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EXHIBIT 10.12
LANCE, INC.
2004 LONG-TERM INCENTIVE PLAN FOR OFFICERS
Purposes and The primary purposes of the 2004 Long-Term Incentive
Introduction Plan for 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
Participation and 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 and Each participant will be assigned a Target Incentive
Performance Measures expressed as a percentage of his or her Base Salary.
Participants may be 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
[* Targets not required to be disclosed.]
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*% and a 0.1% Net Revenues increase would increase an
award *%. Percent of payout will be rounded to the
nearest tenth of a percent. 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 of Awards will be made as soon as practicable after
Awards performance 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
Terminations of employment, or is terminated involuntarily before the
Employment end of the Plan Years, any award will be forfeited. In
the event of death, permanent disability,
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or normal or early retirement, any award will be paid on
a pro rata basis after the end of the Plan Years.
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.
"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
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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 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.
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"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 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.
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.
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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.]