in the Plan shall be construed

	 	(a)	 	to give any employee of the Company any right to be granted any Award other than at
the sole discretion of the Committee;
	 
	 	(b)	 	to give any Participant any rights whatsoever with respect to shares of Common
Stock except as specifically provided in the Plan;

10

 

	 	(c)	 	to limit in any way the right of the Company or any Subsidiary to terminate, change
or modify, with or without cause, the employment of any Participant at any time; or
	 
	 	(d)	 	to be evidence of any agreement or understanding, express or implied, that the
Company or any Subsidiary will employ any Participant in any particular position at any
particular rate of compensation or for any particular period of time.

	 	 	Payments and other benefits received by a Participant under an Award shall not be deemed part
of a Participant’s regular, recurring compensation for purposes of any termination, indemnity
or severance pay laws and shall not be included in, nor have any effect on, the determination
of benefits under any other employee benefit plan, contract or similar arrangement provided by
the Company or any Subsidiary, unless expressly so provided by such other plan, contract or
arrangement.
	 
	18.	 	NO LOANS
	 
	 	 	The Company shall not lend money to any Participant to finance a transaction under this Plan.
	 
	19.	 	NOTICES
	 
	 	 	All notices to the Company regarding the Plan shall be in writing, effective as of actual
receipt by the Company, and shall be sent to:

	 	 	 	Attention: Corporate Compensation

General Mills, Inc.

Number One General Mills Boulevard

Minneapolis, MN 55426

	20.	 	RECOGNITION AWARDS
	 
	 	 	Notwithstanding any other provision of the Plan to the contrary, the Committee is given the
discretionary authority to award up to a total of 10,000 unrestricted shares of Common Stock
during each calendar year to selected employees as a bonus or reward (“Recognition Awards”).
Under this paragraph no employee shall receive over 100 shares of Common Stock as Recognition
Awards over the duration of the Plan’s term.

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