LANCE INC
EX-10.1
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>g89977exv10w1.txt
<DESCRIPTION>EX-10.1
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

                                  LANCE, INC.

              2004 ANNUAL PERFORMANCE INCENTIVE PLAN FOR OFFICERS

Purposes and      The primary purposes of the 2004 Annual Performance Incentive
Introduction      Plan for Officers are to:

                  -     Motivate behaviors that lead to the successful
                        achievement of specific sales, financial and operations
                        goals that support Lance's stated business strategy.

                  -     Emphasize link between participants' performance and
                        rewards for meeting predetermined, specific goals.

                  -     Focus participant's attention on operational
                        effectiveness from both an earnings and an investment
                        perspective.

                  -     Promote the performance orientation at Lance and
                        communicate to employees that greater responsibility
                        carries greater rewards because more pay is "at risk."

                  For 2004, participants will be eligible to earn incentive
                  awards based on Corporate Return on Capital Employed (ROCE),
                  Divisional Return on Net Assets (RONA) and individual
                  performance objectives against specific goals as described
                  below.

                  -     ROCE is calculated as follows:

                             Net Income + Interest Expense x (1 - Tax Rate)
                             ----------------------------------------------
                                     Average Equity + Average Debt

                  -     RONA is calculated as follows:

                                    Operating Profit x (1 - Tax Rate)
                        --------------------------------------------------------
                        Average Operating Assets - Average Operating Liabilities

                  Tax Rate shall be the actual income tax rate for ROCE and will
                  be the income tax rate in the operating plan for the
                  applicable operating unit for RONA.

                  To achieve the maximum motivational impact, plan goals and the
                  awards that will be received for meeting those goals will be
                  communicated to participants as soon as practical after the
                  2004 Plan is approved by the Compensation Committee of the
                  Board of Directors.

                  Each participant will be assigned a Target Incentive, stated
                  as a percent of

<PAGE>

                  Base Salary. The Target Incentive Award, or a greater or
                  lesser amount, will be earned at the end of the plan year
                  based on the attainment of predetermined goals.

                  Base Salary shall be the annual rate of base compensation for
                  the Plan Year which is set no later than April of such Plan
                  Year.

                  Following year-end, 100% of the awards earned will be payable
                  to participants in cash.

Plan Year         The period over which performance will be measured is the
                  Company's fiscal year.

Eligibility and   Eligibility in the Plan is limited to Officers of Lance who
Participation     are key to Lance's success. The Compensation Committee of the
                  Board of Directors will review and approve participants
                  nominated by the President and Chief Executive Officer.
                  Participation in one year does not guarantee participation in
                  a following year, but instead will be reevaluated and
                  determined on an annual basis.

                  Participants in the Plan may not participate in any other
                  annual incentive plan (e.g., sales incentives, etc.) offered
                  by Lance or its affiliates. Attachment A includes the list of
                  2004 participants approved by the Compensation Committee at
                  its April 22, 2004 meeting.

Target Incentive  Each participant will be assigned a Target Incentive
Awards            expressed as a percentage of his or her Base Salary.
                  Participants may be assigned Target Incentives by position by
                  salary level or based on other factors as determined by the
                  Compensation Committee.

                  Target Incentives will be reevaluated at least every other
                  year, if not annually. If the job duties of a position change
                  during the year, or Base Salary is increased significantly,
                  the Target Incentive shall be revised as appropriate.

                  Attachment A lists the Target Incentive and applicable
                  performance measure for each participant for the 2004 Plan
                  Year. These Target Incentives will be reviewed and adjusted
                  annually by the Compensation Committee. Target Incentives will
                  be communicated to each participant as close to the beginning
                  of the year as practicable, in writing. Final awards will be
                  calculated by multiplying each participant's Target Incentive
                  by the appropriate percentage (based on financial and
                  individual performance for the year, as described below).

                                       2
<PAGE>

Performance       The 2004 financial performance measures for the Company as a
Measures and      whole and the operating units are shown below. Specific goals
Award Funding     and related payouts are also shown below.

                  Each operating unit will fund its own awards.

                  <TABLE>
                  <CAPTION>
                                         Minimum     Target         Maximum
                                         -------    --------       ---------
                  <S>                     <C>        <C>            <C>
                  Lance, Inc. (ROCE)          *%          *%              *%
                  Lance Co. (RONA)            *%          *%              *%
                  Vista/Tamming (RONA)        *%          *%              *%
                  Award Level Funded         50%        100%            200%
                  </TABLE>

                  [*Targets not required to be disclosed.]

                  Percent of payout will be determined on a straight line basis
                  between minimum and maximum. There will be no payouts unless
                  the minimum applicable performance measure is reached and
                  there will be no payouts if the Company as a whole does not
                  reach the minimum applicable performance measure.

                  The performance measures, specific numerical goals and the
                  role of individual performance in determining final payouts
                  will be communicated to each participant at the beginning of
                  the year. Final Target Incentive Awards will be calculated
                  after the Compensation Committee has reviewed the Company's
                  audited financial statements for 2004 and determined the
                  performance level achieved.

                  Minimum, Target and Maximum levels will be defined at the
                  beginning of each year for each performance measure.

                  The following definitions for the terms Maximum, Target and
                  Minimum should help set the goals for each year, as well as
                  evaluate the payouts:

                  -     Maximum: Excellent; deserves an above-market bonus

                  -     Target: Normal or expected performance; deserves market
                        level bonus

                  -     Minimum: Lowest level of performance deserving payment
                        above base salary; deserves below market bonus

                  -     Below minimum: Deserves no additional pay beyond base
                        salary

                                       3
<PAGE>

Individual        Each Officer will receive 100% of his or her Target
Performance       Incentive Award based on his or her applicable performance
                  measure except for those participants listed on Attachment B,
                  who will receive 75% to 90% of his or her Target Incentive
                  Award based on his or her applicable performance measure and
                  the remainder based on his or her individual performance
                  objective listed on Attachment B.

Form and          Final award payments will be made in cash as soon as
Timing of         practicable after award amounts are of approved by the
Payments          Compensation Committee of the Board of Directors. All awards
                  will be rounded to the nearest $100.

Change in Status  An employee hired into an eligible position during the year
                  may participate in the Plan for the balance of the year on a
                  pro rata basis.

Certain           In the event a participant voluntarily terminates
Terminations of   employment or is terminated involuntarily before the end of
Employment        the year, any award will be forfeited. In the event of death,
                  permanent disability, or normal or early retirement, the award
                  will be paid on a pro rata basis after the end of the plan
                  year. Awards otherwise will be calculated on the same basis as
                  for other participants, except that any adjustment for
                  individual Employment performance will be based on performance
                  prior to the termination of employment.

Change In         In the event of a Change in Control, pro rata payouts
Control           will be made at the greater of (1) Target or (2) actual
                  results for the year-to-date, based on the number of days in
                  the plan year preceding the Change in Control. Payouts will be
                  made within 30 days after the relevant transaction has been
                  completed.

                  For this purpose, a Change in Control is defined as when any
                  person, corporation or other entity and its affiliates
                  (excluding members of the Van Every Family and any trust,
                  custodian or fiduciary for the benefit of any one or more
                  members of the Van Every Family) acquires or contracts to
                  acquire or otherwise controls in excess of 35% of the then
                  outstanding equity securities of the Company. For the purposes
                  of this plan, the Van Every Family shall mean the lineal
                  descendants of Salem A.Van Every, Sr., whether by blood or
                  adoption, and their spouses.

Withholding       The Company shall withhold from award payments any Federal,
                  foreign, state or local income or other taxes required to be
                  withheld.

Communications    Progress reports should be made to participants quarterly
                  showing the year-to-date performance results and the
                  percentage of Target Incentives that would be earned if
                  results remain at that level for the entire year.

                                       4
<PAGE>

Executive         Notwithstanding any provisions to the contrary above,
Officers          participation, Target Incentive Awards and prorations for
                  executive officers, including the President and Chief
                  Executive Officer, shall be approved by the Compensation
                  Committee.

Governance        The Compensation Committee of the Board of Directors of Lance,
                  Inc. is ultimately responsible for the administration and
                  governance of the Plan. Actions requiring Committee approval
                  include final determination of plan eligibility and
                  participation, identification of performance measures,
                  performance objectives and final award determination. The
                  Committee retains the discretion to adjust any award that is
                  determined to be inappropriate due to anomalies in the
                  application of a performance measure. The decisions of the
                  Committee shall be conclusive and binding on all participants.

                                       5
<PAGE>

                                  ATTACHMENT A
<TABLE>
<CAPTION>
                                                              Performance            Award            Target
      Name                          Title                       Measure            Percentage       Incentive
     ------                        -------                   -------------         -----------      ----------
<S>                          <C>                             <C>                   <C>              <C>
P. A. Stroup, III            President and Chief             Lance, Inc.                *%               $*
                             Executive Officer               ROCE

H. D. Fields                 Vice President and              Vista/Tamming              *%               $*
                             President, Vista                RONA
                             Bakery, Inc.

L. R. Gragnani, Jr.          Vice President                  Lance, Inc.                *%               $*
                             - Information                   ROCE
                             Technology/CIO

E. D. Leake                  Vice President                  Lance, Inc.                *%               $*
                             - Human Resources               ROCE

B. C. Preslar                Vice President                  Lance, Inc.                *%               $*
                             - Finance and Chief             ROCE
                             Financial Officer

F. I. Lewis                  Vice President                  Lance Co.                  *%               $*
                             - Sales                         RONA

D. R. Perzinski              Treasurer                       Lance, Inc.                *%               $*
                                                             ROCE

M. E. Wicklund               Controller and                  Lance, Inc.                *%               $*
                             Assistant Secretary             ROCE
</TABLE>

[*Award targets omitted for participants as targets not required to be
disclosed.]

<PAGE>

                                  ATTACHMENT B
<TABLE>
<CAPTION>
                                                                               Individual
                                                         Individual           Performance
                                                        Performance            Objective
      Name                      Title                    Objective             Percentage
      ----                      -----                   -----------           -----------
<S>                        <C>                         <C>                    <C>
P. A. Stroup, III          President and Chief          Lance, Inc.                *%
                           Executive Officer               Safety

H. D. Fields               Vice President and          Vista/Tamming               *%
                           President, Vista                Safety
                           Bakery, Inc.

E. D. Leake                Vice President               Lance, Inc.                *%
                           - Human Resources               Safety

F. I. Lewis                Vice President               Direct Store               *%
                           - Sales                     Delivery Sales
</TABLE>

[*Objective percentage omitted for participants as targets not required to be
disclosed.]

</TEXT>
</DOCUMENT>
