EXHIBIT 10-H-3
SANDERSON FARMS, INC.
Bonus Award Program
as of November 1, 1993
I. PURPOSE
The Board of Directors of Sanderson Farms, Inc. has determined that in
addition to the Company's existing competitive and equitable total
compensation package, it is desirable to maintain a bonus award program for
its salaried employees. The purposes for such a program include:
A. To encourage excellence and high levels of performance.
B. To recognize the contributions of the salaried employees to the
overall profitability of the Company.
C. To encourage all employees from every division in the Company to
cooperate, share information and work together as a team for the
overall benefit of the Company and its shareholders.
SANDERSON FARMS, INC.
Bonus Award Program
as of November 1, 1993
II. PARTICIPATION AND MAXIMUM AWARD
The Executive Committee of Sanderson Farms, Inc. will select and
recognize personnel eligible to participate in the bonus award program, and
reserves the right to review and change the class of eligible employees at any
time. Those now designated include:
A. Salaried personnel within the corporate structure of Sanderson
Farms, Inc., Sanderson Farms, Inc. (Production Division), Sanderson Farms,
Inc. (Processing Division) and Sanderson Farms, Inc. (Foods Division).
B. All salaried management and accounting trainees within the
corporate structure.
The maximum bonus award achievable will be 25% of the employee's base
salary.
SANDERSON FARMS, INC.
Bonus Award Program
as of November 1, 1993
III. ELIGIBILITY
EMPLOYMENT
Except in the case of death, disability or retirement, as set forth
below, employees must be employed in a designated position on October 31 of
the applicable fiscal year to be eligible to participate in the bonus award
program.
PARTICIPATION LEVEL
If a person becomes an employee in a designated position during the year
and is employed in a designated position on October 31, the base salary paid
to such employee during that portion of the year during which he or she was
employed in a designated position will be used in calculating the amount of
such employee's bonus award. Base salary for this purpose shall include
regular compensation only, and shall not include bonus award payments and any
other miscellaneous payments that might be treated as income to the employee.
DEATH, DISABILITY AND RETIREMENT
If an eligible employee terminates employment with the Company during
the fiscal year before October 31 as a result of death, disability or
retirement, such employee will be eligible to participate in the Bonus Award
Program notwithstanding the fact that the employee is not employed on October
31, and the base salary paid to such employee during that portion of the year
during which he or she was employed in a designated position will be used to
calculate the amount of such employee's bonus award.
EXTRAORDINARY CIRCUMSTANCES
Extraordinary circumstances will be subject to review by the Executive
Committee.
SANDERSON FARMS, INC.
Bonus Award Program
as of November 1, 1993
IV. DETERMINATION OF AWARD AND PAYMENT
Bonus award programs for many corporations focus in some form or another
on the real dollar profits earned by the corporation within a given timeframe.
This method of determining bonuses to be paid to employees recognizes that
bonuses should be paid to employees only after a fair and equitable return has
been earned for the shareholders who own the company.
In recognition of the fact that one of our primary obligations as
employees of this Company is to our shareholders, the Executive Committee and
the Board of Directors have determined that net profits made by the
consolidated corporations [Sanderson Farms, Inc., Sanderson Farms, Inc.
(Production Division), Sanderson Farms, Inc. (Processing Division) and
Sanderson Farms, Inc. (Foods Division)] on a per share basis for the period
November 1 through October 31 of each year will be the basis for bonus awards.
The cost of the bonus awards program will be included in the operating cost of
the corporations in determining the actual annual per share net income.
The audited annual financial statements, on a consolidated basis, of
Sanderson Farms, Inc. will be the measuring tool for the bonus award program.
The annual bonus award will be paid to participants in the bonus award program
after the outside auditors have completed their annual audit of the
corporations, which is usually approximately two (2) months after the end of
the fiscal year.
SANDERSON FARMS, INC.
Bonus Award Program
as of November 1, 1993
V. OBJECTIVES AND FORMULAS FOR DETERMINATION OF
THE BONUS AWARD
The net income per share objective and the corresponding bonus award
percentage will be determined by the Executive Committee of Sanderson Farms,
Inc. on an annual basis.
The objectives and award percentages for fiscal 1995 (November 1, 1994
through October 31, 1995) are as follows:
RANK PER SHARE RETURN* AWARD PERCENTAGE
Best (1st) $3.5012 25.000%
2nd $3.4293 23.887%
3rd $3.3482 22.776%
4th $3.2672 21.665%
5th $3.1862 20.554%
6th $3.1052 19.443%
7th $3.0241 18.332%
8th $2.9431 17.221%
9th $2.8621 16.110%
10th $2.7811 14.999%
11th $2.7000 13.888%
12th $2.6190 12.777%
13th $2.5380 11.666%
14th $2.4570 10.555%
15th $2.3759 9.444%
16th $2.2949 8.333%
17th $2.2139 7.222%
18th $2.1329 6.111%
19th $2.0518 5.000%
20th BELOW ZERO (0)
*Net of bonus.
The following formula will be utilized to determine the exact dollar
amount of a participant's bonus award.
A = Gross Award
S = Base Salary (excluding bonus award
payments and other items of miscellaneous income) of the
Participant during that portion of the year in which he
or she was employed in a designated position.
P = Percentage of Award Earned
FORMULA
S X P = A
EXAMPLE
A = Gross Award
S = Base Salary paid to the eligible employee during the
year of $30,780
P = Percentage of Award 10th Place = 14.999%
$30,780 x 14.999% = $4,616.69
SANDERSON FARMS, INC.
Bonus Award Program
as of November 1, 1993
VI. PARAMETERS
This bonus award program has been designed to encourage teamwork and
cooperation among all of the divisions of Sanderson Farms, and to ensure that
Sanderson Farms is consistently among the leaders in profitability in the
broiler and prepared foods industry. The program is also designed to pay a
bonus to employees only after the Company has returned to its shareholders a
fair and equitable return.
1. In the event of extraordinary operating conditions that were
unforeseen when setting the objectives and percentages in this bonus award
program, such circumstances will be considered by the Executive Committee of
Sanderson Farms, Inc. in making awards.
2. In the event of possible reporting errors affecting the ranking, such
circumstances will be considered by the Executive Committee of Sanderson
Farms, Inc. in making awards.
3. In the event changes in laws or accounting procedures affect the
ranking, such circumstances will be considered by the Executive Committee of
Sanderson Farms, Inc. in making awards.