EXHIBIT 10.2
LANCE, INC.
2004 LONG-TERM INCENTIVE PLAN FOR OFFICERS
Purposes and The primary purposes of the 2004 Long-Term Incentive Plan for
Introduction Officers are to:
- Align executives' interests with those of stockholders
by linking a substantial portion of compensation to the
Company's cumulative consolidated earnings per share
(EPS) over three fiscal years and compound annual growth
in the Company's consolidated net revenues (Net
Revenues) over three fiscal years based on the Company's
2004-2006 Strategic Plan.
- Provide a way to attract and retain key executives and
managers who are critical to Lance's future success.
- Provide competitive total compensation for executives
and managers commensurate with Company performance.
To achieve the maximum motivational impact, performance
measures, Plan goals and the awards that will be received for
meeting those goals will be communicated to participants as
soon as practical after the 2004 Plan is approved by the Stock
Award Committee of the Board of Directors.
Each participant will be assigned a Target Incentive, stated
as a percent of Base Salary. The Target Incentive Awards, or a
greater or lesser amount, will be granted after the end of the
three fiscal years, 2004 through 2006, based on the attainment
of predetermined goals.
Base Salary shall be the annual rate of base compensation for
the 2004 fiscal year which is set no later than April of such
fiscal year.
Plan Years The period over which performance will be measured is
the Company's three fiscal years, 2004 through 2006.
Eligibility and Eligibility in the Plan is limited to Executive Officers and
Participation managers who are key to Lance's success. The Stock Award
Committee will review and approve participants nominated by
the President and Chief Executive Officer. Participation in
one year does not guarantee participation in a following year
but will be reevaluated and determined on an annual basis.
Attachment A includes the list of 2004 participants approved
by the Stock Award Committee on April 22, 2004.
Target Incentives Each participant will be assigned a Target Incentive expressed
and Performance as a percentage of his or her Base Salary. Participants may be
Measures assigned to a Performance Tier by position by salary level or
based on other factors as determined by the President and
Chief Executive Officer. If the duties of a participant change
significantly during the Plan Years, the President and Chief
Executive Officer, with the approval of the Stock Award
Committee, may change the Target Incentive for such
participant for the remaining portion of the Plan Years.
Attachment A lists the Target Incentives for each participant
for the Plan Years as determined by the Stock Award Committee.
Target Incentives will be communicated to each participant as
close to the beginning of the year as practicable, in writing.
Target Incentives will be calculated by multiplying each
participant's Base Salary by the appropriate percentages, as
described below.
Target Incentives shall be calculated as follows:
Percentage of Base Salary
Performance Tier for 2004-2006 Target Incentives
---------------- -------------------------------
1 *%
2 *%
3 *%
For 2004-2006, awards will be based 75% on three-year
cumulative consolidated EPS and 25% on three-year compound
annual growth in consolidated Net Revenues since 2003, with
each performance measure calculated separately, as follows:
Minimum Target
------- ------
EPS $* $*
Net Revenues *% *%
Minimum EPS performance funds 37.5% of the award and target
EPS performance funds 75% of the award. Minimum Net Revenues
performance funds 12.5% of the award and target Net Revenue
funds 25% of the award. Percent of payout will be determined
on a straight line basis between minimum and target and
percent of payout above target is determined on the same
straight line basis. A $0.01 EPS increase would increase an
award *% and a 0.1% Net Revenues increase would increase an
award *%. Percent of payout will be rounded to the nearest
tenth of a per-
[*Targets not required to be disclosed.]
2
cent. There is no maximum limit on the amount of an award but
there will be no payout unless a minimum performance measure
is reached. For example, achieving EPS of $* would result in
an award equal to *% of Target Incentive and achieving Net
Revenues of *% would result in an award equal to *% of Target
Incentive.
[*Targets not required to be disclosed.]
Final Target Incentive Awards will be calculated and granted
after the Stock Award Committee has reviewed the Company's
audited financial statements for 2004 through 2006 and
determined the performance levels achieved.
Awards Each participant shall receive cash equal to 25% in value of
his or her award, 50% in value will be in restricted stock and
25% in value in stock options.
To determine the number of shares of the Company's Common
Stock issued pursuant to each stock option and each restricted
stock grant, the value of each option is calculated using the
Black-Scholes model of the Company's compensation adviser in
January 2007 after the end of the Plan Years, subject to
certain adjustments, and each restricted stock grant using the
average of the high and low for the Company's Common Stock on
the date of grant.
Restricted stock will vest as to 50% on the date of grant and
the balance one year after the date of grant.
Stock options will be nonqualified, will vest on the date of
grant, will have an exercise price equal to the price used for
restricted stock grants and will be exercisable for five years
after the date of grant.
Form and Timing Awards will be made as soon as practicable after performance
of Awards measures are calculated and approved by the Stock Award
Committee. All awards will be rounded to the nearest multiple
of $100 or 50 shares, as the case may be.
Change In Status An employee hired into an eligible position during the Plan
Years may participate in the plan for the balance of the Plan
Years on a pro rata basis.
Certain In the event a participant voluntarily terminates employment,
Terminations of or is terminated involuntarily before the end of the Plan
Employment Years, any award will be forfeited. In the event of death,
permanent disability, or normal or early retirement, any
award will be paid on a pro rata basis after the end of the
Plan Years.
3
In the event a participant voluntarily terminates
employment, any award which has not vested will
terminate and be forfeited. In the event a participant
is terminated involuntarily, any award which has not
vested will terminate and be forfeited except that stock
options which have vested prior to involuntary
termination may be exercised within 30 days of
termination. In the event of death, stock options shall
become fully vested and may be exercised within one year
of death. In the event of permanent disability, stock
options shall become fully vested and remain exercisable
in accordance with the terms of the award. In the event
of normal retirement, stock options which have or will
vest within six months of normal retirement will vest
and become exercisable in accordance with the terms of
the award and may be exercised within three years of
normal retirement. In the event of death, disability or
normal retirement, restricted stock awards which are not
vested will be vested pro rata based on the number of
full months elapsed since the date of the award. In the
event of early retirement, restricted stock awards which
are not vested will be vested pro rata based on the
number of full months elapsed since the date of the
award. In all other cases, awards which have not vested
upon termination of employment will terminate and be
forfeited.
Change In Control In the event of a Change in Control, pro rata
payouts will be made at the greater of (1) Target or (2)
actual results for the three fiscal years-to-date, based
on the number of days in the Plan Years preceding the
Change in Control. Payouts will be made within 30 days
after the relevant transaction has been completed.
Also, in the event of a Change in Control, the vesting
of restricted stock will be accelerated to fully vest
upon the effective date of a Change in Control.
A Change in Control is defined as when any person,
corporation or other entity and its affiliates
(excluding members of the Van Every Family and any
trust, custodian or fiduciary for the benefit of any one
or more members of the Van Every Family) acquires or
contracts to acquire or otherwise controls in excess of
35% of the then outstanding equity securities of the
Company. The Van Every Family shall mean the lineal
descendants of Salem A. Van Every, Sr., whether by blood
or adoption, and their spouses.
Withholding The Company shall withhold from awards any Federal,
foreign, state or local income or other taxes required
to be withheld.
Communications Progress reports should be made to participants
annually, showing performance results.
4
Executive Officers Notwithstanding any provisions to the contrary above,
participation, awards and prorations for executive
officers, including the President and Chief Executive
Officer, shall be approved by the Stock Award Committee.
Governance The Stock Award Committee of the Board of Directors
of Lance, Inc. is ultimately responsible for the
administration and governance of the Plan. Actions
requiring Committee approval include final determination
of plan eligibility and participation, identification of
performance measures and goals and final award
determination. The Committee retains the discretion to
adjust any award due to extraordinary events such as
acquisitions, dispositions, required accounting
adjustments or similar events, affecting the
calculations under a performance measure. The decisions
of the Committee shall be conclusive and binding on all
participants.
5
ATTACHMENT A
Award Target
Name Title Percentage Incentive
---- ----- ---------- ---------
P. A. Stroup, III President and Chief *% $*
Executive Officer
H. D. Fields Vice President and *% $*
President, Vista
Bakery, Inc.
B. C. Preslar Vice President *% $*
- Finance and Chief
Financial Officer
L. R. Gragnani, Jr. Vice President *% $*
- Information
Technology/CIO
E. D. Leake Vice President *% $*
- Human Resources
F. I. Lewis Vice President - Sales *% $*
D. R. Perzinski Treasurer *% $*
M. E. Wicklund Controller and *% $*
Assistant Secretary
[*Award targets omitted for participants as targets not required to be
disclosed.]