DEF 14A 1 d321586ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.    )

Filed by the Registrant  x

Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

¨   Preliminary Proxy Statement
¨   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x   Definitive Proxy Statement
¨   Definitive Additional Materials
¨   Soliciting Material Pursuant to §240.14a-12

SNYDER’S-LANCE, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x   No fee required.
¨   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

 

   

 

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Aggregate number of securities to which transaction applies:

 

 

   

 

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

   

 

  (4)  

Proposed maximum aggregate value of transaction:

 

 

   

 

  (5)   Total fee paid:
   
   

 

¨   Fee paid previously with preliminary materials.
¨   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:

 

 

   

 

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Date Filed:

 

 

   

 

 

 

 


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LOGO

SNYDER’S-LANCE, INC.

13024 Ballantyne Corporate Place, Suite 900

Charlotte, North Carolina 28277

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

 

To the Stockholders of Snyder’s-Lance, Inc.:

The 2012 annual meeting of stockholders of Snyder’s-Lance, Inc., a North Carolina corporation, will be held at the Springhill Suites Charlotte Ballantyne, 12325 Johnston Road, Charlotte, North Carolina 28277, on Thursday, May 3, 2012 at 9:30 a.m., Eastern Daylight Time, for the following purposes:

1. To elect the four directors nominated by the board of directors;

2. To ratify the selection of KPMG LLP as the independent registered public accounting firm for fiscal year 2012;

3. To hold an advisory vote to approve executive compensation;

4. To approve the Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan;

5. To approve the Snyder’s-Lance, Inc. 2012 Associate Stock Purchase Plan; and

6. To transact such other business as may properly come before the meeting and any adjournments or postponements thereof.

Only stockholders of record as of the close of business on March 12, 2012 are entitled to receive notice of, and to vote at, the annual meeting.

Please vote by Internet, telephone or mail as soon as possible so your shares will be voted promptly, even if you plan to attend the annual meeting in person. Additional information about voting is included in the accompanying proxy statement and your proxy card.

By order of the Board of Directors,

/s/ A. Zachary Smith III

A. Zachary Smith III

Chief General Counsel and Secretary

Charlotte, North Carolina

March 28, 2012

Important Notice Regarding the Availability of

Proxy Materials for the 2012 Annual Meeting of Stockholders

to be held on May 3, 2012

The Proxy Statement and Annual Report to Stockholders for the fiscal year ended December 31, 2011 are available at www.envisionreports.com/LNCE.


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TABLE OF CONTENTS

 

     Page  

General Information

     1   

Security Ownership of Principal Stockholders and Management

     5   

Section 16(a) Beneficial Ownership Reporting Compliance

     6   

Proposal 1: Election of Directors

     7   

Information About Directors and Nominees

     7   

Corporate Governance

     10   

The Board of Directors

     10   

Director Independence

     10   

Meetings of the Board of Directors

     10   

Board Leadership Structure

     10   

Board Committees

     11   

Board’s Role in Risk Oversight

     13   

Director Nomination Process

     13   

Stockholder Recommendations of Director Candidates

     14   

Stockholder Communications with the Board

     15   

Director Compensation

     15   

Executive Compensation

     17   

Compensation Discussion and Analysis

     17   

Executive Compensation Tables

     30   

Summary Compensation Table

     30   

2011 Grants of Plan Based Awards

     32   

Outstanding Equity Awards at Fiscal Year-End 2011

     33   

2011 Option Exercises and Stock Vested

     34   

2011 Nonqualified Deferred Compensation

     34   

2011 Potential Payments Upon Termination or Change in Control

     36   

Risk Analysis of Compensation Programs

     41   

Equity Compensation Plan Information

     41   

Compensation Committee Interlocks and Insider Participation

     41   

Compensation Committee Report

     42   

Audit Committee Report

     42   

Related Person Transactions

     43   

Policy for Review of Transactions with Related Persons

     43   

Transactions with Related Persons

     43   

Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm

     44   

Proposal 3: Advisory Vote on Executive Compensation

     45   

Proposal 4: Approval of 2012 Key Employee Incentive Plan

     46   

Proposal 5: Approval of 2012 Associate Stock Purchase Plan

     53   

Stockholder Proposals for the 2013 Annual Meeting

     55   

2011 Annual Report to Stockholders

     55   

Other Matters

     55   

Annex A- 2012 Key Employee Incentive Plan

     A-1   

Annex B- 2012 Associate Stock Purchase Plan

     B-1   


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SNYDER’S-LANCE, INC.

 

 

PROXY STATEMENT

FOR

2012 ANNUAL MEETING OF STOCKHOLDERS

 

 

We are providing these proxy materials in connection with the 2012 Annual Meeting of Stockholders of Snyder’s-Lance, Inc. (“Snyder’s-Lance,” the “Company,” “we,” “us,” or “our”). This proxy statement contains important information for you to consider when deciding how to vote on the matters to be brought before the annual meeting. Please read it carefully.

On December 6, 2010, a wholly-owned subsidiary of Lance, Inc. (“Lance”) was merged with and into Snyder’s of Hanover, Inc. (“Snyder’s”), with the result that Snyder’s became a wholly-owned subsidiary of Lance (the “merger”). In connection with the merger, Lance changed its name to Snyder’s-Lance, Inc. effective December 10, 2010. References to “Lance” and “Snyder’s” in this proxy statement refer to the companies as they existed before the merger.

This proxy statement and the accompanying materials were first mailed to stockholders on or about March 28, 2012.

GENERAL INFORMATION

Why am I receiving these materials?

You have received these proxy materials because the board of directors of Snyder’s-Lance is soliciting your proxy to vote your shares at the annual meeting. The proxy statement includes information that we are required to provide you under SEC rules and is designed to assist you in voting your shares.

What is a proxy?

Our board of directors is asking for your proxy. This means you authorize persons selected by us to vote your shares at the annual meeting in the way that you instruct. All shares represented by valid proxies received before the annual meeting will be voted in accordance with the stockholder’s specific voting instructions.

What is included in these materials?

These materials include:

 

   

the Notice of the 2012 annual meeting;

 

   

the Proxy Statement for the annual meeting;

 

   

a proxy card for the annual meeting; and

 

   

the 2011 Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

What items will be voted on at the annual meeting?

There are 5 proposals scheduled to be voted on at the annual meeting:

 

   

the election of the four directors nominated by the board, each to serve for a term of three years;

 

   

the ratification of the audit committee’s selection of KPMG LLP as our independent registered public accounting firm for 2012;

 

   

an advisory vote to approve the compensation of our named executive officers;

 

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the approval of the Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan; and

 

   

the approval of the Snyder’s-Lance, Inc. 2012 Associate Stock Purchase Plan.

The board of directors is not aware of any other matters to be brought before the meeting. If other matters are properly raised at the meeting, the proxy holders may vote any shares represented by proxy in their discretion.

What are the board’s voting recommendations?

Our board of directors recommends that you vote your shares:

 

   

“FOR” each of the board’s nominees to the board of directors;

 

   

FOR” the ratification of the audit committee’s appointment of KPMG LLP as our independent registered public accounting firm for 2012;

 

   

FOR” the proposal regarding an advisory vote to approve executive compensation;

 

   

“FOR” approval of the Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan; and

 

   

“FOR” approval of the Snyder’s-Lance, Inc. 2012 Associate Stock Purchase Plan.

Who can attend the annual meeting?

Admission to the annual meeting is limited to:

 

   

stockholders as of the close of business on March 12, 2012;

 

   

holders of valid proxies for the annual meeting; and

 

   

our invited guests.

Admission to the meeting will be on a first-come, first-served basis. Each stockholder may be asked to present valid picture identification such as a driver’s license or passport and proof of stock ownership as of the record date. If you plan to attend the annual meeting and you require directions, please call us at (704) 554-1421.

When is the record date and who is entitled to vote?

The board of directors set March 12, 2012 as the record date. All holders of our common stock as of the close of business on that date are entitled to vote. Each share of common stock is entitled to one vote. As of the record date, there were 68,019,953 shares of common stock outstanding.

What is a stockholder of record?

A stockholder of record or registered stockholder is a stockholder whose ownership of Snyder’s-Lance stock is reflected directly on the books and records of our transfer agent, Computershare Investor Services, LLC. If you hold stock through an account with a bank, broker or similar organization, you are considered the beneficial owner of shares held in “street name” and are not a stockholder of record. For shares held in street name, the stockholder of record is your bank, broker or similar organization. We only have access to ownership records for the registered shares. If you are not a stockholder of record, we may require additional documentation to evidence your stock ownership as of the record date, such as a copy of your brokerage account statement, a letter from your broker, bank or other nominee or a copy of your notice or voting instruction card.

 

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How do I vote?

You may vote by any of the following methods:

 

   

In person. Stockholders of record and beneficial stockholders with shares held in street name may vote in person at the meeting. If you hold shares in street name, you must also obtain a legal proxy from your broker to vote in person at the meeting.

 

   

By phone or via the Internet. You may vote by proxy by phone or via the Internet by following the instructions in the proxy card provided.

 

   

By mail. You may vote by proxy by signing and returning the proxy card provided.

If you vote by phone or the Internet, please have your proxy card available. The control number appearing on your card is necessary to process your vote. A phone or Internet vote authorizes the named proxy holders in the same manner as if you marked, signed and returned a proxy card by mail.

How can I change or revoke my vote?

You may change or revoke your vote as follows:

 

   

Stockholders of record. You may change or revoke your proxy or voting instructions by (1) mailing a written notice of revocation to our Secretary at Snyder’s-Lance, Inc., 13024 Ballantyne Corporate Place, Suite 900, Charlotte, North Carolina 28277, (2) submitting another timely vote (including by phone or Internet) or (3) attending the annual meeting and voting in person. For all methods of voting, the last timely vote cast will supersede all previous votes.

 

   

Beneficial owners of shares held in “street name.” You may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker.

What happens if I do not give specific voting instructions?

Stockholders of record. If you are a stockholder of record and you:

 

   

indicate when voting on the Internet or by phone that you wish to vote as recommended by the board of directors, or

 

   

sign and return a proxy card without giving specific voting instructions,

then the proxy holders will vote your shares in the manner recommended by the board of directors on all matters presented in this proxy statement and as the proxy holders may determine in their discretion for any other matters properly presented for a vote at the meeting.

Beneficial owners of shares held in “street name.” If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is referred to as a “broker non-vote.”

Which ballot measures are considered “routine” or “non-routine”?

The election of directors (“Proposal 1”), the advisory vote to approve the compensation of the named executive officers (“Proposal 3”), the approval of the Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan (“Proposal 4”) and the approval of the Snyder’s-Lance, Inc. 2012 Associate Stock Purchase Plan (“Proposal 5”) are matters considered non-routine under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore there may be broker non-votes on Proposals 1, 3, 4 and 5.

 

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The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2012 (“Proposal 2”) is a matter considered routine under applicable rules. A broker or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected to occur in connection with Proposal 2.

What is the quorum for the annual meeting?

The presence, in person or by proxy, of the holders of a majority of Snyder’s-Lance common stock eligible to vote at the annual meeting. This is called a “quorum.” A quorum is necessary to conduct business at the annual meeting.

What is the voting requirement to approve each of the proposals?

The following are the voting requirements for each proposal:

 

   

Proposal 1. Election of the directors requires the affirmative vote of a plurality of the votes cast at the annual meeting. This means the four director nominees receiving the highest number of votes will be elected.

 

   

Proposal 2. Approval of the ratification of KPMG LLP as our independent registered public accounting firm for fiscal year 2012 requires the affirmative vote of a majority of the votes cast on Proposal 2 at the annual meeting.

 

   

Proposal 3. Approval, on an advisory basis, of the compensation of the named executive officers requires the affirmative vote of a majority of the votes cast on Proposal 3 at the annual meeting.

 

   

Proposal 4. Approval of the Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan requires the affirmative vote of a majority of the votes cast on Proposal 4 at the annual meeting.

 

   

Proposal 5. Approval of the Snyder’s-Lance, Inc. 2012 Associate Stock Purchase Plan requires the affirmative vote of a majority of the votes cast on Proposal 5 at the annual meeting.

How are abstentions and broker non-votes treated?

Abstentions and shares held of record by a broker or in street name that are eligible to vote on any matter are counted as present and entitled to vote for purposes of determining whether a quorum is present. Broker shares and other shares held in street name that are not entitled to vote on any matter at the annual meeting are not included in determining whether a quorum is present. Abstentions and broker non-votes are not counted as votes cast at the annual meeting and therefore will have no impact on the outcome of the vote on any matter.

Who pays for solicitation of proxies?

We are paying the cost of soliciting proxies. We have retained Georgeson, Inc. for a cost of $7,500, plus out-of-pocket expenses, to assist in the solicitation. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for sending proxy materials to stockholders and obtaining their votes. In addition to soliciting the proxies by mail and the Internet, certain of our directors, officers and regular employees, without compensation, may solicit proxies personally or by telephone, facsimile and email.

Where can I find the voting results of the annual meeting?

Snyder’s-Lance will announce preliminary or final voting results at the annual meeting and publish final results in a Form 8-K filed with the SEC within four business days of the completion of the meeting.

 

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SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT

The following table sets forth as of December 31, 2011 information concerning the beneficial ownership of our common stock by (1) the only persons known by us to be beneficial owners of more than 5% of our common stock, (2) each director and nominee for director, (3) each executive officer named in the Summary Compensation Table on page 30 and (4) all directors and executive officers as a group. Unless otherwise indicated, all persons named as beneficial owners of common stock have sole voting power and sole investment power with respect to the shares indicated. In accordance with SEC rules, all holdings include shares of common stock that may be acquired pursuant to stock options that are or will become exercisable within 60 days of December 31, 2011.

 

Name and Address of

Beneficial Owner

   Number of Shares
and Nature of
Beneficial Ownership
    Percent of
Common Stock
Outstanding (1)
 

Michael A. Warehime and Patricia A. Warehime

13024 Ballantyne Corporate Place, Suite 900

Charlotte, NC 28277

     11,082,100 (2)      16.3

Sally W. Yelland

13024 Ballantyne Corporate Place, Suite 900

Charlotte, NC 28277

     5,430,549 (3)      8.0

Blackrock, Inc.

40 East 52nd Street

New York, NY 10022

     3,685,689 (4)      5.4

Charles E. Good

1250 York Street

Hanover, PA 17331

     6,132,279 (5)      9.0

Jeffrey A. Atkins

     15,000        *   

Peter P. Brubaker

     75,012        *   

C. Peter Carlucci, Jr.

     66,352 (6)      *   

John E. Denton

     71,352 (7)      *   

James W. Johnston

     783,623 (8)      1.2

Carl E. Lee, Jr.

     588,615 (9)      *   

W. J. Prezzano

     18,000        *   

David V. Singer

     682,981 (10)      1.0
     470,294 (11)      *   

Dan C. Swander

     18,000        *   

Isaiah Tidwell

     20,587        *   

Rick D. Puckett

     191,956 (12)      *   

Kevin A. Henry

     34,398 (13)      *   

Blake W. Thompson

     —          *   

Directors and executive officers as a group (16 persons)

     20,280,701 (14)      29.5

 

* Less than 1%.
(1) Based on 67,820,798 shares outstanding on December 31, 2011 plus options held by such persons that are exercisable within 60 days of December 31, 2011.
(2) Michael A. Warehime has sole power to vote or direct the vote of 8,848,174 shares. Patricia A. Warehime has sole power to vote or direct the vote of 848,670 shares. Mr. Warehime has sole power to vote or to direct the vote of 1,027,849 shares owned by Warehime Enterprise, Inc. (“WEI”). Michael and Patricia Warehime also have shared power to vote or to direct the vote of 357,407 shares owned by MAW Associates, LP (“MAW”). Michael and Patricia Warehime are married and may be deemed to share beneficial ownership of their shares. Of these shares, 357,407 are pledged as security for loans made to MAW and 1,000,000 are pledged as security for loans made to Mr. Warehime.
(3) Sally W. Yelland has sole power to vote or direct the vote of 3,773,170 shares (including 62,352 shares subject to exercisable options). She has shared power to vote or to direct the vote of 1,657,379 shares held by certain trusts. Such power is shared with the other trustee of the trusts, Charles E. Good.

 

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(4) Based on a Schedule 13G filed on February 9, 2012 by BlackRock, Inc. reporting shares held on December 30, 2011. The Schedule 13G reports that BlackRock, Inc. has sole power to vote and dispose of all of such shares.

 

(5) Charles E. Good has sole power to vote or direct the vote of 7,944 shares (including 2,092 shares subject to exercisable options). He has shared power to vote or to direct the vote of 280,510 shares owned jointly with his wife. Mr. Good has sole power to vote or direct the vote of 4,185,088 shares held by certain trusts for the benefit of Warehime family members. He also has shared power to vote or direct the vote of 1,662,921 shares held by certain trusts. He shares voting power over 1,657,379 of such shares with Sally W. Yelland.

 

(6) Includes 57,852 shares subject to exercisable options.

 

(7) Includes 58,022 shares subject to exercisable options.

 

(8) Includes 741,823 shares held indirectly by Mr. Johnston’s wife as trustee and beneficiary of a family trust and 25,000 shares held in another trust for the benefit of Mr. Johnston’s wife.

 

(9) Includes 272,862 shares subject to exercisable options.

 

(10) Includes 395,555 shares subject to exercisable options.

 

(11) Consists of shares held by the Philip L. Van Every Foundation (the “Foundation”), of which Mr. Singer is a member of the Board of Administrators, which holds the sole voting and dispositive power of such shares.

 

(12) Includes 131,166 shares subject to exercisable options.

 

(13) Includes 24,998 shares subject to exercisable options.

 

(14) Includes 16,138 shares subject to exercisable options held by directors and executive officers, 470,294 shares held by the Foundation of which Mr. Singer is a member of the Board of Administrators and 1,357,407 shares pledged as security. Does not include shares beneficially owned by Sally W. Yelland or Blackrock, Inc.

In connection with the merger, Michael A. Warehime and Patricia A. Warehime entered into a standstill agreement with the Company. Pursuant to the terms of the standstill agreement, as amended, subject to certain exceptions, neither Michael A. Warehime nor Patricia A. Warehime may (i) acquire or attempt to acquire any additional shares of Snyder’s-Lance stock or any material assets of Snyder’s-Lance or its subsidiaries, (ii) transfer any or all of their shares of Snyder’s-Lance stock or (iii) take any action contrary to maintaining certain aspects of the proposed governance structure of Snyder’s-Lance through 2012, including agreements regarding the reduction of the total number of directors over time and the re-election of certain Lance directors eligible for re-election in 2011 and 2012. The standstill agreement limits Mr. and Mrs. Warehime’s aggregate beneficial ownership to no more than thirty percent (30%) of the issued and outstanding shares of Snyder’s-Lance common stock. The standstill agreement will terminate on December 6, 2013 or earlier upon an agreement by all the parties.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors and certain persons who beneficially own more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Executive officers, directors and beneficial owners of more than 10% of our common stock are required to furnish us copies of all ownership reports they file. Based solely on our review of the reports that we received and written representations that no other reports were required, we believe that our executive officers, directors and beneficial owners of more than 10% of our common stock complied with all applicable filing requirements on a timely basis during fiscal year 2011, except for Michael A. Warehime and Patricia A. Warehime who filed a late joint Form 4 covering three transactions that occurred on May 18, 2011.

 

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PROPOSAL 1 – ELECTION OF DIRECTORS

The board of directors is divided into three classes. Directors are elected by class for three-year terms. The board of directors has nominated the following four directors for election at the 2012 annual meeting to hold office until the annual meeting of stockholders in 2015 and until their successors are elected and qualified:

 

   

Jeffrey A. Atkins

 

   

Peter P. Brubaker

 

   

Carl E. Lee, Jr.

 

   

Isaiah Tidwell

The nominees were selected by the board of directors in accordance with the bylaws and governance principles of the Company and the terms of the merger agreement between Lance and Snyder’s. Under the merger agreement, the parties agreed to the composition of the board of directors through the 2012 annual meeting of stockholders. The board of directors has determined that each of the four nominees qualifies as an independent director under applicable listing standards of The Nasdaq Global Select Market (“Nasdaq”), except for Carl E. Lee, Jr.

All of the nominees are current directors, and each has agreed to be named in this proxy statement and serve if elected. Although we know of no reason why any of the nominees would not be able to serve, if any nominee is unavailable for election, the holders of the proxies solicited by the board intend to vote your shares for any substitute nominee proposed by the board of directors. The proxies being solicited cannot be voted for a greater number of individuals than the four nominees.

Election of the directors requires the affirmative vote of a plurality of the votes cast at the annual meeting. Accordingly, the four director nominees receiving the highest number of votes will be elected. An abstention or broker non-vote will have no effect on the outcome of the election of directors.

The board of directors unanimously recommends that you vote “FOR” each of the four nominees listed above.

Information About Directors and Nominees

The following table lists each of the nominees for director and the directors whose terms of office will continue after the annual meeting.

 

Name

   Age      Position with the Company    Expiration of Term as
Director
     Director
Since
 

Jeffrey A. Atkins

     63       Director      Director Nominee         2006   

Peter P. Brubaker

     65       Director      Director Nominee         2010   

C. Peter Carlucci, Jr.

     68       Director      2014         2010   

John E. Denton

     68       Director      2013         2010   

James W. Johnston

     65       Director      2014         2008   

Carl E. Lee, Jr.

     52       President and Chief Operating
Officer and Director
     Director Nominee         2010   

W. J. Prezzano

     71       Lead Independent Director      2014         1998   

David V. Singer

     56       Chief Executive Officer and Director      2013         2003   

Dan C. Swander

     68       Director      2013         2004   

Isaiah Tidwell

     67       Director      Director Nominee         1995   

Michael A. Warehime

     70       Chairman of the Board      2013         2010   

Patricia A. Warehime

     57       Director      2014         2010   

Set forth below is biographical information about each nominee and continuing director, including for each nominee or director, the individual’s principal occupation, as well as a brief description of the specific experience, qualifications, attributes or skills that led the board of directors to conclude that such nominee or director should serve as a director.

 

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Jeffrey A. Atkins served as the Executive Vice President and Chief Financial Officer of ACH Food Companies, Inc., a Memphis, TN food manufacturer, distributor and marketer, from 2003 until his retirement in 2010. He worked as a private investor from 2001 until 2003; Chief Financial Officer of Springs Industries, Inc., a Fort Mill, SC manufacturer and distributor of textile home furnishings from 1999 until 2001; and Chief Executive Officer and Chief Financial Officer of Pete’s Brewing Company, a Palo Alto, CA craft-beer brewer and marketer from 1997 until 1998. He held various positions including Vice President of Corporate Planning (1995-1996) at The Quaker Oats Co., a Chicago, Illinois food and beverage marketer and manufacturer, from 1977 to 1996. He serves as Chairman of the board of directors of Stratas Foods, Inc., a manufacturer and distributor of edible oils. Mr. Atkins brings to the board of directors a valuable understanding of the food industry gained through his many years of experience with several companies in the industry, including almost 20 years with The Quaker Oats Company. He also provides a unique perspective to the board of directors because of his experience as the chief financial officer for multiple companies.

Peter P. Brubaker has been the President of Hammer Creek Enterprises LLC, a private investment and financial advisory firm, since 2005. In 2005, Mr. Brubaker retired as the President and Chief Executive Officer of Susquehanna Media Co., a radio broadcasting and cable television company. He served as Vice President/Finance and Chief Financial Officer of Susquehanna Pfaltzgraff Co. from 1980 until 1995 and worked as a commercial banker for Mellon Bank, N.A. from 1974 until 1977. Mr. Brubaker served as a member of the board of directors of Snyder’s until December 2010 when he was elected to the Company’s board of directors in connection with the merger. Mr. Brubaker also holds an MBA from Harvard Business School. Mr. Brubaker is qualified to be a director because of the valuable combination of financial expertise and executive and managerial experience that he brings to the board of directors.

C. Peter Carlucci, Jr. has been a member of the law firm of Eckert Seamans Cherin & Mellott, LLC since 1989. From 2005 until 2007, he served as a director of Sigma Coatings USA, Inc. and a managing director of Sigma Coatings USA, B.V., producers of industrial coatings. Mr. Carlucci was a director of Snyder’s for 30 years from June 1980 until December 2010 when he was appointed to the Company’s board of directors in connection with the merger. Mr. Carlucci provides a valuable perspective to the board of directors from his experience in the legal profession. He also brings an appreciation of the role of a board of directors which was acquired through his service on Snyder’s and other boards.

John E. Denton works as a private investor. From 2004 until 2009, Mr. Denton was a partner at Maloney, Mitchell and Denton, a commercial real estate firm specializing in planned unit developments and mixed use communities. He has worked as a Division Manager at Proctor and Gamble Food Products, President of Hanover Foods, and Chairman and Chief Executive Officer of New World Pasta. Mr. Denton also served as President and Chief Executive Officer of Snyder’s from 1992 to February 2000. Mr. Denton served as a member of the board of directors of Snyder’s until December 2010 when he was elected to the Company’s board of directors in connection with the merger. Mr. Denton is qualified for service on the board of directors because of his extensive knowledge of the food industry acquired through his experience with numerous companies in the industry, including Snyder’s. His understanding and appreciation of Snyder’s business is valuable to the board of directors.

James W. Johnston has served as the President and Chief Executive Officer of Stonemarker Enterprises, Inc., a Mooresville, NC consulting and investment company, since 1996. He was the Vice Chairman of RJR Nabisco, Inc., a Winston-Salem, NC diversified manufacturer of consumer products from 1995 until 1996; Chairman of R. J. Reynolds Tobacco Worldwide from 1993 until 1996; and Chairman and Chief Executive Officer of R. J. Reynolds Tobacco Co. from 1989 until 1996. He is a director of Sealy Incorporated. Mr. Johnston provides the board of directors with a valuable perspective acquired through his significant leadership and executive experience. He also brings an important understanding of the role of a board of directors because of his previous board experience.

Carl E. Lee, Jr. has served as President and Chief Operating Officer of Snyder’s-Lance since December 2010. He served as the President and Chief Executive Officer of Snyder’s of Hanover, Inc. from 2005 until December 2010. From 1986 until 1997, Mr. Lee held various sales and marketing positions with Frito-Lay, including Vice President and General Manager for Frito-Lay Southeast Region and managing sales for Frito-Lay Europe. In 1997, Mr. Lee began working for Nabisco where he led their South American business, served as President of their Caricam Region and their Southern Cone Region. Mr. Lee also led Nabisco’s Global Export business which covered 95 countries. Mr. Lee has served on the board of directors of Welch’s Foods since 2009. Mr. Lee served as a member of the board of directors of Snyder’s until December 2010 when he was elected to the Company’s board of directors in connection with the merger. Mr. Lee brings to the board of directors his significant understanding of Snyder’s business and operations acquired through his service as the President and CEO of Snyder’s. His extensive domestic and international experience in the snack food industry and his merger and acquisition experience provide the board with a valuable perspective.

 

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W. J. Prezzano served as the Chairman of the Board of Lance from 2005 until 2010 and has worked as a private investor since 1997. He was elected as Lead Independent Director of the Company in December 2010 in connection with the merger. He was the Vice Chairman of Eastman Kodak, Inc. in Rochester, NY from 1996 until 1997. During his 32-year career, Mr. Prezzano’s responsibilities included managing Kodak’s extensive consumer products and brands globally. He is a director of TD Bank Financial Group (Toronto, Canada), TD Ameritrade Holding Corporation, Roper Industries, Inc. and EnPro Industries, Inc. and former Chairman of Medical University of South Carolina Foundation. He is also a member of the Board of Trustees of Charleston Day School. Mr. Prezzano received a BS in Economics (Marketing major) and an MBA from the University of Pennsylvania’s Wharton School. Mr. Prezzano brings to the board of directors his significant managerial and executive experience as well as extensive experience serving on multiple boards of directors. His years of dedicated service as a member of the Company’s board of directors also qualify him to serve as a member of the board of directors.

David V. Singer has served as the Chief Executive Officer of the Company since 2005. He served as the President and Chief Executive Officer of Lance from 2005 until the merger with Snyder’s in 2010. He was the Executive Vice President and Chief Financial Officer of Coca-Cola Bottling Co. Consolidated, Charlotte, NC, beverage manufacturing and distribution, from 2001 until 2005 and Vice President and Chief Financial Officer of Coca-Cola Bottling Co. Consolidated from 1986 until 2001. He is a director of Flowers Foods, Inc. and has been a director of Snyder’s-Lance since 2003. In addition, Mr. Singer earned a BS is Marketing and an MBA from Pennsylvania State University. Mr. Singer provides the board of directors with a vital understanding and appreciation of the Company’s business which he developed while serving as its President and CEO and as a member of its board of directors for the past eight years. He brings extensive management and financial experience to the board of directors as well as significant knowledge of the food and beverage industries.

Dan C. Swander has been the Operating Partner of Swander Pace Capital, an equity investment firm specializing in consumer products and related industries in San Francisco, CA since 2006. He was the Chief Executive Officer of Method Products, Inc., a San Francisco, CA marketer of household cleaning and personal care products, from 2008 until 2009; Executive Vice President of Basic American Foods, Inc., a Walnut Creek, CA food manufacturing company from 2004 until 2005; President and Chief Operating Officer of International Multifoods Corporation, a Minnetonka, MN food manufacturing company, from 2001 until 2004; and Chairman and Director of Swander Pace & Company, a strategy consulting firm specializing in the food, beverage and packaged goods industries in San Francisco, CA, from 1987 until 2001. Mr. Swander’s significant executive experience, which includes experience in the food and packaged goods industries, particularly qualifies him to serve on the board of directors. Mr. Swander brings his knowledge of the finance sector to the board of directors acquired through his experience with an equity investment firm.

Isaiah Tidwell has worked as a private investor since 2005. He was the Georgia Wealth Management, Director, Executive Vice President – Wachovia Bank, N.A. in Atlanta, GA from 2001 until 2005; President of Georgia Banking – Wachovia Bank, N.A. in Atlanta, GA from 1999 until 2001; and Executive Vice President and Southern/Western Regional Executive of Wachovia Bank, N.A. from 1996 until 1999. In addition, Mr. Tidwell earned a BS in Accounting from North Carolina Central University and an MBA from the Babcock Graduate School of Management of Wake Forest University. He is a Director of Ruddick Corporation and Lincoln National Corporation. Mr. Tidwell’s years of dedicated service since 1995 as a member of Lance’s board of directors qualify him for service on the board of directors of Snyder’s-Lance. His experience in the banking industry also provides a valuable perspective to the board of directors.

Michael A. Warehime has served as the Chairman of the Company’s Board of Directors since December 2010. He was the Chairman of the Board of Directors of Snyder’s before the merger with Lance. From 1973 until 1992, he served as the Chairman and a Director of Farmers Bank & Trust Company. Mr. Warehime is also the President of Warehime Enterprise, Inc., ARWCO Corporation and MAW Associates, LP, and the Co-Chairman and Chief Executive Officer of Seafood America. Mr. Warehime, who owns a significant equity interest in the Company, is uniquely qualified to serve on the board of directors because of his deep knowledge of Snyder’s business and his many years of experience in the food industry. In addition, he brings to the board of directors his expertise in the areas of marketing, sales and finance. Mr. Warehime is married to Patricia A. Warehime.

Patricia A. Warehime worked as an occupational therapist at the Lincoln Intermediate Unit Preschool Program in New Oxford, Pennsylvania. She currently serves on the board of directors of Capital Blue Cross Insurance Company and is a member of the board of trustees of Elizabethtown College in Elizabethtown, Pennsylvania. Ms. Warehime served as a member of the board of directors of Snyder’s until December 2010 when she was appointed to the Company’s board of directors in connection with the merger. Ms. Warehime brings to the board of directors an appreciation for the role of a board of directors acquired through her diverse board experience. Ms. Warehime is married to Michael A. Warehime.

 

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CORPORATE GOVERNANCE

The Board of Directors

We are governed by a board of directors and various committees of the board that meet throughout the year. The board of directors and its committees have general oversight responsibility for our affairs. In exercising its fiduciary duties, the board of directors represents and acts on behalf of Snyder’s-Lance and our stockholders.

Director Independence

The board of directors determines the independence of its members based on the standards specified by Nasdaq. The board of directors has reviewed the relationships between Snyder’s-Lance and each director to determine compliance with the Nasdaq standards. Based on its review, the board of directors has determined that the following directors and director nominees are independent: Jeffrey A. Atkins, Peter P. Brubaker, C. Peter Carlucci, Jr., John E. Denton, James W. Johnston, W.J. Prezzano, Dan C. Swander and Isaiah Tidwell. A majority of the current members of the board of directors are independent. The board of directors has also determined that each member of the audit and compensation committee is independent.

In conducting its review of director independence, the board of directors reviewed the following transactions, relationships or arrangements and does not believe that such transactions or arrangements impair the directors’ independence or ability to exercise independent judgment. All matters described below are within the Nasdaq independence standards. See “Related Person Transactions” for additional details regarding the following transactions and relationships.

 

Name

  

Matters Considered

C. Peter Carlucci, Jr.    Legal services provided to the Company by Eckert Seamans Cherin & Mellott, LLC, of which Mr. Carlucci is a member; employment of Mr. Carlucci’s son by a subsidiary of the Company.
John E. Denton    Service as President and CEO of Snyder’s of Hanover, Inc. from 1992 to 2000, ending ten years before Snyder’s became a wholly-owned subsidiary of the Company in December 2010 in connection with the merger.

The independent directors of the board meet at least twice each year in executive session without the other directors.

Meetings of the Board of Directors

The board of directors held 5 meetings during fiscal year 2011. Each incumbent director attended 75% or more of the board and applicable committee meetings during fiscal year 2011 for the periods during which each such director served. Each director is expected to attend the annual meeting of stockholders in person. All incumbent directors who were directors of the Company at the time of the 2011 annual meeting of stockholders attended the 2011 annual meeting.

The independent directors held 4 executive sessions in 2011.

Board Leadership Structure

The board of directors does not have a general policy regarding the separation of the roles of Chairman of the Board and CEO. The board of directors believes that it is in our best interest to retain flexibility in determining whether to separate or combine the roles of Chairman and CEO based on our circumstances. Mr. Singer is the CEO and Mr. Warehime is the Chairman of the Board, meaning the roles of Chairman of the Board and CEO are currently separate.

If the Chairman of the Board is not an independent director, our corporate governance principles provide for a Lead Independent Director. The Lead Independent Director is elected by the independent directors of the board. The Lead Independent Director:

 

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coordinates the activities of the independent directors;

 

   

advises the Chairman and participates with the Chairman and CEO in preparing board meeting schedules and agendas;

 

   

advises the Chairman and CEO as to the quality, quantity and timeliness of information provided to the independent directors;

 

   

presides at all meetings of the board when the Chairman is not present and at all executive sessions of the board;

 

   

calls meetings of the independent directors;

 

   

recommends the retention of consultants by the board;

 

   

interviews director candidates along with the members of the governance and nominating committee;

 

   

assists with compliance with our governance principles;

 

   

coordinates and moderates executive sessions of the board;

 

   

evaluates the CEO’s performance along with the compensation committee;

 

   

recommends to the governance and nominating committee the membership of the committees of the board and committee chairmen; and

 

   

serves as a member of the executive committee and as a member of all other committees of the board.

Mr. Warehime is the Chairman of the Board and Mr. Prezzano is the Lead Independent Director.

Board Committees

The board of directors has a standing audit committee, compensation committee, executive committee, banking and contracts committee and governance and nominating committee. The board of directors may also establish other committees from time to time as it deems necessary. Committee members and committee chairs are appointed by the board of directors.

The members of the board’s committees are identified in the following table:

 

Director

  

Audit

   Compensation    Executive    Governance
and
Nominating
   Banking and
Contracts

Jeffrey A. Atkins

   Chair       X      

Peter P. Brubaker

   X    X         

C. Peter Carlucci, Jr.

      X       X   

John E. Denton

      X    X    X   

James W. Johnston

   X          X   

Carl E. Lee, Jr.

              

W.J. Prezzano

   X    X    X    Chair    X

David V. Singer

         X       Chair

Dan C. Swander

      X       X   

Isaiah Tidwell

   X    Chair    X      

Michael A. Warehime

         Chair      

Patricia A. Warehime

              

Each committee of the board of directors functions pursuant to a written charter adopted by the board of directors. Copies of each of the committee charters are available on our website, www.snyderslance.com, under the Investor Relations tab.

 

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The following table provides information about the operation and key functions of each board committee:

 

Committee

  

Members

 

Functions and Additional Information

   Number of
Meetings in
Fiscal 2011
 
Audit Committee   

Jeffrey A. Atkins (1)

Peter P. Brubaker

James W. Johnston

W.J. Prezzano

Isaiah Tidwell

    Assists the board of directors in fulfilling its oversight responsibilities by overseeing and reviewing the financial reports and other financial information provided to the stockholders      5   
       Provides director oversight of the independent auditor, which includes having sole authority and responsibility for appointment, termination and compensation of the independent auditor   
       Consults with the independent auditor out of the presence of management about internal controls and the fullness and accuracy of our financial statements   
       Reviews the integrity of our internal and external financial reporting processes   
       Considers and approves, if appropriate, major changes to our auditing and accounting principles and practices as suggested by the independent auditor, management or the internal auditor   
       Monitors our systems and procedures for compliance with laws, regulations and other legal requirements   
       Oversees our risk assessment and risk management policies   
       Oversees the development of our enterprise risk management policies and procedures   
       Reviews capital expenditure projects, acquisitions and divestitures in excess of $5 million   
       The board of directors has determined that Mr. Atkins is an “audit committee financial expert” within the meaning of applicable SEC regulations   
       The board of directors has determined that all of the members of the audit committee are “independent” within the meaning of applicable Nasdaq listing standards   
Compensation
Committee
  

Isaiah Tidwell (1)

Peter P. Brubaker

C. Peter Carlucci, Jr.

John E. Denton

W.J. Prezzano

Dan C. Swander

    Administers and interprets our executive employee stock plans      5   
       Reviews the compensation of our executive officers and establishes their compensation (other than the CEO)   
       Recommends performance criteria for the CEO to the board of directors   
       Evaluates the performance of the CEO and reports to the board of directors on such evaluation   
       Makes recommendations to the board of directors concerning the compensation of the CEO and non-employee directors   
       The board of directors has determined that all of the members of the compensation committee are “independent” within the meaning of applicable Nasdaq listing standards   
Executive
Committee
  

Michael A. Warehime (1)

Jeffrey A. Atkins

John E. Denton

W.J. Prezzano

David V. Singer

Isaiah Tidwell

 

•    

  Exercises the authority of the board and acts on its behalf from time, except when such authority is delegated to the independent directors or the delegation of such authority is prohibited by law      0   
Governance and
Nominating
Committee
  

W.J. Prezzano (1)

C. Peter Carlucci, Jr.

John E. Denton

James W. Johnston

Dan C. Swander

    Identifies, evaluates and recommends candidates for election to the board of directors      3   
       Recommends the members of each committee and the Chairman of each committee to the board of directors   
       Assesses and reviews with the board of directors the appropriate qualifications for members of the board of directors   
       Reviews and recommends appropriate changes to the board of directors regarding our corporate governance principles, codes of conduct and ethics and other corporate governance documents   
       Reviews the adequacy of the committee charters and recommends any changes to the board of directors   
       The board of directors has determined that all of the members of the governance and nominating committee are “independent” within the meaning of applicable Nasdaq listing standards   
Banking and
Contracts
Committee
  

David V. Singer (1)

W.J. Prezzano

    Selects our banks and financial institutions      0   
       Designates those officers and employees authorized to conduct business with such banks and financial institutions   
       Reviews, approves and authorizes certain contracts arising in the ordinary course of business   

 

(1) Committee Chairman

 

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Board’s Role in Risk Oversight

Management is responsible for managing the risks that Snyder’s-Lance faces. The board of directors is responsible for overseeing management’s approach to risk management. The involvement of the full board of directors in reviewing our strategic objectives and plans is a key part of the board’s assessment of management’s approach and tolerance to risk. While the board of directors has ultimate oversight responsibility for overseeing management’s risk management process, the board has delegated to the audit committee the lead role in overseeing the Company’s approach to risk management.

The audit committee is responsible for (i) overseeing our risk assessment and risk management policies; (ii) overseeing management’s identification, monitoring and evaluation of our major financial and other risk exposures, including operational, legal, regulatory, business, commodity, major project, strategic, credit, liquidity, derivative, reputation and external risks; (iii) overseeing the development of our enterprise risk management policies and procedures, including limits and tolerances, risk roles and responsibilities, risk mitigation decisions and risk related assumptions; and (iv) reporting regularly to the board of directors on our overall enterprise risk management program.

The compensation committee also assists the board in its oversight of the evaluation and management of risks related to our compensation policies and practices.

Director Nomination Process

The board of directors has delegated to its governance and nominating committee the responsibility for identifying, evaluating and recommending director candidates to the board of directors. In identifying potential director candidates, the governance and nominating committee seeks input from other members of the board of directors and executive officers. Additionally, the governance and nominating committee may consider director candidates recommended by employees, community leaders, business contacts, third-party search firms and any other sources deemed appropriate by the governance and nominating committee. The governance and nominating committee will also consider director candidates appropriately recommended by stockholders.

In evaluating director candidates, the governance and nominating committee does not set specific, minimum qualifications that must be met by a director candidate. Rather, the governance and nominating committee considers the following factors, in addition to any other factors deemed appropriate by the governance and nominating committee:

 

   

whether the candidate is of the highest ethical character and shares our values;

 

   

whether the candidate’s reputation, both personal and professional, is consistent with our image and reputation;

 

   

whether the candidate’s diverse characteristics, experiences, perspectives and skills would benefit the board of directors given the current composition of the board of directors;

 

   

whether the candidate is “independent” as defined by the applicable Nasdaq listing standards and other applicable laws, rules or regulations regarding independence;

 

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whether the candidate qualifies as someone who is “financially sophisticated” or as an “audit committee financial expert” as described in the Nasdaq listing standards or any other applicable laws, rules or regulations;

 

   

whether the candidate is free from material conflicts of interest that would interfere with the candidate’s ability to perform the duties of a director or that would violate any applicable Nasdaq listing standards or other applicable laws, rules or regulations;

 

   

whether the candidate’s service as an executive officer of another company or on the boards of directors of other companies would interfere with the candidate’s ability to devote sufficient time to discharge his or her duties as a director; and

 

   

if the candidate is an incumbent director, the director’s overall service to Snyder’s-Lance during the director’s term, including the number of meetings attended, the level of participation and the overall quality of performance of the director.

Diversity is one of the various factors the governance and nominating committee may consider in identifying director nominees, but the governance and nominating committee does not have a formal policy regarding board diversity.

The governance and nominating committee assesses and reviews these guidelines with the board of directors each year and modifies them as appropriate. The board of directors also considers these guidelines in carrying out its responsibility for filling vacancies and selecting nominees for election as directors at annual meetings of stockholders. All director candidates, including candidates appropriately recommended by stockholders, are evaluated in accordance with the process described above.

Stockholder Recommendations of Director Candidates

Stockholders who wish to recommend director candidates for consideration by the governance and nominating committee may do so by submitting a written recommendation to the chairman of the governance and nominating committee c/o our Secretary at Snyder’s-Lance, Inc., 13024 Ballantyne Corporate Place, Suite 900, Charlotte, North Carolina 28277. Such recommendation must include the following:

 

   

the name and address of the stockholder submitting the recommendation or the beneficial owner, if any, on whose behalf the recommendation is made;

 

   

the class and number of shares of our stock that are owned beneficially and of record by the stockholder and, if applicable, the beneficial owner, including the holding period for such shares as of the date of the recommendation;

 

   

sufficient biographical information concerning the director candidate, including a statement about the director’s qualifications;

 

   

all other information regarding each director candidate proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission;

 

   

description of all arrangements or understandings among the stockholder and the candidate and any other person or persons pursuant to which the recommendation is being made; and

 

   

a written consent of the candidate to be named in our proxy statement and to stand for election if nominated by the board of directors and to serve if elected by the stockholders.

Recommendations by stockholders for director candidates to be considered for the 2013 annual meeting must be submitted by November 28, 2012. Appropriate submission of a recommendation by a stockholder does not guarantee the selection of the stockholder’s candidate or the inclusion of the candidate in our proxy statement.

Our Bylaws provide that nominations of persons for elections to the board of directors may be made at any annual meeting of the stockholders by any stockholder entitled to vote on such election. Such nominations must be

 

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submitted in writing to our Secretary at our principal office at least 75 days, but not more than 105 days, before the first anniversary of the preceding year’s annual meeting, and in accordance with the procedures specified in our Bylaws. The presiding officer or chairman of the annual meeting of stockholders may refuse to accept the nomination of any person that is not submitted in compliance with such procedures.

Stockholder Communications with the Board

Stockholders may communicate with any of our directors by sending a written communication to a director c/o our Secretary at Snyder’s-Lance, Inc., 13024 Ballantyne Corporate Place, Suite 900, Charlotte, North Carolina 28277. All communications received in accordance with these procedures will be reviewed by the Secretary and forwarded to the appropriate director or directors unless such communications are considered, in the reasonable judgment of the Secretary, to be improper for submission to the intended recipient, such as communications unrelated to our business, relating to routine or insignificant matters, advertisements, commercial solicitations or frivolous or offensive communications.

DIRECTOR COMPENSATION

The following table shows the compensation paid to each non-employee director who served on our board of directors in 2011:

 

Name

   Fees
Earned or
Paid in
Cash

($)(1)
     Stock
Awards

($)(2)
     Option
Awards
($)(3)
     Non-Equity
Incentive Plan
Compensation

($)
    All Other
Compensation
($)
    Total
($)
 

Jeffrey A. Atkins

     73,000         86,680         —           —          —          159,680   

Peter P. Brubaker

     69,000         86,680         —           —          3,611 (4)      159,291   

C. Peter Carlucci, Jr.

     67,500         86,680         —           —          3,611 (4)      157,791   

John E. Denton

     69,000         86,680         —           —          3,611 (4)      159,291   

William R. Holland

     6,000         —           —           —          —          6,000   

James W. Johnston

     67,500         86,680         —           —          —          154,180   

W.J. Prezzano

     96,000         86,680         —           —          —          182,680   

Dan C. Swander

     67,500         86,680         —           —          —          154,180   

Isaiah Tidwell

     80,500         86,680         —           —          —          167,180   

Michael A. Warehime

     660,000         —           —           566,280 (5)      76,604 (6)      1,302,884   

Patricia A. Warehime

     55,500         86,680         —           —          3,611 (4)      145,791   

Sally W. Yelland

     3,000         —           —           —          3,611 (4)      6,611   

 

(1) The amounts shown in this column represent the aggregate amounts of fees earned or paid in cash for services as a director in fiscal year 2011.
(2) The amounts shown in this column represent the aggregate grant date fair value of restricted common stock awards computed in accordance with ASC Topic 718. Each non-employee director (except for Mr. Warehime) received 4,000 shares of restricted stock on June 20, 2011 under the 2008 Director Stock Plan. The assumptions made in determining the fair values of the stock awards are described on pages 35 and 38 to 41 of our Form 10-K for the fiscal year ended December 31, 2011. There were no forfeitures of restricted stock awards in fiscal year 2011. As of December 31, 2011, the aggregate number of shares of restricted common stock outstanding for each of the non-employee directors serving on such date was as follows: Mr. Atkins—4,000; Mr. Brubaker—4,000; Mr. Carlucci—4,000; Mr. Denton—4,000; Mr. Johnston—4,000; Mr. Prezzano—4,000; Mr. Swander—4,000; Mr. Tidwell—4,000; Mr. Warehime—0; and Ms. Warehime—4,000.
(3)

There were no option awards to directors in fiscal year 2011. Options held by former directors of Snyder’s were converted into options with respect to Snyder’s-Lance common stock on December 6, 2010 under the terms of the merger agreement with Snyder’s. As of December 31, 2011, the aggregate number of shares underlying outstanding option awards for each of the directors serving on that date was: Mr. Atkins—0; Mr. Brubaker—0; Mr. Carlucci—57,852; Mr. Denton—58,022; Mr. Johnston—0; Mr. Prezzano—0; Mr. Swander—0; Mr. Tidwell—0; Mr. Warehime—0; and Ms. Warehime—0.

 

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(4) Amount reflects one-time discretionary cash payment provided in lieu of stock options that would have been granted in 2011 to the former directors of Snyder’s pursuant to the Snyder’s of Hanover, Inc. Non-Qualified Stock Option Plan.
(5) This amount represents the cash amount earned by Mr. Warehime under our 2011 Annual Plan. See the narrative description below for additional information regarding Mr. Warehime’s compensation arrangements.
(6) Amounts reflect (a) one-time discretionary cash payment provided in lieu of stock options that would have been granted in 2011 to the former directors of Snyder’s pursuant to the Snyder’s of Hanover, Inc. Non-Qualified Stock Option Plan—$45,140, (b) life insurance premiums—$9,941, (c) personal use of automobile—$11,233 and (d) 401(k) match—$10,290.

In connection with a review of our director compensation, we engaged Pearl Meyer & Partners (“Pearl Meyer”) to conduct an assessment of the competitiveness of our policies. Pearl Meyer prepared a report which identified a group of 11 peer firms and concluded that the total annual direct compensation paid to our directors ranked 8th out of 12 firms, which is at the 35th percentile of the group. Based upon these findings, the recommendations made by Pearl Meyer in their report and the recommendations of our Compensation Committee, on February 8, 2011, the board of directors approved several changes to director compensation. These changes included increasing the annual retainer for board members, increasing the additional fee for serving as Chairman of the Compensation Committee and adding an additional fee for serving as Lead Independent Director. The basic elements of compensation for our non-employee directors for 2011 were as follows:

 

Elements of Non-Employee Director Compensation

   2011
($)
 

Basic Annual Retainer for All Non-Employee Directors

     45,000   

Additional Fee for Lead Independent Director

     15,000   

Additional Fee for Chairman of the Audit Committee (1)

     10,000   

Additional Fee for Chairman of the Compensation Committee (1)

     10,000   

Additional Fee for Chairman of the Governance and Nominating Committee (1)

     7,500   

Fee for each Board of Directors and Committee Meeting Attended (1)

     1,500   

 

(1) The Chairman of the Board does not receive a fee for attending Committee meetings or serving as a committee chairman.

Under the terms of the merger agreement, Michael A. Warehime is entitled to receive through 2013 annual compensation of $660,000 plus an annual incentive target equal to $990,000 under our Annual Plan. Mr. Warehime’s incentive opportunity under the Annual Plan is required to be determined in a manner consistent with the annual incentive for the CEO. See the discussion beginning on page 21 for additional information regarding the 2011 Annual Plan. Mr. Warehime also received certain perquisites and personal benefits in 2011 consistent with benefits he received from Snyder’s prior to the merger.

Under our 2008 Director Stock Plan, each non-employee director serving on the 20th day of the month following our annual meeting of stockholders each year automatically receives an award of up to 4,000 shares of our restricted stock. In 2011, each non-employee director received an award of 4,000 shares of restricted stock on June 20, 2011.

Shares of our restricted stock subject to awards under the 2008 Director Stock Plan vest 12 months after the date of the award. If there is a change in control of Snyder’s-Lance prior to such vesting date, then the shares of restricted stock become fully vested on the date of the change in control, as determined under the plan. If the director ceases to serve as a director prior to such vesting date due to the director’s death, then the shares of restricted stock become fully vested on the date of the director’s death. If the director ceases to serve as a director for any reason other than death prior to the vesting date, then the shares of restricted stock become vested on a pro rata basis at a rate of one-twelfth for each month that the director served as a director after the applicable award date. Directors have the right to receive dividends with respect to the restricted shares and to vote the shares prior to vesting.

 

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EXECUTIVE COMPENSATION

This discussion includes statements regarding financial and operating performance targets in the limited context of our executive compensation programs. Investors should not evaluate these statements in any other context. These are not statements of management’s expectations of future results or guidance.

Compensation Discussion and Analysis

In this section, we explain the compensation of the following officers, who we refer to as the “named executive officers,” of Snyder’s-Lance for fiscal year 2011:

 

Name

  

Title

David V. Singer

   Chief Executive Officer

Carl E. Lee, Jr.

   President and Chief Operating Officer

Rick D. Puckett

   Executive Vice President, Chief Financial Officer and Treasurer

Kevin A. Henry

   Senior Vice President and Chief Human Resources Officer

Charles E. Good

   Senior Vice President

Blake W. Thompson (1)

   Senior Vice President – Supply Chain

 

(1) Mr. Thompson resigned on August 22, 2011.

We also describe certain compensation provided to Michael A. Warehime, Chairman of the Board, pursuant to the terms of the merger agreement with Snyder’s of Hanover, Inc. (the “merger agreement”).

Executive Summary

Executive Compensation Philosophy

The Compensation Committee of the Board of Directors (the “Committee”) is responsible for providing overall guidance for the compensation of all of our executive officers, including the named executive officers. The Committee believes that our executive compensation program should:

 

   

Create and protect value for stockholders;

 

   

Support our business strategy;

 

   

Be guided by clear and consistent objectives, principles and philosophies undergirded by integrity, fairness and objectivity;

 

   

Reward and motivate performance and admonish failure to deliver performance against agreed upon goals and objectives; and

 

   

Competitively support and enable the attraction, recruitment, development and retention of top tier leadership talent.

We seek to accomplish these objectives in a way that is consistent with our culture and the long-term interests of our stockholders and employees.

Elements of Executive Compensation

The following table lists the key elements of our 2011 executive compensation program:

 

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          Primary Objective     

Elements of Compensation

  

Reward Period

   Attract and Retain    Reward
Performance and
Responsibility
   Align Interests with
Stockholders
   Method of Delivery

Base Salary

   Ongoing    þ    þ       -Cash

Annual Performance Incentive Plan

   Annual    þ    þ    þ    -Cash

Long-Term Cash and

Equity Compensation

   Annual    þ    þ    þ    -Stock Options

-Restricted Stock

-Cash

Severance and Change of Control Arrangements

   Specific Events    þ          -Cash severance

payments

-Accelerated
vesting of stock
options and
restricted stock

Benefits and Perquisites

   Ongoing    þ          -Supplemental
benefit plans

-Certain
perquisites

Role of Stockholder Say-on-Pay Votes

We provide our stockholders with the opportunity to cast an annual advisory vote on executive compensation (a “say-on-pay proposal”). At the Company’s annual meeting of stockholders held in May 2011, approximately 95% of the votes cast on the say-on-pay proposal at the meeting were voted in favor of the proposal. The Committee believes this vote affirms the stockholders’ support of the Company’s approach to executive compensation and did not make specific changes to our executive compensation program in response to the vote. As discussed below, however, the Committee continues to review and refine the design and administration of our executive pay practices. The Committee also will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for the named executive officers.

Changes to Our Compensation Programs

As a result of the merger, the boards of directors and executive teams of Lance and Snyder’s were combined in December 2010 and are now working together to manage a significantly larger and more complex organization. In connection with these changes, the Compensation Committee of the Board of Directors (the “Committee”) initiated an in-depth review of our executive compensation program in 2011, which is continuing with the assistance of its consultant, Pearl Meyer & Partners (the “consultant”). Over the past several years, the Committee has made the following changes to our compensation program in connection with its reviews:

 

   

Strengthened the link between stockholder value creation and executive compensation by adding the performance measure of Relative Total Shareholder Return to our long-term incentive program;

 

   

Adopted a new form of executive severance agreement to be used for new executive officers, which is more consistent with current market practices and provides reduced benefits from previous severance agreements;

 

   

Discontinued the practice of entering into change in control agreements with new executive officers;

 

   

Entered into an amendment agreement with Mr. Puckett to eliminate his right to receive change in control benefits if he voluntarily terminates his employment during the thirteenth month following a change in control;

 

   

Clarified in the Company’s annual and long-term incentive plans that a change in control will occur only upon the closing of a relevant transaction rather than stockholder approval of the transaction;

 

   

Strengthened the stock ownership guidelines for officers and directors;

 

   

Included a “double trigger” for the change in control provisions in the proposed Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan being presented to the stockholders for approval at the annual meeting; and

 

   

Eliminated tax gross-ups for perquisites beginning January 1, 2012.

 

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The Committee also determined to eliminate the remaining perquisites for the named executive officers beginning January 1, 2013 and is considering various other changes, including further revisions to our change in control provisions.

Determining Executive Compensation

The Committee approves all elements of compensation for the named executive officers other than the CEO. For the CEO, the Committee approves and recommends all annual compensation to the Board of Directors for final review and approval. The Committee has sole responsibility for and approves all long-term and stock-based compensation for all executive officers, including the CEO.

The CEO conducts an annual review of performance and compensation of the named executive officers during the first quarter of each year. As part of this review, the CEO submits recommendations to the Committee relating to the compensation of these officers. Following a review of these recommendations, the Committee determines and approves the compensation of these officers, with such modifications of the CEO’s recommendations as the Committee considers appropriate.

The Committee’s review of the CEO’s compensation is subject to separate procedures. The Committee, with the assistance of the Chairman of the Board and the Lead Independent Director, conducts an annual evaluation of the CEO’s performance. Based on that evaluation, the Committee then consults with its independent compensation consultant and determines and recommends to the Board of Directors the CEO’s annual compensation and performance objectives. The Board of Directors, upon recommendation of the Committee, establishes the performance criteria for the CEO and reviews the CEO’s performance against the criteria. The independent directors of the Board meet in executive session to set the annual compensation for the CEO.

 

How do we determine compensation levels for the named executive officers?

In setting and recommending compensation levels, the Committee considers all elements of the executive compensation program in total rather than each element in isolation. The Committee is guided by its own subjective judgment and those sources of information that the Committee considers relevant, including various compensation surveys and data provided by the Committee’s compensation consultant. The Committee also reviews the compensation data and tables in the Executive Compensation section of our annual proxy statements. The overall purpose of these reviews is to bring together in one place all of the elements of actual and potential future compensation of our named executive officers so the Committee may analyze both the individual amounts of compensation, the mix of compensation and the total amounts of actual and potential compensation.

As a general principle, the Committee believes that compensation of the executive officers cannot always be based upon fixed formulas and that the prudent use of discretion in determining compensation will generally be in the long-term interests of our Company and its stockholders. Accordingly, from time to time in the exercise of its discretion, the Committee may approve changes in compensation that it considers to be appropriate to award performance or otherwise to provide incentives toward achieving the objectives of our executive compensation program.

Role of Compensation Consultant and Benchmarking

The Committee retains Pearl Meyer & Partners to assist the Committee in its executive compensation decisions. For its decisions regarding 2011 compensation, the Committee engaged the consultant to provide an assessment of the competitiveness of our executive compensation program, including the competitiveness of our base salaries, target total cash compensation, actual total cash compensation, long-term incentives, and target and actual total direct compensation, with similar size companies in similar industries. The consultant also assists the Committee in its evaluation of the performance of the CEO.

In conducting its assessment, the consultant used data from comprehensive surveys. The consultant used the 2010/2011 Watson Wyatt Survey Report on Top Management Compensation, the 2010 US Mercer Benchmark Database Executive and one confidential survey for its analysis of cash compensation. The data from these surveys was adjusted for differences in revenues and sizes of peer companies using regression analysis, focusing on companies with $1.6 billion in revenue within the non-durable manufacturing industry (food and kindred products) and general industry firms employing the appropriate revenue, industry, and executive role perspectives.

 

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The consultant also selected a peer group based on input from the Committee and consisting of publicly traded companies in the food and snack food industries with a target median revenue size of $1.6 billion. The peer group consisted of the following 11 companies:

 

Company Name

   Revenue (1)
($ in  billions)
   Market
Capitalization (2)

($ in billions)
   Market
Capitalization to
Revenue Ratio

Coca-Cola Bottling Co.

   1.5    0.5    0.3

Church & Dwight Inc.

   2.6    4.6    1.8

Del Monte Foods Co.

   3.7    2.6    0.7

Diamond Foods, Inc.

   0.6    0.9    1.4

Flowers Foods Inc.

   2.6    2.3    0.9

Hain Celestial Group, Inc.

   0.9    1.0    1.1

J&J Snack Foods Corp.

   0.7    0.8    1.1

McCormick & Co. Inc.

   3.3    5.6    1.7

Ralcorp Holdings Inc.

   3.9    3.2    0.8

Sunopta Inc.

   1.0    0.4    0.4

Treehouse Foods, Inc.

   1.6    1.6    1.0

Peer Group Median

   1.6    1.6    1.0

Snyder’s-Lance, Inc. (3)

   1.6    1.6    1.0

 

(1) Revenue reflects 4 quarters trailing as of November 2010.
(2) As of November 2010.
(3) Reflects projected fiscal year end revenue and market capitalization (as estimated in November 2010), assuming the merger occurred on January 1, 2010.

The Committee considers the compensation of our CEO and the other named executive officers relative to the compensation paid to similarly situated executives at companies in the survey group, peer group and a market composite reflecting the average of the survey and peer group data. The Committee used these comparisons as a point of reference for measurement but not as the determinative factor in setting our executives’ compensation.

Neither the consultant nor any of its affiliates provide any services to Snyder’s-Lance except for the services related solely to executive officer and director compensation.

Base Salaries

Base salaries are the foundation of our executive compensation program. The Committee generally seeks to maintain base salaries for the named executive officers around the 50th percentile of base salaries for similar positions at similar companies. The Committee, however, also considers the responsibilities of the executives, market demand for executives with similar capability, experience and time in position, and our corporate performance and the performance of each executive in relation to our strategic objectives.

The following table reflects the base salaries approved for the named executive officers for 2011:

2011 Base Salaries

 

Name

   Approved 2011
Base Salary
 

David V. Singer

   $ 725,000   

Carl E. Lee, Jr.

   $ 625,000   

Rick D. Puckett

   $ 455,000   

Kevin A. Henry

   $ 320,000   

Charles E. Good

   $ 288,750   

Blake W. Thompson

   $ 318,600   

The CEO’s base salary was increased by 3.6% for 2011 as compared to his 2010 base salary. The base salaries for the other named executive officers were increased by amounts ranging from 3% to 14% of 2010 base salaries.

 

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How did we determine base salaries for 2011?

On February 7, 2011, the Committee considered its annual review of Mr. Singer’s compensation. As a result of that review and the Committee’s evaluation of our performance and the performance of Mr. Singer in 2010, the Committee approved and recommended to the Board of Directors a 3.6% increase in his base salary for 2011. In determining the amount of the increase, the Committee considered the consultant’s analyses of the survey and peer group data and noted that Mr. Singer’s base salary was below the 50th percentile of the market composite. The Committee also considered Mr. Singer’s performance review and the fact that the Company’s operating results for 2010 were below plan. The increase put Mr. Singer’s base salary between the 35th and 40th percentiles of the market composite. The Board of Directors approved Mr. Singer’s salary increase on February 8, 2011.

On February 7, 2011, Mr. Singer submitted recommendations to the Committee regarding the base salaries for the other named executive officers. Based on Mr. Singer’s recommendations, input from the consultant and the Committee’s subjective evaluation of the Company’s performance and the performance of those individuals in 2010, the Committee increased the base salaries of the other named executive officers by amounts ranging from 3% to 14% for 2011. Mr. Lee’s base salary was increased by approximately 14% from his 2010 base salary at Snyder’s of Hanover, Inc. This increase was provided to Mr. Lee in connection with his assuming the role of President and COO at the time of the merger and recognizes his previous CEO experience and vital role in the integration and operational management of the larger combined company. Mr. Puckett’s base salary was increased by approximately 10% in recognition of his increased responsibilities as a result of the merger. On average, the 2011 base salaries of the named executive officers, other than Mr. Singer, were set at the 49th percentile of the market composite. On an individual basis, the base salaries for those officers ranged from the 40th percentile (Mr. Good) to the 75th percentile (Mr. Lee) of the market composite.

Mr. Warehime received $660,000 for his services as Chairman of the Board in 2011. In accordance with the terms of the merger agreement, Mr. Warehime is entitled to receive annual base compensation of $660,000 for each of 2011, 2012 and 2013.

Annual Performance Incentive Plans

Our annual performance incentive plans (the “Annual Plans”) are designed to provide each executive officer the opportunity to receive an annual cash bonus based on the achievement of certain sales, financial and operational goals. In setting bonus awards, the Committee considers each executive’s level of responsibility in relation to our annual and long-term objectives, recommendations of the CEO, and our obligations under the agreements with the CEO. The Committee sets target bonuses at levels that are designed to link a substantial portion of each individual’s total annual compensation to the achievement of performance goals.

The performance goals are set with respect to pre-determined financial measures for our business. The financial performance measures and goals are determined based on our operating plan for the year, which is developed by management and approved by the Board of Directors.

2011 Annual Plan

On February 7, 2011, the Committee adopted and approved the Snyder’s-Lance, Inc. 2011 Annual Performance Incentive Plan for Officers (the “2011 Annual Plan”). The 2011 Annual Plan was recommended to the Board of Directors, which approved the participation of Mr. Singer in the plan on February 8, 2011. The Board of Directors also approved the participation of Michael A. Warehime, Chairman of the Board, in the 2011 Annual Plan pursuant to the terms of the merger agreement.

 

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The following tables reflect the calculations and amounts of the annual bonuses paid to each of the named executive officers under the 2011 Annual Plan:

2011 Annual Bonus Awards

 

Name

   Base
Salary
     x      Target
Bonus %
(% of Base Salary)
  x      Overall Goal
Achievement
Percentage
  =      Bonus
Award

Paid
 

Rick D. Puckett

   $ 455,000         x       75%     x       57.2%     =       $ 195,195   

Kevin A. Henry

   $ 320,000         x       50%     x       57.2%     =       $ 91,520   

Charles E. Good

   $ 288,750         x       50%     x       57.2%     =       $ 82,583   

Blake W. Thompson

   $ 318,600         x       50%     x       0%     =       $ 0

 

* Mr. Thompson resigned prior to the payout date.

 

Name

   x      Pre-Tax
Operating
Profit*
     x      Award
Percentage
    =      Bonus
Award

Earned
     -      Discretionary
Reduction
     =      Bonus
Award

Paid
 

Michael A. Warehime

     x       $ 84.7         x         1.4     =       $ 1,185,800         -       $ 619,520         =       $ 566,280   

David V. Singer

     x       $ 84.7         x         1.3     =       $ 1,101,100         -       $ 686,400         =       $ 414,700   

Carl E. Lee, Jr.

     x       $ 84.7         x         1.2     =       $ 1,016,400         -       $ 658,900         =       $ 357,500   

 

* In millions. Excludes special items.

 

Why are there two different formulas for determining annual bonuses?

The Committee seeks to select target financial measures and goals based on our annual operating plan. Due to the expected unpredictability of the operations and financial results of the Company in 2011 resulting from the merger, the Committee desired to retain the ability to exercise both positive and negative discretion when evaluating an executive’s performance, so it would have the flexibility to increase or decrease bonus awards. The Committee is restricted by Section 162(m) of the Internal Revenue Code (the “Code”) from using positive discretion to increase an award for certain “covered officers,” which include Messrs. Singer and Lee. Consequently, the Committee established a bonus formula for Messrs. Singer and Lee with potentially higher payout levels while retaining the ability to use appropriate negative discretion. The alternative formula was also used for Mr. Warehime pursuant to the terms of the merger agreement, which requires Mr. Warehime’s target incentive to be consistent with the CEO’s. In considering whether to use negative discretion to reduce the final bonus awards, the Committee was permitted to consider various factors, including the Company’s overall achievement level with respect to the financial goals set for Messrs. Puckett, Henry, Good and Thompson.

Each named executive officer was assigned a target bonus award under the 2011 Annual Plan based on a percentage of his base salary. The following target awards were assigned to the named executive officers for 2011:

 

Name

   2011
Award Percentage
(% of Base Salary)
  2011
Annual Plan
Target  Award
 

David V. Singer

   100%   $ 725,000   

Carl E. Lee, Jr.

   100%   $ 625,000   

Rick D. Puckett

     75%   $ 341,250   

Kevin A. Henry

     50%   $ 159,985   

Charles E. Good

     50%   $ 144,375   

Blake W. Thompson

     50%   $ 159,300   

Mr. Warehime’s target award was set at $990,000 in accordance with the terms of the merger agreement.

The target awards for Messrs. Warehime, Singer and Lee were set as a point of reference for the Committee when determining whether to exercise negative discretion. Mr. Warehime is entitled to a target award in accordance with the terms of the merger agreement, under the Annual Plan, of 150% of his base compensation for each of 2011, 2012 and 2013. Mr. Singer’s target award was set in accordance with his employment agreement, which provides for a target annual award equal to 100% of base salary. Mr. Singer’s total target cash compensation (i.e., base salary plus target annual bonus) was set between the 35th and 45th percentiles of the market composite.

 

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Mr. Lee’s target award was set at 100% of base salary in connection with his assuming the role of President and COO at the time of the merger and to reflect his broad responsibilities with the combined company. Mr. Puckett’s target award was increased to 75% of base salary for 2011 from 60% of base salary for 2010 due to his increased responsibilities resulting from the merger. Mr. Henry’s target award remained at 50% of base salary, and Mr. Good’s target award was set at 50% of base salary, which the Committee determined was in line with market data for similar positions at peer companies. On average, the total target cash compensation for the named executive officers, other than Mr. Singer, was set at the 50th percentile of the market composite, with the individual total target cash compensation for each named executive officer ranging from the 45th percentile (Mr. Henry and Mr. Good) to the 75th percentile (Mr. Lee).

For each of Messrs. Puckett, Henry and Good, the overall goal achievement percentage under the 2011 Annual Plan was calculated based on our achievement of annual corporate performance goals with respect to pre-determined financial performance measures. For 2011, the Committee selected annual financial measures and assigned applicable weights and performance goals as follows:

 

Performance Measure

   Weight     Target
Performance
Goal (1)
 

Net Revenue

     40   $ 1.62 billion  (2) 

Corporate Earnings Per Share (“EPS”)

     40   $ 0.92 (3) 

Free Cash Flow

     20   $ 74 million  (4) 

 

(1) The threshold payout for each performance measure was zero and the maximum payout for each performance measure was 200% of target.
(2) For Net Revenue, performance below target resulted in a 25% reduction in the payout for each 1% reduction in Net Revenue below target, and performance above target resulted in a 25% increase in the payout for each 1% increase in Net Revenue above target. The payout with respect to Net Revenue was subject to increase or decrease by the Committee, at its discretion, due to the complexities of the route conversion and major partner brand activities. The payout for Net Revenue could not exceed target if the threshold level of achievement was not obtained for EPS.
(3) For Earnings Per Share, performance below target resulted in a 10% reduction in payout for each $0.01 reduction in EPS below target, and performance above target resulted in a 10% increase in payout for each $0.01 increase in EPS over $1.00.
(4) For Free Cash Flow, performance below target resulted in a 5% reduction in payout for each $1.0 million reduction in Free Cash Flow below target, and performance above target resulted in a 5% increase in payout for each $1.0 million increase in free cash flow above $79 million.

The Committee replaced one of the financial measures used in 2010—Cash Flow from Operations—with Free Cash Flow for 2011. The change was made to better measure the Company’s performance during the integration with Snyder’s. The Committee also increased the weighting for Net Revenue from 35% to 40% and decreased the weighting for EPS from 45% to 40% to give equal weighting to these measures and recognize each as important measures of the combined company’s integration and growth.

For Messrs. Warehime, Singer and Lee, the Committee approved annual bonus opportunities equal to 1.4%, 1.3% and 1.2%, respectively, of Pre-Tax Operating Profit, subject to the exercise of negative discretion by the Committee to reduce the final awards. In considering any discretionary reductions, the Committee was permitted to take into account the target award for each participant as well as the overall goal achievement under the performance goals set with respect to Net Revenue, EPS and Free Cash Flow.

Each of the financial performance measures (excluding special items) was defined in the 2011 Annual Plan as follows:

 

   

“Net Revenue” is defined as sales and other operating revenue, net of returns, allowances, discounts and other sales deduction items for the 2011 fiscal year, as audited and reported in our Form 10-K for the 2011 fiscal year.

 

   

“Corporate Earnings Per Share” is defined as the fully diluted earnings per share of the Company for the 2011 fiscal year, as audited and reported in our Form 10-K for the 2011 fiscal year.

 

   

“Free Cash Flow” is defined as total operating cash flow less capital expenditures, excluding a special tax refund resulting from change in control expenses related to the merger, for the 2011 fiscal year, as audited and reported in our Form 10-K for the 2011 fiscal year.

 

   

“Pre-Tax Operating Profit” is defined as net revenue less total cost of goods and operating expenses.

 

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The Committee maintained discretion to adjust any award under the 2011 Annual Plan for extraordinary items such as acquisitions, dispositions, discontinued operations, required accounting adjustments or similar events, provided that the manner of exercising such discretion would not prevent the Company from deducting the award for tax purposes under Section 162(m) of the Code. The Committee also retained the discretion to reduce any award for any reason. The Committee exercised negative discretion to reduce the awards paid to Messrs. Singer, Lee and Warehime to reflect the overall goal achievement percentage of 57.2% obtained with respect to the performance goals for the other named executive officers.

Annual bonuses under the 2011 Annual Plan, as described above, were determined by the Committee and paid to the participants in February 2012.

Long-Term Cash and Equity Compensation

The Committee administers our 1997 Incentive Equity Plan, our 2003 Key Employee Stock Plan and our 2007 Key Employee Incentive Plan, as amended. The Committee is authorized to grant restricted stock awards, stock options and other equity awards under these plans. Awards granted to an individual are based upon a number of factors, including the recipient’s position, salary and performance, as well as our overall corporate performance. Both the 1997 Incentive Equity Plan and the 2003 Key Employee Stock Plan have expired and there were no additional shares available for award under these Plans as of December 31, 2011.

The Committee makes awards under our equity incentive plans from time to time to reward short-term performance with equity-based compensation and to motivate the recipients’ long-term performance and retention. Each year, the Committee adopts a three-year performance incentive plan for officers that includes a performance period that generally covers the current year and the two following years (the “Three-Year Plans”).

2011 Three-Year Plan

On February 21, 2011, the Committee adopted and approved the 2011 Three-Year Performance Incentive Plan for Officers and Key Managers (the “2011 Three-Year Plan”) under the 2007 Key Employee Incentive Plan. Each of the named executive officers was selected as a participant in the 2011 Three-Year Plan and assigned a target incentive based on his level of responsibility and position and the analyses and recommendations of the consultant.

The Committee assigned the following target incentives to the named executive officers:

 

Name

   2011 LTIP
Overall
Target
Incentive
 

David V. Singer

   $ 1,900,000   

Carl E. Lee, Jr.

   $ 800,000   

Rick D. Puckett

   $ 475,000   

Kevin A. Henry

   $ 350,000   

Charles E. Good

   $ 115,000   

Blake W. Thompson

   $ 350,000   

 

How did the Committee determine the LTIP target amounts?

The Committee seeks to provide a substantial portion of total compensation in the form of long-term, “at risk” pay. The Committee generally attempts to set long-term target incentives around the 50th percentile of the Company’s competitive market; however, the Committee also considers contractual obligations and subjective factors including the responsibilities of an executive, time in position and the market demand for executives with similar capability and experience. Mr. Singer’s target incentive was determined based on his Executive Employment Agreement, and to set his long-term incentive compensation between the 50th and 60th percentiles of the composite market. For the remaining named executive officers, target incentives were set at approximately the 50th percentile of the market composite, except for Mr. Lee’s incentive. Mr. Lee’s incentive was set at the 70th percentile of the market composite to reflect his prior CEO experience and the importance of his management responsibilities in connection with the integration and operations of the larger combined company.

 

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In accordance with the 2011 Three-Year Plan, each named executive officer was granted nonqualified stock options valued at 25% of his target incentive and restricted shares of common stock valued at 25% of his target incentive, as follows:

 

Name

   Nonqualified
Stock Option
Shares
     Restricted
Stock Shares
 

David V. Singer

     103,260         27,426   

Carl E. Lee, Jr.

     43,479         11,547   

Rick D. Puckett

     25,815         6,855   

Kevin A. Henry

     19,023         5,052   

Charles E. Good

     6,276         1,668   

Blake W. Thompson

     19,023         5,052   

Each stock option granted under the 2011 Three-Year Plan had an initial exercise price of $17.32 and vests in three substantially equal annual installments beginning on February 23, 2012. Each participant was granted a number of stock options equal to the dollar value of his or her stock option incentive divided by the Black-Scholes value of the stock options on February 23, 2011.

Each share of restricted stock also vests in three substantially equal annual installments beginning on February 23, 2012. Each participant was granted a number of shares of restricted stock equal to the dollar value of his or her restricted stock incentive divided by $17.32, which was the closing price on February 23, 2011.

Each named executive officer was also assigned a performance award opportunity with a target long-term performance award equal to 50% of his target incentive under the 2011 Three-Year Plan. Payouts with respect to the performance award opportunities will be payable in cash based on the attainment of predetermined performance goals for 2012 and 2013 with respect to certain financial measures. The Committee determined that the performance period should not include 2011, due to the expected unpredictability of short-term operations and financial performance resulting from the post-merger integration.

The formulas for computing the long-term performance awards are as follows:

 

Participant

  

2011 LTIP Formula

David V. Singer

   Cumulative Pre-Tax Operating Profit x 0.65% = Award Earned

Carl E. Lee, Jr.

   Cumulative Pre-Tax Operating Profit x 0.60% = Award Earned

Rick D. Puckett

Kevin A. Henry

Charles E. Good

Blake W. Thompson

   Target Award x Overall Goal Achievement (%) = Award Earned

As discussed above under the heading “Annual Performance Incentive Plans—2011 Annual Plan,” the formulas for computing the long-term performance awards for Messrs. Singer and Lee were different from the formulas for the other executive officers in order to retain the ability to exercise both positive and negative discretion. The Committee is restricted by Section 162(m) of the Code from using positive discretion to increase an award for Messrs. Singer and Lee. In determining any final awards to Messrs. Singer and Lee, the Committee may exercise negative discretion to reduce the awards taking into consideration each executive’s target performance award and our overall goal achievement level with respect to the financial goals set for Messrs. Puckett, Henry, Good and Thompson under the 2011 Three-Year Plan.

The Committee set the target performance awards under the 2011 Three-Year Plan as follows:

 

Name

   2011 LTIP
Target
Performance
Award
 

David V. Singer

   $ 950,000   

Carl E. Lee, Jr.

   $ 400,000   

Rick D. Puckett

   $ 237,500   

Kevin A. Henry

   $ 175,000   

Charles E. Good

   $ 57,750   

Blake W. Thompson

   $ 175,000   

 

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The overall goal achievement percentage under the 2011 Three-Year Plan will be computed based on a performance matrix taking into account the achievement of performance goals for selected performance measures and the Company’s “Relative Total Shareholder Return” compared to a peer group of 24 companies. For 2011, the Committee chose the following performance measures and weightage factors:

 

Performance Measure

   Weight  

Cumulative Net Revenue

     33.3

Cumulative EPS

     33.3

Average Return on Invested Capital

     33.3

Due to the completion of the merger, the Committee determined to reduce the weighting for Net Revenue from 50% to 33.3%. The Committee also increased the weighting for EPS and Return on Invested Capital from 2010 amounts to 33.3% to reflect the Company’s goal of increasing the return on investment.

The overall goal achievement percentage will be determined in accordance with the following matrix:

 

         Relative Shareholder Return  

Measure

   Attainment   Quartile 4     Quartile 3     Quartile 2     Quartile 1  

Net Revenue

   Maximum     75     100     150     175

EPS

   Target     50     75     100     135

ROIC

   Threshold     25     50     75     100
   Less than 50%     0     25     50     75

Each of the performance measures (excluding special items) and other relevant terms under the 2011 Three-Year Plan are defined as follows:

 

   

“Net Revenue” is defined as the cumulative total of the revenue and other operating revenue, net of returns, allowances, discounts and other sales deduction items for the 2012 and 2013 fiscal years, as audited and reported in the Company’s Forms 10-K for the 2012 and 2013 fiscal years.

 

   

“Corporate Earnings Per Share” is defined as the cumulative total of the fully diluted earnings per share of the Company for the 2012 and 2013 fiscal years, as audited and reported in Lance’s Forms 10-K for the 2012 and 2013 fiscal years.

 

   

“Return on Invested Capital” or “ROIC” is defined as the average of the ROIC for the 2012 and 2013 fiscal years, as audited and reported in the Company’s Forms 10-K for the 2012 and 2013 fiscal years, calculated as follows:

 

  Operating Income x (1 –Tax Rate)   
  Average Equity + Average Net Debt   

 

   

“Operating Income” means our actual earnings before interest and taxes, excluding other income and expenses; “Tax Rate” means our actual total effective income tax rate for each year; and “Average Net Debt” means our average debt less average cash for each year.

 

   

“Relative Total Shareholder Return” is defined as the total shareholder return for the Company relative to a peer group of 24 companies. For additional information regarding the peer group, see Exhibit A-3 of the 2011 Three-Year Plan, attached as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended April 2, 2011. Each peer company, including Snyder’s-Lance, will be put into four quadrants ranked from highest TSR (“Quadrant 1”) to the lowest TSR (“Quadrant 4”).

 

   

“Total Shareholder Return” (“TSR”) is defined as the return of $100 invested in each stock of the peer companies at the beginning of the performance period compared to the value of that $100, with dividends reinvested, at the end of the performance period.

 

   

“Pre-Tax Operating Profit” is defined as the Company’s Net Revenue less total cost of goods and operating expenses for the 2012 and 2013 fiscal years.

The maximum potential payout under each performance award is 175% of target. The Committee maintains discretion to adjust any award under the 2011 Three-Year Plan for extraordinary items such as acquisitions, dispositions, discontinued operations, required accounting adjustments or similar events, provided that the manner of exercising such discretion will not prevent the Company from deducting the award for tax purposes under Section 162(m). The Committee also retains the discretion to reduce any performance award for any reason.

 

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Payments of the performance awards, if any, will be made as soon as practicable in 2014 after the Committee has reviewed the Company’s 2012 and 2013 audited financial statements and determined the performance levels achieved.

COO Retention Grant

On February 23, 2011, the Committee granted a nonqualified stock option to Mr. Lee for the purchase of 434,784 shares of common stock at an exercise price of $17.32 per share. The grant date fair value of the option was $1,717,397. The Committee granted the option to Mr. Lee as a result of his assuming the position of President and Chief Operating Officer, in recognition of his key role in the post-merger integration and to encourage his retention with the Company. The option vests in one installment on February 23, 2016, the fifth anniversary of the grant.

CFO Retention Amendment

On February 21, 2011, the Committee approved a Retention and Amendment Agreement (the “Retention Amendment”) with Mr. Puckett. The Retention Amendment modified Mr. Puckett’s Restated Compensation and Benefits Assurance Agreement, dated April 24, 2008, to eliminate his right to receive severance benefits if he voluntarily terminates his employment during the thirteenth month following a change in control, including the change in control resulting from the merger with Snyder’s. The Retention Amendment also required Mr. Puckett to provide the Company with certain non-competition, non-solicitation and non-interference covenants during and for one year following the termination of his employment. As consideration for entering into the Retention Amendment, Mr. Puckett received on February 23, 2011 (1) a lump sum cash payment of $250,000, (2) 17,322 restricted shares of common stock with a grant date fair value of $300,000 and (3) a nonqualified stock option to purchase 76,086 shares of common stock for an exercise price of $17.32 per share. The grant date fair value of the option was $286,844. The restricted stock and stock option vest on February 23, 2014, the third anniversary of the grant.

2012 Key Employee Incentive Plan

As discussed elsewhere in this proxy statement, the Board of Directors has approved and recommended to the stockholders the 2012 Key Employee Incentive Plan. The 2012 Key Employee Incentive Plan, which will replace our 2007 Key Employee Incentive Plan, is designed to offer performance-based stock and cash incentives and other equity-based incentive awards to attract and retain managerial and other key employees, and to reward such employees for making major contributions to our success with incentive awards that provide a proprietary interest in the long term growth and performance of the Company.

Stock Ownership Guidelines

We expect that individuals who receive awards under our equity incentive plans will retain a substantial portion of the shares awarded to them to foster a mutuality of interests with our stockholders. In 2007, our Board of Directors, upon recommendation of the Committee, adopted stock ownership guidelines for the Board of Directors, officers and senior managers of Snyder’s-Lance. The guidelines generally provide that each of our directors, officers and senior managers retain 50% of common shares received under our equity grants to them, net of required income tax withholding. For 2011, the ownership targets ranged from two times base annual retainer for directors, two times base salary for the CEO, one times base salary for Executive and Senior Vice Presidents and one-half times base salary for all other officers and senior managers. On February 9, 2012, the Board of Directors, on recommendation of the Committee, amended the guidelines to increase the ownership targets to three times cash retainer for directors, three times base salary for the CEO, two times base salary for the President, COO and CFO, one times base salary for Senior Vice Presidents and one-half times base salary for other officers and senior managers.

CEO Employment Agreement

In May 2005, we entered into an Executive Employment Agreement, as amended (the “Employment Agreement”), with Mr. Singer in connection with his appointment as our CEO. The initial term of the Employment Agreement was three years with automatic renewals for successive one-year terms. The Employment Agreement may be terminated on 90 days written notice prior to the end of the initial term or a renewal term.

 

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Under the Employment Agreement, we agreed to provide Mr. Singer (i) a minimum annual base salary of $500,000 during the term of the agreement, (ii) the opportunity to participate in our Annual Plan with a target annual incentive equal to 100% of base salary, (iii) perquisites, including an automobile and club dues and a tax gross-up for such dues, and (iv) such other benefits as are generally made available to similarly situated executives of the Company.

We also agreed to provide Mr. Singer with an annual long-term incentive opportunity beginning after 2005 equal to 120% of his base salary, with 75% of the annual award delivered through a grant of stock options and the remaining 25% provided as a target incentive under our Three-Year Plans. On April 24, 2008, Mr. Singer’s employment agreement was amended to provide that 100% of his annual long-term incentive opportunity after 2007 will be provided as a target incentive under the Three-Year Plans.

The Employment Agreement also provides for potential payments and benefits to Mr. Singer if he is terminated under certain circumstances. See the discussion beginning on page 38 for additional information.

Severance and Change in Control Arrangements

During 2011, each of our named executive officers, except for Mr. Good, was entitled under their employment or severance agreements to severance payments in connection with the occurrence of certain events. These provisions were initially negotiated by us and approved by the Committee and the Board of Directors in connection with the hiring of Messrs. Singer, Puckett and Thompson. In 2011, the Committee adopted a new form of severance agreement, which the Company entered into with Messrs. Lee and Henry.

In 1997, with the assistance of the Company’s then compensation consultant, Hewitt Associates LLC, the Committee and the Board of Directors approved Compensation Benefits and Assurance Agreements (“Benefits Agreements”) for certain key executive officers in the event of a change in control. These agreements were designed to allow the executive officers to continue to focus on the operation of our business and to act in the best interests of our stockholders rather than focus on their own employment status in the event of a potential change in control. The triggering events under these Benefits Agreements were selected to provide the executive benefits in the event a new owner of our Company did not continue the employment of the executive or otherwise made their position untenable. See the discussion beginning on page 36 for additional details regarding the amounts and benefits payable under these agreements in the event of a change in control. The Company has not entered into Benefits Agreements with Messrs. Lee, Henry and Good.

 

Has the Committee made any changes to the Company’s Severance and Change in Control Benefits?

In 2010, the Committee engaged the consultant to provide an in-depth study of our severance and change in control benefits. In February 2011, the Committee made certain changes to the Company’s severance and change in control arrangements based on the consultant’s study and recommendations. First, the Committee adopted a new form of executive severance agreement to be used for new executive officers. The new form is intended to be more consistent with current market practices and provides reduced benefits from the prior severance and change in control packages. Second, the Committee determined not to enter into Benefits Agreements with new executive officers, which included Messrs. Lee, Henry and Good. The Committee also modified Mr. Puckett’s Benefits Agreement as described above under “Long-Term Cash and Equity Compensation—CFO Retention Amendment.” Finally, the Committee clarified in the 2011 Annual Plan and 2011 Three-Year Plan that a change in control will occur only upon the closing of a relevant transaction rather than the approval of the transaction by the stockholders. In the proposed Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan, the Committee included a “double trigger” for the change in control provisions in the Plan being presented to the stockholders for approval at the annual meeting.

Following the merger with Snyder’s, Mr. Thompson resigned from the Company effective August 22, 2011. Mr. Thompson’s resignation qualified as a “qualifying termination” within three years of a “change in control” under his Benefits Agreement. Mr. Thompson’s Benefits Agreement was amended in connection with his resignation to add a payment of $100,000 and non-competition and non-solicitation provisions.

 

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Benefits and Perquisites

We have generally provided to our employees, including the named executive officers, personal benefits that the Committee believes are reasonable, competitive and consistent with our objective of attracting and retaining officer talent. The cost of these benefits is reflected under All Other Compensation (Column (i)) on page 30.

Each of our executive officers, including the named executive officers, is eligible to participate in our group insurance program, which includes group health, dental, vision, life and long-term disability insurance, on the same basis as other employees. Other benefits for all employees include a profit-sharing retirement plan, 401(k) plan, employee stock purchase plan, paid sick leave, paid holidays and paid vacations.

Our named executive officers may participate in a benefit restoration plan which provides amounts that exceed the regulatory limits on contributions to our Profit Sharing Retirement Plan, term life insurance, disability insurance and automobile allowances. Our named executive officers also receive financial, medical and tax planning reimbursement up to $5,000 annually. In addition, Mr. Singer and Mr. Lee received certain other benefits from the Company. Mr. Singer receives reimbursement for a country club membership and an income tax gross up for such reimbursement as provided in his Executive Employment Agreement. Mr. Lee receives reimbursement for a country club membership. Mr. Warehime also receives certain perquisites and benefits consistent with the benefits paid to him by Snyder’s of Hanover.

The Committee reviews and approves annually all perquisites paid by us to our executive officers. With the assistance of the consultant, the Committee reviewed our perquisite policies and determined to eliminate the tax gross-up for perquisites beginning January 1, 2012 and eliminate the remaining perquisites for named executive officers beginning January 1, 2013.

Section 162(m) of the Internal Revenue Code

The Committee considers the tax and accounting effects of compensation elements when designing our incentive and equity compensation plans. Under Section 162(m) of the Code, a public company is generally not entitled to deduct non-performance based compensation paid to its named executive officers for Federal income tax purposes to the extent any such individual’s compensation in any year exceeds $1.0 million. Special rules apply for “performance-based” compensation, including the pre-approval of performance goals applicable to that compensation. In 2007, the stockholders of the Corporation approved the 2007 Key Employee Incentive Plan which is intended to qualify certain elements of compensation for the performance-based exception to the limitations under Section 162(m).

Annual performance incentive awards and stock options and performance awards under the Three-Year Incentive Plan are also intended to be fully deductible as “performance-based” compensation under Section 162(m). Other elements of compensation, including restricted stock awards as part of the Three-Year Incentive Plan, are not intended to be “performance-based” compensation under Section 162(m), and some portion of that compensation may not be fully deductible as a result of Section 162(m). In order to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee has not adopted a policy that all compensation must be deductible for federal income tax purposes.

 

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Executive Compensation Tables

The following tables and related narratives present the compensation for our named executive officers in the format specified by the SEC.

Summary Compensation Table

The following table shows certain compensation information concerning our named executive officers for the fiscal years ended December 31, 2011, January 1, 2011 and December 26, 2009.

 

                                        Non-Equity                
                          Stock      Option      Incentive Plan      All Other         
Name and           Salary      Bonus      Awards      Awards      Compensation      Compensation      Total  
Principal Position    Year      ($)      ($)      ($)      ($)      ($)      ($)      ($)  

(a)

   (b)      (c)      (d)      (e)      (f)      (g)      (i)      (j)  

David V. Singer

     2011         725,000         —           475,018         383,095         414,700         77,354         2,075,167   

Chief Executive Officer

     2010         700,000         —           1,199,992         399,996         653,800         1,045,227         3,999,015   
     2009         660,000         —           842,426         455,448         719,400         90,540         2,767,814   

Carl E. Lee, Jr.

     2011         625,000         —           199,994         1,878,704         357,500         65,907         3,127,105   

President and Chief

     2010         —           —           —           —           —           —        

Operating Officer

     2009         —           —           —           —           —           —        

Rick D. Puckett

     2011         455,000         —           418,746         382,618         195,195         294,923         1,746,482   

Executive Vice

     2010         413,350         —           356,251         118,751         231,700         1,246,557         2,336,609   

President, Chief

     2009         401,310         —           215,058         116,248         218,800         49,836         1,001,252   

Financial Officer and

                       

Treasurer

                       

Kevin A. Henry

     2011         320,000         —           87,501         70,575         91,523         43,668         613,267   

Senior Vice President

     2010         309,000         50,000         641,921         87,501         144,300         71,063         1,303,785   

and Chief Human

     2009         —           —           —           —           —           —        

Resources Officer

                       

Charles E. Good

     2011         288,750         —           28,890         23,284         82,583         66,636         490,143   

Senior Vice President

     2010         —           —           —           —           —           —        
     2009         —           —           —           —           —           —        

Blake W. Thompson (1)

     2011         207,750         —           87,501         70,575         —           1,738,211         2,104,037   

Senior Vice President—

     2010         309,310         —           262,502         87,501         144,500         883,591         1,687,404   

Supply Chain

     2009         300,300         —           160,783         86,904         163,700         39,258         750,945   

 

(1) Mr. Thompson resigned effective August 22, 2011.

Salary (Column (c))

The amounts shown in the “Salary” column include any amounts deferred by the executive officers under our Deferred Compensation Plans and our 401(k) Savings Plan.

Bonus (Column (d))

The amount shown in the “Bonus” column includes a bonus paid to Mr. Henry in connection with his initial employment by Snyder’s-Lance in 2010.

Stock Awards (Column (e))

The amounts shown in the “Stock Awards” column reflect the aggregate grant-date fair values of restricted stock awards computed in accordance with FASB ASC Topic 718. The assumptions made in determining the fair values of the stock awards are described on pages 35 and 38 to 41 of our Form 10-K for the fiscal year ended December 31, 2011.

Option Awards (Column (f))

The amounts shown in the “Option Awards” column reflect the aggregate grant-date fair values of option awards computed in accordance with FASB ASC Topic 718. The assumptions made in determining the fair value of option awards are described on pages 35 and 38 to 41 of our Form 10-K for the fiscal year ended December 31, 2011.

 

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Non-Equity Incentive Plan Compensation (Column (g))

The amounts shown in the “Non-Equity Incentive Plan Compensation” column represent cash amounts paid under our 2011 Annual Plan.

All Other Compensation (Column (i))

The following table sets forth each component of the “All Other Compensation” column for 2011.

 

Benefit

   Singer      Lee     Puckett     Henry      Good     Thompson  

Profit Sharing Plan (1)

   $ 7,963         —        $ 7,963      $ 4,940         —        $ 7,083   

Employee Stock Purchase Plan (2)

     —           —          50        —           —          —     

401(k) Plans (3)

     6,125       $ 10,290        6,125        6,125       $ 10,290        5,153   

Deferred Compensation Plans (4)

     15,584         —          6,799        15,916         —          —     

Term life insurance premiums

     8,772         1,211        6,687        1,087         3,475        3,023   

Country club dues

     10,317         3,200        —          —           —          —     

Personal use automobile

     —           6,066        —          —           7,731        —     

Automobile allowances

     18,000         —          15,600        15,600         —          10,200   

Financial planning and tax services

     2,985         —          1,700        —           —          —     

Tax gross-ups

     7,609         —          —          —           —          —     

Qualifying termination following a change in control

     —           —          —          —           —          1,712,751   

Other

     —           45,140 (5)      250,000 (6)      —           45,140 (5)      —     
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ 77,354       $ 65,907      $ 294,923      $ 43,668       $ 66,636      $ 1,738,211   

 

(1) The amounts shown in this row represent contributions we made to the executives’ accounts under our Profit-Sharing Retirement Plan.

 

(2) The amounts shown in this row represent matching contributions we made to the executives’ accounts under our Employee Stock Purchase Plan.

 

(3) The amounts shown in this row represent the matching contributions we made to the executives’ accounts for 2011 under our 401(k) Savings Plans of up to 2.45% of eligible compensation for Messrs. Singer, Puckett, Henry and Thompson and up to 4.5% of eligible compensation for Messrs. Lee and Good.

 

(4) The amounts shown in this row represent contributions we made to the executives’ accounts under the Deferred Compensation Plans. The plans are described beginning on page 34.

 

(5) Amounts reflect one-time discretionary cash payments provided in lieu of stock options that would have been granted in 2011 to certain management members of Snyder’s pursuant to the Snyder’s of Hanover, Inc. Non-Qualified Stock Option Plan.

 

(6) This amount is a cash payment to Mr. Puckett under a Retention and Amendment Agreement dated February 21, 2011. See the narrative description on page 40 for additional information regarding this agreement.

 

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2011 Grants of Plan Based Awards

The following table shows all grants of plan-based awards made to our named executive officers in 2011.

 

         Estimated Possible
Payouts Under Non-Equity
Incentive Plan Awards
     All Other
Stock
Awards:
Number of
Shares
of Stock
or Units
(#)
     All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
     Exercise
or Base
Price of
Option
Awards
($/Sh)
     Grant Date
Fair Value
of Stock
and Option
Awards
($)(1)
 

Name

   Grant
Date
  Threshold
($)
     Target
($)
     Maximum
($)
             

David V. Singer

   N/A (2)     0         725,000         1,450,000         —           —           —           —     
   2/23/11 (3)     475,000         950,000         1,662,500         —           —           —           —     
   2/23/11 (4)     —           —           —           27,426         —           —           475,018   
   2/23/11 (5)     —           —           —           —           103,260         17.32         383,095   

Carl E. Lee, Jr.

   N/A (2)     0         625,000         1,250,000         —           —           —           —     
   2/23/11 (3)     200,000         400,000         700,000         —           —           —           —     
   2/23/11 (4)     —           —           —           11,547         —           —           199,994   
   2/23/11 (5)     —           —           —           —           43,479         17.32         161,307   
   2/23/11 (7)     —           —           —           —           434,784         17.32         1,717,397   

Rick D. Puckett

   N/A (2)     0         341,250         682,500         —           —           —           —     
   2/23/11 (3)     118,750         237,500         415,625         —           —           —           —     
   2/23/11 (4)     —           —           —           6,855         —           —           118,729   
   2/23/11 (5)     —           —           —           —           25,815         17.32         95,774   
   2/23/11 (6)     —           —           —           17,322         —           —           300,000   
   2/23/11 (7)     —           —           —           —           76,086         17.32         286,844   

Kevin A. Henry

   N/A (2)     0         159,985         319,970         —           —           —           —     
   2/23/11 (3)     87,500         175,000         306,250         —           —           —           —     
   2/23/11 (4)     —           —           —           5,052         —           —           87,501   
   2/23/11 (5)     —           —           —           —           19,023         17.32         70,575   

Charles E. Good

   N/A (2)     0         144,375         288,750         —           —           —           —     
   2/23/11 (3)     28,875         57,750         101,063         —           —           —           —     
   2/23/11 (4)     —           —           —           1,668         —           —           28,890   
   2/23/11 (5)     —           —           —           —           6,276         17.32         23,284   

Blake W. Thompson

   2/23/11 (2)     0         159,300         318,600         —           —           —           —     
   2/23/11 (3)     87,500         175,000         306,250         —           —           —           —     
   2/23/11 (4)     —           —           —           5,052         —           —           87,501   
   2/23/11 (5)     —           —           —           —           19,023         17.32         70,575   

 

(1) The amounts shown in this column represent the grant-date fair market values of the awards computed in accordance with FASB ASC Topic 718. The grant-date fair values of the performance awards were determined based on our expectations as of the grant dates regarding the probable level of achievement under the awards. We assumed the target level of achievement under each performance award. The assumptions made in determining the fair values of the awards are described beginning on page 35 of our Form 10-K for the fiscal year ended December 31, 2011.

 

(2) The amounts shown in this row reflect the threshold, target and maximum cash incentive awards under the 2011 Annual Plan.

 

(3) The amounts shown in this row reflect the threshold, target and maximum performance-based cash awards under the 2011 Three-Year Plan.

 

(4) The amounts shown in this row reflect a grant of restricted stock under the 2011 Three-Year Plan.

 

(5) The amounts shown in this row reflect a grant of stock options under the 2011 Three-Year Plan.

 

(6) The amounts shown in this row reflect a grant of restricted stock under the Lance, Inc. 2007 Key Employee Incentive Plan. See the narrative description on page 27 for additional information regarding this grant of restricted stock.

 

(7) The amounts shown in this row reflect a grant of stock options under the Lance, Inc. 2007 Key Employee Incentive Plan. See the narrative description on page 27 for additional information regarding this grant of stock options.

 

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Outstanding Equity Awards at Fiscal Year-End 2011

The following table shows the outstanding equity awards held by our named executive officers as of December 31, 2011.

 

     Option Awards             Stock Awards  

Name                                                 

   Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(1)
     Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options

(#)
     Option
Exercise

Price
($)
     Option
Expiration
Date
     Number
of
Shares
or Units
of Stock
that
Have
Not
Vested

(#)
    Market
Value of
Shares
or Units
of Stock
that
Have Not
Vested

($)
 

David V. Singer

     83,652         —          —           17.38         02/18/2016         —          —     
     100,000         —          —           17.43         03/08/2017         —          —     
     92,196         —          —           19.44         02/23/2019         —          —     
     85,287         —          —           19.71         02/25/2020         —          —     
     —           103,260 (2)      —           17.32         02/23/2021         —          —     
     —           —          —           —           —           27,426 (5)      617,085   

Carl E. Lee, Jr.

     131,500         —          —           3.929         03/31/2020         —          —     
     28,145         —          —           4.599         03/31/2021         —          —     
     30,310         —          —           6.259         03/31/2022         —          —     
     20,568         —          —           6.679         03/31/2023         —          —     
     12,990         —          —           6.474         03/31/2024         —          —     
     34,857         —          —           8.961         04/01/2025         —          —     
     —           43,479 (2)      —           17.32         02/23/2021         —          —     
     —           434,784 (3)      —           17.32         02/23/2021         —          —     
     —           —          —           —           —           11,547 (5)      259,807   

Rick D. Puckett

     8,950         —          —           14.50         02/21/2013         —          —     
     16,260         —          —           17.43         03/08/2014         —          —     
     25,000         —          —           18.79         01/30/2016         —          —     
     23,499         —          —           14.50         02/21/2018         —          —     
     23,532         —          —           19.44         02/23/2019         —          —     
     25,320         —          —           19.71         02/25/2020         —          —     
     —           25,815 (2)      —           17.32         02/23/2021         —          —     
     —           76,086 (4)      —           17.32         02/23/2021         —          —     
     —           —          —           —           —           6,855 (5)      154,238   
     —           —          —           —           —           17,322 (6)      389,745   

Kevin A. Henry

     18,657         —          —           19.71         02/25/2020         —          —     
     —           19,023 (2)      —           17.32         02/23/2021         —          —     
     —           —          —           —           —           5,052 (5)      113,670   

Charles E. Good

     —           6,276 (2)      —           17.32         02/23/2021         —          —     
     —           —          —           —           —           1,668 (5)      37,530   

Blake W. Thompson

     —           —          —           —           —           —          —     
     —           —          —           —           —           —          —     

 

(1) Options are fully vested.

 

(2) Options vest in three equal annual installments beginning February 23, 2012.

 

(3) Options vest five years from award date of February 23, 2011.

 

(4) Options vest three years from award date of February 23, 2011.

 

(5) Restricted shares vest in three equal annual installments beginning February 23, 2012.

 

(6) Restricted shares vest three years from award date of February 23, 2011.

 

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2011 Option Exercises and Stock Vested

The following table shows option exercises and stock vested during the fiscal year ended December 31, 2011.

 

     Option Awards      Stock Awards  

Name

   Number of
Shares
Acquired on
Exercise (#)
     Value
Realized on
Exercise ($)(1)
     Number of
Shares
Acquired on

Vesting (#)
     Value
Realized on
Vesting ($)
 

David V. Singer

     —           —           —           —     

Carl E. Lee, Jr.

     —           —           —           —     

Rick D. Puckett

     3,500         9,835         —           —     

Kevin A. Henry

     —           —           —           —     

Charles E. Good

     —           —           —           —     

Blake W. Thompson

     2,800         10,752         —           —     
     6,750         47,115         —           —     
     12,168         49,280         —           —     
     15,000         83,850         —           —     
     13,296         90,945         —           —     
     4,554         31,787         —           —     
     17,592         33,425         —           —     
     18,657         30,411         —           —     

 

(1) The amounts shown in this column reflect the aggregate dollar amounts realized upon the exercise of stock options. The amounts show the difference between the market price of our common stock at exercise and the exercise price of the options.

2011 Nonqualified Deferred Compensation

We maintain the Snyder’s-Lance, Inc. Compensation Deferral and Benefit Restoration Plan (the “SLI Deferral Plan”), which is a non-qualified deferred compensation plan, for certain of our key executive officers. Mr. Singer, Mr. Puckett, Mr. Henry and Mr. Thompson participated in the SLI Deferral Plan during fiscal year 2011. We also maintain the Snyder’s of Hanover, Inc. Executive Deferred Compensation Plan (the “Snyder’s Deferral Plan”), which we assumed in connection with the merger in December 2010. Mr. Lee and Mr. Good each participated in the Snyder’s Deferral Plan. We refer to the SLI Deferral Plan and the Snyder’s Deferral Plan collectively as the “Deferred Compensation Plans.”

The following table sets forth information regarding the named executive officers’ accounts and benefits under the Deferred Compensation Plans for fiscal year 2011.

 

Name

   Executive
Contributions
in Last FY ($)(1)
     Company
Contributions
in Last FY ($)(2)
     Aggregate
Earnings
in Last FY ($)(3)
    Aggregate
Withdrawals/
Distributions ($)
     Aggregate
Balance at
Last FYE ($)
 

David V. Singer

     —           80,530         (1,161     —           197,163   

Carl E. Lee, Jr.

     —           —           (28,970     —           270,361   

Rick D. Puckett

     —           76,576         8,201        —           125,609   

Kevin A. Henry

     15,916         —           —          —           15,916   

Charles E. Good

     22,431         —           (4,304     —           126,303   

Blake W. Thompson

     51,937         49,228         (3,593     —           264,097   

 

(1) Amounts reflected in this column are also reported in the “Salary” column for 2011 or the “Non-Equity Incentive Plan Compensation” column for 2010 of the Summary Compensation Table.

 

(2) None of the amounts reflected in this column are reported in the “All Other Compensation” column of the Summary Compensation Table for 2011. These amounts reflect amounts that were contributed by the Company in fiscal year 2011 with respect to fiscal year 2010 employment.

 

(3) The amounts reported in this column are not reported in the Summary Compensation Table because no earnings under the Deferred Compensation Plans are deemed to be above-market or preferential earnings.

 

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Table of Contents

SLI Deferral Plan

Participants in the SLI Deferral Plan may elect to defer from 1% to 40% of their annual base salary and from 10% to 90% of their annual incentive award under our Annual Plans. In addition, we make contributions to each participant’s account equal to the excess, if any, of (a) the profit sharing contribution that we would have made to the participant’s account under our tax-qualified Profit Sharing and 401(k) Retirement Savings Plan (the “Profit Sharing and 401(k) Plan”) if the amount of the contribution were not limited by Section 401(a)(17) and 415 of the Internal Revenue Code of 1986, as amended (the “Code”), over (b) the amount of the profit sharing contribution that we actually made to the participant’s account under our Profit Sharing and 401(k) Plan.

Amounts deferred by participants and contributions made by us are deemed invested by participants in investment choices that are made available by the plan administrator, which are the same investment choices available under our Profit Sharing and 401(k) Plan.

Participants may generally select from the following payment options for each account under the plan:

 

  (a) a single lump sum payment made seven months after termination of employment;

 

  (b) a single lump sum payment made in a year specified by the participant that is before the seventh month after termination of employment;

 

  (c) annual installments over a number of years selected by the participant (but not exceeding 10 years) beginning seven months after termination of employment; or

 

  (d) annual installments over a number of years selected by the participant (but not exceeding 10 years) beginning in a year specified by the participant that is before the seventh month after termination of employment.

The payment options described under (b) and (d) above are not available for balances with respect to our contributions under the plan. If a participant dies, the participant’s account balances will be payable to the participant’s beneficiary in either a single lump sum or five annual installments as elected by the participant. If a participant elects to receive annual installments, the amount payable on each installment date will be equal to the balance in the participant’s account divided by the number of payments to be made. Participants may also be permitted to withdraw a portion of their accounts in the event of certain unforeseeable emergencies. The SLI Deferral Plan was amended effective January 1, 2012, but the changes did not effect the named executive officers’ accounts and benefits for 2011.

Snyder’s Deferral Plan

Participants in the Snyder’s Deferral Plan could elect to defer any fixed periodic dollar amounts or percentages of their current cash compensation, including regular salary and bonus awards, subject to any limitations imposed by the Company. All compensation deferred by participants in the Snyder’s Deferral Plan was contributed to a trust intended to be treated as a “grantor trust” under the Code.

Amounts deferred by a participant could be invested or deemed invested, at the option of the Company, in investment alternatives made available by the Company.

Participants may elect to receive payments under the Snyder’s Deferral Plan:

 

  (a) on the January 1 following a participant’s separation from service;

 

  (b) on a fixed date or dates elected by the participant (but no earlier than the January 1 of the third calendar year after a participant’s initial compensation deferral under the plan);

 

  (c) in the event of an unforeseeable emergency;

 

  (d) upon participant’s disability (as defined by law);

 

  (e) upon participant’s death; or

 

  (f) on the January 1 following a change in control, within the meaning of Section 409A of the Code.

 

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All payments under the Snyder’s Deferral Plan will be made in cash or in-kind. Participants can elect to receive payments in a single lump sum payment or in annual installments over a number of years selected by the participant (up to 10 years), except that payments made upon the disability or death of a participant will be made in a single lump sum payment 90 days following the disability or death, as applicable. The Company will continue to maintain the plan for participants’ accounts existing as of December 31, 2011, but no additional deferrals or company contributions will be made after December 31, 2011.

2011 Potential Payments Upon Termination or Change in Control

We have agreements and plans that require us to provide compensation or other benefits to our named executive officers in connection with events related to a termination of employment or a change in control. The following table shows the estimated benefits payable to each named executive officer (except Blake W. Thompson) assuming each covered event occurred on December 31, 2011. See page 40 for information related to Mr. Thompson’s resignation on August 22, 2011.

 

Name and Plans

   Involuntary
Termination
Without
Cause Prior
to a Change
in Control
     Death or
Disability
     Retirement      Change in
Control
     Qualifying
Termination
Within 3
Years after a
Change

in Control
 

David V. Singer

              

Cash Severance

   $ 2,900,000         —           —           —         $ 4,350,000   

Incentive Under 2011 Annual Plan

     414,700       $ 414,700       $ 414,700       $ 725,000         725,000   

Incentive Under 2011 Three-Year Plan

     316,667         316,667         316,667         316,667         —     

Accelerated Vesting of Stock Options

     535,089         535,089         —           535,089         —     

Accelerated Vesting of Restricted Stock

     —           617,085         205,695         617,085         —     

SLI Deferral Plan

     197,163         197,163         197,163         —           197,163   

Profit Sharing “Make Whole”

     —           —           —           —           141,375   

Health and Dental Insurance

     16,667         —           —           —           25,000   

Outplacement Services

     —           —           —           —           72,500   

Excise Tax Gross-Up

     —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 4,380,286       $ 2,080,704       $ 1,134,225       $ 2,193,841       $ 5,511,038   

Carl E. Lee, Jr.

              

Cash Severance

   $ 1,875,000         —           —           —           —     

Incentive Under 2011 Annual Plan

     357,500       $ 357,500       $ 357,500       $ 625,000         —     

Incentive Under 2011 Three-Year Plan

     133,333         133,333         133,333         133,333         —     

Accelerated Vesting of Stock Options

     —           2,477,402         —           2,477,402         —     

Accelerated Vesting of Restricted Stock

     —           259,808         86,602         259,808         —     

Snyder’s Deferral Plan

     270,361         270,361         270,361         270,361       $ 270,361   

Profit Sharing “Make Whole”

     —           —           —           —           —     

Health and Dental Insurance

     —           —           —           —           —     

Outplacement Services

     62,500         —           —           —           —     

Excise Tax Gross-Up

     —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,698,694       $ 3,498,404       $ 847,796       $ 3,765,904       $ 270,361   

Rick D. Puckett

              

Cash Severance

   $ 796,250         —           —           —         $ 2,184,000   

Incentive Under 2011 Annual Plan

     341,250       $ 195,195       $ 195,195       $ 341,250         341,250   

Incentive Under 2011 Three-Year Plan

     —           79,167         79,167         79,167         —     

Accelerated Vesting of Stock Options

     —           527,769         —           527,769         —     

Accelerated Vesting of Restricted Stock

     —           544,005         51,240         544,005         —     

SLI Deferral Plan

     125,609         125,609         125,609         —           125,609   

Profit Sharing “Make Whole”

     —           —           —           —           70,980   

Health and Dental Insurance

     —           —           —           —           25,000   

Outplacement Services

     —           —           —           —           91,000   

Excise Tax Gross-Up

     —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,263,109       $ 1,471,745       $ 451,211       $ 1,492,190       $ 2,837,839   

 

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Table of Contents

Name and Plans

   Involuntary
Termination
Without
Cause Prior
to a Change
in Control
     Death or
Disability
     Retirement      Change in
Control
     Qualifying
Termination
Within 3
Years after
a Change

in Control
 

Kevin A. Henry

              

Cash Severance

   $ 719,978         —           —           —           —     

Incentive Under 2011 Annual Plan

     —         $ 91,523       $ 91,523       $ 159,985         —     

Incentive Under 2011 Three-Year Plan

     58,333         58,333         58,333         58,333         —     

Accelerated Vesting of Stock Options

     —           98,539         —           98,539         —     

Accelerated Vesting of Restricted Stock

     —           113,670         37,890         113,670         —     

SLI Deferral Plan

     15,916         15,916         15,916         —         $ 15,916   

Profit Sharing “Make Whole”

     —           —           —           —           —     

Health and Dental Insurance

     —           —           —           —           —     

Outplacement Services

     —           —           —           —           —     

Excise Tax Gross-Up

     —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 794,227       $ 377,981       $ 203,662       $ 430,527       $ 15,916   

Charles E. Good

              

Cash Severance

     —           —           —           —           —     

Incentive Under 2011 Annual Plan

     —         $ 82,853       $ 82,853       $ 144,375         —     

Incentive Under 2011 Three-Year Plan

     —           19,167         19,167         19,167         —     

Accelerated Vesting of Stock Options

     —           32,510         —           32,510         —     

Accelerated Vesting of Restricted Stock

     —           37,530         12,510         37,530         —     

Snyder’s Deferral Plan

   $ 126,303         126,303         126,303         126,303       $ 126,303   

Profit Sharing “Make Whole”

     —           —           —           —           —     

Health and Dental Insurance

     —           —           —           —           —     

Outplacement Services

     —           —           —           —           —     

Excise Tax Gross-Up

     —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 126,303       $ 298,363       $ 265,853       $ 359,885       $ 126,303   

The following narrative describes the terms of our agreements and plans that relate to payments in connection with a termination of employment or change in control.

2011 Annual Plan

Under the 2011 Annual Plan, in the event of death, permanent disability or retirement, each participant in the plan would be paid a pro rata amount based on our actual performance determined after the end of the plan year. The term “retirement” is defined as a termination of employment either after age 65 or after attainment of age 55 with the prior consent of the compensation committee.

In the event of a “change in control,” each participant would be paid a pro rata amount equal to the participant’s target incentive for the year-to-date, based on the number of days in the year preceding the consummation of the change in control.

Under the 2011 Annual Plan, a “change in control” will generally be deemed to occur upon:

 

   

the acquisition of 25% or more of the combined voting power of our securities by any person or group, other than a trustee or fiduciary holding securities under one of our employee benefit plans, a corporation owned by our current stockholders, or a member of the Van Every Family, which includes the descendents of Salem A. Van Every, Sr. and their spouses;

 

   

a change in the majority of our board of directors over a two year period;

 

   

approval by the stockholders and consummation of a plan of complete liquidation of our Company or the sale of substantially all of our assets to an entity of which our current stockholders own less than 60% of the voting control; or

 

   

approval by the stockholders and consummation of a merger, consolidation or reorganization after which our current stockholders own less than 60% of the voting control of our Company or the surviving entity.

A “change in control” will occur only in the event of the consummation of the relevant transaction.

 

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Table of Contents

2011 Three-Year Plan

Under the 2011 Three-Year Plan, in the event a participant voluntarily terminates employment (other than for retirement) or is terminated involuntarily, no payments will be made under outstanding performance awards.

In the event of death or disability before the end of the performance period, any outstanding performance award will be paid on a pro-rata basis in cash based on target performance. In the event of death or disability on or after the end of the performance period, any outstanding performance award will be paid on a pro-rata basis in cash based on actual performance. In the event of death or disability, any unvested stock options or shares of restricted stock granted under the Three-Year Plans will become fully vested as of the date of such event.

In the event of retirement, (i) any outstanding performance award will be paid in cash based on actual performance, (ii) unvested stock options will continue to vest for a period of six months after retirement, and (iii) unvested shares of restricted stock will become vested pro rata based on the number of full months elapsed since the award date. The term “retirement” is defined in the 2011 Three-Year Plan as a termination of employment either after age 65 or after attainment of age 55 with the prior consent of the compensation committee.

In the event of a change in control, any outstanding performance awards will be paid in cash pro rata based on the target performance through the closing date with such proration based on the number of days in the performance period preceding the date of the closing of the change in control. All unvested stock options and unvested shares of restricted stock will become fully vested and exercisable as of the date of a change in control. The definition of a change in control is substantially similar to the definition under the 2011 Annual Plan, as described above.

Deferred Compensation Plans

Under the Deferred Compensation Plans, participants are entitled to certain payments in connection with a termination of employment, death or a change in control. The terms of the Deferred Compensation Plans are described beginning on page 34.

Agreements with the Chief Executive Officer

Employment Agreement. On May 11, 2005, we entered into an Executive Employment Agreement, as amended (the “Employment Agreement”), with Mr. Singer in connection with his appointment as our Chief Executive Officer. If Mr. Singer’s employment is terminated by us prior to a change of control and without cause, we would be required to provide Mr. Singer with the following:

 

  (a) a payment equal to his accrued base salary and benefits as of the date of termination;

 

  (b) a pro rata payment under our Annual Performance Incentive Plan based on the actual results for the year;

 

  (c) an amount equal to two times his base salary plus two times his then current target incentive under our Annual Performance Incentive Plan;

 

  (d) up to 24 months of health insurance and dental plan coverage;

 

  (e) a pro rata payment with respect to each outstanding performance cycle under our Three-Year Incentive Plans based on the actual results for the performance cycle;

 

  (f) immediate vesting of all unvested options and the ability to immediately exercise such options; and

 

  (g) any other amounts or benefits required to be paid under any of our other agreements, plans, policies or arrangements through the date of termination.

In the event of termination for death or disability, we have agreed to provide Mr. Singer with the payments and benefits listed under items (a), (b), (e), (f) and (g) above.

Compensation and Benefits Assurance Agreement. Mr. Singer is also a party to a Compensation and Benefits Assurance Agreement (a “Benefits Agreement”), which will continue for as long as he is employed with us under the terms of his Executive Employment Agreement. In the event of a change in control, there is an automatic three-year extension of the Benefits Agreement.

 

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Table of Contents

Benefits are payable under the Benefits Agreement only if one of the following events occurs within three years after a change in control:

 

  (a) involuntary termination without cause;

 

  (b) voluntary termination for good reason; or

 

  (c) breach of the Benefits Agreement by us or our successor.

We refer to each of these covered events as a “qualifying termination.” The definition of a change in control is substantially similar to the definition in the 2011 Annual Plan.

If a qualifying termination occurs within three years following a change in control, Mr. Singer would receive the following:

 

  (a) his accrued base salary and benefits as of the date of termination;

 

  (b) an amount equal to three times his base salary plus three times the greater of his prior year cash incentive or current year target incentive under our Annual Plan;

 

  (c) a pro rata payment based on the greater of his current year target incentive or the actual incentive earned through the date of the termination under our Annual Plan;

 

  (d) an amount equal to the amounts paid under items (a), (b) and (c) above multiplied by the highest percentage of his compensation contributed to his account under our qualified profit sharing plan during the three years prior to termination;

 

  (e) up to 36 months of health and dental plan insurance;

 

  (f) outplacement services for up to one year, with a maximum cost of 10% of his base salary;

 

  (g) immediate vesting of all unvested stock options; and

 

  (h) an amount equal to any Federal excise taxes payable by the executive.

Agreements with Other Named Executive Officers

Severance Agreements. Mr. Puckett, Mr. Lee and Mr. Henry were each party to an Executive Severance Agreement as of December 31, 2011 (the “Severance Agreements”).

Under Mr. Puckett’s Severance Agreement, he was entitled to the following payments in the event of an involuntary termination without cause and prior to a change in control:

 

  (a) accrued base salary and benefits as of the date of termination;

 

  (b) an amount equal to base salary plus current year target incentive under our Annual Performance Incentive Plan;

 

  (c) a pro rata incentive payment based on the greater of current year actual incentive or current year target incentive under the Annual Plan.

Under Mr. Lee’s and Mr. Henry’s Severance Agreements, Mr. Lee and Mr. Henry were each entitled to the following payments in the event of (1) an involuntary termination without cause or (2) a voluntary termination for good reason:

 

  (a) accrued base salary and benefits as of the date of termination;

 

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Table of Contents
  (b) an amount equal to 1.5 times the sum of (i) base salary plus (ii) current year target incentive under our Annual Performance Incentive Plan;

 

  (c) a pro-rata incentive payment based on actual performance under the annual incentive award and any outstanding long-term performance awards through the termination date; and

 

  (d) outplacement services for up to one year, at a maximum cost of 10% of his base salary.

The initial term of the Severance Agreements is three years with automatic renewals for successive one-year terms. Each Severance Agreement may be terminated on one year’s notice prior to the end of an initial or renewal term.

Compensation and Benefits Assurance Agreements. As of December 31, 2011, Mr. Puckett was party to a Compensation and Benefits Assurance Agreement, as amended by a Retention and Amendment Agreement dated as of February 21, 2011 (the “Executive Benefits Agreement”). The Retention and Amendment Agreement, among other things, amended the Compensation and Benefits Assurance Agreement to eliminate from the definition of “qualifying termination” a voluntary termination for any reason during the thirteenth month following a change in control.

Mr. Puckett’s Executive Benefits Agreement is substantially identical to Mr. Singer’s Benefits Agreement, except for the term and termination and outplacement services provisions. Under Mr. Puckett’s Executive Benefits Agreement, the initial term of the Executive Benefits Agreements is three years. After the initial term, Mr. Puckett’s Executive Benefits Agreement automatically renews for successive one-year terms and may be terminated by the Company on one-year’s notice prior to the end of an initial or renewal term. In the event of a change in control, there is an automatic three-year extension of Mr. Puckett’s Executive Benefits Agreement. Mr. Singer’s Benefits Agreement will continue for as long as he is employed by us under the terms of his Employment Agreement. Mr. Puckett’s agreement provides for outplacement services for up to two years (instead of one year) at a maximum cost of 20% (instead of 10%) of his base salary.

Mr. Thompson was party to a Compensation and Benefits Assurance Agreement during 2011, as amended by a Severance, Release and Amendment dated as of August 19, 2011, which added non-competition, non-solicitation and severance provisions. The Agreement, as amended, provided for the following payments and benefits in the event of a “qualifying termination” of employment within three years after a change in control:

 

  (a) accrued base salary and benefits as of the date of the qualifying termination;

 

  (b) an amount equal to the sum of (i) three times his base salary in effect on the date of the qualifying termination or, if greater, his base salary immediately before the change in control, plus (ii) three times the greater of his prior year annual cash incentive or current year target incentive under the Annual Performance Plan, plus (iii) $100,000.

 

  (c) a pro rata payment based on the greater of his current year target incentive or the actual incentive earned through the date of the termination under the Annual Plan;

 

  (d) an amount equal to the amounts paid under items (a), (b) and (c) above multiplied by the highest percentage of his compensation contributed to his account under our qualified profit sharing plan during the three years prior to termination;

 

  (e) up to 36 months of health and dental plan insurance;

 

  (f) outplacement services for up to two years, at a maximum cost of 20% of his base salary;

 

  (g) immediate vesting of any unvested stock options; and

 

  (h) an amount to cover, on an after-tax basis, any Federal excise taxes payable by Mr. Thompson.

Mr. Thompson resigned from the Company effective as of August 22, 2011. Mr. Thompson’s resignation qualified as a “qualifying termination” within three years of a “change in control.” As a result, Mr. Thompson received the following severance compensation and benefits in accordance with the terms of his Compensation and Benefits Assurance Agreement:

 

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Name and Plans

   Qualifying
Termination
Within 3
Years after a
Change

in Control
 

Blake W. Thompson

  

Base Salary and Severance

   $ 1,533,651   

Annual Performance Incentive

     101,091   

SLI Deferral Plan

     264,097   

Profit Sharing “Make Whole”

     43,010   

Health and Dental Insurance

     3,847   

Outplacement Services

     35,000   

Excise Tax Gross-Up

     —     
  

 

 

 

Total

   $ 1,980,696   

Risk Analysis of Compensation Programs

We have considered our compensation policies and practices for all employees and concluded that any risks arising from our policies and practices are not reasonably likely to have a material adverse effect on Snyder’s-Lance.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information concerning our outstanding equity compensation arrangements as of December 31, 2011.

 

Plan Category

   Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights

(a)
     Weighted-average
exercise price of
outstanding
options, warrants
and rights

(b)
     Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))

(c)
 

Equity compensation plans approved by security holders (1)

     2,080,819       $ 17.56         712,617   

Equity compensation plans not approved by security holders (2)

     1,298,638       $ 4.62         —     
  

 

 

    

 

 

    

 

 

 

Total

     3,379,457       $ 12.58         712,617   

 

(1) Includes the 1995 Director Option Plan, which was approved by the stockholders on April 21, 1995, the Lance, Inc. 1997 Incentive Equity Plan, which was approved by the stockholders on April 18, 1997, the Lance, Inc. 2003 Key Employee Stock Plan, which was approved by the stockholders on April 24, 2003, and the Lance, Inc. 2007 Key Employee Stock Plan, as amended, which was approved by the stockholders on May 4, 2010.

 

(2) Includes the Snyder’s of Hanover, Inc. Non-qualified Stock Option Plan, as amended on September 30, 2010. Outstanding options under the plan were assumed by the Company in connection with the merger.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

William R. Holland, Isaiah Tidwell, Peter P. Brubaker, C. Peter Carlucci, Jr., John E. Denton, W.J. Prezzano and Dan C. Swander served on the compensation committee in fiscal year 2011. None of the directors who served on the compensation committee in fiscal year 2011 served as one of our employees in fiscal 2011 or has ever served as one of our officers. During fiscal year 2011, none of our executive officers served as a director or member of the compensation committee (or other committee performing similar functions) of any other entity of which an executive officer served on our board of directors or compensation committee.

 

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COMPENSATION COMMITTEE REPORT

The compensation committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, recommended to the board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2011.

Submitted by the Compensation Committee of the Board of Directors.

Isaiah Tidwell, Chair

Peter P. Brubaker

C. Peter Carlucci, Jr.

John E. Denton

W.J. Prezzano

Dan C. Swander

AUDIT COMMITTEE REPORT

The primary purpose of the Audit Committee is to oversee the accounting and financial reporting processes of Snyder’s-Lance and the integrated audits of its financial statements, including its compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Management has primary responsibility for our financial statements and financial reporting processes, including our systems of internal controls. The Audit Committee operates under a written charter, which was last amended in October 2011.

In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2011. During the past fiscal year, the Audit Committee discussed with our independent registered public accounting firm the matters required to be discussed under generally accepted auditing standards, including the matters required to be discussed by the Statement of Auditing Standards No. 114. The Audit Committee also received during the past fiscal year the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm their independence.

The Audit Committee approved in advance all audit and non-audit services for 2011. These services are outlined in more detail under “Proposal 2—Ratification of Selection of Independent Registered Public Accounting Firm.” The Audit Committee also discussed with our internal audit accountants and our independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets periodically with the internal audit accountants and our independent registered public accounting firm, with and without management present, to discuss the results of their examination and their evaluations of the internal controls and the overall quality of financial reporting of Snyder’s-Lance.

Based on the reviews, discussions and disclosures referred to above, the Audit Committee recommended to the board of directors that the audited consolidated financial statements of Snyder’s-Lance for the fiscal year ended December 31, 2011 be included in its Annual Report on Form 10-K for such fiscal year.

Submitted by the Audit Committee of the Board of Directors.

Jeffrey A. Atkins, Chair

Peter P. Brubaker

James W. Johnston

W.J. Prezzano

Isaiah Tidwell

 

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RELATED PERSON TRANSACTIONS

Policy for Review of Transactions with Related Persons

The board of directors has a policy requiring approval of transactions between Snyder’s-Lance and its directors, director nominees, executive officers, greater than five percent beneficial stockholders, and their respective immediate family members, where the amount involved in the transaction exceeds or is expected to exceed $120,000 in a single calendar year. Under the policy, such transactions must be approved by either (1) a majority of the disinterested members of the governance and nominating committee or (2) a majority of the independent and disinterested members of the board. In either case, a related person transaction may not be approved by a single director.

Transactions with Related Persons

The following is a description of related person transactions entered into by Snyder’s-Lance in fiscal year 2011.

In fiscal year 2011, we engaged in business transactions with MAW Associates, LP (“MAW Associates”), ARWCO Corporation (“ARWCO”), and Warehime Enterprise, Inc. (“WEI” and, together with MAW Associates and ARWCO, the “Businesses”), each of which provides financing to our independent business operators and distributors for the purchase of trucks and routes. Each of the Businesses and Snyder’s-Lance have entered into an agreement pursuant to which we provide certain administrative services, including deducting loan payments from distributors’ weekly settlement and remitting the payments to the respective Business.

The following table sets forth (i) the outstanding aggregate amount of each Business’ loans to distributors, (ii) the aggregate amount of the loan payments collected by Snyder’s-Lance and paid to each Business, and (iii) the aggregate amount of management fees paid by each Business to Snyder’s-Lance during the fiscal year ended December 31, 2011. The management fee paid by each Business is recalculated each year to reimburse Snyder’s-Lance for the actual costs it incurs to provide these services.

 

Business

   Distributor Loans
Outstanding ($)
     Loan Payments
Collected by
Company and
Remitted to
Business ($)
     Management Fees
Paid by Business
to Company ($)
 

MAW Associates

     29,161,215         4,444,160         59,731   

ARWCO

     3,210,692         737,185         30,733   

WEI

     3,162,786         553,128         27,731   

The governance and nominating committee believes that the transactions described above are no less favorable to the Company than those available from an unrelated third party in an arms’ length transaction.

The following related persons have interests in the Businesses.

MAW, LLC. Patricia A. Warehime is the sole member of MAW, LLC, and Vice President, Secretary/Treasurer of MAW, LLC. Michael A. Warehime, her husband, is the President and CEO of MAW, LLC. Mr. Warehime and Mrs. Warehime have authority to manage the affairs of MAW, LLC. Mrs. Warehime and Mr. Warehime do not receive additional compensation for their roles with MAW, LLC.

MAW Associates. MAW, LLC is the general partner of, and owns a 1% general partnership interest in, MAW Associates. Mr. Warehime is the President of MAW Associates. Each of Mr. and Mrs. Warehime’s three daughters owns 33% of the limited partnership interests in MAW Associates. Neither Mrs. Warehime nor Mr. Warehime receive compensation from MAW Associates.

ARWCO. Mr. Warehime is a Director and President of ARWCO. The daughters of Mr. and Mrs. Warehime have the following ownership interests in ARWCO: Susan Rupp owns 11.1%, Katherine Mininger owns 11.1%, and a trust for the benefit of Elizabeth Warehime owns 11.1% (although Elizabeth Warehime has no voting control over the stock held in this trust, of which Mr. Good is the trustee). Mr. Warehime’s and Mrs. Yelland’s brother and sister-in-law, John and Patricia M. Warehime, own 30.3% of ARWCO. Mrs. Yelland’s son, Steven B. Yelland, owns 16.7% of ARWCO and is a director and Vice President, Secretary and Treasurer of ARWCO, and her daughter, Ann Adornetto, owns 16.7%.

 

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WEI. Mr. Warehime owns 52.7% of the stock of WEI and serves as its President and as a Director. Steven B. Yelland is the Vice President, Secretary, Treasurer and a Director of WEI. Mr. and Mrs. Warehime’s three daughters own an aggregate of 1.7% of WEI. Mrs. Yelland owns 13.6% of the stock. Mr. Warehime’s and Mrs. Yelland’s brother and sister-in-law, John and Patricia M. Warehime, own 16.9%. Mr. Warehime received dividends from WEI in the amount of $56,036 during fiscal year 2011. Ms. Yelland received dividends from WEI in the amount of $23,081 in fiscal 2011.

C. Peter Carlucci, Jr. is a member of Eckert Seamans Cherin & Mellott, LLC (“Eckert”), which served as outside legal counsel to Snyder’s-Lance during fiscal year 2011. We paid Eckert $292,849 during the calendar year 2011. Mr. Carlucci’s son, Carl P. Carlucci, III, is a Business Development Manager-Export of S-L Snacks National, LLC, a subsidiary of Snyder’s-Lance. His compensation for fiscal year 2011 was $207,987, including additional payments related to his relocation. The fees paid to Eckert were less than 1% of the firm’s consolidated gross revenues for 2011, and Mr. Carlucci’s son is not an executive officer of the Company.

PROPOSAL 2 – RATIFICATION OF SELECTION OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The audit committee has selected KPMG LLP as our independent registered public accounting firm for fiscal year 2012. We are presenting this selection to our stockholders for ratification at the annual meeting.

KPMG LLP has audited our consolidated financial statements since fiscal year 1991. Representatives of KPMG LLP are expected to be present at the annual meeting with an opportunity to make a statement if they desire to do so. They also are expected to be available to respond to appropriate questions.

Stockholder ratification of the selection of KPMG LLP as our independent registered public accounting firm is not required. We are submitting the selection of KPMG LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the audit committee will reconsider its selection of KPMG LLP.

Fees Paid to KPMG LLP

The following table presents fees for professional audit services rendered by KPMG LLP for the audit of our consolidated financial statements for the fiscal years ended December 31, 2011 and January 1, 2011 and fees billed for other services rendered by KPMG LLP during those periods.

 

     FY 2011      FY 2010  

Audit Fees (1)

   $ 1,108,506       $ 841,000   

Audit-Related Fees (2)

     —           —     

Tax Fees (3)

     —           7,530   

All Other Fees (4)

     —           364,196   
  

 

 

    

 

 

 

Total

   $ 1,108,506       $ 1,212,726   

 

(1) Audit Fees consist of the aggregate fees billed for professional services rendered for the audit of our annual consolidated financial statements, audit of management’s assertion relating to internal controls over financial reporting and reviews of the financial statements included in our Quarterly Reports on Form 10-Q. Audit Fees also consist of the aggregate fees billed for services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.

 

(2) Audit-Related Fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.”

 

(3) Tax Fees consist of the aggregate fees billed for professional services rendered for tax compliance and review. For fiscal year 2010, these services included the review of our federal, state and foreign tax returns.

 

(4) All Other Fees consists of aggregate fees billed for products and services other than the services reported above. For fiscal year 2010, this category consists of fees billed for due diligence services related to the merger with Snyder’s.

 

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Audit Committee Pre-Approval of Audit and Non-Audit Services

The audit committee’s policy is to pre-approve all audit and non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Proposed services may either be subject to case-by-case pre-approval by the audit committee or may be pre-approved by the audit committee on a categorical basis. Pre-approval is generally provided for up to one year. Any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The audit committee has delegated pre-approval authority to its Chairman and may delegate such pre-approval authority to another member of the audit committee in its discretion. Any services approved by the Chairman or such other member of the audit committee must be reported to the full audit committee at its next scheduled meeting. Our Corporate Controller is required to periodically report to the full audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with the pre-approval policies and the fees for the services performed to date. None of the fees paid by us to the independent registered public accounting firm under the categories Audit-Related, Tax and All Other Fees described above were approved by the audit committee after services were rendered pursuant to the de minimis exception established under the regulations of the SEC.

Vote Required

The affirmative vote of a majority of the votes cast on the proposal is required to ratify the selection of KPMG LLP. Abstentions and broker non-votes will not be counted as votes cast on the proposal and will have no impact on the outcome of the vote.

Recommendation of the Board

The board of directors unanimously recommends that you vote “FOR” ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2012.

PROPOSAL 3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION

This Proposal 3 enables our stockholders to cast a non-binding, advisory vote to approve the compensation of our executive officers as disclosed in this proxy statement in accordance with the rules of the SEC.

At the Company’s Annual Meeting in May 2011, 95% of the votes cast on the non-binding, advisory vote to approve the compensation of our executive officers were voted in favor of the proposal. The Compensation Committee believes this affirms the stockholders’ support of the Company’s approach to executive compensation.

As described in detail under the heading “Executive Compensation—Compensation Discussion and Analysis,” our executive compensation programs are designed to attract, motivate and retain our executive officers, who are critical to our success. Please read the “Executive Compensation” section beginning on page 17 for additional details about our executive compensation programs, including information about the fiscal year 2011 compensation of our named executive officers.

We are asking our stockholders to indicate their support for our executive compensation programs as described in this proxy statement. This Proposal 3 gives our stockholders the opportunity to express their views on the compensation of our executive officers. This vote is not intended to address any specific term of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we are asking our stockholders to vote “FOR” the following resolution at the annual meeting:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules, including the “Compensation Discussion and Analysis,” the “Executive Compensation Tables” and any related material disclosed in this proxy statement, is hereby APPROVED.”

This vote is advisory and will not be binding. However, the board and the compensation committee value the opinions of our stockholders and will review and consider the outcome of this advisory vote when making future compensation decisions for our executive officers.

 

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Vote Required

The affirmative vote of a majority of the votes cast on the proposal is required to approve, on an advisory basis, the resolution approving the compensation paid to our named executive officers. Abstentions and broker non-votes will not be counted as votes cast on the proposal and will have no impact on the outcome of the vote.

Recommendation of the Board

The board of directors unanimously recommends that you vote “FOR” the advisory resolution approving the compensation paid to our named executive officers.

PROPOSAL 4 – APPROVAL OF 2012 KEY EMPLOYEE INCENTIVE PLAN

The board of directors of Snyder’s-Lance considers equity and performance-based compensation as an essential tool for achieving the objectives of our executive compensation program, including attracting and retaining top leadership talent, rewarding and motivating performance against agreed upon goals and objectives and aligning the interests of our key employees with our stockholders. With these objectives in mind, the board of directors has adopted, subject to stockholder approval, the Snyder’s-Lance, Inc. 2012 Key Employee Incentive Plan (the “2012 Plan”).

If approved by our stockholders, the 2012 Plan will authorize the issuance of shares of our common stock to managerial and other key employees in the form of stock options, stock appreciation rights, restricted stock and performance equity awards. The 2012 Plan will also authorize other awards denominated in monetary units or shares of common stock payable in cash or common stock. A complete copy of the 2012 Plan is attached as Annex A to this proxy statement and should be read in connection with the following description of the 2012 Plan.

Background and Purpose

Consistent with the objectives of our executive compensation program, we have provided equity and performance-based compensation to managerial and key employees for many years under the Lance, Inc. 2007 Key Employee Incentive Plan (the “2007 Plan”), the Lance, Inc. 2003 Key Employee Stock Plan and the Lance, Inc. 1997 Incentive Equity Plan (together, the “Prior Plans”).

Additionally, as a result of the merger in December 2010, we assumed and converted non-qualified stock options issued under the Snyder’s of Hanover, Inc. Non-Qualified Option Plan (the “Snyder’s Plan”) into options to acquire 3,296,105 shares of our common stock.

As of February 29, 2012, no shares remain available for grant under the 2007 Plan, which expires on April 26, 2013. Both the 1997 Incentive Equity Plan and the 2003 Key Employee Stock Plan have expired, and there are no additional shares available for award under these plans. There have been no additional shares available for award or awarded under the Snyder’s Plan since the consummation of the merger.

The 2012 Plan is intended to increase the reserve of common stock available to us so that we can continue to provide competitive equity and performance-based compensation to our executive officers and key employees that is consistent with our long-term strategic objectives and the objectives of our executive compensation program. If approved by the stockholders, the 2012 Plan will become effective as of the date of approval and no further awards will be granted under the 2007 Plan. The board of directors and compensation committee believe the shares requested under the 2012 Plan are reasonable in relation to our strategic objectives and the interests of our stockholders.

Selected Share Data for Existing Plans

The following table sets forth selected information regarding the number of stock options and “full value” awards (i.e., restricted stock) outstanding under all of our existing plans as of February 29, 2012:

 

Selected Share Data, as of February 29, 2012

   Total  

Stock options outstanding, all plans (1)

     3,834,686   

Full value awards outstanding, all plans

     268,047   

Shares available for future awards, all plans

     92,000   

Common shares issued and outstanding

     67,710,092   

 

(1) The weighted average exercise price of all stock options outstanding as of February 29, 2012 was $13.90. The weighted average contractual life of all stock options outstanding as of February 29, 2012 was 7.25 years.

 

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The following table sets forth the number of stock options and fair value awards (i.e., restricted shares and units) granted in fiscal 2011, 2010 and 2009. The table also shows the weighted average number of common shares outstanding in the fiscal year indicated.

 

Fiscal Year

   Stock Options
Granted
    Full Value Awards
Granted
     Weighted Average
Number of Common
Shares Outstanding
 

2011

     1,052,473        198,407         67,400,000   

2010

     480,412 (1)      123,970         34,128,000   

2009

     267,463        383,810         31,565,000   

 

(1) Excludes options with respect to 3,296,105 shares of common stock assumed in connection with the merger on December 6, 2010 under the Snyder’s Plan with a weighted average exercise price of $3.55 as of the date of the merger. As of February 29, 2012, there were 1,298,638 shares subject to these options with a weighted average price of $4.62 and a weighted average life of 8.23 years.

For additional information regarding our equity compensation plans at December 31, 2011, see “Equity Compensation Plan Information” beginning on page 41.

Section 162(m) of the Code

The 2012 Plan is also intended to provide income tax benefits to both us and our employees. The Plan authorizes the grant of incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), stock appreciation rights, and other types of awards that may qualify under Section 162(m) of the Code as qualified performance-based compensation. Section 162(m) generally limits the deduction that we may take for compensation of our Chief Executive Officer and certain of our other most highly compensated officers. Under Section 162(m), certain compensation, including compensation based on the attainment of performance goals, will not be subject to this limitation if certain requirements are met. Among these requirements is a requirement that the material terms pursuant to which the performance based compensation is to be paid be disclosed to and approved by the stockholders. Accordingly, if the 2012 Plan is approved by the stockholders and other conditions of Section 162(m) relating to performance-based compensation are satisfied, performance-based compensation paid to covered officers pursuant to the 2012 Plan should not fail to be deductible due to the operation of Section 162(m).

Number of Shares

The 2012 Plan reserves for issuance to certain key employees the sum of (a) 3,000,000 shares of our common stock plus (b) the number of shares of our common stock available for awards under the 2007 Plan immediately prior to the effective date of the 2012 Plan plus (c) any shares of common stock that were subject to an award under the 2007 Plan, which award is canceled, terminates, expires or lapses for any reason from and after the effective date of the 2012 Plan. Initially, if the 2012 Plan is approved by the stockholders, we expect that 3,000,000 shares of common stock (approximately 4% of the outstanding shares of our common stock as of February 29, 2012) will be available for awards under the 2012 Plan.

With respect to stock options and stock appreciation rights, the number of common shares available for issuance under the plan will be reduced by one share of common stock for each share of common stock subject to such awards regardless of the actual number of shares of common stock issued upon exercise or settlement. Shares covered by awards under the 2012 Plan will again be available for awards if and to the extent (a) the award is cancelled, terminates, expires or lapses or (b) the award is settled in cash. The maximum number of shares of common stock with respect to each type of award intended to satisfy the performance-based exception from the deductibility limitations of Section 162(m) of the Code (other than performance cash awards) granted to a participant in one calendar year shall not exceed (a) 500,000 shares for stock options and stock appreciation rights and (b) 500,000 shares for restricted awards or other performance equity awards.

Administration

The 2012 Plan will be administered by the compensation committee of the board of directors, or, to the extent required, a subcommittee of the Compensation Committee comprised of the members of the Compensation Committee who are “non-employee directors” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 or “outside directors” within the meaning of Section 162(m) of the Code (the “Committee”).

 

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In the event that any member of the Compensation Committee is not a “non-employee director” under Rule 16b-3 or an “outside director” under Section 162(m), as the case may be, it is intended that such member of the Committee will abstain from any decision impacted by Section 16(b) or Section 162(m). Under the 2012 Plan, the Committee will (i) select the key employees to receive awards from time to time, (ii) make awards in such form and amounts as it determines, (iii) impose such limitations, restrictions and conditions upon awards as it deems appropriate, (iv) interpret the 2012 Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to the 2012 Plan, (v) correct any defect or omission or reconcile any inconsistency in the 2012 Plan or any award granted thereunder and (vi) make all other determinations and take all other actions necessary or advisable for the implementation and administration of the 2012 Plan. The Committee will also have the authority to accelerate the vesting and/or waive any restrictions, or otherwise amend the terms of any award within its discretion. The 2012 Plan will terminate on May 3, 2018.

Eligibility

Only managerial and other key employees may participate in the 2012 Plan. Key employees are those employees who occupy managerial or other important positions and who have made or are expected to make important contributions to our business or the business of a subsidiary, as determined by the Committee. Initially, approximately 150 employees are expected to be eligible to participate. The Committee in its discretion will determine which key employees will receive awards from time to time.

Awards of Stock Options and Stock Appreciation Rights

The 2012 Plan provides for the grant of options to purchase shares of common stock at exercise prices determined by the Committee as of the date of grant. In no event will option exercise prices be less than the fair market value of shares of common stock at the close of business on the date of grant. The fair market value of the common stock on February 29, 2012 was $22.45 per share.

The 2012 Plan also provides for the grant of stock appreciation rights (either in tandem with stock options or freestanding), which entitle holders upon exercise to receive either cash or shares of common stock or a combination thereof, as the Committee in its discretion shall determine, with a value equal to the difference between (i) the fair market value on the exercise date of the shares with respect to which a stock appreciation right is exercised and (ii) the fair market value of such shares on the date of grant (or such other price as set by the Committee provided such other price is not less than the fair market value of such shares on the date of grant).

Awards to key employees of options under the 2012 Plan, which may be either incentive stock options (which are eligible for special tax treatment) or nonqualified stock options, are determined by the Committee. The terms and conditions of each such option and of any stock appreciation right are to be determined by the Committee at the time of the grant. In no event will the Committee grant incentive stock options for more than an aggregate of 3,000,000 shares of common stock.

Exercise of an option (or a stock appreciation right) will result in the cancellation of any related stock appreciation right (or option) to the extent of the number of shares in respect of which such option or stock appreciation right has been exercised. Options and stock appreciation rights granted under the 2012 Plan will expire as determined by the Committee, but the term of incentive stock options may not be more than 10 years from the date of grant. The option agreements entered into with the optionees will specify the extent to which options and stock appreciation rights may be exercised during their respective terms, including in the event of the optionee’s death, disability or termination of employment.

Payment for shares issuable pursuant to the exercise of an option may be made either in cash or by tendering shares of common stock with a fair market value at the date of the exercise equal to the portion of the exercise price which is not paid in cash. Any shares of common stock tendered must have been, to the extent required by applicable accounting principles, held by the participant for at least six months prior to tender or acquired in the open market. The Committee may also allow cashless exercises as permitted by applicable rules and regulations or exercises by any other means that are consistent with the applicable law and the purpose of the 2012 Plan.

Participants that are granted stock options and stock appreciation rights will have no rights as a stockholder of our company with respect to the shares covered by the stock options or stock appreciation rights until such time as the underlying shares of common stock are issued to the participant.

 

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Restricted Awards, Performance Awards and Other Awards

The Plan provides for the issuance of restricted awards in the form of shares of restricted stock or restricted units representing shares of common stock on such terms and conditions as are determined from time to time by the Committee, in addition to or in combination with other awards under the 2012 Plan. Such restrictions may include the continued service of the participant with us, the attainment of specified performance goals or any other conditions deemed appropriate by the Committee. No more than 700,000 shares of common stock may be awarded in the form of restricted stock, restricted stock units, performance equity awards, or other stock-based or combination awards.

The stock certificates evidencing the restricted stock will bear an appropriate legend and will be held in our custody until the applicable restrictions have been satisfied. A participant cannot sell, transfer, pledge, assign or hypothecate shares of restricted stock until the applicable restrictions have been satisfied. Once the restrictions are satisfied, the shares will be delivered to the participant. During the period of restriction, the participant may exercise full voting rights and receive cash dividends with respect to the restricted stock. The participant will also be credited with stock dividends, if any, with respect to the restricted stock, subject to the same restrictions of the underlying restricted stock. Awards of restricted units will be paid in shares of common stock upon vesting with each unit having a value equal to the fair market value of one share of common stock.

The Committee may also make performance awards in the form of performance equity awards or performance cash awards to selected key employees, in addition to or in combination with other awards under the 2012 Plan. Performance equity awards are made in units representing shares of common stock and performance cash awards are made for a specified dollar value including a number of units payable in cash. The 2012 Plan provides that the number of performance awards granted and/or the vesting of granted performance awards shall be contingent on the attainment of certain performance goals or other conditions over a period of time (called the “performance period”), all as determined by the Committee. During the performance period, the Committee will determine what number (if any) of performance awards have been earned. Earned performance awards may be paid in cash, shares of common stock or a combination thereof having an aggregate fair market value equal to the value of the earned performance awards as of the payment date.

In addition, the 2012 Plan permits the Committee to make grants of other awards of common stock or awards denominated in units of common stock, including ones valued using measures other than market values.

Qualified Performance-Based Awards

Section 162(m) of the Code limits the deduction that we may take for compensation paid to our Chief Executive Officer and certain of our other most highly compensated officers to $1,000,000 per individual, unless the qualified performance-based compensation requirements of Section 162(m) are satisfied.

The 2012 Plan is designed such that all awards of stock options and stock appreciation rights are intended to qualify as performance-based compensation under Section 162(m). For awards other than stock options and stock appreciation rights, the Committee may designate such awards as performance-based compensation awards by establishing performance goals for the awards based on one or more of the following performance measures:

 

   

revenue (including gross revenue or net revenue);

 

   

sales (including gross sales or net sales);

 

   

profit (including net profit, gross profit, operating profit, economic profit, profit margins or other corporate profit measures excluding special items);

 

   

earnings on a pre-tax or after-tax basis (including EBIT, EBITDA, earnings per share, earnings growth or other corporate earnings measures);

 

   

margins (net or gross);

 

   

net income (before or after taxes, operating income or other income measures);

 

   

cash (cash flow, cash generation or other cash measures);

 

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stock price or performance;

 

   

stock index price or performance;

 

   

total stockholder return (stock price appreciation plus reinvested dividends divided by beginning share price or other measures of return);

 

   

financial return measures (including dividends, return on assets, capital, equity, investment or sales, cash flow or free cash flow);

 

   

market share measures;

 

   

improvements in capital structure;

 

   

levels of debt, equity, accounts receivable, lost time accidents or safety;

 

   

employee relations (surveys, employee claims);

 

   

expenses (operating expense, expense management, expense ratio, expense efficiency ratios, other expense measures or cost containment, including medical, casualty and workers compensation costs);

 

   

internal rate of return or increase in net present value;

 

   

working capital targets relating to inventory, accounts receivable or other components;

 

   

planning accuracy (as measured by comparing planned results to actual results);

 

   

productivity improvement;

 

   

inventory measures (turns, reduction, shrinkage);

 

   

customer relations and service (count, frequency, attitude, order fill rate);

 

   

compliance goals (employee turnover, social goals, diversity goals, safety programs, regulatory or legal compliance); and

 

   

business expansion, acquisitions and divestitures.

The performance goals may be expressed in terms of company-wide objectives or objectives that relate to the performance of one of our affiliates, divisions, regions, departments or functions or a combination of such objectives. The performance goals may be expressed in absolute terms, in percentages, or in terms of growth from period to period or growth rates over time, as well as measured relative to an established or specially-created performance index of our competitors or peers. Subject to the requirements of Section 162(m) of the Code (to the extent applicable), the Committee may determine to adjust certain goals (including indexes) during or after the applicable performance period to take into consideration or to mitigate the unbudgeted impact of certain unusual, non-recurring or extraordinary items or events. The Committee may also provide that the achievement of performance goals will be waived upon death or disability or in connection with a change in control of our company.

The performance periods for performance based-awards may be as short as three-months or for any longer period. Although the 2012 Plan enables the Committee to determine awards based on the performance measures described above, the Committee has absolute discretion to decrease or eliminate an award under the plan. No individual participant may receive in one calendar year cash based awards in excess of $3,000,000.

Withholding for Payment of Taxes

The 2012 Plan provides for the withholding and payment by a participant of any payroll or withholding taxes required by applicable law. In satisfying the withholding obligation, we may elect to withhold shares having a fair

 

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market value equal to the minimum tax that could be imposed on the transaction. In addition, we may permit participants to elect to satisfy tax withholding obligations by either (1) having us withhold shares with a fair market value equal to the minimum tax that could be imposed on the transaction or (2) tendering previously acquired shares having such fair market value, as long as to the extent required by applicable accounting principles such shares have been held by the participant for at least six months or were acquired by the participant on the open market.

Changes in Capitalization and Similar Changes

In order to prevent dilution or enlargement of rights under the 2012 Plan or to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities property or cash (other than regular, quarterly cash dividends) or any other event or transaction that effects the number or kind of shares of common stock outstanding, the number and kind of shares of common stock available for issuance under the 2012 Plan (including under outstanding awards) and the number and kind of shares of common stock subject to the award limits under the plan will be equitably adjusted as determined by the Committee in its discretion. The terms of any outstanding award will also be equitably adjusted by the Committee as to price, number or kind of shares of common stock subject to the awards, vesting and other terms to reflect such events.

Changes in Control

The 2012 Plan makes two changes to the treatment of equity awards upon a change in control, as compared to the Prior Plans. First, the definition of change in control generally requires consummation of the underlying transaction, rather than just stockholder approval. Second, while the Prior Plans provided for automatic vesting upon the change in control (sometimes referred to as “single trigger” vesting), the 2012 Plan requires both the occurrence of the change in control and a subsequent termination of the participant’s employment in order for awards to become vested in connection with a change in control (often referred to as “double trigger” vesting). More specifically, except as may otherwise be provided in an award agreement, incentive plan or other instrument adopted under the 2012 Plan, the Plan provides that in the event a participant’s employment is either terminated by the Company without cause or by the participant for good reason within 24 months of a change in control of our Company, (1) any options and stock appreciation rights will be fully exercisable as of the date of such termination and will remain exercisable for their full term, (2) all restrictions and conditions of all restricted awards will be deemed satisfied as of the date of such termination and (3) all performance awards will be deemed to have been fully earned assuming target performance as of the date of such termination.

A “change in control” will generally be deemed to occur under the 2012 Plan upon:

 

   

the acquisition of 25% or more of the combined voting power of our securities by any person or group, other than a trustee or fiduciary holding securities under one of our employee benefit plans, a corporation owned by our current stockholders or the Warehime Family, which consists of Michael A. Warehime and his descendents and any spouse of Michael A. Warehime or his descendents;

 

   

a change in the majority of the board of directors over a two year period;

 

   

consummation of the sale of substantially all of our assets to an entity of which our current stockholders own less than 60% of the voting control;

 

   

consummation of a merger, consolidation or reorganization after which our current stockholders own less than 60% of the voting control of our company or the surviving entity; or

 

   

the stockholders of the Company approve a plan of complete liquidation of the company.

A “change in control” will not be deemed to occur with respect to a person if the person is part of a purchasing group that consummates a change in control transaction.

Amendment and Termination of the 2012 Plan; No Repricing of Options or Stock Appreciation Rights

The board of directors will have the power to amend, modify or terminate the 2012 Plan. Stockholder approval will be required for any change to the material terms of the 2012 Plan to the extent required by the rules of any national securities exchange upon which the common stock is listed at the time the amendment is proposed or Section 422 of

 

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the Code with respect to incentive stock options. In addition, without stockholder approval (except in connection with a fundamental corporate transaction involving the company, such as a merger, consolidation, special dividend or stock-split), the terms of outstanding awards may not be amended to reduce the exercise price of outstanding stock options or stock appreciation rights, or cancel outstanding stock options or stock appreciation rights in exchange for cash, other awards or stock options or stock appreciation rights with an exercise price that is less than the exercise price of the original stock options or stock appreciation rights. The Compensation Committee may also amend the 2012 Plan or any award under the plan to ensure compliance with Section 409A of the Code.

New Plan Benefits

Because awards under the 2012 Plan are to be determined by the Compensation Committee from time to time, we cannot currently determine the number of awards or shares of stock that may be granted to a particular individual under the 2012 Plan. However, in 2011, we granted to the named executive officers the awards set forth above in the table entitled “Grants of Plan Based Awards.” In addition, all current executive officers, other than the named executive officers, as a group received awards covering 5,949 shares under the Prior Plans in 2011; no current directors, other than directors who are executive officers, were eligible to receive awards under the Prior Plans in 2011; and all non-executive officer employees as a group received awards covering 10,949 shares under the Prior Plans in 2011.

Federal Income Tax Treatment

Incentive Stock Options. Incentive stock options granted under the 2012 Plan will be subject to the applicable provisions of the Code, including Section 422. If shares of our common stock are issued to an optionee upon the exercise an incentive stock option, and if no “disqualifying disposition” of such shares is made by such optionee within one year after the exercise of the incentive stock option or within two years after the date the incentive stock option was granted, then (i)&nbs