Performance

For 117 years, Hormel Foods has been guided by the values of integrity and innovation. The company has flourished by promoting the best governance practices with high standards for transparency and accountability, as well as financial sustainability through the use of sound business decisions. By applying these guiding principles, Hormel Foods has experienced tremendous growth.

In just eight years, our company has increased sales from $3 billion to more than $6 billion. While it took us from 1891 to 1999 to reach $3 billion, our commitment to innovation resulted in ability to double our sales in the last eight years.

Conducting our Business Ethically

Maintaining a high ethical standard is extremely important at Hormel Foods. From employees working in our plants to members of the Board of Directors, we see it as our responsibility to apply ethics to all decisions and actions.

Code of Ethical Business Conduct

Our Way is the values-based program at Hormel Foods that guides our daily actions.

At Hormel Foods, we require our employees to be trained on our company’s policies and procedures. Our Code of Ethical Business Conduct serves as a guide for our employees, officers and directors in making business decisions. The code covers many of the topics discussed in this report, including fair employment practices, harassment, safety, diversity, environmental responsibility and product integrity. Additionally, our code of conduct outlines our policies on conflict of interest, gifts, illegal payments, illegal political contributions and disciplinary action.

At Hormel Foods, all of our policies follow local and national laws in the United States and elsewhere.

Communicating Our Way

To ensure our employees understand the value system at Hormel Foods, we communicate Our Way in our employees’ native languages. In the United States, for example, we provide this information in Spanish, as well as English.

If our employees observe anything that does not comply with our code and the values outlined in Our Way, we provide a hotline number to facilitate anonymous employee feedback and address concerns — 1-800-750-4972. To ensure accountability, this hotline is operated by an independent third-party organization.

Performance-based Executive Compensation

As part of our principle of maintaining financial sustainability, Hormel Foods has a compensation committee within our Board of Directors that consists exclusively of nonemployee, 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
• Incent the behavior of executive officers to create stockholder value.

To accomplish these goals, we also benchmark compensation compared to industry peers. The incentive-based system factors in individual performance, competitive market data and overall performance of the company. Incentive compensation is also comprised of both short-term and long-term incentives to help assure the company’s success into the future.

Board of Directors and
Corporate Governance

The Hormel Foods Board of Directors consists of 13 members; 10 of whom are independent.

The Board of Directors oversees all activities at Hormel Foods and is ultimately responsible for ensuring that the company’s performance is based on strong ethical practices. The board consists of 13 members, 10 of whom are independent. Hormel Foods President and Chief Executive Officer Jeffrey M Ettinger serves as Chairman of the Board. The Board of Directors has adopted the Hormel Foods Corporate Governance Guidelines that outline their responsibilities to the company. The board has several committees — audit, compensation, governance and contingency. A detailed committee structure can be found on the corporate governance page of our corporate Web site.

Lead Director Position Established

To help facilitate the mission of the Board of Directors, the team adopted a well-recognized corporate governance practice by establishing a lead director position at the end of fiscal year 2008. The lead director is an independent director selected by its members to ensure additional independent leadership among the Board of Directors.

Our Governing Principles

The governance committee is responsible for identifying and recommending individuals qualified to become members of the Board of Directors, to oversee succession planning for the corporation's chief executive officer, to ensure the corporation's personnel resources are being managed responsibly and effectively and to develop and recommend to the Board of Directors a set of corporate governance principles applicable to the company.

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

Open Communication with Stakeholders

We welcome feedback on our corporate responsibility performance and reporting from our stakeholders. In addition, we offer interested parties the opportunity to communicate with the Board of Directors. 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, to the nonemployee directors or the specified directors on various topics related to business.