EXHIBIT 10.2
AGRILINK FOODS
EXCELLENCE IN PERFORMANCE
A MANAGEMENT INCENTIVE PROGRAM
FISCAL 2002
Agrilink Foods Excellence in Performance, a management incentive program, (the
`Plan') is a discretionary annual cash bonus program. This Plan is an important
component of compensation. When combined with base salary, it creates a total
compensation opportunity that, when business goals are achieved, is competitive
within the food industry, and, when those goals are exceeded, provides an
above-market compensation opportunity.
The objective of the Plan is to align managers' financial objectives with those
of Agrilink owners, Pro-Fac Cooperative. It is designed to motivate managers to
perform in a way that will optimize Agrilink earnings, and to effectively manage
and improve the operating cash flow of Agrilink. The Plan recognizes the impact
managers can have on the achievement of Agrilink business goals by rewarding
those achievements.
Participation
Participation is limited to a group of managers selected by the executive
committee, and who do not participate in any company-sponsored sales and
marketing incentive program, or other Agrilink incentive program.
Targeted Incentive Awards
Each participating manager's targeted bonus award, or bonus opportunity, is
based on competitive bonuses paid at other food companies which are similar in
size to Agrilink Foods and is expressed as a percentage of base salary paid
during the fiscal year. The sum of these individual targeted bonuses represents
the company's targeted bonus pool.
Performance Targets
The performance targets for Agrilink are established annually by the Agrilink
Foods Executive Committee and the Agrilink Board of Directors. Annual
performance targets are generally based on a level of earnings and operating
cash flow that represent real growth, that insure a fair payment to growers for
the products they deliver, and that provide a reasonable return-on-investment to
Agrilink owners. The performance targets are subject to change each year to
insure they are consistent with Agrilink annual business objectives and
strategic direction.
Incentive Payments
Each year, the Agrilink Foods Management Executive Committee reviews the annual
profit plan and establishes the appropriate potential bonus payment levels
associated with incremental changes in Agrilink Foods Incentive Earnings.
Generally, performance targets of greater difficulty will result in the
potential for higher bonus awards, when those targets are met or exceeded.
Should actual results fall below the minimum target levels established for the
year, no incentive awards will be paid.
A threshold operating cash flow level is established. If the company achieves
the minimum level of operating cash flow, the incentive pool is then based on
Incentive Earnings. Variations in cash flow above the threshold level will not
impact the amount of the incentive pool. Adjustments to either Incentive
Earnings or to operating cash flow may be made for purposes of establishing the
incentive pool, as deemed appropriate by the company.
Incentive award payments are incumbent upon the company's ability to pay full
Commercial Market Value to its grower/owners in exchange for the raw product
they deliver to Agrilink. Generally, Commercial Market Value, or CMV, represents
the cash price growers would receive for their crops if they sold them on the
open market or via pre-season contract to other processors. If, in any year, the
company cannot pay at least 100% of CMV to its growers, then no incentive awards
will be paid for that year, regardless of company or individual performance. In
years in which at least 100% CMV is paid to members, the bonus pool will be
based on total Agrilink Foods performance compared to the performance targets
established for Incentive Earnings, after adjustments, if any.
Individual awards are discretionary and will be determined by the Management
Executive Committee member based on the associate's individual performance, with
final approval of the Agrilink CEO. Therefore, favorable performance of Agrilink
as a whole does not guarantee an award to any individual participant, rather it
represents bonus opportunity. Participants' individual targeted awards are used
solely to create the overall target incentive pool. Agrilink earnings
performance against pre-established targets will either increase or decrease the
incentive pool. The allocation to each individual of this incentive pool is
totally discretionary, based on individual performance. Any participant
receiving a performance rating of `Below Expectations' will be ineligible for an
annual incentive award.
Payment of Awards
Individual incentive awards will be paid via payroll on the September 15th
following each fiscal year end. ("Highly compensated employees" have the ability
to defer all or a portion of their annual bonus into the Non-qualified 401(k)
Plan.) The payments are subject to the appropriate income and payroll tax
withholding, 401(k) deductions, and court-ordered garnishments. Deferred awards
are subject to FICA withholding.
In order to receive an award, an individual must be an employee of the company
and on the active payroll on the September 15th payment date. Exceptions to this
are for retirement, disability or death, which may occasion pro-rata payments
based upon actual salary earned during the fiscal year. Any other exceptions are
to be made only with the approval of the Agrilink CEO.
Future of the Program
This Plan is reviewed annually by the company and its board of directors to
insure that it is consistent with the company's business objectives. The company
reserves the right to amend or terminate this Plan at its discretion.