HORMEL FOODS CORP DE

Our cash-based LTIP is designed to provide a small group of key employees selected by the Compensation Committee with an incentive to maximize stockholder value. LTIP performance awards granted for fiscal 2024 provide an incentive opportunity based on several company financial metrics, including organic net sales growth, return on invested capital, or ROIC, and the Company’s long-term TSR performance compared to a peer group.

How the LTIP Performance Awards Work

Under the LTIP, the Compensation Committee grants each participant, including each of the NEOs, a target dollar award opportunity covering a three-year performance period. Participants can have up to three overlapping LTIP performance awards outstanding at any time.

Prior to fiscal 2024, the sole performance metric in the LTIP was relative TSR. The LTIP award outstanding for the performance period that ended in June 2024, and the period that will end in June 2025 are based solely on relative TSR. For the three-year performance cycle beginning in fiscal 2024, however, the LTIP performance awards were redesigned to include three metrics:

Relative TSR: Our calculation of relative TSR under the LTIP measures the change in our stock price during the performance period and assumes a reinvestment of any dividends paid. For awards granted in 2024, if our actual relative TSR for the three-year period is at the 50 th percentile of the peer group, then this component of the program is funded at target levels. If our actual relative TSR ranks highest among the peers, then the award payout for this component of the program equals three times the target opportunity. This component of the program is not funded unless our actual relative TSR is above the 25 th percentile of the peers for the performance period. Awards will be interpolated for Company performance between these discrete points.

ROIC: For purposes of the fiscal 2024-2026 LTIP, we calculate ROICfor the last year in the performance period, recognizing that business decisions made in the first two years of the performance period impact such ROIC, by dividing our Net Earnings by our Invested Capital.

If our ROIC is 10%, then this component of the program is funded at target award levels. The Committee may adjust ROIC to exclude the impact of accretion expense, goodwill impairment, charges for reorganizing or restructuring, charges from asset write-downs, acquisitions or divestitures, foreign exchange gains or losses, changes in accounting principles or tax laws, rules or regulations, and extraordinary, unusual, transition, one-time and/or non-recurring items as determined by the Committee from time-to-time.

Organic Net Sales Growth: We calculate Organic Net Sales Growth for purposes of the fiscal 2024-2026 LTIP by determining the percentage year-over-year growth in Net Sales, excluding the impact, if any, of acquisitions and divestitures, for each fiscal year during the applicable performance period. If our Organic Net Sales Growth for the three-year period beginning in fiscal 2024 is 2.50%, then this component of the program is funded at

target award levels. The Committee may adjust Organic Net Sales Growth for extraordinary, unusual, transition, one-time and/or non-recurring items as determined by the Committee from time-to-time.

We believe that the target-level goals in the fiscal 2024 LTIP can be characterized as requiring strong performance. Based on our historical performance, the Compensation Committee believes that attainment of the target performance level for each metric, although uncertain, is reasonably possible. Threshold goals are more likely to be achieved, and the goals associated with a maximum payout will require exceptional levels of performance.

Notwithstanding the Committee’s decision to move away from a single-metric approach in the LTIP, thereby increasing our NEOs ability to receive a payout on these awards without regard to conditions over which they do not have direct control, the Committee felt that the program should continue to be weighted most heavily towards a relative performance metric. The Committee has attempted to design the LTIP awards in a manner that serves as a balance against the absolute performance nature of the stock options and RSUs provided to the NEOs. In other words, if our TSR over a three-year period underperforms the TSR of a peer group in a broader stock market that is very strong, the stock options and shares received upon vesting of the RSUs may be valuable, but the LTIP awards will be worth less. Conversely, if our TSR over a three-year period outperforms that of our peers in a very weak stock market, the options and shares received upon vesting of the RSUs may be worth less, but the LTIP awards would generate value.

For the fiscal 2024 through fiscal 2026 cycle of the LTIP, the Compensation Committee selected the following peer group of publicly traded food industry companies for use in calculating relative TSR.

This peer group is the same as the LTIP peer group approved for the June 2022 through June 2025 cycle of the program, except that Sanderson Farms Inc. was removed due to its being acquired and becoming a private company.

LTIP award payouts are capped at three times the target award; such an outcome would require exceptional performance. The Committee retains discretion to reduce the amount of any award payout.

Other Change to the LTIP for Fiscal 2024

In addition to changing the metrics in the LTIP for fiscal 2024, the Committee changed the performance periods associated with the program. Prior to fiscal 2024, awards followed a June-to-June performance cycle. Beginning with the fiscal 2024 grants, the awards follow our fiscal year. As a result of this change, which is administratively simpler, there were no LTIP performance awards granted in June 2023 and the fiscal 2024 grants included a prorated transitionary target amount added to the annual grant, commensurate with the pro-rated annual amount relating to the gap in cycle timing.

Further, while the newly added metrics (ROIC and Organic Net Sales Growth) are being measured based on fiscal year performance over a three-year period, the relative TSR performance for the fiscal 2024-2026 awards is being measured from June 16, 2023 (when the 2023 cycle would have started) through October 25, 2026 (the last day of fiscal 2026) to eliminate any gap in the measurement of performance of that metric.

Target awards for our NEOs under each cycle of the LTIP outstanding during fiscal 2024 was as follows:

In setting the cash incentive target for each participant, the Committee considers the responsibilities of the employee, his or her contributions to the Company’s success, and competitive market data. Upon review of these factors, Mr. Snee, Ms. Smiley, Ms. Brady and Dr. Myers received increases in their target LTIP awards for the three-year cycle beginning in fiscal 2024. If, during any three-year performance period, a subsequent target award is increased or decreased due to a promotion or job change, that change will be applied to any existing target awards as of the subsequent award’s grant date.