Pre-Effective Amendment to Registration of Securities Issued in a Business-Combination Transaction — Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4/A Amendment #1 to S-4: Premium Standard Farms Etal 177 832K
2: EX-10.2.B Long-Term Incentive Plan: Psfarms, Inc. 5 17K
3: EX-12.1 Statement Re: Comp of Ratio of Earnings to Fix Chr 1 10K
4: EX-23.2 Consent of Arthur Andersen 1 6K
5: EX-23.3 Consent of Kpmg LLP 1 6K
EX-10.2.B — Long-Term Incentive Plan: Psfarms, Inc.
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Exhibit 10.2(b)
[PREMIUM STANDARD FARMS LOGO]
PREMIUM STANDARD FARMS
LONG TERM INCENTIVE PROGRAM
APRIL 2001 - MARCH 2005
FY2002 - FY2005
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PREMIUM STANDARD FARMS
LONG TERM INCENTIVE PLAN (LTIP)
PURPOSE
The senior leadership of PSF wanted to create a total compensation rewards
program that encouraged key executives to stay with the Company over a period of
time and to commit to strategic business objectives designed to give the Company
a competitive edge in the market place while encouraging long-term growth and
profitability. When achieved, PSF would reward key executives in such a way to
ensure our long-term compensation practices are competitive with long-term plans
offered by both public and private companies. Further, the plan is designed to
encourage teamwork among top executives while providing opportunities to be
individually recognized and rewarded for exceptional effort and performance.
ELIGIBILITY
Senior managers selected by the PSF Compensation Committee are eligible to
participate in the LTIP. Selected participants are charged with the
responsibility of providing superior leadership and accountability for long-term
earnings growth.
PERFORMANCE PERIOD
The LTIP period begins on April 1, 2001 and concludes on March 31, 2005. This
period was selected as it most accurately reflects the anticipated complete
business cycle typically associated with our industry.
PERFORMANCE MEASUREMENT
The LTIP uses Return on Net Assets (RONA) as the singular performance
measurement on the incentive portion during the entire LTIP performance period.
The PSF Compensation Committee determined that a reasonable objective was to
establish an expectation for the Company that provided a 75% chance to attain
the LTIP at the Target bonus level based on current available resources.
While RONA will have separate and distinct targets for each of the four fiscal
years during the LTIP period the final LTIP award will be cumulative over the
entire LTIP period. Using the multi-year cumulative measure will moderate the
impact of volatile earnings over the course of the cycles in our business. RONA
as a performance measurement will include both operating and non-operating
earnings (before interest and taxes) and will be determined after accruing for
the cost of this long-term plan (post-accrual earnings).
2
LTIP POOL
The following chart illustrates the total LTIP Pool at various RONA levels:
[Download Table]
2/3 1/3
INCENTIVE DISCRETIONARY
RONA POOL POOL TOTAL POOL % OF POOL
---- --------- ------------- ---------- ---------
8.30% 0 0 0 0%
8.80% 0 0 0 0%
9.30% 0 0 0 0%
9.80% 0 0 0 0%
10.00% 1,400,000 700,000 2,100,000 30%
10.30% 1,866,667 933,333 2,800,000 40%
10.80% 2,333,333 1,166,667 3,500,000 50%
11.30% 2,800,000 1,400,000 4,200,000 60%
11.80% 3,266,667 1,633,333 4,900,000 70%
12.30% 3,733,333 1,866,667 5,600,000 80%
12.80% 4,200,000 2,100,000 6,300,000 90%
13.30% 4,666,667 2,333,333 7,000,000 100%
13.80% 5,366,667 2,683,333 8,050,000 115%
14.30% 6,066,667 3,033,333 9,100,000 130%
14.80% 6,766,667 3,383,333 10,150,000 145%
15.30% 7,466,667 3,733,333 11,200,000 160%
15.80% 8,166,667 4,083,333 12,250,000 175%
16.30% 8,866,667 4,433,333 13,300,000 190%
PERFORMANCE TARGETS
The chart presented above displays the available total LTIP Pool at various RONA
levels. The LTIP will pay nothing until the Threshold is achieved at 10% RONA.
At that point the available Pool for all plan participants is $2,100,000 or 30%
of what the Pool would be at Target. As RONA increases so does the total Pool
and the values remain incrementally proportionate to and beyond the Target goal.
[LINE GRAPH]
[Download Table]
REVISED
RONA % of Goal Target %
---------------------------
8.30% 62% 0%
8.80% 66% 10%
9.30% 70% 20%
9.80% 74% 30%
10.30% 77% 40%
10.80% 81% 50%
11.30% 85% 60%
11.80% 89% 70%
12.30% 92% 80%
12.80% 96% 90%
13.30% 100% 100%
13.80% 104% 115%
14.30% 108% 130%
14.80% 111% 145%
15.30% 115% 160%
15.80% 119% 175%
16.30% 123% 190%
3
PARTICIPANT'S SHARE OF THE POOL
All eligible executives are granted a percentage of the LTIP Pool. The
percentage is usually granted by the CEO at the beginning of the LTIP period.
Once assigned, each participating executive can compute their individual Pool by
multiplying their percentage by the total Pool available at each RONA level
displayed in the chart above.
PARTICIPANT'S LTIP AWARDS
All LTIP awards are divided into two sections: Incentive and Discretionary.
Incentive
The incentive portion of the LTIP is determined at the beginning of the LTIP
period and represents two-thirds of the participants total Pool. The incentive
portion of the LTIP is awarded based on RONA achievement as outlined in the
chart presented above.
Discretionary Pool
The discretionary portion of the LTIP is determined at the conclusion of the
LTIP period and represents one-third of the participants total Pool. The
discretionary portion of the LTIP is based on the assessment of the CEO at the
conclusion of the LTIP period and is generally determined by the participants'
overall performance during the LTIP period. Since this portion of the LTIP is
completely discretionary, it may be more, less, or the same as what was computed
using one-third of the participants total Pool as a base.
VESTING
Vesting of a Participants Incentive Pool interest is based on continued
employment with Premium Standard Farms:
- One-Third of Incentive Pool vests at end of 2nd Year (3/31/03)
- One-Third of Incentive Pool vests at end of 3rd Year (3/31/04)
- One-Third of Incentive Pool vests at end of 4th Year (3/31/05)
- There is no vesting schedule associated with the Discretionary
portion of the LTIP. All discretionary awards pay out shortly
after the conclusion of the LTIP period provided the
participant has continued employment with the Company.
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Full vesting rights are accorded executives who leave the Company due to death,
disability or at normal retirement age during the performance period. Executives
that transfer to ContiGroup or another company under PSF Holdings Inc. will
retain a pro-rata interest in the PSF LTIP assuming all other criteria is met.
Special vesting and funding rules apply if the Company is sold or in the event
of an initial public offering (IPO) during the performance period. Should this
occur the PSF Compensation Committee would review the circumstances and
determine the appropriate course of action to take at that time.
DEFERRED COMPENSATION
LTIP awards received at the conclusion of the LTIP period can be completely or
partially deferred however, the decision to defer compensation must be made at
least by the end of the calendar year preceding the actual award declaration.
The conditions and provisions of this benefit are detailed in the PSF Deferred
Compensation Plan Summary Plan Description. Contact the Vice President of Human
Resources for a copy.
ADMINISTRATION
The Compensation Committee of the Board of Directors shall approve the
administration of the LTIP. The Compensation Committee shall have the sole
responsibility for the interpretation of all LTIP requirements and the payment
of LTIP benefits. While the Compensation Committee generally expects the earning
expectations and the thresholds to remain in tact during the entire LTIP period,
they do reserve the right to alter or modify the earnings expectations and RONA
thresholds during the LTIP period in the event of unforeseen and extraordinary
events. Additionally, the Compensation Committee may modify the provisions of
the LTIP where there are major capital infusions or major withdrawal of capital
during the LTIP period. The Compensation Committee also has the right to add and
delete participants, subject to vesting, at their discretion.
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Dates Referenced Herein
| Referenced-On Page |
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| This ‘S-4/A’ Filing | | Date | | First | | Last | | | Other Filings |
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| |  |
| | 3/31/05 | | 2 | | | | | None on these Dates |
| Corrected on: | | 11/27/02 |
| Filed on: | | 8/10/01 |
| | 4/1/01 | | 2 |
| List all Filings |
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