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8-K - FORM 8-K - SANDERSON FARMS INC | g21928e8vk.htm |
Exhibit 10
SANDERSON FARMS, INC.
BONUS AWARD PROGRAM
(EXECUTIVE COMMITTEE)
Effective November 1, 2009
Supercedes November 1, 2008
Supercedes November 1, 2008
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SANDERSON FARMS, INC.
Bonus Award Program
Effective Nov. 1, 2009
Bonus Award Program
Effective Nov. 1, 2009
I. PURPOSE
The Board of Directors of Sanderson Farms, Inc. has determined that in addition to the
Companys 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. |
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 trainees within the corporate structure. |
The maximum bonus award achievable will vary depending on the employees position in the
Company.
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SANDERSON FARMS, INC.
Bonus Award Program
Bonus Award Program
III. ELIGIBILITY
EMPLOYMENT/PARTICIPATION LEVEL
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 and must have been
employed in a designated position for a period of nine months prior to the end of the fiscal year
to be eligible to participate in the bonus award program. 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, and had been employed in a designated
position for a period of at least nine months, 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 employees bonus
award.
MILITARY SERVICE
If an employee is on qualified military leave of absence during part or all of the fiscal
year, such employee will be eligible to participate in the Bonus Award Program if such employee
would have been otherwise eligible to participate. Such employees Base Salary for purposes of
determining any bonus award will be his or her base salary that would have been paid had he or she
not been on military leave.
EXTRAORDINARY CIRCUMSTANCES
Extraordinary circumstances will be subject to review by the Executive Committee.
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SANDERSON FARMS, INC.
Bonus Award Program
Bonus Award Program
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 time frame. 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. With this basic
philosophy in mind, the Board has determined that no bonuses will be paid under this program unless
net return on average stockholders equity after consideration is taken for any bonus paid under
this program for the year exceeds eight percent (8%). After this minimum threshold is met, the
Bonus Award Program will become effective, and bonuses will be paid if the other criteria described
in this program are met.
In recognition of the fact that one of our primary obligations as employees of this Company is
to our shareholders, the Board of Directors has 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 primary basis for
bonus awards. The earnings per share for purposes of computing the bonus awards, as set forth
herein, shall be computed net of any bonuses awarded and net of any extraordinary, non recurring
income items. For all salaried employees of Sanderson Farms other than those management level
employees specifically described in this program, this will be the sole basis for determining bonus
awards.
Although the Board has determined that net profits earned for shareholders of the Company
should be the primary method of determining the bonuses to be paid to employees, the Board has also
recognized that certain management level employees have responsibility for and more direct control
over the operating performance and profitability of the Company. In recognition of this fact, the
Board has concluded that a certain percentage of such employees bonus should be determined by
evaluating the operating and profitability performance of the Company relative to its peers and
competitors. Therefore, while a portion of such employees bonus will be determined by the
Companys earnings per share performance, a portion of such employees bonus will also be
determined by evaluating the performance of the Company as compared to our peers and competitors by
Agri Stats for the poultry division, and certain net income growth targets for managers in the
foods division, all as described herein.
The audited annual financial statements, on a consolidated basis, of Sanderson Farms, Inc.
will be the measuring tool for the net return to shareholders portion of 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.
The Companys performance relative to its peers and competitors as reported by Agri Stats will
be used to evaluate and determine bonuses paid to those employees whose bonuses are determined in
part by such performance. The appropriate measuring tool as set forth in this Bonus Award Program
as reported by Agri Stats for the twelve (12) month period ending on October 31 each year will be
used to determine if a bonus has been earned by such employees.
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SANDERSON FARMS, INC.
Bonus Award Program
Bonus Award Program
V. OBJECTIVES AND FORMULAS FOR DETERMINATION OF THE BONUS AWARD
A. | All salaried employees |
All salaried employees will receive a bonus if the net income per share objectives set forth
below are met, and if the minimum return on average stockholders equity for the year is earned.
Net income shall be computed net of any bonuses awarded and net of any extraordinary, non recurring
income items not related to the fiscal years operations. The annual audited financial statements,
on a consolidated basis, of Sanderson Farms, Inc., will be the measuring tool for this portion of
the Bonus Award Program. The annual bonus award will be paid to participants after the outside
auditors have completed their annual audit of the consolidated corporation.
The earnings per share objectives and the respective percentage of employees bonus dependent
upon EPS earned for the fiscal year (November 1 thru October 31) are as follows:
RANK | PER SHARE RETURN* | PERCENTAGE OF AWARD | ||||||||
Best
|
(1st) | $ | 5.08 | 100.0 | % | |||||
2nd | $ | 5.02 | 95.0 | % | ||||||
3rd | $ | 4.97 | 90.0 | % | ||||||
4th | $ | 4.91 | 85.0 | % | ||||||
5th | $ | 4.86 | 80.0 | % | ||||||
6th | $ | 4.80 | 75.0 | % | ||||||
7th | $ | 4.74 | 70.0 | % | ||||||
8th | $ | 4.69 | 65.0 | % | ||||||
9th | $ | 4.63 | 60.0 | % | ||||||
10th | $ | 4.58 | 55.0 | % | ||||||
11th | $ | 4.52 | 50.0 | % | ||||||
12th | $ | 4.47 | 45.0 | % | ||||||
13th | $ | 4.41 | 40.0 | % | ||||||
14th | $ | 4.35 | 35.0 | % | ||||||
15th | $ | 4.30 | 30.0 | % | ||||||
16th | $ | 4.24 | 25.0 | % | ||||||
17th | $ | 4.19 | 20.0 | % | ||||||
18th | $ | 4.13 | 15.0 | % | ||||||
19th | $ | 4.08 | 10.0 | % | ||||||
20th | $ | 4.02 | 5.0 | % |
* | Net of bonus and net of extraordinary, non recurring income items not related to the fiscal years operations. The per share return targets were calculated using the diluted shares as of the end of the most recent fiscal year. Adjustments to these targets will be made to reflect changes in the number of shares outstanding resulting from any merger, consolidation, reorganization, re-capitalization, re-incorporation, stock-splits, stock dividend, stock repurchase, or other changes in the corporate structure of the Company. Furthermore, the target per share return numbers were calculated based on a target net return on projected sales. The Company reserves the right to adjust these targets in the event of a substantial fluctuation in sales pounds or dollars during the year. |
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The following formula will be utilized to determine the exact dollar amount of a participants
bonus award dependent upon EPS performance.
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 based on above schedule | ||||
M | = | Percent of salary eligible to be earned as a bonus based on EPS performance. | ||||
FORMULA | ||||||
S X P X M = A |
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SANDERSON FARMS, INC.
Bonus Award Program
Bonus Award Program
As with any awards made under this Bonus Award Program, no bonus will be paid unless total net
income return (after bonus) on average stockholders equity for the year exceeds eight percent
(8%). Net return on average stockholders equity will be computed by taking the average of
beginning and ending stockholders equity for the applicable year, and dividing that number into
net income for the year.
For all employees other than those specifically set forth below, the percent of salary
eligible to be earned as a bonus based on EPS performance (M in the above formula) is 25%. The
management level employees set forth below shall be eligible to earn a bonus based on EPS
performance equal to the percent of their salary as set forth below (M in the above formula):
CEO
|
75 | % | ||
CFO,
|
50 | % | ||
COO/President
|
50 | % | ||
Dir.-Sales
|
35 | % | ||
Dir.-Production
|
35 | % | ||
Dir.-Processing
|
35 | % |
B. Executive Committee
Bonus awards under this Bonus Award Program for the Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer and President, Director of Marketing, Director of Production,
Director of Processing, Director of Development, the Controller, the Director of Administration,
the Director of Technical Services, the Director of Sales, Director of OD and Corporate
Communications and the Chief Financial Analyst will be granted based on a combination of earnings
per share performance and general corporate performance as measured against the Companys peers and
competitors as reported by Agri Stats. For purposes of calculating bonuses awarded and paid to
individuals in these positions based on operating performance, the corporate Agri Stats measure
will be as reported in Agri Stats bottom line analysis, per head report, net of bonus. Awards
made to these individuals based on the operating performance factor will be as follows:
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Percentage of Salary | ||||||||
Eligible to be Earned as | Corporate Agri Stats | |||||||
Bonus on Operating | Bottom Line | |||||||
Performance Factors | Report (per head) | |||||||
(Percentage of Award Earned) | ||||||||
TARGET
|
TOP 3 PLACES | |||||||
CEO
|
75 | % | 100 | % | ||||
CFO, COO,
|
50 | % | 100 | % | ||||
Dir. Sales, Dir. Proc.
|
35 | % | 100 | % | ||||
Dir.Prod.
|
35 | % | 100 | % | ||||
Controller, Dir. Admn.
|
25 | % | 100 | % | ||||
Dir.Tech Svcs.
|
25 | % | 100 | % | ||||
Dir. Devlop., Chief Analyst
|
25 | % | 100 | % | ||||
Dir. OD/Comm.
|
25 | % | 100 | % | ||||
HIGH AVERAGE
|
PLACES FOUR AND FIVE | |||||||
CEO
|
75 | % | 662/3 | % | ||||
CFO, COO
|
50 | % | 662/3 | % | ||||
Dir.-Sales,
|
35 | % | 662/3 | % | ||||
Dir.-Prod., Dir.-Proc.
|
35 | % | 662/3 | % | ||||
Controller, Dir.-Admin.,
|
25 | % | 662/3 | % | ||||
Dir-Tech Svcs.
|
25 | % | 662/3 | % | ||||
Dir. Develop.,Chief Analyst
|
25 | % | 662/3 | % | ||||
Dir. OD/Comm.
|
25 | % | 662/3 | % | ||||
LOW AVERAGE
|
PLACES SIX AND SEVEN | |||||||
CEO
|
75 | % | 331/3 | % | ||||
CFO, COO
|
50 | % | 331/3 | % | ||||
Dir.-Sales,
|
35 | % | 331/3 | % | ||||
Dir.-Prod., Dir.-Proc.,
|
35 | % | 331/3 | % | ||||
Controller, Dir.-Admin,
|
25 | % | 331/3 | % | ||||
Dir-Tech Svcs.
|
25 | % | 331/3 | % | ||||
Dir. Develop.,Chief Analyst
|
25 | % | 331/3 | % | ||||
Dir. OD/Comm.
|
25 | % | 331/3 | % |
In the event of significant changes in the number of participants in any Agri Stats report,
the Executive Committee may alter the places in each award category to reflect the changes in the
number of participants.
The following formula will be utilized for all employees whose bonus is to be determined in
part by factors other than EPS performance to determine that portion of the award dependent upon
such factors:
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 based on performance factor | ||||
M | = | Percentage of salary eligible to be earned and paid as a bonus on performance factor. | ||||
FORMULA | ||||||
S X P X M = A |
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SANDERSON FARMS, INC.
Bonus Award Program
Bonus Award Program
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.
4. The per share return targets were calculated using diluted shares at the end of the most
recent fiscal year. Adjustments to these targets will be made to reflect changes in the number of
shares outstanding resulting from any merger, consolidation, reorganization, re-capitalization,
re-incorporation, stock-splits, stock dividend, stock repurchase, or other changes in the corporate
structure of the Company. Furthermore, the target per share return numbers were calculated based on
a target net return on projected sales. The Company reserves the right to adjust these targets in
the event of a substantial fluctuation in sales pounds or dollars during the year.
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