UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 31, 2006

Penford Corporation

(Exact name of registrant as specified in its charter)

Washington	0-11488	91-1221360
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

7094 South Revere Parkway,
Centennial, Colorado	80112-3932
(Address of principal executive offices)	(Zip Code)

303-649-1900
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

On October 31, 2006, the Board of Directors approved, following its review of the recommendation of the Executive Compensation and Development Committee (the “Committee”), the 2007 fiscal year performance metrics and the target bonus percentages for named executive officers under the Penford Corporation executive bonus program.

Under the executive bonus program, each executive officer has been assigned a target bonus for the 2007 fiscal year determined as a percentage of base salary. The target bonus for the Chief Executive Officer is 100 percent of base salary. The target bonus is 75 percent and 40 percent, respectively, for the Chief Financial Officer and the other named executive officers who are Vice Presidents. The maximum bonus amount payable under the program is capped at 200 percent of target bonus.

After the end of the 2007 fiscal year, the Committee will determine the extent to which the participants achieve the quantitative performance metrics, which for fiscal 2007 was determined to be 70% of the target attainment goal, and individual qualitative performance metrics, which for fiscal 2006 was determined to be 30% of the target attainment goal. The Committee determined that the quantitative performance metrics for fiscal 2006 will include earnings and returns. The individual qualitative performance metrics were tailored to each named executive officer and include such metrics as project and function leadership, identifying opportunities and successfully implementing programs.

At the end of the 2007 fiscal year, the Committee will adjust the amount based on quantitative and qualitative performance by individual performance factor ratings of 50 percent to 150 percent applied separately to the quantitative and qualitative performance amounts. In addition, a subjective adjustment (positive or negative) can be applied to the bonus amount based on the executive’s success or failure in capitalizing on business opportunities that may develop during the year.

In addition to establishing the bonus program for the 2007 fiscal year, the Committee and the Board also reviewed 2006 fiscal year performance. The following bonuses for the 2006 fiscal year were approved: Mr. Malkoski, $420,000; Mr. Cordier, $230,500; Mr. Kunerth, $80,000; Mr. Randall, $115,000; and Mr. Lawlor, $79,000. The expense for these bonuses was recognized in fiscal 2006 results of operations. Options under the Penford Corporation Long-Term Incentive Plan were granted on October 31, 2006 to the following named executives in the amounts shown: Mr. Randall, 15,000 shares; Mr. Kunerth, 10,000 shares; and Mr. Lawlor, 10,000 shares. The options have an exercise price of $16.25 per share and vest and become exercisable in accordance with the terms of the Plan in four equal installments beginning on the first anniversary of the date of the grant. The Board and Committee also established the following annual salaries for named executive officers effective January 1, 2007: Mr. Malkoski, $490,000; Mr. Cordier, $325,000; Mr. Kunerth, $235,000; Mr. Lawlor, $230,000; and Mr. Randall, $235,000.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Penford Corporation (Registrant)
November 3, 2006	/s/ Steven O. Cordier
	Steven O. Cordier
	Senior Vice President and Chief Financial Officer