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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.    )

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HORMEL FOODS CORPORATION

AUSTIN, MINNESOTA

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To the Stockholders:

The Annual Meeting of Stockholders of Hormel Foods Corporation, a Delaware corporation, will be held in the Richard L. Knowlton Auditorium of the Austin High School, 300 NW 4^th Street, Austin, Minnesota, on Tuesday, January 27, 2009, at  8:00 p.m. Central standard time.  The items of business are:

The Board of Directors has fixed December 1, 2008, at the close of business, as the record date for the determination of stockholders entitled to notice of, and to vote at, the meeting.

By Order of the Board of Directors

BRIAN D. JOHNSON

Corporate Secretary

December 17, 2008

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PROXY STATEMENT

HORMEL FOODS CORPORATION

(CUSIP No. 440452100)

1 HORMEL PLACE

AUSTIN, MINNESOTA 55912

The enclosed proxy is solicited by the Board of Directors of Hormel Foods Corporation (the “Company”) for use at the Annual Meeting of Stockholders to be held on January 27, 2009.  This proxy statement and form of proxy are first being mailed to stockholders on or about December 17, 2008.

GENERAL INFORMATION

Voting Securities -   The Company had 134,526,092 shares of common stock outstanding as of December 1, 2008.  Each share of stock is entitled to one vote.  There is no cumulative voting.  The Company has no other class of shares outstanding.  Only stockholders of record at the close of business as of December 1, 2008 are entitled to vote at the meeting.

Voting Your Proxy -   Whether or not you plan to attend the meeting, we encourage you to grant a proxy to vote your shares.  Follow the instructions on your proxy card or electronic delivery notice to cast your vote via the Internet or telephone.  If you received a proxy card, you may vote your shares by completing the card with your vote, signature and date, and returning it by mail in the envelope provided.

If you submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the Board of Directors’ recommendations as follows:

“FOR:”

·                  Election to the Board of the 13 director nominees named in this proxy statement;

·                  Ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm for the next fiscal year;

·                  Approval of the Hormel Foods Corporation 2009 Long-Term Incentive Plan; and

·                  Approval of the Hormel Foods Corporation 2009 Nonemployee Director Deferred Stock Plan;

and “AGAINST:”

·                  The stockholder proposal regarding disclosure of greenhouse gas emissions caused by individual products via product packaging, if presented at the meeting.

The persons appointed as proxies will vote in their discretion on other matters as may properly come before the meeting and which the Company did not know of prior to October 31, 2008.

Revoking Your Proxy -   You may revoke your proxy at any time before it is exercised by contacting the Corporate Secretary.

Expenses -   The expenses of soliciting proxies will be paid by the Company.  Proxies may be solicited at Company expense personally, or by mail, telephone or electronic communication, by directors, officers and other employees.  Such persons will not receive additional compensation.  The Company will reimburse banks, brokerage firms and other nominees for their reasonable out-of-pocket expenses incurred in sending proxy materials to beneficial owners.  Your cooperation in promptly granting a proxy to vote your shares will help to avoid additional expense.

Quorum -   A majority of the outstanding shares will constitute a quorum at the meeting.  If a stockholder holds shares in “street name” and does not provide voting instructions to the holder of the account regarding non-discretionary matters, such shares are considered “broker nonvotes”.   “Street name” means the shares are held in a stock brokerage account or by a bank, trust or other institution.  Broker nonvotes and abstentions are counted for purposes of determining the presence of a quorum for the transaction of business.  Shares represented by abstentions are counted in the same manner as shares submitted with a “withheld” or “no” vote in tabulating the votes cast.  Shares represented by broker nonvotes are not considered entitled to vote

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and thus are not counted for purposes of determining whether a proposal has been approved.  Under current New York Stock Exchange (“NYSE”) rules, uninstructed brokers would have discretionary voting power for the election of directors (Item #1) and for ratification of Ernst & Young LLP as independent registered public accounting firm (Item #2).  Uninstructed brokers would not have discretionary voting power for approval of the Company’s 2009 Long-Term Incentive Plan (Item #3), the Company’s 2009 Nonemployee Director Deferred Stock Plan (Item #4), or the stockholder proposal (Item #5).

MEETING ADMISSION

The following persons will be admitted to the Annual Meeting of Stockholders to be held on January 27, 2009:

CONDUCT OF MEETING

The Chairman will preside over the Annual Meeting of Stockholders pursuant to the Bylaws and by action of the Board of Directors.  The Chairman has broad authority to ensure the orderly conduct of the meeting.  This includes discretion to recognize stockholders or proxies who wish to speak, and to determine the extent of discussion on each item of business.  Rules governing the conduct of the meeting will be available at the meeting along with the agenda.  The Chairman may also rely on applicable law regarding disorderly conduct to ensure that the meeting is conducted in a manner that is fair to all stockholders.

ITEM 1 – ELECTION OF DIRECTORS

The Board of Directors recommends a vote FOR each of the 13 director nominees listed below.  The persons named as proxies will vote FOR the election of these 13 nominees to hold office as directors until the next Annual Meeting of Stockholders and until their successors are elected and qualify, unless stockholders specify otherwise.  If any of such nominees become unavailable for any reason, it is intended that the proxies will vote for the election of such substitute persons as may be designated by the Board of Directors.  Directors are elected by a plurality of the votes cast.  The 13 candidates receiving the highest number of votes will be elected.

NOMINEES FOR DIRECTORS

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No family relationship exists between any of the director nominees or executive officers of the Company.

CORPORATE GOVERNANCE

Corporate Governance Guidelines

The Board of Directors has adopted Corporate Governance Guidelines which include the following:

·                  At all times a substantial majority of the Board will be independent, as that term is defined in relevant law and the NYSE listing standards;

·                  Directors who (1) retire or change their principal employment, (2) reach retirement age of 72, or (3) take action that creates a conflict of interest with the Company, must submit a letter of resignation from the Board.  The Board may accept or reject a letter of resignation.  It is the Board’s general policy that directors will not stand for reelection after reaching age 72;

·                  The Board and Board committees will conduct annual self-evaluations;

·                  Directors participate in an annual strategic planning retreat, which provides directors a detailed overview of the Company’s strategic business plans and an opportunity to access senior management of the Company;

·                  All non-management directors will meet in executive session at least quarterly;

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·                  The Compensation Committee will evaluate the Chief Executive Officer’s performance annually.  This evaluation is based in part on a self-evaluation by the Chief Executive Officer that is reviewed by all of the nonemployee directors.  The annual evaluation will take into account the Chief Executive Officer’s performance measured against established goals.  After the process has been completed, the Compensation Committee will set the Chief Executive Officer’s compensation;

·                  Directors will have full access to officers and employees of the Company; and

·                  The Board and each committee have the power to hire independent legal, financial or other advisers, without consulting or obtaining the approval of any officer of the Company.

The Company’s Corporate Governance Guidelines may be found on the Company’s Web site at www.hormelfoods.com under “Investors - Corporate Governance”.  A copy of the Corporate Governance Guidelines is available in print free of charge to any stockholder who requests it.

Subsequent to fiscal 2008 year end, the Board of Directors established a “Lead Director” position and elected Luella G. Goldberg to this position.  The Governance Committee will determine the duties of the Lead Director.

Code of Ethical Business Conduct

The Company has adopted a Code of Ethical Business Conduct that covers its directors, officers and employees.  This Code of Ethical Business Conduct may be found on the Company’s Web site at www.hormelfoods.com under “Investors - Corporate Governance”.  A copy of the Code of Ethical Business Conduct is available in print free of charge to any stockholder who requests it.

Stock Ownership Guidelines

The Company’s officers and directors are subject to stock ownership guidelines.   Officers are expected to hold Company stock equivalent to 2.5 to 5 times their annual base salary, depending on position.  Directors are expected to hold Company stock equivalent to 4 times their annual retainer.  The value of shares individually owned, held in Company benefit plans, and deferred in the Company’s deferred compensation plans are counted toward the guidelines.   Individual ownership of shares is determined under Section 16 of the Securities Exchange Act of 1934, as amended.

The guidelines were adopted effective January 1, 2005.  All officers and directors have an initial five year phase-in period to comply with the guidelines.  Newly elected officers and directors have five years from their election to comply with the guidelines.   Officers promoted to a level requiring higher stock ownership under the guidelines have five years to achieve compliance.

Board Independence

The Company’s Corporate Governance Guidelines require that a substantial majority of the Company’s directors be independent.  The NYSE listing standards require that a majority of the Company’s directors be independent and that the Audit, Compensation and Governance Committees be comprised entirely of independent directors.  The Board of Directors has adopted standards to assist it in making the annual determination of each director’s independence status. These Director Independence Standards are consistent with the NYSE listing standards. The Director Independence Standards are posted on the Company’s Web site at www.hormelfoods.com under “Investors - Corporate Governance”.  A director will be considered “independent” if he or she meets the requirements of the standards and the independence criteria in the NYSE listing standards.

The Board of Directors has affirmatively determined that the following directors have no direct or indirect material relationship with the Company and satisfy the requirements to be considered independent:

The Board also has determined that each of the Company’s Audit, Compensation, Governance and Contingency Committees is composed solely of independent directors.  In making the independence determinations, the Board of Directors reviewed all of the directors’ relationships with the Company.  This review is based primarily on a review of the responses of the directors to questions regarding employment, business, family, compensation and other relationships with the Company and its management. In making the independence determination for Mr. Pearson, Chairman Emeritus of Hy-Vee, Inc., the Board considered the relationship arising out of the transactions in the ordinary course of business between the Company and Hy-Vee, Inc., a customer of the Company.  The board determined that this relationship was not material and did not impair Mr. Pearson’s independence.

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Board of Director and Committee Meetings

Board of Directors and Committees -   The Board of Directors conducts its business through meetings of the Board and its committees.  The Board of Directors held six regularly scheduled meetings during the last fiscal year.  Each director attended at least 83% of the total meetings during the fiscal year of the Board and Board committees on which he or she served, with two exceptions.  Elsa A. Murano attended 74% of the total meetings of the Board and Board committees on which she served.  Ronald D. Pearson attended 58% of the total meetings of the Board and Board committees on which he served.  The Chair of the Governance Committee presides at executive sessions of the nonmanagement directors.

The Board of Directors has established the following Board committees: Audit, Compensation, Governance, Pension Investment and Contingency.   The table below provides membership for each of the committees and meeting information for fiscal 2008.

*  Committee Chair

Each of the Audit, Compensation and Governance Committees has adopted and operates under a written charter.  These charters may be found on the Company’s Web site at www.hormelfoods.com under “Investors - Corporate Governance”.  Copies of these charters are available in print free of charge to any stockholder who requests them.

Audit Committee -  Each member of the Audit Committee is financially literate as determined by the Board.  The Board also determined that John L. Morrison is an audit committee financial expert, as defined by the rules of the Securities and Exchange Commission (“SEC”).   The duties of the Audit Committee include the following:

·                  Select and evaluate the performance of the independent registered public accounting firm;

·                  Discuss with the internal auditors and independent registered public accounting firm the overall scope and plans for their respective audits;

·                  Ensure that the independent registered public accounting firm is accountable to the Committee and that the firm has no relationship with management or the Company that would impede their independence;

·                  Review and discuss with management and the external auditors the quarterly and annual financial statements of the Company;

·                  Establish procedures for the handling of complaints received by the Company regarding accounting, internal controls or auditing matters, including the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;

·                  Provide an open avenue of communication between the internal auditors, the external auditors, Company management and the Board of Directors;

·                  Understand the Company’s key areas of risk and assess the steps management takes to manage such risk; and

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·                  Oversee the Company’s Code of Ethical Business Conduct, including assessment of the steps management takes to assure the Company’s compliance with all applicable laws and regulations and corporate policies.

Compensation Committee -   The duties of the Compensation Committee include the following:

·                  Establish compensation arrangements for all officers of the Company;

·                  Engage a compensation consultant to review the Company’s compensation programs;

·                  Make recommendations to the Board regarding incentive compensation and equity-based compensation plans, and administer such plans; and

·                  Make recommendations to the Board regarding compensation to be paid to the Company’s directors.

Governance Committee -   The duties of the Governance Committee include the following:

·                  Establish criteria for new directors and evaluate potential candidates;

·                  Make recommendations to the Board regarding the composition of Board committees;

·                  Review the Company’s executive succession plans;

·                  Periodically assess the Company’s adherence to its Corporate Governance Guidelines;

·                  Evaluate objectives and policies regarding the Company’s management of its human resources; and

·                  Oversee the annual evaluation of the Board and the Chief Executive Officer.

The Governance Committee recommends new director nominees to the Board.  The Committee determines the selection criteria of director nominees based upon the Company’s needs at the time nominees are considered.  In evaluating director candidates, the Committee will consider a candidate’s:

·                  Intellect;

·                  Integrity;

·                  Broad-based experience at the policy-making level in business, government, education or the public interest;

·                  Analytical ability;

·                  Ability to qualify as an independent director; and

·                  Ability and willingness to devote time and energy to effectively carry out all Board responsibilities.

Identifying and Evaluating Nominees for Director -   The Governance Committee is responsible for establishing procedures to identify and review the qualifications of all nominees for Board membership.  The Committee considers nominations of director candidates made by current directors, an independent search firm, senior management, and the Company’s stockholders.  The Committee applies the same criteria for consideration of stockholder nominees as it does to nominees proposed by other sources.

Stockholders wishing to make a recommendation may do so by contacting the Governance Committee, c/o Corporate Secretary, Brian D. Johnson, at 1 Hormel Place, Austin, Minnesota 55912.  Stockholders should send:

1.               Name of the candidate and a brief biographical sketch and resume;

2.               Contact information for the candidate and a document evidencing the candidate’s willingness to serve as a director if elected; and

3.               A signed statement as to the submitting stockholder’s current status as a stockholder and the number of shares currently held.

The Committee’s procedures include making a preliminary assessment of each proposed nominee.  Such assessment is based upon the resume and biographical information, an indication of the individual’s willingness to serve, and business experience and leadership skills.  This information is evaluated against the criteria set forth above and the Company’s specific needs at that time.  Based upon a preliminary assessment of the candidate(s), those who appear best suited to meet the Company’s needs may be invited to participate in interviews, which are used to further evaluate candidates.

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On the basis of information learned during this process, the Committee determines which nominee(s) to recommend to the Board to submit for election at the next Annual Meeting of Stockholders.  The Board selects new Board nominees based on its assessment and consideration of various factors.  These factors include the current Board profile, the long-term interests of stockholders and the needs of the Company, and the goal of creating an appropriate balance of knowledge, experience and diversity on the Board.  No candidate meeting the criteria for director nomination was submitted by a stockholder for the 2009 Annual Meeting of Stockholders.

Pension Investment Committee -   The Pension Investment Committee establishes investment policies for the Company’s defined benefit pension plans.  The Committee also periodically reviews investments for consistency with those policies.

Contingency Committee -   The Contingency Committee considers the matters the Board refers to the Contingency Committee.   Such matters would require the deliberation and decision of disinterested and independent directors.

Policy Regarding Attendance at Annual Meetings

The Company encourages, but does not require, its Board members to attend the Annual Meeting of Stockholders.  Last year three of the Company’s directors attended the Annual Meeting of Stockholders, with inclement weather preventing travel by the other directors.

Board Communication

Interested parties may communicate with the Board of Directors by sending a letter directed to the Board of Directors, nonemployee directors or specified individual directors, and addressed to:  Corporate Secretary, Brian D. Johnson, 1 Hormel Place, Austin, Minnesota 55912.  All communications, whether signed or anonymous, will be directed to the Chair of one of the committees based on the subject matter of the communication, or to the nonemployee directors or the specified directors, if so addressed.

COMPENSATION OF DIRECTORS

The Company provides the following elements of compensation to nonemployee directors:

·                  Annual retainer of $40,000, with half paid on February 1 and the other half paid on August 1;

·                  Additional retainer of $5,000 per year for chairperson of the Compensation, Governance, Pension Investment and Contingency Committees, with half paid on February 1 and the other half paid on August 1;

·                  Additional retainer of $8,000 per year for chairperson of the Audit Committee, with half paid on February 1 and the other half paid on August 1;

·                  Meeting fee of $1,500 for attendance at each regular Board meeting, with $4,500 for attendance at three-day annual strategic planning retreat and Board meeting;

·                  Meeting fee of $500 for attendance by telephone at a special Board meeting;

·                  Meeting fee of $1,000 for attendance in person at each committee meeting;

·                  Meeting fee of $500 for attendance by telephone at each committee meeting;

·                  An award of 2,500 restricted shares of stock on February 1; and

·                  A grant of 4,000 stock options on February 1, with an exercise price equal to the fair market value of one share of the Company’s common stock based on the NYSE closing price of the stock at the end of that day ($38.97 on February 1, 2008).

Directors may defer all or a portion of retainer and meeting fees under the Company’s Nonemployee Director Deferred Stock Plan.  Deferred fees times 105% are credited as stock units under the plan.  The stock units have the same value as Company common stock and receive dividend equivalents.  Stock units become payable in shares of Company common stock following termination of service as a director.

The award of restricted shares and grant of stock options were made pursuant to the terms of the stockholder-approved 2000 Stock Incentive Plan.  Each nonemployee director and the Company entered into a Restricted Stock Award Agreement and a Stock Option Agreement consistent with the 2000 Stock Incentive Plan.  The restricted shares are subject to a five-year restricted period.  However, the restricted shares vest immediately upon death, disability, or retirement from the Board, subject to a minimum one-year restricted period.  Directors receive declared dividends on the restricted shares prior to vesting.  The options have a ten-year term and are exercisable six months after the date of grant.

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Directors who are employees of the Company receive $100 for each Board meeting they attend.  This meeting fee has remained unchanged since 1934.  Compensation of employee directors is included in the Summary Compensation Table on page 22.

The Compensation Committee makes recommendations to the Board of Directors regarding compensation to be paid to the Company’s directors.  The Committee uses a compensation consultant, Pearl Meyer & Partners, to provide nonemployee director compensation advice each year.  The consultant analyzes each element of director compensation and total director compensation for the same peer group of companies which is used to evaluate executive compensation.  See “How Annual Compensation Decisions are Made” on page 21 for a list of these peer companies.  The Committee reviews the consultant’s report of competitive director compensation and determines whether to recommend to the Board a change in the Company’s nonemployee director compensation.  If such a change is recommended by the Committee, the full Board would then determine whether to approve the change.

The fiscal 2008 compensation of our nonemployee directors is shown in the following table.

DIRECTOR COMPENSATION FOR FISCAL 2008

(1)                                  Consists of annual retainer, additional retainer for committee chairs, and meeting fees.  Includes amounts voluntarily deferred under the Company’s Nonemployee Director Deferred Stock Plan.

(2)                                  Consists of the compensation cost recognized in fiscal 2008 for restricted stock granted in fiscal 2008 and prior fiscal years, calculated in accordance with Statement of Financial Accounting Standard (“FAS”) 123R on the same basis used for financial reporting purposes.  Assumptions used to calculate these amounts are included in Note A, “Summary of Significant Accounting Policies – Employee Stock Options”, and Note I, “Stock-Based Compensation”, of the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 26, 2008.  The grant date fair value of restricted stock granted to each nonemployee director in fiscal 2008 is $97,425, which consists of 2,500 shares of restricted stock granted to each nonemployee director on February 1, 2008. The grant date fair value is based on the NYSE closing price of our common stock on the grant date.

(3)                                  Consists of the compensation cost recognized in fiscal 2008 for stock option awards granted in fiscal 2008 and prior fiscal years, calculated in accordance with FAS 123R on the same basis used for financial reporting purposes.  Assumptions used to calculate these amounts are included in Note A, “Summary of Significant Accounting Policies – Employee Stock Options”, and Note I, “Stock-Based Compensation”, of the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 26, 2008.  The grant date fair value of options granted to each nonemployee director in fiscal 2008 is $38,680, which consists of 4,000 stock options granted to each nonemployee director on February 1, 2008.  This grant date fair value is based on the Black-Scholes model valuation of $9.67 per share. The following assumptions were used in the calculation: options will be held for 8 years; dividend yield of 1.90% annually; a risk-free interest rate of 3.67%; and expected price volatility of 21%. This value has not been reduced to reflect that these options are subject to forfeiture.

(4)                                  Consists primarily of dividend equivalents paid on stock units under the Company’s Nonemployee Director Deferred Stock Plan.  Also includes matching gifts to educational institutions made by the Company on behalf of directors as follows: Mrs. Goldberg - $10,000; Mr. Nakasone - $10,000; and Dr. Smith - $7,500.  This matching gift program is available to all full-time employees, retired employees, directors and retired directors of the Company.

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(5)                                  As of October 26, 2008, nonemployee directors held the following number of unexercised stock options and unvested shares of restricted stock:

AUDIT COMMITTEE REPORT AND
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

Audit Committee Report

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors.  Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls.  The Committee has the sole authority to appoint or replace the Company’s independent registered public accounting firm.  The independent registered public accounting firm reports directly to the Audit Committee.

The Audit Committee has reviewed and discussed the Company’s fiscal year 2008 audited financial statements with management and with Ernst & Young LLP, the Company’s independent registered public accounting firm. The Audit Committee also has discussed with Ernst & Young LLP the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended.

The Audit Committee has received from Ernst & Young LLP the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young LLP their independence from the Company.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the fiscal year 2008 audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended October 26, 2008, for filing with the SEC.

Independent Registered Public Accounting Firm Fees

The following table shows aggregate fees billed to the Company for fiscal years ended October 26, 2008 and October 28, 2007 by Ernst & Young LLP, our independent registered public accounting firm.

Audit Fees -   Audit fees are for audit of the Company’s financial statements for fiscal years 2008 and 2007.  Audit fees also include reviews of the financial statements included in the Company’s quarterly reports on Form 10-Q.

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Audit-Related Fees -   Audit-related fees are for services related to the performance of the audit.  These services include benefit plan audits, due diligence related to acquisitions, and consultations concerning financial accounting and reporting standards.

Tax Fees -   Tax fees are for services related to tax compliance, tax advice and tax planning.

Audit Committee Preapproval Policies and Procedures

The Audit Committee has adopted policies and procedures requiring preapproval of audit and nonaudit services provided to the Company by the independent registered public accounting firm.  The Committee preapproved all of the services performed by Ernst & Young LLP during fiscal years 2008 and 2007.  The Audit Committee approves all audit and nonaudit fees in advance at each quarterly meeting.

ITEM 2 – RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Directors appointed Ernst & Young LLP as the independent registered public accounting firm to audit the consolidated financial statements of the Company and its subsidiaries for the fiscal year ending October 26, 2008.  Ernst & Young LLP has served as the Company’s public auditors since 1931.

At the Annual Meeting, stockholders will be asked to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending October 26, 2008.  Stockholder approval of this appointment is not required.  The Board is requesting ratification in order to obtain the views of the Company’s stockholders.  If the appointment is not ratified, the Audit Committee will reconsider its selection.  Representatives of the firm are expected to be present at the meeting, will be afforded an opportunity to make a statement, and will be available to respond to appropriate questions.

Ratification of this appointment will require the affirmative vote of the majority of the shares of common stock represented in person or by proxy at the meeting.  The Board of Directors recommends a vote FOR ratification of the appointment of Ernst & Young LLP.  Properly dated and signed proxies will be so voted unless stockholders specify otherwise.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Information as to the persons or groups known by the Company to be beneficial owners of more than five percent of the Company’s common stock, as of December 1, 2008, is shown below:

(1)                                  The Hormel Foundation holds 6,544,806 of such shares as individual owner and 57,222,236 of such shares as trustee of various trusts.  The Hormel Foundation, as trustee, votes the shares held in trust.  The Hormel Foundation has a remainder interest in all of the shares held in trust.  The remainder interest consists of principal and accumulated income in various trusts.  These interests are to be distributed when the trusts terminate upon the death of designated beneficiaries, or upon the expiration of twenty-one years after the death of such designated beneficiaries.

The Hormel Foundation was converted from a private to a public foundation on December 1, 1980.  The Certificate of Incorporation and Bylaws of the Foundation provide for a Board of Directors, a majority of whom represent nonprofit agencies to be given support by the Foundation.  Each member of the Board of Directors of The Hormel Foundation has equal voting rights.

Members of the Board of Directors of The Hormel Foundation are: Chairman, Richard L. Knowlton, retired Chairman of the Board of Hormel Foods; Major Marlys K. Anderson, Officer in Charge, The Salvation Army of Austin; Jerry A.

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Anfinson, Certified Public Accountant, Austin; Mark T. Bjorlie, Executive Director, Young Men’s Christian Association, Austin; Dr. Zigang Dong, Director, The Hormel Institute, Austin, representing the University of Minnesota; Jeffrey M. Ettinger, Chairman of the Board, President and Chief Executive Officer of Hormel Foods; Kermit F. Hoversten, Attorney, Austin; Joel W. Johnson, retired Chairman of the Board of Hormel Foods; Dr. Timothy J. Johnson, former Chief Executive Officer of Austin Medical Center - Mayo Health System, Austin; Mandi D. Lighthizer-Schmidt, Director, United Way of Mower County, Inc.; James R. Mueller, Executive Director, Cedar Valley Services, Inc., Austin; Dr. J. Doug Myers, representing the Austin Public Education Foundation, Inc.; John E. O’Rourke, representing the City of Austin; Gary J. Ray, President Protein Business Units of Hormel Foods; Bonnie B. Rietz, former Mayor of the City of Austin; Steven T. Rizzi, Jr., Attorney, Austin; Michael C. Ruzek, representing the Austin Area Foundation; Mahlon C. Schneider, retired Senior Vice President and General Counsel of Hormel Foods; and Robert J. Thatcher, retired Vice President and Treasurer of Hormel Foods, representing the Austin Community Scholarship Committee.

(2)                                  Based on information provided in a Schedule 13G filed with the Securities and Exchange Commission on February 5, 2008, Barclays Global Investors, N.A. reported that it has sole power to vote 4,243,146 shares and sole power to dispose of 5,076,659 shares; Barclays Global Fund Advisors, an investment advisor, has sole power to vote and dispose of 1,013,105 shares, Barclays Global Investors, Ltd., has sole power to vote 462,921 shares and sole power to dispose of 540,687 shares, Barclays Global Investors Japan Limited, an investment advisor, has sole power to vote and dispose of 200,111 shares, and Barclays Global Investors Canada Limited, an investment advisor, has sole power to vote and dispose of 20,619 shares.  The shares reported are held by the company in trust accounts for the economic benefit of the beneficiaries of those accounts.

SECURITY OWNERSHIP OF MANAGEMENT

Information as to beneficial ownership of the Company’s common stock by directors, nominees, executive officers of the Company named in the Summary Compensation Table on page 22, and all directors and executive officers of the Company as a group as of December 1, 2008, is shown below:

* Less than one percent.

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 (1)          Except as otherwise indicated and subject to applicable community property and similar statutes, the persons listed as beneficial owners of the shares of the Company’s common stock have sole voting and investment powers with respect to the shares, and the shares are not subject to any pledge.  Holdings are rounded to the nearest full share.

(2)           Consists of shares subject to options exercisable on or within 60 days of December 1, 2008.

(3)           Includes the following number of shares of the Company’s common stock beneficially owned by members of their respective households:  Mr. Bross – 18,866; Mr. Ettinger - 454; and Mr. Morrison - 3,500.

(4)           Does not include any shares owned by The Hormel Foundation.  Mr. Ettinger and Mr. Ray are members of the Board of Directors of The Hormel Foundation.  Mr. Ettinger and Mr. Ray disclaim beneficial ownership of all shares owned by The Hormel Foundation.

(5)           Shares listed as beneficially owned include, where applicable, shares allocated to participants’ accounts under the Hormel Tax Deferred Investment Plan A - 401(k), and a pro-rata share of unallocated shares held in the Company’s Joint Earnings Profit Sharing Trust for the benefit of participants.

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis that follows this report. Based on this review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended October 26, 2008.

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Overview

The Compensation Committee of the Board of Directors establishes and administers the compensation and benefit programs for executive officers.  The Compensation Committee consists exclusively of nonemployee, independent directors.  The Committee uses a compensation consultant, Pearl Meyer & Partners, to provide compensation advice independent of Company executives.  The Committee and their consultant work with senior management to implement and monitor the programs the Committee approves.

The Company’s executive compensation programs are designed to achieve two primary goals:

·                  Attract and retain highly qualified executive officers; and

·                  Incent the behavior of executive officers to create stockholder value.

These two goals are achieved by providing a competitive total compensation program that offers competitive “fixed pay” (i.e., base salary and benefits) along with “variable, performance-based pay” designed to reward performance.

Total compensation for executive officers is leveraged heavily toward incentive compensation rather than base salary.  Incentive compensation is comprised of both short-term and long-term incentives.  An appropriate balance of short-term and long-term incentives assures executive officers are properly balancing the need for consistent annual performance with the need for improved performance over a multi-year timeline.  This compensation balance provides both significant risk and opportunity for reward based on Company performance.

The Company’s philosophy is to target total compensation for the management team at the 75th percentile of the market data commensurate with length of service and performance.  The management team includes the named executive officers (“NEOs”) listed in the Summary Compensation Table.  We believe the performance levels required to realize this target compensation level position the Company’s performance in the top quartile of its peers.  This should in turn deliver above market returns to our stockholders.  The Committee believes that this strategy has allowed the Company to attract and retain a skilled, experienced management team that has delivered strong, consistent financial and stock price performance.

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Executive Compensation Programs

Executive officer compensation consists of five parts:

·                  Base Salary;

·                  Operators’ Share Incentive Compensation Plan;

·                  Stock Incentive Plan;

·                  Long-Term Incentive Plan; and

·                  Benefits and Perquisites.

Base Salary

Base salary levels are the fixed portion of the executive compensation package. Base salary levels typically represent less than 50% of an executive officer’s total compensation.  Salary levels are based on a combination of factors.  These factors include competitive pay levels, the executive’s experience and tenure, the executive’s responsibilities, the executive’s performance and the Company’s overall annual budget for merit increases.  In keeping with the Company’s desire for a performance-oriented pay program, base salaries are generally below competitive median levels.

Operators’ Share Incentive Compensation Plan

Why Operators’ Shares?

The Operators’ Share Incentive Compensation Plan (the “Operators’ Share Plan”) is a short-term incentive.  The basic concept of the Operators’ Share Plan structure has been in place since 1932.  The Operators’ Share Plan currently includes approximately 111 employees.

This annual cash incentive plan rewards employee participants for Company financial performance, as measured by earnings per share (“EPS”).  The concept behind this incentive plan is that as the EPS of the Company rises over time, so too the executive’s compensation rises.  Improved earnings per share, over time, results in an increase in the stock price, which improves stockholder value.

In addition to generating consistent earnings, the Committee also wants to ensure that senior management is focused on:

·                  Sound capital management decisions;

·                  Business unit specific results; and

·                  Achieving planned financial results.

The Company thus includes compensation based on Economic Value Added (“EVA”) performance as a component of the EPS-based Operators’ Shares calculation.  EVA is a measure that recognizes the productive use of capital assets and therefore rewards wise, responsible decision-making regarding capital investments.  Capital investments include accounts receivable, inventory, new plants and equipment, and acquisitions.

The EVA component for the Operators’ Shares can be either Company or business unit based, or both, depending upon the responsibility of the participant.  The Committee establishes EVA targets for the Company and each business unit at the beginning of the fiscal year, based on the Company’s approved fiscal year financial plan.   The components of the financial plan that determine EVA are used in establishing the EVA target.

To determine EVA results, operating income per the Company’s audited financial statements is first adjusted in a manner determined by the Committee for items which include:

·                  Minority interest and/or equity in earnings adjustments to convert these items from a financial basis to an EVA basis;

·                  Interest or other income that is included for EVA;

·                  Inventory valuation adjustments that are excluded from EVA;

·                  A charge on the capital employed in various business units; and

·                  A charge for taxes.

The resulting EVA is then further adjusted in a manner determined by the Committee for specific excluded items, including non-recurring transactions, to calculate final EVA.  Examples of such items are the first year impact of acquisitions, investment gains and losses on the “rabbi trust” (described under “Nonqualified Deferred Compensation Plan” on page 20), and the impact of accounting changes.

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Final EVA is then compared to the established EVA target.  The difference between the final EVA and the target is put through a calculation that uses an interval to determine the EVA multiplier.  An interval is established by the Committee for the Company and each business unit at the beginning of the fiscal year.  The Committee has determined the interval should be set at a level where the resulting EVA multiplier is expected to be within a range of 0 to 2.0 based on actual results.

The EVA multiplier is applied to a portion of the Operators’ Shares.  The EVA multiplier can be as low as 0, and has a cap of 3.0.  The percentage of the Operators’ Shares subject to the EVA component ranges from 25% at the lowest participant level up to 50% for others, including the CEO.  The Committee also added a 10% goal setting premium to the EVA-based portion of the Operators’ Share Plan.  That premium rewards participants when the Company as a whole or a specific business unit, as applicable, plans and achieves at least a 10% improvement in profit over the previous fiscal year, and meets or exceeds the established EVA goal.

The Compensation Committee believes that the primary measure of Company EPS appropriately focuses all participants on overall Company performance.  The secondary EVA measure further holds senior management accountable for their capital investment decisions.  The goal setting premium encourages aggressive goal setting and accomplishment of these aggressive goals.

How the Plan Works

Upon initial eligibility for plan participation, an employee receives a grant of Operators’ Shares.  Operators’ Shares are phantom units, not actual shares of stock or the right to receive the value of stock.  Operators’ Shares represent the right to receive cash compensation under the Operators’ Share Plan.

Grants of Operators’ Shares to executive officers are determined by the Compensation Committee.  Grants of Operators’ Shares to management employees other than executive officers are determined by the Chief Executive Officer.  Operators’ Shares are awarded at a level that results in total annual cash compensation targeted between median and top quartile levels relative to market pay levels, taking into consideration length of service and performance.

During the year, participants receive “dividend equivalents”.  These are cash payments equal to declared dividends multiplied by the number of Operators’ Shares held.  The sum of these cash payments made during the year is deducted from the final Operators’ Shares payment at year end.

Following the end of each fiscal year, the Company calculates each participant’s Operators’ Share Plan award.  This is a three part calculation:

1.               The non-EVA adjusted portion of the Operators’ Shares award is calculated first.  This is done by multiplying the Company’s annual EPS by the number of Operators’ Shares identified for that participant to be treated as non-EVA adjusted.  This currently is 50-75% of the Operators’ Shares based on the participant’s position.

2.               The EVA adjusted portion of the Operators’ Shares award is then calculated.  This is done by multiplying the Company’s annual EPS by the number of Operators’ Shares identified for that participant to be treated as EVA adjusted.  This currently is 25-50% of the Operators’ Shares based on the participant’s position.  This result is further multiplied by the EVA multiplier, described above.

3.               If the participant qualified for the Company or business unit profit goal setting premium, it is calculated as well.  This is done by multiplying the participant’s EVA adjusted number of Operators’ Shares by the EPS times 10%.

The sum of these three parts is the total Operators’ Shares award for the year.  This award is decreased by the total amount of dividend equivalents paid during the year to determine the final Operators’ Shares payment.

For example - CEO Operators’ Share Plan award calculation for fiscal 2008:

·                  Mr. Ettinger’s number of Operators’ Shares is 850,000

·                  The earnings per share was $2.08

·                  His Operators’ Shares subject to the EVA adjustment is 50%

·                  His EVA multiplier is .52

1.               The non-EVA adjusted portion of his Operators’ Shares bonus is:

850,000 Operators’ Shares

x 50% non-EVA portion

x $2.08 EPS                                       

=                                                                                      $884,000

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2.               The EVA adjusted portion of his Operators’ Shares bonus is:

850,000 Operators’ Shares

x 50% EVA portion

x $2.08 EPS

x ..52 EVA multiplier                         

=                                                                                      $459,680

3.               Mr. Ettinger’s Operators’ Shares award for fiscal 2008 is:                                                     $1,343,680

As another example – Operators’ Share Plan award calculation for an NEO assigned to two business units and achieving the 10% goal setting premium for fiscal 2008:

·                  Mr. Ray’s number of Operators’ Shares is 590,000

·                  The earnings per share was $2.08

·                  His Operators’ Shares subject to the EVA adjustment is 50%

·                  His EVA multiplier for Refrigerated Foods is 1.38

·                  His EVA multiplier for Jennie-O Turkey Store is .26

1.               The non-EVA adjusted portion of his Operators’ Shares bonus is:

590,000 Operators’ Shares

x 50% non-EVA portion

x $2.08 EPS                                        

=                                                                                      $613,600

2.               The EVA adjusted portion of his Operators’ Shares bonus for

Refrigerated Foods is:

590,000 Operators’ Shares

x 50% EVA portion

x 50% allocated to Refrigerated Foods

x $2.08 EPS

x 1.38 EVA multiplier                        

=                                                                                      $423,384

3.               The EVA adjusted portion of his Operators’ Shares bonus for

Jennie-O Turkey Store (JOTS) is:

590,000 Operators’ Shares

x 50% EVA portion

x 50% allocated to JOTS

x $2.08 EPS

x ..26 EVA multiplier                          

=                                                                                      $79,768

4.               The business unit profit goal setting premium portion of his Operators’

Shares bonus for Refrigerated Foods is:

590,000 Operators’ Shares

x 50% EVA portion

x 50% allocated to Refrigerated Foods

x $2.08 EPS

x ..10 (10%) premium                          

=                                                                                      $30,680

4.              Mr. Ray’s Operators’ Shares award for fiscal 2008 is:                                                                                            $1,147,432

The fiscal 2008 EVA multiplier and goal setting premium varied for the NEOs, based upon the total Company results or their business unit results, as follows:

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As indicated in the table above, the Refrigerated Foods and Hormel Foods International business units exceeded their EVA goals for fiscal year 2008 resulting in multipliers of 1.38 and 1.02, respectively.   The Grocery Products business unit underperformed slightly in relation to its EVA goal resulting in a multiplier just below 1.0.  The total Company results were such that the multiplier was .56.  As a result, employees assigned to the total Company for EVA purposes had the value of a portion of their Operator Shares decreased by almost one-half.  The Compensation Committee exercised negative discretion in reducing the multiplier for Mr. Ettinger and Ms. Feragen to .52.

SEC rules provide that the Company does not have to disclose EVA targets and EVA results if doing so would result in competitive harm to the Company.  Current and historical EVA targets and EVA results are maintained by the Company as confidential and proprietary information.  The Committee believes disclosure of such information would result in competitive harm to the Company.  Such harm would be caused by factors including the following:

·                  EVA targets and EVA results are financial measures determined at a business unit level, which is a type of competitively sensitive information that the Company does not publicly disclose; and

·                  EVA targets and EVA results are a non-traditional financial metric and their disclosure may cause confusion.

The EVA adjusted portion of an executive’s Operators’ Shares bonus is more difficult to achieve than the remainder of the Operators’ Shares bonus because of the additional variables involved.  These variables include the EVA target and interval established by the Committee and the need to manage capital investment decisions and actual EVA results.  The goal setting premium applies only when meeting aggressive goals and is thus more difficult to attain than more typical performance.

Historically, the EVA multiplier has ranged from zero for some executives to approximately 2.0 for others.  On average, executives have achieved an EVA multiplier of approximately 1.0.  The Committee expects that on average executives will continue to achieve an EVA multiplier of approximately 1.0.   Achievement of a 1.0 or higher EVA multiplier indicates that the EVA target has been met or exceeded.

The Compensation Committee reviews the Operators’ Shares holdings of each executive officer on an annual basis as part of its assessment of total compensation levels.   For this review, Operators’ Shares are valued based on the target EPS established at the beginning of the fiscal year.  As appropriate, the Compensation Committee periodically awards additional Operators’ Shares to maintain a competitive, performance-oriented compensation package.  In combination with base salary, Operators’ Shares award levels are targeted to deliver total annual cash compensation between median and top quartile levels relative to market pay levels, taking into consideration length of service and performance.

Stock Incentive Plan

Why Stock?

The Hormel Foods Corporation 2000 Stock Incentive Plan is administered by the Compensation Committee and is considered long-term compensation.  The Plan allows the Committee to grant different types of equity awards, including stock options, restricted stock and other stock-based awards.  In general, the Committee uses stock options as the primary form of annual equity award.  The Committee favors stock options because the option structure focuses executives on continued stock price improvement.  Stock option grants typically vest equally over a four year period and have a term of ten years. This extended vesting period and term encourage executives to weigh how business decisions made in the near-term affect the Company’s long-term stock price performance.

The Compensation Committee also has built a safeguard into administration of the plan.  Stock options are granted annually effective as of the first Tuesday of December.  This practice ensures that options grant dates cannot be manipulated for a more favorable strike price.  Options are always granted at the market price of the Company stock at the date of grant.  Options thus provide compensation to the optionee only to the extent the market price of the stock increases between the date of grant and the date the option is exercised.  Options are intended to provide long-term compensation tied specifically to increases in the price of the Company’s stock, thereby aligning the financial interests of executives and stockholders.

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The Company’s officers are expected to hold Company stock equivalent to 2.5 to 5 times their annual base salary, depending on position.   See “Stock Ownership Guidelines” on page 5 for more information on the Company’s stock ownership guidelines.

How Awards are Determined

During 2008, 160 members of senior management received a stock option grant.  The Compensation Committee determines, with the assistance of its outside consultant, the amount of options to be granted to executive officers, including the CEO.  The Chief Executive Officer adds his input and recommendations regarding grants to executives (other than himself) and other eligible employees.  The Committee reviews such recommendations and determines all final option grants to all eligible employees.

Options are generally awarded based on the influence an employee’s position is considered by the Compensation Committee to have on stockholder value.  The number of options awarded may vary up or down from prior year awards based on the level of an individual executive officer’s contribution to the Company in a particular year, determined in part on the recommendation of the Chief Executive Officer.  The Compensation Committee’s determination of option grants in fiscal year 2008 and in past years took into consideration a number of factors.  These factors include past grants to the individual, total compensation level (relative to other executives and relative to market data), contributions to the Company during the last completed fiscal year, potential for contributions in the future, and as a component of total compensation targeted at the 75th percentile of the market data.

At the end of fiscal year 2008, the Company’s stock price was below the exercise price of stock options granted over the past four years.

Long-Term Incentive Plan

Why a Long-Term Incentive Plan?

Company executive officers are eligible to participate in the Hormel Foods Corporation 2005 Long-Term Incentive Plan (“LTIP”). This Plan is designed to provide a small group of key employees selected by the Compensation Committee with an incentive to maximize stockholder value.  This Plan provides an additional incentive opportunity based on the Company’s long-term “Total Shareholder Return” performance compared to its peers.  The Committee feels that the relative performance nature of the LTIP balances the absolute performance of the stock options, and recognizes the cyclicality of the business.  In other words, if the Company underperforms in a very strong market, the options may be valuable, but the LTIP will be worthless.  Conversely, if the Company outperforms its peers in a very weak market, the options may be worthless, but the LTIP would generate a reward.

How the LTIP Works

“Total Shareholder Return” measures the increase in stock price, assuming reinvested dividends.  Each participant, including the NEOs, is given a target dollar award opportunity for the three-year performance period.  There are a total of 40 participants in the current LTIP.  In selecting participants, and the amount of cash incentive which can be earned by each participant, the Compensation Committee considers various factors.  These factors include the nature of the services rendered by the employee, his or her present and potential contributions to the success of the Company, and as a component of total compensation targeted at the 75th percentile of the market data.

The current three-year LTIP performance cycle began October 31, 2005 and ended October 26, 2008.  If the Company’s actual Total Shareholder Return for the three-year period was at the 50th percentile of the peer group, then participants would earn the target award.  If the Company’s actual Total Shareholder Return ranked highest among the peers, then the award payout would equal three times the target opportunity.  No award would be paid unless actual Total Shareholder Return is above the 25th percentile of the peers.  The Compensation Committee retains discretion to reduce the amount of any award payout.  The peer group consists of 32 publicly traded companies in the food industry, listed below.

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For the current LTIP performance cycle ended October 26, 2008, the Company’s Total Shareholder Return was at the 48.5 percentile in relation to the LTIP Peer Companies.  This resulted in a payout at 97% of the target award assigned to each participant in the plan.

During the current three-year LTIP performance cycle, new officers may be elected or officers participating in the current LTIP may be promoted.  In these cases, the Compensation Committee may grant “shadow” awards.  While “shadow” awards are not made under the LTIP, they are similar to LTIP awards.  “Shadow” award target opportunities and actual awards are calculated in the same manner as LTIP awards.  As such, “shadow” awards have the practical effect of either adding a new officer to the current three-year LTIP performance cycle on a pro-rata basis or increasing a promoted officer’s opportunity under the current three-year LTIP performance cycle commensurate with their new position.

Pension Plan

The Company maintains noncontributory defined benefit pension plans covering substantially all salaried employees.  Pension benefits for salaried employees are based upon the employee’s highest five years of compensation (as described below) of the last 10 calendar years of service and the employee’s length of service.

The Salaried Employees Pension Plan provides an annual pension benefit based on the base benefit and supplemental benefit.  The base benefit is .95% of the average annual compensation multiplied by the years of benefit service, limited to 40 years, at retirement.  The supplemental benefit is .65% of average annual compensation less covered compensation multiplied by the years of benefit service, limited to 35 years.  Average annual compensation is the average of the highest five years of compensation of the last ten completed calendar years at retirement.  For this purpose, annual compensation consists of base salary and Operators’ Share Plan payments.  Covered compensation is derived from a published table based on year of birth that averages the maximum social security wage bases during the participant’s working life.

The earliest retirement age is 55 years, after completion of 15 years of service.  The base benefit is discounted ½% for every month retirement occurs before age 62.  However, an employee may retire with 30 years of service after attaining age 60 and avoid the discount on the base benefit.  The supplemental benefit is multiplied by an adjustment factor which increases from .48 at age 55 to 1.00 at age 65.

Supplemental Executive Retirement Plan

Why have a SERP?

The Supplemental Executive Retirement Plan (“SERP”) provides an annual pension benefit to a select group of management, including all NEOs, based on the same pension formula as the Salaried Employees Pension Plan.  The SERP bases the benefit on compensation that is not allowable in the Salaried Employees Pension Plan.  Such compensation includes amounts over the qualified plan compensation limit, currently $230,000, restricted stock awards, and deferrals to nonqualified deferred income plans.  Rather than adding a different measure of value, the SERP merely restores the value executives lose under the Pension Plan (described above) due to government limitations.

In 2007, the SERP was modified to discontinue lump sum payouts and reinstate the early retirement discount and benefit service limits for members of the Executive Committee.  Mr. Ray was grandfathered in these provisions.

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Nonqualified Deferred Compensation Plan

Why have a NQDCP?

In the same way that the SERP eliminates the government-imposed limitations on the Pension Plan, the nonqualified deferred compensation plan (“NQDCP”) eliminates the government-imposed limitations on the Company’s 401(k) plan.  The Company’s NQDCP, the Executive Deferred Income Plan, permits eligible employees, including all NEOs, to annually defer certain compensation.  This compensation includes base salary, Operators’ Shares dividend equivalents and year-end payments, and long-term incentive plan payments.  The Company may make discretionary contributions to the participant’s deferral accounts.

Deferrals of cash compensation are credited with deemed investment gains and losses.  Similar to a 401(k) plan, the participant may choose from a number of investments, none of which provide above-market interest rates.  Payments under the plan are made on the date(s) selected by each participant in accordance with the terms of the plan or on such other date(s) as specified in the plan.  Payments relating to deferrals of cash compensation are paid in cash.

Mr. Ray also participates in a frozen nonqualified deferred income plan.  This plan allows him to defer $1,000 each year and receive earnings on his deferrals on a pre-determined interest rate.

In connection with the plan, the Company has created a grantor trust, commonly known as a “rabbi trust.”  The Company is under no obligation to further fund this trust and would do so only at its discretion.  The assets of the trust will be used to pay benefits under the plan, but the assets of the trust are subject to the claims of general creditors of the Company.

The Committee believes that the SERP and the NQDCP together provide a competitive retirement package for executives that is consistent with the retirement benefits provided to all Company employees.

Survivor Income Protection Plan

Why have a SIPE?

The Survivor Income Plan for Executives (“SIPE”) is provided in addition to the life insurance plan which is available to all salaried employees.  As with the qualified pension plans, there are limits on the levels of insurance provided under the broad-based plan.  The Company offers the SIPE to provide a death benefit commensurate with the income levels of the participants.  The SIPE is available to a designated group of management employees, including all NEOs.

The SIPE pays a benefit to the employee’s spouse or dependent child of 60% of average salary (based on a five-year average) for up to 20 years if the eligible employee died while actively employed.  If the payment is made to a beneficiary instead of a spouse or dependent child, the maximum duration is five years (for participants joining the SIPE in 2000 or after) or 20 years (for participants joining the SIPE prior to 2000).  If the eligible employee died after retirement, payment to the spouse or dependent child is 1% per year of service up to 40% of average salary for 15 years.  If the payment is made to a beneficiary, not to a spouse or dependent child, the maximum duration is five years (for participants joining the SIPE in 2000 or after) or ten years (for participants joining the SIPE prior to 2000).

Perquisites

The Company provides limited perquisites to its executive officers.  The Company maintains two corporate aircraft, but executive use of the aircraft is strictly limited to business purposes.  In the past, executives were reimbursed for personal financial planning expenditures, up to a set dollar amount.  In fiscal 2008 the Company made a one-time final payment of $3,000 to executives to apply against financial planning expenditures and then discontinued this perquisite.

The Company maintains a condominium in Vail, Colorado.  The condominium is made available to 134 members of senior management as a vacation destination.  The taxable value, according to IRS regulations, of the use of this property is charged as taxable income to the employee.  The Company provides cars to executive officers.  Due to business travel needs, the Company has chosen to provide a Company car in lieu of paying mileage for the use of a personal vehicle.  The annual taxable value, according to IRS regulations, of the vehicle is charged as taxable income to the employee.

The Company provides a designated group of managers, including executive officers, an annual medical physical.  Assuring these key managers are in good health minimizes the chance business operations will be interrupted due to an unexpected health condition.

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How Annual Compensation Decisions are Made

The Committee reviews and approves recommendations for pay changes for the CEO, each of his 12 direct reports and a group of 19 additional executive officers who hold key positions within the Company.  Each year, the Committee asks its outside consultant to update the competitive analysis for each of these positions.

For the NEOs, the consultant develops “market consensus” data using both a peer group of companies similar to the Company in size and industry (listed below) and a combination of several compensation surveys.  The use of peer group data (1) provides the Committee with more specific information regarding market practices than is available from surveys and (2) allows the Committee to compare the Company’s relative pay positioning in relation to the Company’s relative performance positioning to ensure a proper pay-for-performance alignment.  The use of survey data (1) provides information based on specific position responsibilities rather than pay level and (2) provides pay information for positions that fall below the NEOs.  The consultant works with the Company’s Vice President - Human Resources to ensure a proper understanding of the roles, responsibilities and revenue scope of each position reviewed.

The companies in this Pay and Performance Peer Group are different than the LTIP Peer Companies because the purpose of each list is different.  The Pay and Performance Peer Group consists of food companies which are more similar in size to the Company.  This makes them a better match to use for compensation comparison purposes.  The LTIP Peer Companies are a broader group of food companies which are publicly traded, allowing for determination of total shareholder return.  Since total shareholder return is not dependent on company size, a broader group of companies can be included.   This broader group assures there will be a sufficient number of comparison companies at the end of the three-year LTIP performance cycle if some of the companies are eliminated by acquisition, bankruptcy, or similar events.

Upon completing the competitive analysis, the consultant provides the Committee with a report of the relative pay and performance findings.  Based on the results of this analysis, the Committee discusses strategic goals for the program and establishes broad parameters for annual pay decisions, including desired changes in overall pay mix.  The consultant then works with the CEO and the Committee Chair to develop an initial set of recommendations for annual pay decisions, consistent with the guidelines established by the Committee.  The consultant presents preliminary recommendations to the CEO and Chair based on each executive’s market positioning and relative internal positioning.  The CEO and Chair then modify those recommendations based on their assessment of each individual’s performance and contribution.  The initial results are then submitted to the Committee for review and discussion.  Based on the Committee discussion, modifications are made to the initial recommendations, as appropriate, and the Committee approves the final recommendations at a subsequent meeting.  The CEO does not participate in the Committee’s process for establishing the CEO’s compensation.

For fiscal year 2008, the Committee approved salary increases, changes to Operators’ Shares grants, and stock option grants for the NEOs and other key executives.  Both Mr. Ettinger and Ms. Feragen are relatively new to their positions as CEO and CFO, respectively.  When an executive is relatively new to their position, it is the Committee’s practice to make meaningful increases to compensation levels over a two-to-four year period to reflect the new position and responsibilities.  Accordingly, both Mr. Ettinger and Ms. Feragen received significant increases to their base salaries and stock options for fiscal 2008.  Notwithstanding these increases, the target total compensation opportunity for Mr. Ettinger is below the 75th percentile, and

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the target total compensation for Ms. Feragen is below the 50th percentile level.  The Committee considers their positioning appropriate in light of their position tenure and will look to improve their competitive positioning over time, as warranted by experience and performance in their respective roles.

The other three NEOs, Messrs. Ray, Fielding and Bross, are experienced in their positions.  As such annual increases in their target total compensation opportunities were more modest.  The target total compensation opportunities for each of these three more-tenured executives is consistent with the Company’s stated 75th percentile philosophy.  The Committee considers this positioning appropriate in light of the significant experience, expertise and proven track record of these three individuals.

Tax Deductibility

Compensation decisions for our executive officers are made with full consideration of the tax implications, including deductibility under Internal Revenue Code Section 162(m).   Section 162(m) limits the deductibility of compensation paid to certain executive officers in excess of $1 million annually, but excludes “performance-based compensation” from this limit.

Our stockholders have approved the Company’s Operators’ Share Plan, LTIP and 2000 Stock Incentive Plan for the purpose of qualifying those plans as performance-based compensation under Section 162(m).  The Committee believes that compensation paid pursuant to these plans will be deductible, except for dividend equivalents paid under the Operators’ Share Plan.  Such dividends may not be deductible in full for any NEO in a given year.  In this proxy statement, we are asking that stockholders approve the Company’s 2009 Long-Term Incentive Plan.

COMPENSATION OF NAMED EXECUTIVE OFFICERS (NEOS)

The following tables and narrative disclosure should be read in conjunction with the Compensation Discussion and Analysis, which presents the objectives of our executive compensation and benefit programs.  The table below presents compensation for fiscal year 2008 for individuals who served as Chief Executive Officer and Chief Financial Officer and for each of the other three most highly compensated executive officers who were serving as executive officers at the end of fiscal 2008.

SUMMARY COMPENSATION TABLE

(1)                                  Includes amounts voluntarily deferred under the Company’s Tax Deferred Investment Plan A - 401(k) and the Executive Deferred Income Plan.

(2)                                  Consists of the compensation cost recognized during each fiscal year for the option awards granted in that fiscal year and prior fiscal years, calculated in accordance with FAS 123R on the same basis used for financial reporting purposes.  Assumptions used to calculate these amounts in fiscal 2008 are included in Note A, “Summary of

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Significant Accounting Policies – Employee Stock Options”, and Note I, “Stock-Based Compensation”, of the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 26, 2008.

(3)                                In fiscal 2008, consists of Operators’ Share Incentive Compensation Plan payments earned in fiscal 2008 and paid subsequent to fiscal year end and payouts under the current three-year (October 31, 2005 to October 26, 2008) LTIP performance cycle paid subsequent to fiscal year end as shown in the table below.  In fiscal 2007, consists entirely of Operators’ Share Incentive Compensation Plan payments earned in fiscal 2007 and paid subsequent to fiscal year end.  Includes amounts voluntarily deferred under the Executive Deferred Income Plan.

(4)                                Includes the annual increase in the actuarial present value of accumulated benefits under our Salaried Employees Pension Plan and Supplemental Executive Retirement Plan.  In accordance with SEC rules, the present value was determined using the same assumptions applicable for valuing pension benefits for purposes of our financial statements. See “Pension Benefits” on page 27. The NEOs had no above-market or preferential earnings on deferred compensation, except that Mr. Ray had $12,581 in fiscal 2008 and $10,646 in fiscal 2007 in above-market earnings under a frozen nonqualified deferred income plan.  This plan allows him to defer $1,000 each year and receive earnings on his deferrals at a pre-determined interest rate.

(5)                                All other compensation, including perquisites and other personal benefits, consists of the following:

ALL OTHER COMPENSATION TABLE