Insider Trading Policy
The strength of our nation’s stock market system, as well as Hormel Foods Corporation’s stakehold in that system, lies in investor confidence that the securities of public companies, including our own, are traded fairly upon information that is transparent and equally available to all investors. Hormel Foods Corporation ("Hormel Foods") has long prided itself on the integrity of its employees, officers and directors. To that end, this policy has been adopted to provide guidance to officers, directors and employees of Hormel Foods regarding transactions in Hormel Foods securities and to insure that material nonpublic information is not misused.
Employees, officers and directors of Hormel Foods, including members of their immediate families and households (sometimes referred to in this policy as “insiders”), shall not engage in any transaction involving the purchase or sale of Hormel Foods securities while aware of material nonpublic information concerning Hormel Foods. In addition, you are prohibited from “tipping” -- disclosing material nonpublic information to others who may use that information to trade in Hormel Foods securities or pass along the information to others who might trade in Hormel Foods securities.
This policy applies to material nonpublic information relating to other companies, including Hormel Foods' customers, vendors or suppliers when that information is obtained in the course of employment with Hormel Foods.
Trading in the securities of Hormel Foods while you are aware of nonpublic information does not violate the securities laws or this policy unless the information is “material”. For this purpose material information is defined as any information, either positive or negative, for which there is a substantial likelihood that a reasonable investor would consider such information to be important in making an investment decision regarding the purchase or sale of Hormel Foods securities. It should be emphasized that materiality will be judged with the benefit of hindsight when it is too late to undo the decision. While it is not practical to precisely predict what information will be “material” the following should, as a rule, be treated as material:
Inside information simply means information that has not yet been generally made available to the investing public. Once material nonpublic information has been disclosed to the general public it loses its character as inside information. For this purpose, effective public disclosure requires that the information be widely available for a sufficient period of time (generally two business days must elapse) to give the markets enough time to digest the information. This requirement is satisfied if dissemination of inside information is made to the wire service through a press release, national news services or national newspapers or disclosed through a public filing with the U.S. Securities and Exchange Commission (“SEC”) (Form 10-Q, Form 10-K or Form 8-K).
PROHIBITION ON PLEDGING
Because a margin sale or foreclosure sale may occur at a time when you are aware of material nonpublic information or otherwise not permitted to trade in Hormel Foods securities, all officers and directors are prohibited from holding Hormel Foods securities in a margin account or pledging Hormel Foods securities as collateral for a loan.
PENALTIES FOR INSIDER TRADING
The consequences of insider trading for Hormel Foods and the individual can be disastrous. Insiders may be subject to:
In addition, the federal securities laws also impose potential liability on companies and other “controlling persons” (such as managerial and supervisory personnel) if they fail to take appropriate steps to prevent insider trading by company personnel. Charges of insider trading, even where defensible, are made with the benefit of hindsight and typically result in adverse publicity and embarrassment for the individual and the company involved.
Violation of this policy shall subject an employee to appropriate disciplinary action which may include termination of employment.
If you have questions as to whether information received by you about Hormel Foods or another company is material nonpublic information, refrain from trading or disclosing such information until you first determine the information has been made public or is otherwise not material. Obviously, when in doubt, consult with the Hormel Foods' General Counsel or Corporate Secretary before proceeding.
If stock analysts, members of the media or any outsider asks a question regarding inside information, he or she should be referred to Hormel Foods' designated spokesperson. In this regard inquiries from the media, stock exchange and others regarding rumors, unusual trading activity or other material information should be directed to one of the following: CEO, President, Chief Financial Officer, or Director of Investor Relations. Inquiries from financial media or stock analysts should be first referred to the Director of Investor Relations or, in his absence, the Chief Financial Officer. In making the referral, your response should be limited to the referral itself without commenting further on the inquiry.
The following are examples of insider trading:
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