Looking for an agreement? Search from over 1 million agreements now.

Executive Benefits Protection Plan

This is an actual contract by Hershey.
Browse the agreement preview below and buy the entire agreement for $35
Search This Document
Exhibit 10.1





THE HERSHEY COMPANY

EXECUTIVE BENEFITS PROTECTION PLAN

(GROUP 3A)

Amended and Restated as of December 29, 2006



The Hershey Company Executive Benefits Protection Plan (Group 3A), as set forth herein, is intended to help attract and retain qualified management employees and maintain a stable work environment by making provision for the protection of covered employees in connection with a Change in Control or termination of employment under certain circumstances as set forth herein. The Plan is an amendment to and restatement (as amended) of the Hershey Foods Corporation Executive Benefits Protection Plan (Group 3A), which was last amended and restated effective June 4, 2003.



ARTICLE 1

DEFINITIONS



As hereinafter used, the following words shall have the meanings set forth below.



1.1 AIP means the Annual Incentive Program under the KEIP and annual incentives awarded under the Company's Sales Incentive Plan and any successor or replacement plan thereof.



1.2 Annual Base Salary means with respect to an Executive the higher of:



1.2.1 his or her highest annual base salary in effect during the one (1) year period preceding a Change in Control; or



1.2.2 his or her highest annual base salary in effect during the one (1) year period preceding his or her Date of Termination.



For purposes of the foregoing, salary reduction elections pursuant to Sections 125 and 401(k) of the Code shall not be taken into account.



1.3 Annual Bonus means with respect to an Executive the higher of:



1.3.1 the highest bonus paid or payable, including any bonus or portion thereof which has been earned but deferred, to him or her by the Company with respect to any of the three fiscal years (or such shorter period during which he or she has been employed by the Company or eligible to receive any bonus payment) immediately preceding the fiscal year in which a Change in Control occurs (annualized for any fiscal year during such period consisting of less than twelve full months or with respect to which he or she has been employed by the Company or eligible to receive a bonus for less than twelve full months); or






1.3.2 his or her 100% target bonus award amount for the year including his or her Date of Termination.



For purposes herein, only payments under the AIP, as well as payments under any successor or replacement substitute plan, shall be treated as bonus payments.



1.4 Base Amount shall have the meaning ascribed to such term in Section 280G(b)(3) of the Code.



1.5 Board means the Board of Directors of the Company.



1.6 Cause means with respect to an Executive:



1.6.1 his or her willful and continued failure to substantially perform his or her duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to him or her by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed his or her duties; or



1.6.2 his or her willfully engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company.



For purposes of this Section 1.6, no act or failure to act, on the part of an Executive, shall be considered willful unless it is done, or omitted to be done, by him or her in bad faith and without reasonable belief that his or her action or omission was in the best interests of the Company. Any act, or failure to act, based upon prior approval given by the Board or upon the instruction or with the approval of the Chief Executive Officer or an Executive ? s superior or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of an Executive shall not be deemed to be for Cause unless and until there shall have been delivered to him or her a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to him or her and he or she is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, he or she is guilty of the conduct described in Subsection 1.6.1 or 1.6.2 above, and specifying the particulars thereof in detail.



1.7 CLRP means The Hershey Company Compensation Limit Replacement Plan and any successor or replacement plan thereof.





2




1.8 Change in Control means:



1.8.1 individuals who, on April 18, 2006, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to April 18, 2006, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by specific vote or by approval of the proxy statement of the Company in which such person is named as nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided , however , that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as described in Rule 14a-12(c) under the Securities Exchange Act of 1934 (the "Exchange Act" )) ( ?Election Contest") or other actual or threatened solicitation of proxies or consents by or on behalf of any person (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of the Exchange Act) ("Person") other than the Board ("Proxy Contest"), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director; and provided further , however , that a director who has been approved by the Hershey Trust while it beneficially owns more than 50% of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Power") shall be deemed to be an Incumbent Director;



1.8.2 the acquisition or holding by any Person of beneficial ownership (within the meaning of Section 13(d) under the Exchange Act and the rules and regulations promulgated thereunder) of shares of the Common Stock and/or the Class B Common Stock of the Company representing 25% or more of either (i) the total number of then outstanding shares of both Common Stock and Class B Common Stock of the Company (the "Outstanding Company Stock") or (ii) the Outstanding Company Voting Power; provided that, at the time of such acquisition or holding of beneficial ownership of any such shares, the Hershey Trust does not beneficially own more than 50% of the Outstanding Company Voting Power; and provided, further, that any such acquisition or holding of beneficial ownership of shares of either Common Stock or Class B Common Stock of the Company by any of the following entities shall not by itself constitute such a Change in Control hereunder: (i) the Hershey Trust; (ii) any trust established by the Company or by any Subsidiary for the benefit of the Company and/or its employees or those of a Subsidiary; (iii) any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; (iv) the Company or any Subsidiary or (v) any underwriter temporarily holding securities pursuant to an offering of such securities;



1.8.3 the approval by the stockholders of the Company of any merger, reorganization, recapitalization, consolidation or other form of business combination (a " Business Combination") if, following consummation of such Business Combination, the Hershey Trust does not beneficially own more than 50% of the total voting power of all outstanding voting securities eligible to elect directors of (x) the surviving entity or entities (the "Surviving Corporation") or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of more than 50% of the combined voting power of the then outstanding voting securities eligible to elect directors of the Surviving Corporation; or





3




1.8.4 the approval by the stockholders of the Company of (i) any sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation (the "Acquiring Corporation") if, following consummation of such sale or other disposition, the Hershey Trust beneficially owns more than 50% of the total voting power of all outstanding voting securities eligible to elect directors (x) of the Acquiring Corporation or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of more than 50% of the combined voting power of the then outstanding voting securities eligible to elect directors of the Acquiring Corporation, or (ii) a liquidation or dissolution of the Company.



1.09 Code means the Internal Revenue Code of 1986, as amended from time to time.



1.10 Committee means the Compensation and Executive Organization Committee of the Board or any successor committee having similar authority.



1.11 Company means The Hershey Company, a Delaware corporation.



1.12 Coverage Period means the period commencing on the date on which a Change in Control occurs and ending on the date which is the second anniversary thereof.



1.13 Date of Termination has the meaning assigned to such term in Section 4.2 hereof.



1.14 Deferred Compensation Plan means The Hershey Company Deferred Compensation Plan and any successor or replacement plan thereof.



1.15 DC SERP means the Defined Contribution Supplemental Executive Retirement Plan benefit of The Hershey Company Deferred Compensation Plan.



1.16 Disability means the long-term disability of the Executive determined in accordance with the terms of the Company's long-term disability plan (regardless of whether the Executive is covered by such long-term disability plan).



1.17 Effective Date means December 29, 2006.



1.18 Executive means an individual designated by the Committee, in its sole discretion, as eligible for coverage under the Plan.



1.19 Excise Tax means any excise tax imposed under Section 4999 of the Code.





4




1.20 Good Reason means with respect to an Executive:



1.20.1 the assignment to him or her of any duties inconsistent in any respect with his or her position (including status, offices, titles and reporting relationships), authority, duties or responsibilities immediately prior to either the Potential Change in Control which precedes the Change in Control or the Change in Control or any other action by the Company which results in a diminution in any respect in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;



1.20.2 a reduction by the Company in his or her annual base salary as in effect, as applicable, on the Effective Date or as the same may be increased from time to time, or on the date he or she first becomes an Executive if he or she was not an Executive on the Effective Date or as the same may be increased from time to time;



1.20.3 the Company's requiring him or her to travel on Company business to a substantially greater extent than required immediately prior to either the Potential Change in Control which precedes the Change in Control or the Change in Control;



1.20.4 the failure by the Company, without his or her consent, to pay to him or her any portion of his or her current compensation (including, but not limited to, any amounts the Executive is entitled to receive under Section 2.6 hereof), or to pay to him or her any portion of an installment of deferred compensation under any deferred compensation program of the Company within thirty (30) business days of the date such compensation is due;



1.20.5 the failure by the Company to continue in effect any compensation plan in which he or she participates immediately prior to either the Potential Change in Control preceding the Change in Control or the Change in Control which is material to his or her total compensation, including but not limited to the KEIP (other than with respect to any contingent PSU grant that is outstanding as of the date of the Change in Control), the CLRP, and the SERP, as applicable, or any substitute or alternative plans adopted prior to either such Potential Change in Control or Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of his or her participation relative to other participants, as existed at the time of such Potential Change in Control or Change in Control;



1.20.6 the failure by the Company to continue to provide him or her with benefits substantially similar to those enjoyed by him or her under any of the Company's pension, life insurance, medical, health and accident, disability or other welfare plans in which he or she was participating at the time of either the Potential Change in Control preceding the Change in Control or the Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive him or her of any material fringe





5



benefit enjoyed by him or her at the time of such Potential Change in Control or Change in Control, or the failure by the Company to provide him or her with the number of paid vacation days to which he or she is entitled on the basis of years of service with the Company in accordance with the Company's normal vacation policy in effect at the time of such Potential Change in Control or Change in Control;



1.20.7 any purported termination by the Company of his or her employment after a Change in Control otherwise than in accordance with the termination procedures of Article 4 hereof;



1.20.8 any material failure by the Company to comply with and satisfy any of its obligations under this Plan after a Potential Change in Control that is followed within one (1) year by a Change in Control; or



1.20.9 any material failure by the Company to comply with and satisfy any of its obligations under any grantor trust established by the Company to provide itself with a source of funds to assist itself in satisfying its liabilities under this Plan after (i) a Change in Control described in Subsection 1.8.1, clause (ii) of Subsection 1.8.4, or clause (i) of Subsection 1.8.4 other than a sale or other disposition to a corporation; (ii) a Change in Control described in Subsection 1.8.2 if during the Coverage Period, Incumbent Directors, as described in Subsection 1.8.1, cease for any reason to constitute at least a majority of the Board; (iii) a Change in Control described in Subsection 1.8.3 if, at any time during the Coverage Period, Incumbent Directors, as described in Subsection 1.8.1, do not constitute at least a majority of the board of directors of the Surviving Corporation; or (iv) a Change in Control described in clause (i) of Subsection 1.8.4 involving a sale or other disposition to a corporation if, at any time during the Coverage Period, Incumbent Directors, as described in Subsection 1.8.1, do not constitute at least a majority of the board of directors of such corporation.



For purposes of this Plan, any good faith determination of Good Reason made by the Executive shall be conclusive.



1.21 Hershey Pension Plan means The Hershey Company Retirement Plan and any successor or replacement plan thereof.



1.22 Hershey Trust means either or both of (a) the Hershey Trust Company, a Pennsylvania corporation, as Trustee for the Milton Hershey School, or any successor to the Hershey Trust Company as such trustee, and (b) the Milton Hershey School, a Pennsylvania not-for-profit corporation.



1.23 KEIP means the Hershey Foods Corporation Key Employee Incentive Plan and any successor or replacement plan thereof.



1.24 Mandatory Retirement Age means age sixty-five (65) in the case of an Executive who has served for a minimum of two (2) years at a high level executive or high policy-making position and who is entitled to a nonforfeitable, immediate, annual employer-provided retirement





6






benefit from any source, which is at least equal to a benefit, computed as a life annuity, of at least $44,000 per year (or such other amount as may be provided by future legislation). In the case of all other Executives, there shall be no Mandatory Retirement Age.



1.25 Notice of Intent to Terminate shall have the meaning assigned to such term in Section 4.1 hereof.



1.26 Plan means The Hershey Company Executive Benefits Protection Plan (Group 3A), as set forth herein, as amended from time to time.



1.27 Plan Administrator means The Company's Senior Vice President, Chief People Officer (or other officer of the Company holding a successor position in the Company having the same or substantially similar organizational responsibilities).



1.28 Potential Change in Control means the occurrence of any of the following:



1.28.1 the Hershey Trust by action of any of the Board of Directors of Hershey Trust Company; the Board of Managers of Milton Hershey School; the Investment Committee of the Hershey Trust; and/or any of the officers of Hershey Trust Company or Milton Hershey School (acting with authority) undertakes consideration of any action the taking of which would lead to a Change in Control as defined herein, including, but not limited to consideration of (1) an offer made to the Hershey Trust to purchase any number of its shares in the Company such that if the Hershey Trust accepted such offer and sold such number of shares in the Company the Hershey Trust might no longer have more than 50% of the Outstanding Company Voting Power, (2) an offering by the Hershey Trust of any number of its shares in the Company for sale such that if such sale were consummated the Hershey Trust might no longer have more than 50% of the Outstanding Company Voting Power or (3) entering into any agreement or understanding with a person or entity that would lead to a Change in Control; or



1.28.2 the Board approves a transaction described in Subsection 1.8.2, 1.8.3 or 1.8.4 of the definition of a Change in Control contained herein.



1.29 SERP means The Hershey Company Amended and Restated (2007) Supplemental Executive Retirement Plan and any successor or replacement plan thereof.



1.30 Severance Benefits has the meaning assigned to such term in Section 3.2 hereof.



1.31 Subsidiary means any corporation controlled by the Company, directly or indirectly.



1.32 The 401(k) Plan means The Hershey Company 401(k) Plan.



1.33 Vested Current Bonus Amount shall have the meaning assigned to such term in Section 2.1 hereof.





7



1.34 Vested Current PSU Amount shall have the meaning assigned to such term in Section 2.2 hereof.



1.35 Vested SERP Benefit shall have the meaning assigned to such term in Section 2.3 hereof.



ARTICLE 2

VESTING OR PAYMENT OF CERTAIN BENEFITS

IN THE EVENT OF A CHANGE IN CONTROL



2.1 Vesting of AIP Benefits; Payment of Benefits . Upon the occurrence of a Change in Control:



2.1.1 each Executive shall have a vested and nonforfeitable right hereunder to receive in cash an amount equal to the greater of (x) the 100% target award amount of all then outstanding contingent target AIP grants made to him or her under the KEIP, and (y) the amount that would have been payable to him or her under such contingent target AIP grants as of the end of the applicable award period calculated using as the applicable performance factors, his or her and the Company's actual performance on an annualized basis as of the date of the Change in Control (the greater of (x) and (y) is herein referred to as the " Vested Current Bonus Amount"); and



2.1.2 the Company shall, within thirty (30) business days following the Change in Control, pay to each Executive a lump sum cash payment equal to his or her Vested Current Bonus Amount.



2.2 Vesting of PSU Benefits; Payment of Benefits . Upon the occurrence of a Change in Control:



2.2.1 each Executive shall have a vested and nonforfeitable right hereunder to receive in cash (as specified in Subsection 2.2.2) an amount equal to the contingent target Performance Stock Unit ("PSU") grant, if any, made to him or her under the KEIP for the cycle ending in the year of the Change in Control, determined as the greater of (x) the 100% target award amount and (y) the amount that would have been payable to him or her at the end of such award cycle based on the Company's actual performance through the date of the Change in Control and annualized, plus, if applicable, PSUs from any other completed cycle for which (i) payment has not been made or (ii) an election to defer such PSUs has been made, but such amounts have not been credited to the Executive's PSU Award Sub-Account under the Deferred Compensation Plan, in each case valued at the higher of (i) the highest closing price of the Company ?s Common Stock on the New York Stock Exchange during the sixty (60) day period preceding and including the date of the Change in Control, and (ii) if the Change in Control involves a transaction in which an offer is made to purchase shares of Common Stock from the Company's stockholders, the price at which such offer is made (the higher of (i) and (ii) is herein





8



referred to as the "Transaction Value") (the greater of (x) and (y) is herein referred to as the "Vested Current PSU Amount"); and



2.2.2 the Company shall, within thirty (30) business days following the Change in Control, pay to each Executive a lump sum cash payment equal to his or her Vested Current PSU Amount, increased for any dividends that would be otherwise payable on the PSUs following the Change in Control but prior to the distribution date under this Subsection 2.2.2.



2.3 Vested SERP Benefit . Upon the occurrence of a Change in Control each Executive who either is a participant in the SERP on the date of the Change in Control or was a participant in the SERP on the date of the Potential Change in Control preceding the Change in Control shall be fully vested under the SERP (such vested benefit is hereinafter referred to as "Vested SERP Benefit"). If an Executive continues to be a participant in the SERP as of his or her Date of Termination and he or she has not attained age fifty-five (55), the Executive shall be treated as being eligible for the Early Retirement Benefit under Section 4.b. of the SERP; provided, however, the reduction factor prescribed in Section 4.b(4) of the SERP shall still be given effect in calculating his or her Vested SERP Benefit, provided that (i) for an Executive (other than the Chief Executive Officer of the Company) who has not yet attained age fifty (50) as of the Executive's Date of Termination, the reduction factor in Section 4.b(4) of the SERP shall be based on the number of complete calendar months by which the Date of Termination precedes his or her fifty-second (52 nd ) birthday, and (ii) for an Executive (other than the Chief Executive Officer of the Company) who has attained age fifty (50) as of the Executive's Date of Termination, the reduction factor in Section 4.b(4) of the SERP shall be zero percent (0%).



An Executive's Vested SERP Benefit shall be payable in accordance with Section 6.a. of the SERP, but the actuarial present value of such Executive's Vested SERP Benefit, taking into account the foregoing provisions, shall be determined using: (i) the mortality table described in Section 6.a. of the SERP; (ii) an interest rate equal to the "Lump Sum Interest Rate," as defined in Section 2(h) of the SERP, as of the Executive's Date of Termination; (iii) the Executive's Date of Termination as the date on which payment of the Executive's Vested SERP Benefit is to commence and as the date as of which the actuarial present value of such Vested SERP Benefit is calculated; and (iv) the actual age of the Executive and his or her spouse as of the Executive's Date of Termination.



2.4 Vested Deferred Compensation Plan Benefit . Upon the occurrence of a Change in Control, each Executive who either is a participant in the Deferred Compensation Plan on the date of the Change in Control or was a participant in the Deferred Compensation Plan on the date of the Potential Change in Control preceding the Change in Control shall be fully vested in all benefits payable under the Deferred Compensation Plan.



2.5 Vested Hershey Pension Plan Benefit . Upon the occurrence of a Change in Control, each Executive who either is a participant in the Hershey Pension Plan on the date of the Change in Control or was a participant in the Hershey Pension Plan on the date of the Potential Change in Control preceding the Change in Control shall be fully vested under the Hershey Pension Plan.





9




2.6 Vested Core Retirement and Matching Contributions . Upon the occurrence of a Change in Control, each Executive who either is a participant in The 401(k) Plan on the date of the Change in Control or was a participant in The 401(k) Plan on the date of the Potential Change in Control preceding the Change in Control shall have a vested nonforfeitable right to receive Core Retirement Contributions and Matching Contributions payable under The 401(k) Plan.



2.7 SERP, CLRP, or Deferred Compensation Plan Amendments . Notwithstanding any provision of the SERP, CLRP, or Deferred Compensation Plan, none of the SERP, CLRP, or Deferred Compensation Plan may be terminated or amended in any manner that is adverse to the interests of any Executive without his or her consent either: (i) after a Potential Change in Control occurs and for one (1) year following the cessation of the Potential Change in Control, or (ii) after a Change in Control. Any termination or amendment of the SERP, CLRP, or Deferred Compensation Plan in a manner adverse to the interests of an Executive within one (1) year prior to a Potential Change in Control shall not be given effect for purposes of determining benefits under this Plan.



2.8 Other PSU Grants Outstanding as of the Date of a Change in Control . An Executive shall have a vested and non-forfeitable right hereunder to receive a lump sum cash payment with respect to each contingent target PSU grant that is outstanding as of the date of a Change in Control (and that is not otherwise paid out in whole or in part in accordance with the terms of Section 2.2) in an amount equal to the product of (x) and (y), where (x) is an amount equal to the 100% target award amount of each such contingent target PSU grant valued at the higher of (i) the Transaction Value and (ii) the highest closing price of the Company's Common Stock on the New York Stock Exchange from the date of the Change in Control until the end of the cycle, and (y
-- End of Preview --
Home| About Us| FAQ| Subscription | Contact Us |