EXHIBIT 10.(iii)A
FY 2002 CORPORATE EMPLOYEE COMPENSATION PLAN
(SEPTEMBER 1, 2001 - AUGUST 31, 2002)
OBJECTIVE
To pay additional cash beyond base salary to eligible employees of Farmland Industries, Inc. This plan
applies for the employees who are not tied to any single business or service unit, and for those employees
who have a portion of their variable compensation plan contingent upon the company's financial
performance. Farmland Industries, Inc. ("Corporate") must achieve a threshold or minimum net income before
taxes and extraordinary items, or no payout occurs, for this portion of the plan.
This plan includes four important exhibits which are an integral part of the plan structure. Please be
aware of and consult them. They include the following:
Exhibit A - Corporate financial performance criteria
and levels
Exhibit B - A summary schedule of payout opportunities by
earnings level
Exhibit C - Additional detail on determination of payout
Exhibit D - Descriptions and definitions of accounting terms and
methodologies relevant to this plan
PLAN STRUCTURE
The plan provides the opportunity for a cash payment following the conclusion of FY 2002 to eligible
employees for the attainment of corporate objectives. The corporate standard measure is net income before
taxes and extraordinary items.
The structure and format of the Corporate Employee compensation plan may differ in some respects from unit
customized plans. Plan requirements and rules for such items as eligibility for participation, pro-ration
of payout, etc., supersede those of any customized plans should conflicts occur (Note: some details in
sales incentive plans may vary given the difference in nature between sales and non-sales variable pay
plans.)
ELIGIBILITY
The following types of employees are ineligible for payout under the Corporate Employee Compensation Plan:
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o Employees whose terms and conditions of employment are subject to collective bargaining.
o Employees hired after June 1, 2002 (waived if the employee is a former regular full time employee during FY 2002; payout is
prorated).
o Regular part time employees with less than 500 hours of service during FY 2002.
o Temporary employees with less than 1000 hours of service during FY 2002.
o Employees terminated for cause prior to 8/31/2002.
o Employees who terminate voluntarily prior to 8/31/2002 (employees who terminate to accept a position with a member
cooperative may be eligible for a prorated payout).
o Employees included in variable compensation plans other than the standard corporate employee compensation plan. Exceptions
must be approved by the Chief Executive Officer, and by the VP, Human Resources.
Certain classes of employees who terminate prior to 8/31/2002 will receive payout based on their eligible
earnings during the year:
Death/Disability
Retirement
Reduction in Force
Focus Team member obtaining outside employment
Layoff
Leave of Absence
Hired after 9/1/2001 but on or before 6/1/2002
Involuntary separations, other than for reasons included in the list above, which are not for performance
or for cause, may result in prorated payout.
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Employees who voluntarily terminate prior to 8/31/2002 for the purpose of assuming a position with a system
member cooperative may be eligible to receive a payout. To secure eligibility, the employee must notify
Corporate Human Resources, in writing, at the time of separation and ensure that the system member
cooperative notifies Farmland's Corporate Human Resources Department, in writing, to verify employment from
the point of separation through the conclusion of the plan year.
Employees on formal disciplinary or performance probation are ineligible for that portion of the fiscal
year.
DETERMINATION
OF PAYOUT
Payout is determined as a percentage of eligible gross wages or salary paid during the fiscal year, as
shown in Exhibits B and C. Corporate performance measurements are labeled "threshold", "target", and
"maximum".
Threshold - The minimal performance level required for the plan to pay out. No payout occurs for
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achievement below threshold.
Target - Identifies the actual performance objective.
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Maximum - A performance level exceeding target at which the payout as a percentage of eligible gross wages
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or salary is frozen. No payout occurs beyond these percentages regardless of performance.
Payout for performance between threshold and target or target and maximum is prorated.
In the event of a merger, change of control, or other major organizational structure change (as determined
by the CEO) during the course of the plan year, the rate of earnings for the year up to the effective date
of the change, would be projected to the end of the quarter in order to derive a net income performance
estimate.
MODIFICATION
OF THE PLAN
Farmland Management and/or the Board of Directors reserve the right to modify this plan, including changing
details, temporarily suspending the plan, or terminating the plan altogether prior to the conclusion of the
fiscal year. They reserve the same right relative to any business or service unit variable pay plan.
APPROVED:
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Robert Honse
President and CEO
EXHIBIT A
FY 2001 PERFORMANCE CRITERIA AND GOALS
Corporate Net Income before taxes and extraordinary items (full fiscal year):
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Threshold $63,140,000
Target $90,200,000
Maximum $126,280,000
EXHIBIT B
FY 2002 Variable Compensation Program Annual Payout Schedule
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Non-Sales Annual
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eshold - Target - Maximum Earnings V Comp Calculation Point
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3 - 5 - 8 All Non - Exempt* Any Earnings
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3 - 5 - 8 Below $37,130 Exempt Actual Earnings
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3 - 6 - 10 $37,130 - $40,844 $38,990
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4 - 7 - 12 $40,845 - $44,929 $42,890
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5 - 8 - 15** $44,930 - $51,669 $48,300
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5 - 10 - 18 $51,670 - $59,419 $55,545
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6 - 12 - 22 $59,420 - $68,334 $63,880
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7 - 15 - 27 $68,335 - $78,584 $73,460
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8 - 18 - 33 $78,585 - $90,374 $84,480
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10 - 22 - 40 $90,375 - $103,929 $97,155
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12 - 25 - 46 $103,930 - $119,519 $111,725
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12 - 25 - 46 $119,520 - $137,449 $128,485
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12 - 25 - 46 $137,450 - $158,064 $147,760
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14 - 28 - 52 $158,065 + Actual Earnings
(Non - FII Executives)
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* Includes Truck Drivers
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** Production Supervisors identified with a v-comp code of ??8 will be calculated at least at the
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5-8-15 opportunity, using the calc point that corresponds with their earnings.
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- ------------------------------------------ -------------------------------------
EXECUTIVES Annual
- ------------------------------------------ -------------------------------------
- ------------------------------------------ -------------------------------------
Threshold - Target - Maximum Earnings V Comp Calculation Point
- ---------------------------------------------------------- ----------------------
- ---------------------------------------------------------------------------------------
18 - 36 - 67 Designated FII Executives
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22 - 45 - 83 Designated FII Executives
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25 - 50 - 92 President and CEO
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$95,480 - $114,574 $105,030
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$114,575 - $137,489 $126,035
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$137,490 - $164,989 $151,240
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$164,990 - $197,989 $181,490
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$197,990 - $237,589 $217,790
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$237,590 - $285,109 $261,350
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$285,110 - $342,129 $313,620
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$342,130 - $410,554 $376,345
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$410,555 - $492,664 $451,610
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$492,665 - $591,199 $541,935
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$591,200 - $709,439 $650,320
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$709,440 - $851,329 $780,385
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$851,330 + Actual Earnings
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EXHIBIT C
DETAIL ON DETERMINATION OF PAYOUT
Non-Exempt Employees:
Payout is determined as a percentage of eligible gross earnings paid during
fiscal year 2002.
Note: Eligible gross wages may exclude some lump sums.
Exempt/Management Employees:
Payout is determined as a percentage of the Variable Comp Calculation Point based on eligible
gross wages during fiscal year 2002. Exhibit B grid lists the percentage opportunities
assigned to each Variable Comp Calculation Point.**
NOTE: Lump Sum amounts given during the fiscal year will not be
included in Eligible gross wages unless they were given in lieu of
merit increase.
Eligible Earnings:
Base earnings, merit increase pay, lump sum in lieu of a merit increase, shift
differential, bridge differential, and geographic differential.
Production supervisor flat rate overtime payments.
Non-exempt overtime payments.
Non-eligible Earnings:
The following is list of the most common items not included as earnings:
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Vacation balance lump sum payments at termination
Previous FY variable compensation payment
Sales Commission, SPIFF payment, bonus, etc.
Severance pay
Relocation reimbursements
Exceptions to normal eligibility or ineligibility of earnings must be
approved in advance by the Vice President, Human Resources.
EXHIBIT D
DETERMINATION OF EXTRAORDINARY ITEM
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If Farmland achieves its performance goals, but experiences a loss year due to extraordinary items, the Board of Directors of
Farmland Industries, Inc. maintains the discretion to authorize, adjust, or deny payout of any portion of the Corporate Variable
Compensation Plan. This also applies to employees who participate in customized business or service unit plans. Employees on sales
incentive plans are not affected by this provision unless specific portions of their plans are tied to corporate performance.
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GUIDELINES FOR "EXTRAORDINARY" DESIGNATION
The Chief Financial Officer and the Chief Executive Officer must approve the classification of any item as "extraordinary."
Transactions deemed as "extraordinary" include:
o The punitive portion of litigation results in favor of or against Farmland, excluding redemptive payments on normal business
matters where the intent is to substantially restore net income to where it would have been had the incident not occurred.
o The loss generated from the impairment of asset value of a major asset, group of assets, or investments.
o The loss from any new business activity or business unit added subsequent to the approval of the Business Plan, provided
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that the acquisition was such that it required specific Board of Director approval outside of the business plan.
o Other items as approved.
Specific requests by an operating unit for treatment of an item as "extraordinary" must be approved by the Senior Management
representative before review by the Chief Financial Officer and the Chief Executive Officer.
The Chief Financial Officer and the Chief Executive Officer will determine how individual extra-ordinary items shall affect the final
determination of quarterly and/or annual net income.
