Hershey Foods Corporation
Deferred Compensation Plan
This Deferred Compensation Plan (the "Plan") allows
participants in the Annual Incentive Program (the "AIP") of Hershey
Foods Corporation's Key Employee Incentive Plan to defer receipt of
all or part of their awards under the AIP. Participants in the
Long Term Incentive Program ("LTIP") of the Key Employee Incentive
Plan may also defer under this plan the cash equivalent of the
dividends received on deferred LTIP awards provided certain minimum
stockholding requirements have been satisfied. The Plan is
intended to benefit those key executives of Hershey Foods
Corporation (and subsidiaries as specified in the AIP and LTIP) who
participate in the AIP or LTIP, to secure their goodwill, loyalty
and achievement, and to help attract and retain high quality
executives.
AIP awards for 1995 and beyond may be deferred under
this Plan. Also, Participants who have previously deferred AIP
awards under the deferral arrangement in effect for awards prior to
1995 may elect to credit their deferral accounts under the prior
deferral arrangement to their Accounts under this Plan as
hereinafter described.
Dividends earned on deferred LTIP awards may also be
deferred under the Plan, but only if the Participant has satisfied
the employee minimum stockholding requirements established by the
Compensation and Executive Organization Committee of the Board of
Directors. Dividends previously earned, as well as future
dividends earned on deferred LTIP awards are eligible for deferral
under the Plan.
Article I
Definitions
The following definitions apply to this Plan:
1.1 Account. "Account" means the Account maintained by the
Company pursuant to Article II with respect to each Participant.
1.2 AIP. "AIP" means the Annual Incentive Program of Hershey
Foods Corporation's Key Employee Incentive Plan.
1.3 Board. "Board" or "Board of Directors" means the Board of
Directors of Hershey Foods Corporation.
1.4 Committee or Compensation Committee. "Committee" or
"Compensation Committee" means the Compensation and Executive
Organization Committee of the Board.
1.5 Company. "Company" means Hershey Foods Corporation, a
Delaware corporation.
1.6 Deferral Election. "Deferral Election" means a
Participant's election to defer all or part of the Participant's
AIP award or the dividends earned on the Participant's deferred
LTIP award as described in Article II.
1.7 Determination Date. "Determination Date" means the last
day of each calendar quarter.
1.8 Disability. "Disability" means a condition or circumstance
entitling a Participant to be classified as "disabled" pursuant to
the Company's Long Term Disability Plan.
1.9 Investment Options. "Investment Options" means the
following investment options which are to be used as earnings
indices as described in Section 2.3:
1. Hershey Fixed Income Fund
2. IDS Cash Management Fund
3. American Express Trust Equity Index Fund I
The Investment Options are chosen by the Plan Administrator and are
subject to change from time to time as the Plan Administrator, in
its discretion, deems necessary or appropriate. No provision of
this Plan shall be construed as giving any Participant an interest
in any of these Investment Options nor shall any provision require
that the Company make any investment in any such funds.
1.10 LTIP. "LTIP" means the Long Term Incentive Program
of Hershey Foods Corporation's Key Employee Incentive Plan.
1.11 Participant. "Participant" means an employee of the
Company who is eligible to participate in the AIP or LTIP and who
elects to participate in this Plan by filing a Deferral Election as
provided in Article II.
1.12 Plan. "Plan" means this Hershey Foods Corporation
Deferred Compensation Plan as set forth herein and as amended from
time to time.
1.13 Plan Administrator. "Plan Administrator" means the
Director, Executive Compensation and Employee Benefits, for Hershey
Foods Corporation.
1.14 Plan Year. "Plan Year" means the calendar year.
1.15 Retirement. "Retirement" means termination of
employment with a Company after becoming eligible for retirement
under the Hershey Foods Corporation Retirement Plan.
Article II
Deferral Elections: Accounts
2.1. Election to Defer.
a. AIP Awards. A Participant may elect to defer
receipt of all or a portion of his or her anticipated bonus under
the AIP. A Participant's election must be made no later than
November 1st of the year in which the Participant renders the
services which result in the bonus award. The election must be
made on a form supplied by the Plan Administrator. The election to
defer a bonus is irrevocable except as specifically provided
otherwise in this Plan.
b. LTIP Awards. A Participant may elect under this
Plan to defer receipt of all or a portion of the dividends to be
earned on deferred LTIP awards. A Participant's election must be
made at least sixty (60) days prior to the date the dividend will
be paid. The election must be made on a form supplied by the Plan
Administrator. The election to defer receipt of an LTIP dividend
is irrevocable except as specifically provided otherwise in this
Plan.
2.2. Accounts.
a. Establishment of Accounts. Any amounts deferred by
a Participant will not be funded or set aside for future payment by
the Company. Instead, an Account will be noted for the Participant
on the Company's books. A Participant's Account will be credited
with amounts deferred and with investment credits as provided in
subparagraph c. below. A separate Account will be established for
each Deferral Election.
b. Participants as Unsecured Creditors. A
Participant's entitlement to receive the amount reflected by his or
her Account will be based solely on an unconditional promise to pay
by the Company and is not assignable; however, except as provided
in Section 7.5 below, the Participant at all times will be fully
vested in the Account.
c. Investment Credits to Accounts. Subject to such
limitations as may from time to time be required by law or imposed
by the Plan Administrator, and subject to such operating rules and
procedures as may be imposed from time to time by the Plan
Administrator, each Participant may express to the Plan
Administrator a preference as to how the Participant's Account
should be constructively invested among the Investment Options.
Such preference shall designate the percentage of the Participant's
Accounts which is requested to be constructively invested in each
Investment Option.
(1) Any initial or subsequent expression of
investment preference shall be in writing, on a form supplied by
and filed with the Plan Administrator, and shall be subject to such
rules and procedures as the Plan Administrator may promulgate from
time to time. Participants may change their investment preferences
effective as of the beginning of each Plan Year.
(2) All investment preferences shall be advisory
only and shall not bind the Company or the Plan Administrator. The
Company shall not be obligated to invest any funds in connection
with this Plan. If, however, the Company chooses to invest funds
to provide for its liabilities under this Plan, the Plan
Administrator shall have complete discretion as to investments.
(3) Whether or not a Participant's investment
preferences are followed, the Participant's Account will be
credited with earnings or losses as follows. As of each
Determination Date, the net earnings or losses (as defined below)
of each Investment Option since the preceding Determination Date
shall be allocated among all Accounts in accordance with the
preferences indicated by each Participant as though the Accounts
had been invested in the Investment Option in accordance with each
Participant's indicated preference.
(4) If the Plan Administrator receives an initial
or revised investment preference which it deems to be incomplete,
unclear or improper, the Participant's investment preference then
in effect shall remain in effect (or, in the case of a deficiency
in an initial investment preference, the Participant shall be
deemed to have filed no investment preference) until the beginning
of the next Plan Year, unless the Plan Administrator provides for,
and permits the application of, corrective action prior thereto.
If a Participant fails to file an effective investment preference,
the Participant's Account will be constructively invested in the
IDS Federal Income Fund.
(5) If the Plan Administrator determines that the
constructive value of an Account as of any date on which
distributions are to be made differs materially from the
constructive value of the Account on the prior Determination Date
upon which the distribution is to be based, the Plan Administrator,
in its discretion, shall have the right to designate any date in
the interim as a Determination Date for the purpose of
constructively revaluing the Account so that the account from which
the distribution is being made will, prior to the distribution,
reflect its share of such material difference in value. Similarly,
the Plan Administrator may adopt a policy of providing for regular
interim valuations without regard to the materiality of changes in
the value of the Accounts.
d. Statement of Accounts. Within a reasonable time
after the end of each calendar year, the Plan Administrator shall
submit to each Participant a statement of the balance in his
Accounts.
2.3 Credit of Previous AIP Deferrals to Accounts.
Participants who have previously deferred AIP awards under the
deferral arrangements in effect for awards prior to 1995 may elect
as of any beginning of any Plan Year to credit any portion of their
deferral accounts under the prior arrangement to their Accounts
under this Plan. Credits shall be made to this Plan pursuant to
this Section on January 1 of the year subsequent to any such
election being made. Amounts so credited shall become part of a
Participant's Account and shall be subject to the terms and
conditions of this Plan, except that prior elections as to payment
of deferred amounts shall remain in effect. Once amounts are
credited to a Participant's Account pursuant to this Section 2.3,
they may not thereafter be returned to the Participant's deferral
accounts under the prior deferral arrangement.
2.4 Credit of Previous Dividends Paid on LTIP Deferrals to
Accounts. Participants who have previously received dividends on
deferred LTIP awards under the deferral arrangements in effect for
awards prior to 1995 may elect as of the beginning of any Plan Year
to credit any portion of their previously deferred dividends under
the prior arrangement to their Accounts under this Plan.
Notwithstanding the above, previously deferred LTIP dividends are
not eligible to be deferred pursuant to the terms of the Plan
unless the Participant has satisfied the employee minimum
stockholding requirements established by the Committee. Credits
shall be made to this Plan pursuant to this Section on the January
1 of the year subsequent to any such election being made. Amounts
so credited shall become part of a Participant's Account and shall
be subject to the terms and conditions of this Plan,
except that prior elections as to payment of deferred amounts shall
remain in effect. Once amounts are credited to a Participant's Account
pursuant to this Section 2.4, they may not thereafter be returned
to the Participant's deferral accounts under the prior deferral
arrangement.
Article III
Distribution of Deferrals
3.1 Initial Election of Distribution Options in Deferral
Election. A Participant must specify in his or her Deferral
Election when the Participant's Account will be distributed.
Distribution may be made or begin in any year or years in the
future, but distributions must begin not later than the calendar
year following the calendar year in which the Participant attains
age 70. The Participant may elect to receive amounts deferred in
a lump sum or in up to ten approximately equal annual installments.
A Participant may specify different distribution dates and forms of
payment under each of his or her Deferral Elections.
3.2 Changes in Distribution Options.
a. A Participant is entitled to one future opportunity
to further lengthen (not shorten) the deferral period provided in
a Deferral Election and to make one future change with regard to
lengthening (not shortening) the payment schedule provided in that
Election up to a maximum payment schedule of ten years.
b. Any change in the deferral period or the payment
schedule must be submitted to the Plan Administrator in writing, on
a form provided by the Plan Administrator, at least twelve months
before the date payments were originally scheduled to begin. Any
change in the deferral period shall not require payments to begin
after the calendar year following the Participant's attainment of
age 70.
3.3 Payment of Deferred Amounts.
a. Upon the date elected by the Participant, the
Company shall begin to pay an amount equal to the total amount then
credited to the Participant's Account. Such amount is to be paid
either in one lump sum or in approximately equal annual
installments over a period of years as elected by the Participant,
which period shall be not more than ten years. Each annual
installment shall include investment credits on the remaining
balance during the previous year until the Account shall have been
paid out in full. A Participant may continue to express investment
preferences as provided in paragraph c of Section 2.2 during the
period that the Account is being distributed.
b. If the Participant should die before payment in full
of the amount standing to the Participant's credit in the Account,
the unpaid balance may be paid in one lump sum or in installments
to the Participant's beneficiary in accordance with whichever
election has been made by the Participant. If the Participant
should die before the beginning date of the deferral payment and
did not indicate a specific method of distribution, then the
beneficiary may petition the Plan Administrator regarding the
method of distribution. In the absence of a designated
beneficiary, the balance of the Account will be paid in a lump sum
to the estate of the Participant as soon as possible.
c. If the Participant's employment is terminated for
any reason other than Retirement, death or Disability before the
elected payment date, then the Company, acting through the Plan
Administrator, at its discretion and at any time thereafter may:
(1) Immediately pay over any amounts credited to
the Participant's Account to the Participant.
(2) Deposit any amounts credited to the
Participant's Account with a third party fiduciary in trust for the
Company's benefit who will manage and pay over such amounts to the
Participant in accordance with the terms of this Plan, with
administrative costs in such event being charged to the
Participant's Account.
(3) Continue to itself maintain and pay over
amounts deferred to the Participant in accordance with the terms of
this Plan and the Participant's election pursuant thereto.
d. If both the Participant and his beneficiary shall
die after payments to the Participant begin and before all payments
are made from the Participant's Account, the remaining value of the
Account shall be determined as of the date of death of the
beneficiary or Participant, whichever is later, and shall be paid
as promptly as possible in one lump sum to the estate of such
beneficiary or as specified in the beneficiary's last will and
testament, as the case may be.
e. A Participant may designate or change his or her
beneficiary (without the consent of any prior beneficiary) on a
form provided by the Plan Administrator and delivered to the Plan
Administrator before the Participant's death.
f. Installment payments shall commence on or before the
fifteenth day of the year selected by the Participant (or on or
before the fifteenth day of the year after the year in which the
Participant retires, if the Participant has elected to defer until
after Retirement).
3.4 Hardship Distributions. The Compensation Committee may,
in its discretion, accelerate payments to a Participant in an
amount up to the bonus previously deferred, together with
investment credits to date, in the event of demonstrated severe
financial hardship. Any such payments made will be limited to the
amount needed to meet the demonstrated financial need. A
Participant seeking a financial hardship withdrawal from his or her
Account must request a hearing with the Plan Administrator, who
will gather facts and render a report to the Compensation Committee
for a decision.
3.5 Other Withdrawals: Forfeiture Penalty. A Participant
may, by written request on a form provided by the Plan
Administrator, withdraw all or any portion of his Account as of any
Determination Date, provided that the Participant shall forfeit 15%
of the amount withdrawn as a penalty.
3.6. Withholding. Any payments made pursuant to this
Article III shall be subject to appropriate federal, state or local
income tax withholdings.
Article IV
Claims Procedure
4.1 The following provisions are incorporated in the Plan in
accordance with the requirements of the Employment Retirement
Income Security Act of 1974:
a. The following claims procedure is hereby
established:
(1) A Participant or beneficiary shall make a claim
for the benefits provided by delivering a written request to the
Plan Administrator. Upon receipt of a claim, the Plan
Administrator shall determine whether to grant the claim, deny it,
or grant it in part.
(2) If a claim is wholly or partially denied,
notice of the decision, meeting the requirements of paragraph (3)
following shall be furnished to the claimant within a reasonable
period of time after receipt of a claim by the Plan Administrator.
(3) The Plan Administrator shall provide to every
claimant who is denied a claim for benefits, written notice setting
forth in a manner calculated to be understood by the claimant, the
specific reason or reasons for the denial; specific reference to
pertinent Plan provisions on which denial is based; a description
of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such
material or information is necessary; and an explanation of the
Plan's claim review procedure as set forth herein.
(4) The purpose of the review procedures set forth
herein is to provide a procedure by which a claimant under the Plan
may have a reasonable opportunity to appeal a denial of a claim to
the named fiduciary for a full and fair review. To accomplish that
purpose, the claimant or his duly authorized representative may
request a review upon written application to the Committee may
review pertinent Plan documents; and may submit issues and comments
in writing. A claimant (or his duly authorized representative)
shall request a review by filing a written application for review
with the Committee at any time within sixty (60) days after receipt
by the claimant of written notice of denial of this claim.
(5) The decision on review of a denied claim shall
be made as follows. The decision on review shall be made by the
Committee, which may in its discretion hold a hearing on the denied
claim. The Committee shall make a decision promptly, and not later
than sixty (60) days after receipt of the request for review,
unless special circumstances (such as the need to hold a hearing)
require an extension of time of reprocessing, in which case a
decision shall be rendered as soon as possible, but not later than
one hundred twenty (120) days after receipt of the request for
review. The decision on review shall be in writing and shall
include specific reasons for the decisions, written in the manner
calculated to be understood by the claimant, and specific
references to the pertinent Plan revisions on which the decision is
based. The Committee shall have full discretion to decide the
claim and its decision on review shall be final and binding on all
parties.
b. For purposes of implementing the claims procedure
(but not for any other purposes), the Committee is hereby
designated as a named fiduciary of this Plan.
Article V
Plan Administrator
5.1 Plan Administrator Duties. The Plan Administrator shall
administer this Plan and shall be a named fiduciary of the Plan for
that purpose. The Plan Administrator may be a Participant. A Plan
Administrator who is a Participant may not vote on matters
affecting his or her personal benefit under this Plan, but any such
individual shall otherwise be fully entitled to act in matters
arising out of or affecting this Plan notwithstanding his or her
participation herein. The Plan Administrator shall have the
authority to make, amend, interpret, and enforce all appropriate
rules and regulations for the administration of this Plan and
decide or resolve any and all questions, including interpretations
of this Plan, as may arise in connection with the Plan.
5.2 Agents. In the administration of this Plan, the Plan
Administrator may, from time to time, employ agents and delegate to
them or to others (including employees of the Company) such
administrative duties as it sees fit. The Plan Administrator may
from time to time consult with counsel, who may be counsel to the
Company.
5.3 Binding Effect of Decisions. In carrying out its duties
herein, the Plan Administrator (or its designee) shall have full
discretion to exercise all powers and to make all determinations,
consistent with the terms of the Plan, in all matters entrusted to
it, and its determinations shall be final and binding on all
parties.
5.4 Indemnity. The Company shall indemnify and hold harmless
the Plan Administrator and any employees to whom administrative
duties under this Plan are delegated, against any and all claims,
loss, damage, expense, or liability arising from any action or
failure to act with respect to this Plan, except in the case of
willful misconduct.
Article VI
Amendment and Termination
6.1 Amendment. The Committee may at any time amend the Plan
in whole or in part. However, no amendment shall be effective to
decrease or restrict any then existing Account or to change the
Company's obligations under any then existing Deferral Election.
6.2 Board's Right to Terminate. The Board may at any time
terminate the Plan in its entirety, in which event no new Deferral
Elections shall be made, but the obligations of the Company under
existing Deferral Elections shall continue.
Article VII
Miscellaneous
7.1 Unfunded Plan. This Plan is intended to be an "unfunded"
plan maintained primarily to provide deferred compensation for a
"select group of management or highly compensated employees" within
the meaning of the Employee Retirement Income Security Act of 1974,
as amended, and shall be so construed.
7.2 Unsecured General Creditor. This Plan is unfunded.
Benefits shall be paid from the Company's general assets.
Participants and their beneficiaries, heirs, successors, and
assigns shall have no legal or equitable rights, interest or claims
in any property or assets owned or which may be acquired by the
Company. Such assets of the Company shall not be held under any
trust for the benefit of Participants, their beneficiaries, heirs,
successors or assigns, or held in any way as collateral security
against the obligations of the Company under this Plan. The
Company's obligation under the Plan shall be that of an unfunded
and unsecured promise of the Company to pay money in the future.
The Company in its sole discretion, may, however, elect to provide
for its liabilities under this Plan through a trust or funding
vehicle, provided, however, that the terms of any such trust or
funding vehicle shall not alter the status of Participants and
beneficiaries as mere general unsecured creditors of the Company or
otherwise cause the Plan to be funded or benefits taxable to
Participants except upon actual receipt.
7.3 Nonassignability. Neither a Participant nor any other
person shall have any right to commute, sell, assign, transfer,
pledge, anticipate, mortgage, or otherwise encumber, transfer,
hypothecate, or convey in advance of actual receipt the amounts, if
any, payable hereunder, or any part thereof. The rights to all
such amounts are expressly declared to be unassignable and non-
transferable. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony, or separate maintenance
owned by Participants or any other person, nor be transferable by
operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency, except as required by law.
7.4 Not a Contract of Employment. The terms and conditions
of this Plan shall not be deemed to constitute a contract of
employment between the Company and a Participant, and a Participant
shall have no rights against the Company except as may otherwise be
specifically provided herein. Moreover, nothing in the Plan shall
be deemed to give a Participant the right to be retained in the
service of the Company or to interfere with the right of the
Company to discipline or discharge an employee at any time.
7.5 Forfeiture of Benefits. If a Participant's employment is
terminated because of willful misfeasance or gross negligence in
the performance of his or her duties, his or her right to benefits
under this Plan shall, in the discretion of the Committee, be
forfeited, and the Company shall have no further obligation
hereunder to such Participant or his or her beneficiary(ies).
7.6 Terms. Use of the masculine pronoun in this Plan will
include the feminine and use of the singular will include the
plural, unless the context clearly indicates otherwise.
7.7 Captions. The captions of the articles, sections and
paragraphs of this Plan are for convenience only and shall not
control or affect the meaning or construction of any of its
provisions.
7.8 Governing Law. This Plan shall be governed by the laws
of the United States and, to the extent not preempted thereby, the
laws of Pennsylvania.
7.9 Validity. The illegality or invalidity of any provision
of this Plan shall not affect its remaining parts, but this Plan
shall be construed and enforced without such illegal or invalid
provisions.
7.10 Notice. Any notice or filing required or permitted to
be given to the Plan Administrator under the Plan shall be
sufficient if in writing and hand delivered, or sent by registered
or certified mail, to:
Director, Executive Compensation
and Employee Benefits
Hershey Foods Corporation
100 Crystal A Drive
Hershey, Pennsylvania 17033
Such notice shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on
the postmark on the receipt for registration or certification.
7.11 Successors. The provisions of this Plan shall bind and
inure to the benefit of the Company and its successors and assigns.
The term successors as used herein shall include any corporation or
other business entity which shall, whether by merger,
consolidation, purchase of assets, or otherwise, acquire all or
substantially all of the business or assets of the Company, and
successors of any such corporation or other business entity.
7.12 Incapacity. If the Plan Administrator finds that any
Participant or beneficiary to whom a benefit is payable under this
Plan is unable to care for his affairs, any payment due (unless
prior claim therefore shall have been made by a duly authorized
guardian or other legal representative) may be paid, upon
appropriate indemnification of the Plan Administrator, to any
person who is charged with the support of the Participant or
beneficiary. Any such payment shall be payment for the account of
the Participant and shall be a complete discharge of any liability
of the Company to the Participant or beneficiary.