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 employees, officers and directors 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 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 HEDGING
No employee, officer or director of Hormel Foods may purchase any financial instruments (including without limitation prepaid variable forward contracts, equity swaps, collars, and exchange funds) that are designed to hedge or offset any decrease in the market value of Hormel Foods securities held directly or indirectly by the employee, officer or director.
PROHIBITION ON PLEDGING
Because a margin sale or foreclosure sale may occur at a time when an officer or director of Hormel Foods is 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.
PRE-CLEARANCE OF TRANSACTIONS
All transactions in Hormel Foods securities at any time by an executive officer or director of Hormel Foods, as well as any employee designated as subject to pre-clearance procedures, must be pre-cleared with Hormel Foods’ Corporate Secretary.
No transactions in Hormel Foods securities may be made by an executive officer or director of Hormel Foods, or any employee designated as subject to trading windows, during a quarterly “blackout” period which starts two weeks before each fiscal quarter end and continues through the second business day after the quarterly earnings release. No stock options granted by Hormel Foods may be exercised by an employee, officer or director of Hormel Foods during a quarterly “blackout” period which starts two weeks before each fiscal quarter end and continues through the second business day after the quarterly earnings release.
Hormel Foods may impose special “blackout” periods during which no transactions in Hormel Foods securities may be made by any designated employees, officers or directors of Hormel Foods, even though the quarterly trading window would otherwise be open, due to developments known to Hormel Foods but not yet publicly disclosed.
The foregoing restrictions on transactions in Hormel Foods securities and stock option exercises during quarterly and special “blackout” periods shall not apply to transactions or exercises made pursuant to a Rule 10b5-1 plan (see below).
TRANSACTIONS PURSUANT TO RULE 10b5-1 PLANS
You may buy or sell Hormel Foods securities pursuant to certain plans regardless of whether you have material nonpublic information so long as you are in an open trading window (see above) and not aware of material nonpublic information when you adopt the plan (referred to as a Rule 10b5-1 plan). Once your Rule 10b5-1 plan has been put in place, any modifications must occur during an open trading window and when you are not otherwise restricted from trading. Any adoption or modification of a Rule 10b5-1 plan must be pre-cleared with Hormel Foods’ Corporate Secretary. You may not alter or deviate from the terms of the approved Rule 10b5-1 plan. Nothing in this policy prohibits you from terminating a Rule 10b5-1 plan in accordance with applicable laws.
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 not material. When in doubt, consult with Hormel Foods' Corporate Secretary or General Counsel before proceeding.
If stock analysts, members of the media or any outsider ask 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 or her 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:
Any insider with questions about this policy or specific transactions may obtain additional guidance from the Corporate Secretary or General Counsel of Hormel Foods. Insiders should remember, however, that the ultimate responsibility for adhering to this policy and avoiding improper transactions rests with each individual.
Last Revised: March 2015
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