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Hormel Foods Corporate Responsibility

At Hormel Foods, corporate responsibility is engrained in our day-to-day business operations; it’s present and a priority in everything we do. It’s the foundation for which we create value for society — from the products we make, to the way we treat our employees, to the commitments we uphold to our stockholders, and to the communities in which we operate.

We invite you to read more about our specific commitments and achievements in areas such as hunger relief, environmental initiatives, employee engagement and animal welfare in our current 2015 Corporate Responsibility Report or past corporate responsibility reports.

 

Ethics, Governance and Risk

Since the founding of Hormel Foods in 1891, we’ve shaped our daily business decisions and interactions based on strong ethics. We are proud of the ethical behavior our employees demonstrate on a daily basis throughout all of our lines of business. We see this great accomplishment as a result of the ongoing training and cultivation of an ethically sound culture.

Ethics and Conduct

We are committed to achieving high ethical standards throughout our company by providing all employees the framework to apply these ethical standards to all decisions and actions within their daily responsibilities, as outlined below.

Code of Ethical Business Conduct

In an effort to create this ethically sound culture, we train all U.S.-based employees on our Code of Ethical Business Conduct. We provide this policy and third-party compliance reporting process for all employees globally. Our code serves as a guide for our employees, officers and directors in making business decisions. The code covers many of the topics discussed in our corporate responsibility report, including fair employment practices, harassment, safety, diversity, environmental responsibility and product integrity. Additionally, our code outlines our policies on conflicts of interest, gifts, illegal payments, illegal political contributions and disciplinary action.

All company policies at Hormel Foods follow local and national laws in the United States and other locations in which we operate.

  • One-hundred percent of our board members, subsidiaries, U.S. joint ventures and company locations are covered under the code, which includes attesting to compliance with the Foreign Corrupt Practices Act. When considering a company for merger or acquisition, we conduct due diligence and examine the suppliers of the prospective party, and we expect them to comply with our code.
  • To ensure adherence to the code, in 2002 we established a compliance program that upholds accountability through reporting, tracking and investigation of possible violations of the code.
  • The Audit Committee of our Board of Directors oversees the program, which includes a cross-functional Compliance Committee, training of new employees and a hotline and website for employees to report incidents that may violate our code.

The Compliance Committee is chaired by the manager of the company’s internal audit function and includes additional employees from our human resources and legal departments. This committee receives updated information about potential code violations on an as-needed basis. When a potential violation is reported, the committee promptly initiates an investigation that is deemed as the appropriate course of investigative action. If it appears that an infraction of the law has occurred, the committee refers the investigation to the company's general counsel and promptly provides a written report to management. This report outlines the information that was received and the investigative action that is being taken.

At the conclusion of the investigation, a final report is provided to management. If serious violations have been noted, the committee prepares a report to share with the Audit Committee to explain the course of action taken. Certain courses of disciplinary action will be taken depending on the type and severity of the violation. Hormel Foods also takes steps to respond appropriately to these violations to proactively prevent subsequent violations of the law, including modifying the compliance program as necessary.

We are pleased to report that there were no incidents of corruption in 2015.

Additional information about our Board of Director committees can be found in the 2015 Proxy Statement.

Communicating Our Way

To ensure the value system at Hormel Foods is understood and implemented throughout the entire organization, we communicate Our Way – our values platform – to our employees in their native languages. In the United States, for example, we provide this information in Spanish as well as English.

Should our employees observe anything that does not comply with our code of conduct and the values outlined in Our Way, we provide a hotline number and website to facilitate anonymous employee feedback and address concerns. This hotline can be used to report a range of issues, including corruption and discrimination. To ensure accountability, the hotline and website are operated by an independent third-party organization.

Performance-Based Executive Compensation

To advance our principle of perpetuating financial sustainability throughout the organization, Hormel Foods maintains a Compensation Committee within our Board of Directors that is exclusively comprised of non-employee, independent directors. The committee establishes and administers the compensation and benefit programs and upholds two primary goals:

  • Attract and retain highly-qualified executive officers; and
  • Incentivize the behavior of executive officers to create stockholder value.

In order to accomplish these goals and remain competitive within the industry, we also benchmark compensation compared to peer companies. Our incentive-based system considers individual performance, competitive market data and overall performance of the company. To help attract and maintain top talent and propel the company’s success into the future, Hormel Foods also provides executives with the opportunity to receive short- and long-term incentives. More information about our performance-based executive compensation can be found in the 2015 Proxy Statement.

Engaging in Legislative Affairs Overview

There are a number of issues that affect the food industry today, and as relevant legislation evolves, Hormel Foods aims to participate in open, ongoing dialogue with elected officials and community members about our mission and ensure these issues are addressed. We want to make sure our message is conveyed with a clear understanding of the methods in which we conduct our business and the positive role our company plays in the larger scheme of the industry. This dialogue entails:

  • Membership in trade organizations that conduct lobbying on behalf of the food industry. These organizations include the Grocery Manufacturers Association, North American Meat Institute, National Restaurant Association and National Turkey Federation. Hormel Foods is also a member of the U.S. Chamber of Commerce.
  • Monitoring legislative and regulatory issues and conducting lobbying activity when the company determines it is vital to its operations.
  • Conducting one-on-one meetings and individual plant tours with members of Congress and regulatory agencies to help them better understand our company operations and policies.
  • Engaging in public forums by participating in panels on a variety of industrywide issues.

Our participation in public policy and lobbying through the previously mentioned trade organizations and relationships focuses on significant issues such as:

  • Country of origin labeling;
  • Food and Drug Administration - proposed rules and regulations;
  • Food safety improvements;
  • Genetically modified organism labeling;
  • Incentive for research and development;
  • Immigration reform;
  • U. S. Department of Agriculture - proposed rules and regulations; and
  • A balanced approach regarding subsidies, tariffs and mandates for biofuels.

To learn more about our lobbying efforts in 2015, visit the 2015 Hormel Foods Corporate Responsibility Report.



Corporate Governance

At Hormel Foods, the Board of Directors oversees all company activities and assumes the ultimate responsibility of ensuring that company performance is based on strong ethical practices and is aligned with our Code of Ethical Business Conduct. The Hormel Foods Board of Directors currently consists of 15 members, 12 of whom are independent.

Jeffrey M. Ettinger, the Hormel Foods chief executive officer, serves as chairman of our Board of Directors. The board has adopted the Hormel Foods Corporate Governance Guidelines, which outline key corporate governance principles. The board has established three committees – Audit, Compensation and Governance. Additional information about our board structure can be found in the 2015 Proxy Statement.

Corporate Responsibility Governance

The Hormel Foods Corporate Responsibility (CR) Steering Committee is comprised of company executives, and the group’s role is to provide direction and approval for the company’s environmental, social and governance activities. The chair of the CR Steering Committee reports directly to our chief executive officer.

In addition, the Governance Committee of our Board of Directors has oversight of our sustainability, environmental and corporate social responsibility activities.

To learn more about corporate responsibility oversight at Hormel Foods, please visit the 2015 Hormel Foods Corporate Responsibility Report.

Our Governing Principles

Each year, Hormel Foods stockholders elect the members of our Board of Directors at our Annual Meeting. The Governance Committee of the Board of Directors is responsible for identifying and recommending individuals qualified to become members of the board; overseeing succession planning for the corporation’s chief executive officer; ensuring personnel resources are being managed responsibly and effectively; and developing and recommending to the Board of Directors a set of corporate governance principles applicable to the company.

Board Independence and Evaluation

The New York Stock Exchange (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.

To operate in accordance with the NYSE listing standards, the Board of Directors has created and employed standards to assist in making the annual determination of each director’s independence status (view the Director Independence Standards).

In addition to policies outlined in the Hormel Foods Code of Ethical Business Conduct regarding conflicts of interest, we require that our board members submit a letter of resignation if they partake in any action that creates a conflict of interest with the company.

There is an annual self-evaluation of individual committees, and the Board of Directors additionally conducts its own self-evaluation. Stock ownership guidelines help to ensure that the interests of directors and executives are aligned with the interests of the stockholders.

Open Communication with Stakeholders

In addition to seeking feedback from our stakeholders about our corporate responsibility report each year, we also offer interested parties the opportunity to communicate with the Board of Directors by sending a letter directed to the Board of Directors, non-employee directors or specified individual directors, addressed to: Brian D. Johnson, Vice President and Corporate Secretary, 1 Hormel Place, Austin, MN 55912. All communications, whether signed or anonymous, will be directed to the lead director or the chair of one of the committees based on the subject matter of the communication, or to the non-employee directors or the specified directors, if so addressed. This information can be found in the 2015 Proxy Statement.



Risk Management

ERM Overview

Supported by the Board of Directors, the Enterprise Risk Management (ERM) initiative at Hormel Foods aims to examine and manage potential risks to the company. ERM risk teams meet throughout the year to identify, measure and mitigate key risks across the company. ERM teams continually reassess risks to document changes to risk exposures, look for new and emerging risks and provide regular updates to senior management.

ERM teams have developed strategic plans to mitigate the risks identified. Please see our Annual Report for additional information.



Supply Chain

Supply_Chain

At Hormel Foods, we understand the impact our supply chain can have on our company’s overall sustainability performance. To address this, we have developed guidelines to help our suppliers (both those based domestically and internationally) align with our principles. While it is a complex undertaking to understand and measure the impacts of the supply chain, we took a first step by developing Supplier Responsibility Principles in 2010. We introduced them first to our key suppliers in fiscal year 2011, and we shared with all of our suppliers in 2015 to ensure everyone is operating in a sustainable and responsible manner. Furthermore, we continue to review and update these principles on an ongoing basis to ensure that top sustainability concerns are addressed and that they transcend through all levels of our business.

These principles define expectations for our suppliers within specific areas of corporate responsibility such as quality and product integrity, safe work environment standards, animal care processes and environmental management procedures. We require all participants in our business, just like everyone within Hormel Foods, to consistently meet our standards and demonstrate their commitment to transparency and honesty through ethical business practices.

We purchase the majority of our raw materials, equipment and services domestically within the regions where we manufacture our products. These components represent areas for which we have direct responsibility. Agricultural commodities fall outside our direct responsibility, since the majority of these items are purchased from independent farmers. We acknowledge that we can, however, exert influence over the procurement of these commodities. We believe that the development of the above-mentioned Supplier Responsibility Principles will help to uphold our values and principles throughout our supply chain.

Through our supplier quality management program, we formally assess key suppliers in the areas of service, quality and sustainability. In addition, in calendar year 2014 our Procurement Council completed a category-level risk assessment process. Based on the results from this assessment process, we will work with the suppliers in the categories in which opportunities for improvement have been identified.

We also employ a supplier diversity program that gives diverse companies, such as women-owned and minority-owned businesses, the opportunity to supply quality product options that meet our company’s growing business needs. Working together, we provide the highest quality materials and services to our internal and external customers on a timely basis at the best economic value. Suppliers can submit their business for consideration at https://suppliers.hormelfoods.com.



Palm Oil Sourcing Policy

Palm Oil Principles

Hormel Foods recognizes the unique environmental and social risks associated with palm oil. These risks require additional due diligence in sourcing, education and training to ensure the palm oil in our supply chain is not associated with human rights issues, deforestation or plantation expansion on carbon-rich peatlands.

While Hormel Foods is a relatively minor user of palm oil, we realize that responsible sourcing of even the smallest amount of this ingredient can make a difference. Therefore, we will only purchase palm oil from suppliers who comply with the following sourcing principles:

  • Legally acquire land rights and operations.
  • Follow local laws and regulations.
  • Respect the rights of all workers.
  • Respect the free, prior and informed consent of local and indigenous communities.
  • Resolve social conflicts and provide remedy and redress for past violations.
  • Include smallholders in supply chains and ensure equitable benefit sharing.
  • Protect high conservation value areas and high carbon stock forests.
  • Protect rainforests and peatlands, regardless of depth.
  • Reduce greenhouse gas emissions and institute a ban on burning.
  • Follow the principles and criteria of the Roundtable on Sustainable Palm Oil (RSPO).
  • Comply with the Hormel Foods Supplier Responsibility Principles, which outline our expectations for all suppliers to uphold top standards related to food quality, product integrity, human and labor standards, environmental practices, business ethics and animal care. In the event an audit or other credible source reveals a supplier is in violation of these principles, Hormel Foods will require the supplier to implement corrective actions. If reasonable/appropriate corrective actions cannot be agreed to, Hormel Foods will suspend or discontinue purchases from the supplier.

Palm Oil Action Plan

  • We purchase RSPO certified palm oil.  We made an initial commitment to purchase only fully traceable palm oil by the end of 2014. We met this commitment by working with our suppliers and achieved traceability to the mill level. In the spirit of continuous improvement, our updated commitment is to purchase only sustainable palm oil that is fully traceable to the plantation level by 2020.
  • In 2015, all of our suppliers published sourcing policies for their entire operations that meet our principles and implementation timelines.
  • All of our suppliers are required to report the locations of plantations, mills and refineries from which they source and their progress in verifying the palm oil they source meets responsible production practices annually, which will be reviewed by the Hormel Foods Palm Oil Council.
  • In addition, to ensure compliance with our sourcing principles, Hormel Foods will require suppliers to assess plantations in its supply chain (through internal and external assessment teams) and submit reports and findings annually, which will be reviewed by the Hormel Foods Palm Oil Council. If a supplier is in violation of our sourcing principles, Hormel Foods will require the supplier to implement corrective actions. If reasonable/appropriate corrective actions cannot be agreed to, Hormel Foods will suspend or discontinue purchases from the supplier.

We will communicate our progress toward this action plan in future corporate responsibility reports.

Additional Information

This policy applies to all products that contain palm oil that our company sells, in all countries where we operate.

Hormel Foods is a member of the Consumer Goods Forum, which has committed to mobilizing resources to achieve deforestation free supply chains by 2020. This will be made possible by initiatives introduced by individual businesses and by companies working together as partners of governments and non-governmental organizations.

We invite you to learn more about our supply chain in the 2015 Hormel Foods Corporate Responsibility Report.



South American Beef Sourcing 

Hormel Foods is committed to supporting a sustainable supply chain. We require suppliers to comply with all applicable laws and regulations and our Supplier Responsibility Principles, which outline our expectations for food quality, product integrity, human rights and labor standards, environmental practices, business ethics, animal care and continuous improvement. 

We source beef from suppliers who share these commitments and follow the principles and criteria of the Global Roundtable for Sustainable Beef (GRSB). The GRSB a multi-stakeholder group whose mission is to advance continuous improvement in global beef value chain sustainability. The GRSB envisions a world in which all aspects of the beef value chain are environmentally sound, socially responsible and economically viable.

To ensure compliance with our requirements, our beef suppliers have monitoring systems in place for farms supplying cattle, which use satellite images and geo-referenced maps of farms, deforestation data and information from public agencies regarding embargoed areas and human rights. We also require and review independent audits of the environmental monitoring systems of our suppliers.

In addition, Hormel Foods is a member of the Consumer Goods Forum, which has committed to mobilizing resources to achieve deforestation free supply chains by 2020. This will be made possible by initiatives introduced by individual businesses and by companies working together as partners of governments and non-governmental organizations.

If a supplier is found to be in violation of our sourcing principles, Hormel Foods will require the supplier to implement corrective actions. If reasonable/appropriate corrective actions cannot be agreed to, Hormel Foods will suspend or discontinue purchases from the supplier.

For additional information about our corporate responsibility efforts, please visit the 2015 Hormel Foods Corporate Responsibility Report.

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