Hershey Foods (HSY)

What are stock options?

The Committee may grant non-qualified stock options to eligible participants under the EICP. The Committee will determine the number of shares covered by each option, but during any calendar year, no participant may be granted options for more than 500,000 shares (1,000,000 shares, if made for recruitment in the participant’s initial year of participation).

The Committee sets the price of the shares of our Common Stock subject to each stock option, which cannot be less than 100% of the fair market value on the date of grant of the shares covered by the option.

The exercise price of each option must be paid in full at the time of exercise. The Committee also may permit payment through the tender of shares of our Common Stock, or by any other means that the Committee determines to be consistent with the EICP’s purpose. Any taxes required to be withheld must be satisfied by the participant at the time of exercise, either through a cash payment or through withholding of shares that would otherwise be issued at the time of exercise.

Options become exercisable at the times and on the terms established by the Committee. Options expire at the times established by the Committee, which may not be more than ten years after the date of grant.

See the Executive Compensation section of this proxy statement for more information about stock options previously granted to our named executive officers under the Incentive Plan.