.
.
.
EXHIBIT 10.11
LANCE, INC.
2004 ANNUAL PERFORMANCE INCENTIVE PLAN FOR OFFICERS
Purposes and The primary purposes of the 2004 Annual Performance
Introduction Incentive Plan for Officers are to:
_ Motivate behaviors that lead to the successful
achievement of specific sales, financial and
operations goals that support Lance's stated
business strategy.
_ Emphasize link between participants' performance
and rewards for meeting predetermined, specific
goals.
_ Focus participant's attention on operational
effectiveness from both an earnings and an
investment perspective.
_ Promote the performance orientation at Lance and
communicate to employees that greater
responsibility carries greater rewards because
more pay is "at risk."
For 2004, participants will be eligible to earn
incentive awards based on Corporate Return on Capital
Employed (ROCE), Divisional Return on Net Assets
(RONA) and individual performance objectives against
specific goals as described below.
_ ROCE is calculated as follows:
Net Income + Interest Expense x (1 - Tax Rate)
----------------------------------------------
Average Equity + Average Debt
_ RONA is calculated as follows:
Operating Profit x (1 - Tax Rate)
--------------------------------------------------------
Average Operating Assets - Average Operating Liabilities
Tax Rate shall be the actual income tax rate for ROCE
and will be the income tax rate in the operating plan
for the applicable operating unit for RONA.
To achieve the maximum motivational impact, 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
Compensation Committee of the Board of Directors.
Each participant will be assigned a Target Incentive,
stated as a percent of Base Salary. The Target
Incentive Award, or a greater or lesser amount,
will be earned at the end of the plan year based on
the attainment of predetermined goals.
Base Salary shall be the annual rate of base
compensation for the Plan Year which is set no later
than April of such Plan Year.
Following year-end, 100% of the awards earned will be
payable to participants in cash.
Plan Year The period over which performance will be measured is
the Company's fiscal year.
Eligibility and Eligibility in the Plan is limited to Officers of
Participation Lance who are key to Lance's success. The Compensation
Committee of the Board of Directors 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 instead will be reevaluated and determined on an
annual basis.
Participants in the Plan may not participate in any
other annual incentive plan (e.g., sales incentives,
etc.) offered by Lance or its affiliates. Attachment A
includes the list of 2004 participants approved by the
Compensation Committee at its April 22, 2004 meeting.
Target Incentive Awards Each participant will be assigned a Target Incentive
expressed as a percentage of his or her Base Salary.
Participants may be assigned Target Incentives by
position by salary level or based on other factors as
determined by the Compensation Committee.
Target Incentives will be reevaluated at least every
other year, if not annually. If the job duties of a
position change during the year, or Base Salary is
increased significantly, the Target Incentive shall be
revised as appropriate.
Attachment A lists the Target Incentive and applicable
performance measure for each participant for the 2004
Plan Year. These Target Incentives will be reviewed
and adjusted annually by the Compensation Committee.
Target Incentives will be communicated to each
participant as close to the beginning of the year as
practicable, in writing. Final awards will be
calculated by multiplying each participant's Target
Incentive by the appropriate percentage (based on
financial and individual performance for the year, as
described below).
2
Performance Measures The 2004 financial performance measures for the
and Award Funding Company as a whole and the operating units are shown
below. Specific goals and related payouts are also
shown below.
Each operating unit will fund its own awards.
Minimum Target Maximum
------- ------ -------
Lance, Inc. (ROCE) *% *% *%
Lance Co. (RONA) *% *% *%
Vista/Tamming (RONA) *% *% *%
Award Level Funded 50% 100% 200%
[* Targets not required to be disclosed.]
Percent of payout will be determined on a straight
line basis between minimum and maximum. There will be
no payouts unless the minimum applicable performance
measure is reached and there will be no payouts if the
Company as a whole does not reach the minimum
applicable performance measure.
The performance measures, specific numerical goals and
the role of individual performance in determining
final payouts will be communicated to each participant
at the beginning of the year. Final Target Incentive
Awards will be calculated after the Compensation
Committee has reviewed the Company's audited financial
statements for 2004 and determined the performance
level achieved.
Minimum, Target and Maximum levels will be defined at
the beginning of each year for each performance
measure.
The following definitions for the terms Maximum,
Target and Minimum should help set the goals for each
year, as well as evaluate the payouts:
_ Maximum: Excellent; deserves an above-market
bonus
_ Target: Normal or expected performance; deserves
market level bonus
_ Minimum: Lowest level of performance deserving
payment above base salary; deserves below market
bonus
_ Below minimum: Deserves no additional pay beyond
base salary
Individual Each Officer will receive 100% of his or her Target
Performance Incentive Award based on his or her applicable
performance measure except for those participants
listed on Attachment B, who will receive 75% to 90% of
his or her Target Incentive Award based on his or her
applicable performance measure and the remainder based
on his or her individual performance objective listed
on
3
Attachment B.
Form and Timing Final award payments will be made in cash as soon as
of Payments practicable after award amounts are approved by the
Compensation Committee of the Board of Directors. All
awards will be rounded to the nearest $100.
Change in Status An employee hired into an eligible position during the
year may participate in the Plan for the balance of
the year on a pro rata basis.
Certain Terminations of In the event a participant voluntarily terminates
Employment employment or is terminated involuntarily before the
end of the year, any award will be forfeited. In the
event of death, permanent disability, or normal or
early retirement, the award will be paid on a pro rata
basis after the end of the plan year. Awards otherwise
will be calculated on the same basis as for other
participants, except that any adjustment for
individual performance will be based on performance
prior to the termination of employment.
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 year-to-date, based on the
number of days in the plan year preceding the Change
in Control. Payouts will be made within 30 days after
the relevant transaction has been completed.
"Change in Control" means, and shall be deemed to have
occurred upon, the first to occur of any of the
following events:
(i) Any Outside Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the
combined voting power of the Company's then
outstanding securities; or
(ii) During any period of two (2) consecutive years
(not including any period prior to the date hereof),
individuals who at the beginning of such period
constitute the Board (and any new Director, whose
nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of
the Directors then in office who either were Directors
at the beginning of the period or whose nomination for
election was so approved) cease for any reason to
constitute a majority of the members of the Board; or
(iii) The stockholders of the Company approve: (i) a
plan of complete liquidation of the Company; or (ii)
an agreement for the sale or disposition of all or
substantially all of the Company's assets other than a
sale or disposition of all or substantially all of the
Company's assets to an entity at least sixty percent
(60%) of the combined voting power of the voting
securities of which are owned by the stockholders of
the Company in substantially the same proportions as
their ownership of the Company
4
immediately prior to such sale or disposition; or
(iv) The stockholders of the Company approve a merger,
consolidation, or reorganization of the Company with
or involving any other corporation, other than a
merger, consolidation, or reorganization that would
result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity or any parent thereof) at least sixty percent
(60%) of the combined voting power of the voting
securities of the Company (or such surviving entity)
outstanding immediately after such merger,
consolidation, or reorganization.
However, in no event shall a "Change in Control" be
deemed to have occurred with respect to a Participant
if that Participant is part of a purchasing group
which consummates the Change in Control transaction. A
Participant shall be deemed "part of a purchasing
group" for purposes of the preceding sentence if the
Participant is an equity participant in the acquiring
company or group or surviving entity (the "Purchaser")
except for ownership of less than one percent (1%) of
the equity of the Purchaser.
"Beneficial Owner" has the meaning ascribed to such
term in Section 13(d) of the Exchange Act and Rule
13d-3 of the General Rules and Regulations under the
Exchange Act.
"Board" means the Board of Directors of the Company.
"Director" means a member of the Board.
"Member of the Van Every Family" means (i) a lineal
descendant of Salem A. Van Every, Sr., including
adopted persons as well as persons related by blood,
(ii) a spouse of an individual described in clause (i)
of this Paragraph or (iii) a trust, estate, custodian
and other fiduciary or similar account for an
individual described in clause (i) or (ii) of this
Paragraph.
"Outside Person" means any Person other than (i) a
Member of the Van Every Family, (ii) a trustee or
other fiduciary holding securities under an employee
benefit plan of the Company or (iii) a corporation
owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as
their ownership of the Company.
"Participant" means an employee of the Company who is
granted an Award under this Plan.
Withholding The Company shall withhold from award payments any
Federal, foreign, state or local income or other taxes
required to be withheld.
5
Communications Progress reports should be made to participants
quarterly showing the year-to-date performance results
and the percentage of Target Incentives that would be
earned if results remain at that level for the entire
year.
Executive Notwithstanding any provisions to the contrary above,
Officers participation, Target Incentive Awards and prorations
for executive officers, including the President and
Chief Executive Officer, shall be approved by the
Compensation Committee.
Governance The Compensation 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, performance
objectives and final award determination. The
Committee retains the discretion to adjust any award
that is determined to be inappropriate due to
anomalies in the application of a performance measure.
The decisions of the Committee shall be conclusive and
binding on all participants.
6
ATTACHMENT A
Performance Award Target
Name Title Measure Percentage Incentive
---- ----- ----------- ---------- ---------
P. A. Stroup, III President and Chief Lance, Inc. *% $*
Executive Officer ROCE
H. D. Fields Vice President and Vista/Tamming *% $*
President, Vista RONA
Bakery, Inc.
L. R. Gragnani, Jr. Vice President Lance, Inc. *% $*
- Information ROCE
Technology/CIO
E. D. Leake Vice President Lance, Inc. *% $*
- Human Resources ROCE
B. C. Preslar Vice President Lance, Inc. *% $*
- Finance and Chief ROCE
Financial Officer
F. I. Lewis Vice President Lance Co. *% $*
- Sales RONA
D. R. Perzinski Treasurer Lance, Inc. *% $*
ROCE
M. E. Wicklund Controller and Lance, Inc. *% $*
Assistant Secretary ROCE
[* Award targets omitted for participants as targets not required to be
disclosed.]
ATTACHMENT B
Individual
Individual Performance
Performance Objective
Name Title Objective Percentage
---- ----- ----------- -----------
P.A. Stroup, III President and Chief Lance, Inc. *%
Executive Officer Safety
H.D. Fields Vice President and Vista/Tamming *%
President, Vista Safety
Bakery, Inc.
E.D. Leake Vice President Lance, Inc. *%
- Human Resources Safety
F.I. Lewis Vice President Direct Store *%
- Sales Delivery Sales
[* Objective percentage omitted for participants as targets not required to be
disclosed.]