Hershey Foods (HSY)

Base Salary

We set the initial base salary for a new executive officer based upon an evaluation of his or her responsibilities and experience, as well as upon the salaries paid by other companies for comparable executive talent and the salary necessary to recruit the individual to Hershey. We apply a similar approach when adjusting an executive’s salary in response to a promotion or significant change in job responsibilities.

Salary reviews for incumbent officers are generally conducted at the beginning of each year and each officer’s salary is benchmarked against the range of the 50^th to 75^th percentile of the salary level for the comparable position at the companies in our size-adjusted CPG peer group. Salary adjustments, if any, are made after considering peer group comparisons, as well as Company performance against financial goals and individual executive performance as evaluated by the

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Committee and independent members of the Board, in the case of our CEO, or by the CEO in the case of other members of the leadership team. If an executive officer has responsibility for a particular business unit, the business unit’s financial results will also be strongly considered.

Each executive’s base salary was targeted to be at the 50^th percentile level of his or her counterparts in the size-adjusted CPG peer group. Our review at the beginning of 2008 indicated that base salary levels for Mr. West and Mr. Bilbrey were consistent with or slightly below this target, reflecting the fact that each was recently promoted into his position and Ms. Buck’s base salary was consistent with the targeted range for her position. Accordingly, no adjustments were made to their salaries at the beginning of the year, although the Committee requested a mid-year review of their base salaries following receipt of more recent data. The Committee approved increases in Mr. Alfonso’s base salary to $500,000 and Mr. Snyder’s base salary to $485,000 to better align their salaries within the targeted salary range. On June 3, 2008, the Committee approved an adjustment in base salary for Mr. Bilbrey. The adjustment increased Mr. Bilbrey’s salary from $475,000 to $550,000 as a result of updated benchmarking of his position as the North American business he heads represents a very significant portion of our total revenue. See Column (c) of the Summary Compensation Table on page 56 for information regarding the base salary earned by each of our named executive officers during 2008.

Base Salary

We set the initial base salary for a new executive officer based upon an evaluation of his or her responsibilities and experience, as well as upon the salaries paid by us and other companies for comparable executive talent and the salary necessary to recruit the individual to Hershey. We apply a similar approach when adjusting an executive’s salary in response to a promotion or significant change in job responsibilities.

Salary reviews for incumbent officers are conducted at the beginning of each year and each officer’s salary is compared to the 50^th and 75^th percentile of the salary level of the companies in our size-adjusted CPG peer group. Salary adjustments, if any, are made after considering peer group comparisons, as well as Company performance against financial goals and individual executive performance as evaluated by the Committee and independent members of the Board, in the case of our CEO, or by the CEO in the case of other members of the leadership team. If an executive officer has responsibility for a particular business unit, the business unit’s financial results will also be strongly considered.

Each Hershey executive’s base salary was targeted to be at the 50^th percentile level of his or her counterparts in the size-adjusted CPG peer group. Our review at the beginning of 2007 indicated that, with the exception of Mr. Bilbrey, base salary levels were consistent with this target. The base salaries for Mr. Lenny, Ms. Arline, Mr. Hernquist and Mr. Snyder were not increased above their 2006 levels in light of the Company’s 2006 financial performance. Mr. Bilbrey’s base salary for 2007 was increased to close the gap between his former base salary and the targeted salary for

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his position. Mr. West’s base salary was increased at the beginning of 2007 in recognition of his promotion to Executive Vice President and Chief Operating Officer. During the year, Mr. Alfonso’s base salary was increased in recognition of his promotion to CFO. The Committee recommended, and the independent members of the Board of Directors approved, an increase in Mr. West’s base salary to $1 million upon his promotion to President. See Column (c) of the Summary Compensation Table on page 55 for information regarding the base salary earned by Mr. Lenny, Mr. West, our CFO and each of our other named executive officers during 2007.

Base Salary

Salary reviews are conducted at the beginning of each year to compare each executive’s salary to the 50^th and 75^th percentile of the size-adjusted salary level of the companies in our primary peer group. Salary adjustments are made based upon peer group comparisons, as well as Company and individual executive performance. Both financial and, where appropriate, non-financial performance measures are considered in making salary adjustments. If an executive officer has responsibility for a particular business unit, this unit’s financial results also are strongly considered.

We set the initial base salary for a new executive officer based upon an evaluation of his or her responsibilities and experience, as well as upon the salaries paid by us and other companies for comparable executive talent and the salary necessary to recruit the individual to Hershey.

In 2006, base salaries for Mr. Lenny and all of the Company’s executive officers were compared with executives having similar organizational responsibilities at companies in Hershey’s primary peer group.

Each Hershey executive’s base salary was targeted to be at the 50^th percentile level of his or her counterparts in the size-adjusted primary peer group. Based upon its review, the Committee

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approved base salary increases ranging from 2.7% to 7.8%, effective January 1, 2006, for each of the named executive officers to decrease the gap between their salaries and those of the size-adjusted primary peer group. See Column (c) of the Summary Compensation Table on page 45 for information regarding the base salary earned by Mr. Lenny and each of our other named executive officers during 2006.