UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act
of 1934 (Amendment No. )
Filed by the Registrant
x
Filed by a Party other than the Registrant
¨
Check the appropriate box:
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¨
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Preliminary Proxy Statement
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¨
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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¨
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Definitive Additional Materials
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¨
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Soliciting Material Under §240.14a-12
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CONSTELLATION BRANDS, INC.
(Name of Registrant as Specified in its
Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
¨
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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¨
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Fee paid previously with preliminary materials.
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¨
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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A
NNUAL
M
EETING
OF
S
TOCKHOLDERS
June 8, 2012
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of Constellation Brands, Inc. in the
Callahan Theater at the Nazareth College Arts Center
, 4245 East Avenue, Rochester, New
York 14618, on
Friday, July 27, 2012 at 11:00 a.m.
(local time). The Arts Center doors will open at 10:30 a.m.
The Nazareth College Arts Center is located on the campus of Nazareth College in the Town of Pittsford, New York. Parking is available in
Parking Lot A off South Campus Drive.
The attached Notice of Annual Meeting of Stockholders and Proxy Statement describe in
detail the matters expected to be acted upon at the meeting. Also contained in this package is the Companys Annual Report to stockholders, consisting of the Companys 2012 Summary Annual Report and Annual Report on Form 10-K for the
fiscal year ended February 29, 2012, that contains important business and financial information concerning the Company.
We hope you are able to attend this years Annual Meeting.
Very truly yours,
RICHARD SANDS
Chairman of the Board
CONSTELLATION BRANDS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 27, 2012
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Stockholders (the Meeting) of CONSTELLATION BRANDS, INC. (the Company) will be held in the Town of Pittsford in the Callahan Theater at the Nazareth College Arts Center, 4245 East
Avenue, Rochester, New York 14618, on Friday, July 27, 2012 at 11:00 a.m. (local time) for the following purposes as more fully described in the attached Proxy Statement:
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1.
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To elect as directors of the Company the nominees named in the Proxy Statement;
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2.
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To ratify the selection of KPMG LLP as the Companys independent registered public accounting firm for the fiscal year ending February 28, 2013;
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3.
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To approve, by an advisory vote, the compensation of the Companys named executive officers as disclosed in the Proxy Statement;
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4.
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To approve the amendment and restatement of the Companys Annual Management Incentive Plan;
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5.
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To approve the amendment and restatement of the Companys Long-Term Stock Incentive Plan;
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6.
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To consider a stockholder proposal concerning Equal Shareholder Voting, if properly presented at the Meeting;
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7.
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To consider a stockholder proposal concerning Multiple Performance Metrics, if properly presented at the Meeting; and
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8.
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To transact such other business as may properly come before the Meeting or any adjournment thereof.
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The Board of Directors has fixed the close of business on May 29, 2012 as the record date for the determination of stockholders
entitled to notice of and to vote at the Meeting or any adjournment thereof.
Your vote is important.
Kindly sign, date and
return the enclosed proxy card(s) in the postage-paid envelope provided or submit your proxy by telephone or via the Internet by following the instructions on your proxy card(s).
This will allow your shares to be voted even if you cannot attend
the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
DAVID S. SORCE,
Secretary
June 8, 2012
TA
BLE OF CONTENTS
i
CONSTELLATION BRANDS, INC.
207 High Point Drive, Building 100
Victor, New York 14564
PROXY
STATEMENT
2012 ANNUAL ME
ETING OF STOCKHOLDERS
This Proxy Statement is being furnished to the holders of the common stock of CONSTELLATION BRANDS, INC. (the Company,
we, our or us) in connection with the solicitation of proxies by the Board of Directors of the Company (the Board). The proxies are for use at the Annual Meeting of Stockholders of the Company and at
any adjournment thereof (the Meeting). The Meeting will be held on Friday, July 27, 2012 at 11:00 a.m. (local time) in the Town of Pittsford in the Callahan Theater at the Nazareth College Arts Center, 4245 East Avenue, Rochester,
New York 14618.
This Proxy Statement and the accompanying proxy card(s) are being mailed to stockholders beginning on or
about June 18, 2012.
You may submit your proxy by properly executing and returning the accompanying proxy card(s) or by
following the instructions on the accompanying proxy card(s) to submit your proxy by telephone or via the Internet. The shares represented by your proxy, if the proxy is properly submitted and not revoked, will be voted at the Meeting as directed by
your proxy. You may revoke your proxy at any time before the proxy is exercised by delivering to the Secretary of the Company a written revocation or by submitting a proxy bearing a later date by telephone, via the Internet or in writing. You may
also revoke your proxy by attending the Meeting and voting in person.
The shares represented by your proxy will be voted
FOR
the election of the director nominees named herein (Proposal 1), unless you specifically withhold authority to vote for one or more of the director nominees. Further, unless you properly direct otherwise, the shares represented by your
proxy will be voted
FOR
the ratification of the selection of KPMG LLP as the Companys independent registered public accounting firm for the fiscal year ending February 28, 2013 (Proposal 2),
FOR
the approval, by an advisory
vote, of the compensation of the Companys named executive officers as disclosed herein (Proposal 3),
FOR
the approval of the amendment and restatement of the Companys Annual Management Incentive Plan (Proposal 4),
FOR
the
approval of the amendment and restatement of the Companys Long-Term Stock Incentive Plan (Proposal 5), and
AGAINST
the stockholder proposals as described herein (Proposal 6 and Proposal 7).
As of the close of business on May 29, 2012 (the Record Date), the outstanding common stock of the Company consisted of
Class A Common Stock, par value $.01 per share (Class A Stock), Class B Common Stock, par value $.01 per share (Class B Stock), and Class 1 Common Stock, par value $.01 per share (Class 1 Stock). Holders of
Class 1 Stock have limited voting rights, and only holders of Class A Stock and Class B Stock are entitled to vote on Proposals 1 through 7 described in this Proxy Statement. As appropriate, the Company has enclosed with the proxy materials a
Class A Stock proxy card and/or a Class B Stock proxy card, depending on the holdings of the
1
stockholder to whom proxy materials are mailed. Stockholders who receive both a proxy card for Class A Stock and a proxy card for Class B Stock must sign and return
both
proxy cards
in accordance with their respective instructions or submit a proxy by telephone or via the Internet with respect to both Class A Stock and Class B Stock in order to ensure the voting of the shares of each class owned.
The cost of soliciting proxies will be borne by the Company. In addition to solicitation by use of the mail, directors, officers or
regular employees of the Company, without extra compensation, may solicit proxies in person or by telephone, facsimile, Internet or electronic mail. The Company has requested persons holding stock for others in their names or in the names of
nominees to forward these materials to the beneficial owners of such shares. If requested, the Company will reimburse such persons for their reasonable expenses in forwarding these materials.
IMPORTANT NOTICE REGARDING TH
E AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON JULY 27, 2012
This Proxy Statement and the Companys Annual Report to stockholders, consisting of the
Companys 2012 Summary Annual Report and Annual Report on Form 10-K for the fiscal year ended February 29, 2012, are available on the Investors page of our website at
www.cbrands.com/investors
.
VOTI
NG SECURITIES
The capital stock of the Company entitled to be voted at the Meeting that was outstanding as of the Record Date consisted of 153,459,643 shares of Class A Stock and 23,540,335 shares of Class B
Stock. Each share of Class B Stock is convertible into one share of Class A Stock at any time at the option of the holder. Shares of Class 1 Stock have limited voting rights, and holders of Class 1 Stock are not entitled to vote on Proposals 1
through 7 described in this Proxy Statement.
Only holders of record of Class A Stock and Class B Stock on the books of
the Company at the close of business on May 29, 2012, the Record Date for determining eligibility to vote at the Meeting, are entitled to notice of and to vote at the Meeting. Except as otherwise required by Delaware law, the holders of
Class A Stock and the holders of Class B Stock will vote together as a single class on all matters other than the election of directors as set forth below. Each holder of Class A Stock is entitled to one (1) vote for each share of
Class A Stock registered in such holders name, and each holder of Class B Stock is entitled to ten (10) votes for each share of Class B Stock registered in such holders name. Therefore, holders of Class A Stock are
entitled to cast a total of 153,459,643 votes at the Meeting and holders of Class B Stock are entitled to cast a total of 235,403,350 votes at the Meeting.
The holders of shares representing a majority of the outstanding aggregate voting power of Class A Stock and Class B Stock, present at the Meeting in person or by proxy, will constitute a quorum.
Shares represented by proxies marked as abstentions will be counted toward determining the presence of a quorum. Broker non-votes occur when brokers or other nominees submit proxies relating to shares held in street name that
they may vote with respect to at least one of, but not all, the matters to be considered at the Meeting because they have not received instructions from the respective beneficial owners of the shares. Shares with respect to which broker
non-votes occur would be counted as shares present for purposes of determining whether a quorum is present at the Meeting. Under the rules of the New York Stock Exchange, brokers and nominees will not be permitted to vote with respect to Proposals
1, 3, 4, 5, 6 or 7 without receiving direction from the beneficial owners of the Class A Stock or Class B Stock held by such broker or nominee; however, authorized brokers and nominees will be permitted to vote with respect to Proposal 2
without receiving such direction.
2
Accordingly, the Company may receive broker non-votes with respect to Proposals 1, 3, 4, 5, 6 or 7 but does not expect to receive broker non-votes with respect to Proposal 2 unless one or more
beneficial owners have withheld discretionary authority from their respective brokers or nominees.
Under Delaware law and the
Companys certificate of incorporation and by-laws, directors are elected by a plurality of the votes cast (the highest number of votes cast) by the holders of the shares entitled to vote, and actually voting, in person or by proxy. Pursuant to
the Companys certificate of incorporation and based on the number of shares of Class A Stock and Class B Stock that were outstanding on the Record Date, the holders of Class A Stock, voting as a separate class, are entitled to elect
one-fourth of the number of directors to be elected at the Meeting (rounded up to the next number if the total number of directors to be elected is not evenly divisible by four). The holders of Class B Stock, voting as a separate class, are entitled
to elect the remaining number of directors to be elected at the Meeting. Since the Board nominated nine (9) directors, the holders of Class A Stock will be entitled to elect three (3) directors and the holders of Class B Stock will be
entitled to elect six (6) directors. Because the directors are elected by a plurality of the votes cast in each election, votes that are withheld (including broker non-votes) will not be counted and, therefore, will not affect the outcome of
the elections.
The ratification of the selection of KPMG LLP as the Companys independent registered public accounting
firm for the fiscal year ending February 28, 2013 (Proposal 2), the approval, by an advisory vote, of the compensation of the Companys named executive officers as disclosed in this Proxy Statement (Proposal 3), the approval of the
amendment and restatement of the Companys Annual Management Incentive Plan (Proposal 4), the approval of the amendment and restatement of the Companys Long-Term Stock Incentive Plan (Proposal 5), and the adoption of the stockholder
proposals described in this Proxy Statement (Proposal 6 and Proposal 7) each requires the affirmative vote of a majority of the votes entitled to be cast by stockholders present in person or represented by proxy at the Meeting. With respect to these
proposals, holders of Class A Stock and Class B Stock are entitled to vote as a single class at the Meeting, with holders of Class A Stock having one (1) vote per share and holders of Class B Stock having ten (10) votes per
share. Abstentions will have the effect of negative votes. However, because broker non-votes, if any, are not considered entitled to vote, they will not affect the outcome of these votes.
BENEFIC
IAL OWNERSHIP
This section presents information concerning the beneficial ownership of our common stock by certain individuals, entities and groups. Determinations as to whether a particular individual, entity or group
is the beneficial owner of our common stock have been made in accordance with Rule 13d-3 under the Securities Exchange Act of 1934. Under Rule 13d-3, a person is deemed to be the beneficial owner of any shares as to which such person:
(i) directly or indirectly has or shares voting power or investment power, or (ii) has the right to acquire such voting or investment power within 60 days through the exercise of any stock option or other right. The fact that a person is
the beneficial owner of shares for purposes of Rule 13d-3 does not necessarily mean that such person would be the beneficial owner of securities for other purposes. The percentages of beneficial ownership reported in this section were calculated on
the basis of 153,459,643 shares of Class A Stock, 23,540,335 shares of Class B Stock, and 11,652 shares of Class 1 Stock outstanding as of the close of business on May 29, 2012, subject to adjustment as appropriate in each particular case
in accordance with Rule 13d-3.
3
Beneficial Security O
wnership of More Than 5% of the
Companys Voting Common Stock
The following tables present, as of May 29, 2012, information regarding the
beneficial ownership of Class A Stock or Class B Stock by each person who is known to be the beneficial owner of more than 5% of the Class A Stock or Class B Stock. Because many shares reported in the following tables are held by
various Sands-related family partnerships, family trusts and a foundation in which more than one of the beneficial owners listed below serves as a partner, trustee, director or officer, many of those shares are reflected in the tables more than
once. The information reported for the stockholders group in the tables and footnotes below effectively represents the aggregate shares beneficially owned by Robert and Richard Sands without counting any shares more than once. This
stockholders group beneficially owns an aggregate of 32,261,477 shares of Class A Stock and Class B Stock. The outstanding shares included in this number represent approximately 17% of the combined outstanding Class A Stock and Class B
Stock and approximately 60% of the combined voting power of the outstanding Class A Stock and Class B Stock when voting together as a single class. Except as otherwise noted below, the address of each person or entity listed in the tables
is c/o Constellation Brands, Inc., 207 High Point Drive, Building 100, Victor, New York 14564.
Class A Stock
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Name and Address
of
Beneficial Owner
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Amount and Nature of Beneficial
Ownership
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Percent of Class (1)
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Sole
Power
to Vote
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Shared
Power
to Vote
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Sole
Power
to Dispose
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Shared
Power
to Dispose
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Total Shares (1)
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Class A
Only
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If Class B
Converted
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Class A
Only
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If Class
B
Converted
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Robert Sands
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3,878,348
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(2)
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153,234
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(3)
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1,445,055(2)
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2,072,654
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(3)
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5,951,002
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21,251,025
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3.9%
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12.5%
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Richard Sands
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3,717,500
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(4)
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153,234
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(5)
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1,359,623(4)
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2,072,654
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(5)
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5,790,154
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21,095,818
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3.7%
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12.4%
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Abigail Bennett
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107,403
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1,919,420
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(6)
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107,403
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4,667,804
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(7)
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6,694,627
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24,529,755
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4.4%
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14.3%
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Zachary Stern
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106,492
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1,919,420
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(6)
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106,492
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2,025,912
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8,021,256
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1.3%
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5.0%
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CWC Partnership-I
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768
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(8)
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472,376
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(8)
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472,376
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6,571,456
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0.3%
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4.1%
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Trust for the benefit of Andrew Stern, M.D. under the Will of Laurie Sands
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768
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(9)
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1,920,188
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(9)
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1,920,188
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8,582,900
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1.3%
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5.4%
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Stockholders Group Pursuant to Section13(d)(3) of the Securities Exchange Act of 1934 (10)
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7,749,082
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(10)
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4,877,332
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(10)
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9,668,502
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32,261,477
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6.2%
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18.1%
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FMR LLC
82 Devonshire Street
Boston, MA 02109 (11)
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61,765
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21,883,361
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21,883,361
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NA
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14.3%
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NA
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AllianceBernstein L.P.
1345 Avenue of the Americas
New York, NY 10105 (12)
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12,984,305
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16,546,324
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6,606
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16,552,930
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NA
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10.8%
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NA
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BlackRock, Inc.
40 East 52nd Street
New York, NY 10022 (13)
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13,952,041
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13,952,041
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13,952,041
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NA
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9.1%
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NA
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The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, PA 19355 (14)
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250,091
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10,715,615
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250,091
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10,965,706
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NA
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7.1%
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NA
|
4
Class B Stock
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Name and Address of
Beneficial Owner
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Amount and Nature of Beneficial Ownership
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Percent
of
Class
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Sole
Power
to Vote
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Shared
Power
to Vote
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Sole
Power
to Dispose
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Shared
Power
to Dispose
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Total
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Robert Sands
|
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7,287,311
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(2)
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2,017,368(3)
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1,367,419(2)
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8,012,712
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(3)
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15,300,023
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65.0%
|
Richard
Sands
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7,292,952
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(4)
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2,017,368(5)
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1,373,060(4)
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|
8,012,712
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(5)
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15,305,664
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65.0%
|
Abigail Bennett
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|
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|
5,995,344(6)
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11,839,784
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(7)
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17,835,128
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75.8%
|
Zachary
Stern
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5,995,344(6)
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5,995,344
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25.5%
|
CWC Partnership-I
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|
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|
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|
667,368(8)
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|
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|
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6,099,080
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(8)
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|
6,099,080
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|
25.9%
|
Trust for the benefit of Andrew
Stern, M.D. under the
Will of Laurie
Sands
|
|
|
|
|
|
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667,368(9)
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|
|
|
|
|
|
|
|
6,662,712
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(9)
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|
|
|
|
6,662,712
|
|
|
28.3%
|
RES Business Holdings LP
|
|
|
|
|
|
|
|
5,300,000(15)
|
|
|
|
|
|
|
|
|
5,300,000
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(15)
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|
|
|
|
5,300,000
|
|
|
22.5%
|
RES
Business Management LLC
|
|
|
|
|
|
|
|
5,300,000(16)
|
|
|
|
|
|
|
|
|
5,300,000
|
(16)
|
|
|
|
|
5,300,000
|
|
|
22.5%
|
RSS Business Holdings LP
|
|
|
|
|
|
|
|
5,300,000(17)
|
|
|
|
|
|
|
|
|
5,300,000
|
(17)
|
|
|
|
|
5,300,000
|
|
|
22.5%
|
RSS
Business Management LLC
|
|
|
|
|
|
|
|
5,300,000(18)
|
|
|
|
|
|
|
|
|
5,300,000
|
(18)
|
|
|
|
|
5,300,000
|
|
|
22.5%
|
Stockholders Group Pursuant to
Section 13(d)(3) of the Securities
Exchange Act of 1934 (10)
|
|
|
|
|
|
|
|
16,597,631(10)
|
|
|
|
|
|
|
|
|
10,753,191
|
(10)
|
|
|
|
|
22,592,975
|
|
|
96.0%
|
(1)
|
The numbers and percentages reported do not take into account shares of Class A Stock that can be received upon the conversion of shares of Class 1 Stock that can
be purchased by exercising stock options that are exercisable on or within sixty (60) days after May 29, 2012 (the Class 1 Option Shares). These shares are not taken into account because, in accordance with the Companys
certificate of incorporation, any shares of Class A Stock issued upon conversion of shares of Class 1 Stock must be sold immediately in connection with the conversion and, therefore, cannot be held by the beneficial owner of the Class 1 Option
Shares. However, the numbers of shares and percentages of ownership taking into account the shares of Class A Stock that can be received upon the conversion of Class 1 Option Shares are provided in footnotes where appropriate.
|
(2)
|
The reported shares of Class A Stock with respect to which Robert Sands has sole power to vote or dispose (i) include 1,086,293 shares of Class A Stock
that can be purchased by exercising stock options that are exercisable on or within sixty (60) days after May 29, 2012, and 154,728 shares of Class A Stock held by family limited liability companies of which Robert Sands is the
general manager, and (ii) as noted in footnote (1), exclude 1,232,243 shares of Class A Stock that can be received upon conversion of Class 1 Option Shares. The reported shares of Class B Stock over which Robert Sands has the sole power to
vote or dispose includes 1,350,000 shares held by a family trust of which Robert Sands is the sole trustee, and the reported shares of Class A Stock and Class B Stock over which Robert Sands has the sole power to vote include, as applicable,
5,300,000 shares of Class B Stock held by RSS Business Holdings LP and 2,333,902 shares of Class A Stock and 619,892 shares of Class B Stock held by another family partnership. The reporting of these shares as beneficially owned by
Mr. Sands shall not be construed as an admission that Mr. Sands is the beneficial owner of such shares for purposes of Sections 13(d) or 13(g) of the Securities Exchange Act of 1934 or otherwise. If the shares of Class A Stock that
can be received upon the conversion of Mr. Sands Class 1 Option Shares were included in the shares of Class A Stock beneficially owned by Mr. Sands, Mr. Sands would beneficially own a total of (i) 7,183,245 shares of
Class A Stock, representing 4.6% of the outstanding Class A Stock, if the shares of Class B Stock beneficially owned by Mr. Sands were not converted, and (ii) 22,483,268 shares of Class A Stock, representing 13.1% of the
outstanding Class A Stock, if the shares of Class B Stock beneficially owned by Mr. Sands were converted.
|
(3)
|
The reported shares are held by various family partnerships, family trusts and a foundation where, in most cases, Robert Sands serves as a partner, trustee, director or
officer. The reporting of these shares as beneficially owned by Mr. Sands shall not be construed as an admission that Mr. Sands is the beneficial owner of such shares for purposes of Sections 13(d) or 13(g) of the Securities Exchange Act
of 1934 or otherwise. The reported shares are also included in the shares reported as beneficially owned by Richard Sands and the stockholders group described in footnote (10), and the shares reported as beneficially owned by CWC Partnership-I and
the trust described in footnote (9) are included in the reported shares. Amounts reflected in the tables above do not include 28,792 shares of Class A Stock owned by Mr. Sands spouse. Mr. Sands disclaims beneficial
ownership of such shares.
|
(4)
|
The reported shares of Class A Stock with respect to which Richard Sands has sole power to vote or dispose (i) include 1,246,293 shares of
Class A Stock that can be purchased by exercising stock options that are exercisable on or within sixty (60) days after May 29, 2012, and (ii) as noted in footnote (1), exclude 1,471,338 shares of Class A Stock that can
|
5
|
be received upon conversion of Class 1 Option Shares. The reported shares of Class B Stock over which Richard Sands has the sole power to vote or dispose includes 1,350,000 shares held by a
family trust of which Richard Sands is the sole trustee, and the reported shares of Class A Stock and Class B Stock over which Richard Sands has the sole power to vote include, as applicable, 5,300,000 shares of Class B Stock held by RES
Business Holdings LP and 2,333,902 shares of Class A Stock and 619,892 shares of Class B Stock held by another family partnership. The reporting of these shares as beneficially owned by Mr. Sands shall not be construed as an admission that
Mr. Sands is the beneficial owner of such shares for purposes of Sections 13(d) or 13(g) of the Securities Exchange Act of 1934 or otherwise. If the shares of Class A Stock that can be received upon the conversion of Mr. Sands
Class 1 Option Shares were included in the shares of Class A Stock beneficially owned by Mr. Sands, Mr. Sands would beneficially own a total of (i) 7,261,492 shares of Class A Stock, representing 4.6% of the outstanding
Class A Stock, if the shares of Class B Stock beneficially owned by Mr. Sands were not converted, and (ii) 22,567,156 shares of Class A Stock, representing 13.2% of the outstanding Class A Stock, if the shares of Class B
Stock beneficially owned by Mr. Sands were converted.
|
(5)
|
The reported shares are held by various family partnerships, family trusts and a foundation where, in most cases, Richard Sands serves as a partner, trustee, director
or officer. The reporting of these shares as beneficially owned by Mr. Sands shall not be construed as an admission that Mr. Sands is the beneficial owner of such shares for purposes of Sections 13(d) or 13(g) of the Securities Exchange
Act of 1934 or otherwise. The reported shares are also included in the shares reported as beneficially owned by Robert Sands and the stockholders group described in footnote (10), and the shares reported as beneficially owned by CWC Partnership-I
and the trust described in footnote (9) are included in the reported shares. Amounts reflected in the tables above do not include 15,720 shares of Class A Stock owned by Mr. Sands spouse. Mr. Sands disclaims beneficial
ownership of such shares.
|
(6)
|
Abigail Bennett and Zachary Stern are the niece and nephew, respectively, of Robert Sands and Richard Sands. The amounts reflected as shares of Class A Stock and
Class B Stock over which Ms. Bennett and Mr. Stern each have shared power to vote represent 471,608 shares of Class A Stock and 5,431,712 shares of Class B Stock held by CWC Partnership-I and 1,447,812 shares of Class A Stock and
563,632 shares of Class B Stock held by another family partnership. The reporting of such shares as beneficially owned by Ms. Bennett and Mr. Stern shall not be construed as an admission that either of them is the beneficial owner of such
shares for purposes of Sections 13(d) or 13(g) of the Securities Exchange Act of 1934 or otherwise. Ms. Bennett and Mr. Stern have shared voting power with respect to these shares pursuant to a Voting Agreement between the two partnerships
that survives so long as either partnership owns any shares unless the agreement is otherwise terminated. Ms. Bennett and Mr. Stern must exercise such voting power jointly and were granted an irrevocable proxy enabling them to vote the
shares directly. In the event of the death or incapacity of either of Ms. Bennett or Mr. Stern, the other would have the unilateral power to vote the shares. The Voting Agreement provides for the appointment of successor proxies and
establishes mechanics for the voting of the shares in the event of a dispute between Ms. Bennett and Mr. Stern as to the voting of the shares.
|
(7)
|
The amount reflected as shares of Class A Stock and Class B Stock over which Abigail Bennett has the shared power to dispose includes 2,333,902 shares of
Class A Stock and 619,892 shares of Class B Stock held by SER Business Holdings LP, 2,333,902 shares of Class A Stock and 619,892 shares of Class B Stock held by SSR Business Holdings LP, 5,300,000 shares of Class B Stock held by RES
Business Holdings LP, and 5,300,000 shares of Class B Stock held by RSS Business Holdings LP. Ms. Bennett disclaims beneficial ownership with respect to all such shares.
|
(8)
|
CWC Partnership-I is a New York general partnership of which Robert Sands and Richard Sands are managing partners. The reported shares include 768 shares of
Class A Stock and 667,368 shares of Class B Stock owned by a partnership in which CWC Partnership-I is a partner. The reporting of such shares as beneficially owned by CWC Partnership-I shall not be construed as an admission that CWC
Partnership-I is the beneficial owner of such shares for purposes of Sections 13(d) or 13(g) of the Securities Exchange Act of 1934 or otherwise. The reported shares are also included in the shares reported as beneficially owned by Robert Sands,
Richard Sands, the trust described in footnote (9) and the stockholders group described in footnote (10), and 471,608 shares of Class A Stock and 5,431,712 shares of Class B Stock included in the reported shares are also included in the
shares reported as beneficially owned by Abigail Bennett and Zachary Stern.
|
(9)
|
The reported shares are directly or indirectly held by various family partnerships in which the trust is a partner. The reporting of these shares as beneficially owned
by the trust shall not be construed as an admission that the trust is the beneficial owner of such shares for purposes of Sections 13(d) or 13(g) of the Securities Exchange Act of 1934 or otherwise. The reported shares are also included in the
shares reported as beneficially owned by Robert Sands, Richard Sands and the stockholders group described in footnote (10) and, of the reported shares, 1,919,420 shares of Class A Stock and 5,995,344 shares of Class B Stock are also
included in the shares reported as beneficially owned by Abigail Bennett and Zachary Stern. In addition, the shares reported as beneficially owned by CWC Partnership-I are included in the reported shares.
|
(10)
|
The stockholders group, as reported, consists of Robert Sands, Richard Sands, CWC Partnership-I and another family partnership. The reporting of shares
as beneficially owned by the stockholders group shall not be construed as an admission that an agreement to act in concert exists or that the stockholders group is the beneficial owner of such shares for purposes of Sections 13(d) or 13(g) of the
Securities Exchange Act of 1934 or otherwise. The shares reported as beneficially owned by Robert Sands, Richard Sands, CWC Partnership-I, and the trust described in footnote (9) are
|
6
|
included in the shares reported as beneficially owned by the stockholders group. If the shares of Class A Stock that can be received upon the conversion of Robert Sands and Richard
Sands Class 1 Option Shares were included in the shares of Class A Stock beneficially owned by the stockholders group, the stockholders group would beneficially own a total of (i) 12,372,083 shares of Class A Stock, representing
7.8% of the outstanding Class A Stock, if the shares of Class B Stock beneficially owned by the stockholders group were not converted, and (ii) 34,965,058 shares of Class A Stock, representing 19.3% of the outstanding Class A
Stock, if the shares of Class B Stock beneficially owned by the stockholders group were converted. Certain shares of Class A Stock and Class B Stock were pledged as of May 29, 2012 as follows: (i) an aggregate of 8,168,694 shares of
Class B Stock were pledged to a financial institution to secure obligations of a Sands family investment vehicle (the Borrower) under a credit facility, (ii) an aggregate of 5,000,000 shares of Class A Stock (which number
includes 355,889 shares not reported as beneficially owned by the stockholders group) and 5,000,000 shares of Class B Stock were pledged to a second financial institution to secure obligations of the Borrower under a separate credit facility,
(iii) an aggregate of 4,550,000 shares of Class B Stock were pledged to two additional financial institutions to secure obligations of the Borrower under a separate credit facility, (iv) an aggregate of 2,144,876 shares of Class A
Stock were pledged to a fifth financial institution to secure obligations of the Borrower under a separate credit facility, and (v) an aggregate of 294,018 shares of Class B Stock were pledged to an affiliate of the second financial institution
to secure a loan made by such affiliate to a third party in which Richard Sands has an economic interest. Except as noted above, all of these pledged shares are included in the shares reported as beneficially owned by the stockholders group. Subject
to the terms of the various credit facilities, the number of shares of Class A Stock and Class B Stock pledged to secure the credit facilities may increase or decrease from time to time and may be moved by the applicable pledgors among the
various financial institutions from time to time. In the event of noncompliance with certain covenants under the credit facilities, the financial institutions have certain remedies including the right to sell the pledged shares subject to certain
protections afforded to the borrowers and pledgors.
|
(11)
|
Information concerning FMR LLC presented in the table is based solely on the information reported in Amendment 11 to the Schedule 13G of FMR LLC filed on
February 14, 2012 (the FMR Filing). The number of shares equals the number of shares of Class A Stock reported to be beneficially owned by FMR LLC and Edward C. Johnson 3d. The FMR Filing indicates that each of FMR LLC and
Mr. Johnson, through control over various entities, has sole dispositive power with respect to all 21,883,361shares. The FMR Filing further indicates that FMR LLC has sole voting power with respect to 61,765 of these shares; however, the FMR
Filing is internally inconsistent as to the number of shares with respect to which Mr. Johnson has sole voting power.
|
(12)
|
Information concerning AllianceBernstein L.P. presented in the table is based solely on the information reported in Amendment 1 to the Schedule 13G of AllianceBernstein
L.P. filed on February 13, 2012.
|
(13)
|
Information concerning BlackRock, Inc. presented in the table is based solely on the information reported in Amendment 2 to the Schedule 13G of BlackRock Inc. filed on
February 13, 2012.
|
(14)
|
Information concerning The Vanguard Group, Inc. presented in the table is based solely on the information reported in the Schedule 13G of The Vanguard Group, Inc. filed
on February 8, 2012.
|
(15)
|
The shares held by RES Business Holdings LP are included in the number of shares beneficially owned by Richard Sands, the stockholders group described in footnote (10),
RES Business Management LLC and Abigail Bennett. Assuming the conversion of Class B Stock beneficially owned by RES Business Holdings LP into Class A Stock, RES Business Holdings LP would beneficially own 5,300,000 shares of Class A Stock,
representing 3.3% of the outstanding Class A Stock after such conversion.
|
(16)
|
The amount reflected represents 5,300,000 shares of Class B Stock held by RES Business Holdings LP. Assuming the conversion of Class B Stock beneficially owned by RES
Business Management LLC into Class A Stock, RES Business Management LLC would beneficially own 5,300,000 shares of Class A Stock, representing 3.3% of the outstanding Class A Stock after such conversion.
|
(17)
|
The shares owned by RSS Business Holdings LP are included in the number of shares beneficially owned by Robert Sands, the stockholders group described in footnote (10),
RSS Business Management LLC and Abigail Bennett. Assuming the conversion of Class B Stock beneficially owned by RSS Business Holdings LP into Class A Stock, RSS Business Holdings LP would beneficially own 5,300,000 shares of Class A Stock,
representing 3.3% of the outstanding Class A Stock after such conversion.
|
(18)
|
The amount reflected represents 5,300,000 shares of Class B Stock owned by RSS Business Holdings LP. Assuming the conversion of Class B Stock beneficially owned by RSS
Business Management LLC into Class A Stock, RSS Business Management LLC would beneficially own 5,300,000 shares of Class A Stock, representing 3.3% of the outstanding Class A Stock after such conversion.
|
7
Beneficial Security Ownership of Directors and Executive
Officers
The Board has established guidelines for the minimum amounts of our common stock that our non-management
directors and executive officers should beneficially own. These guidelines for stock ownership consider the length of a directors tenure on the Board or an executive officers tenure as an executive officer. We allow individuals five
years in which to reach the applicable ownership guideline. Ownership guidelines can be satisfied through the ownership of stock, including restricted stock, and vested stock options.
The guideline for non-management directors is the beneficial ownership of five (5) times the annual cash retainer fee paid to them.
The guideline for executive officers is based on each officers position in the organization and is a multiple of annual base salary. The Chairman of the Board and the President and Chief Executive Officer each has a stock ownership guideline
of six (6) times his annual base salary. Each of the other executive officers has a stock ownership guideline of three (3) times his annual base salary. As of February 29, 2012, each of our non-management directors and each of our
executive officers had either met his or her respective target or was within the five-year window for doing so.
The following
table sets forth, as of May 29, 2012, the beneficial ownership of Class A Stock, Class B Stock, and Class 1 Stock by our directors, the named executive officers (as defined under the heading Compensation Tables and Related
Information below) and all of our directors and executive officers as a group. The Class A Stock information in the table below does not include shares of Class A Stock that are issuable upon the conversion of either Class B Stock or
Class 1 Stock, although such information is provided in footnotes where applicable. Unless otherwise noted, the individuals listed in the table have sole voting and dispositive power with respect to the shares attributed to them.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
of
Beneficial Owner
|
|
Class A Stock (1)
|
|
Class B Stock
|
|
Class 1 Stock
(1)
|
|
Shares Beneficially Owned
|
|
Percent
of
Class
Beneficially
Owned
|
|
Shares
Beneficially
Owned
|
|
Percent
of
Class
Beneficially
Owned
|
|
Shares
Acquirable
within 60
days
(3)
|
|
Percent
of
Class
Beneficially
Owned (4)
|
|
Outstanding
Shares
|
|
Shares
Acquirable
within
60
days (2)
|
|
Total
Shares
|
|
|
|
|
|
Robert Sands (5)
|
|
4,864,709
|
|
1,086,293
|
|
5,951,002
|
|
3.9%
|
|
15,300,023
|
|
65.0%
|
|
1,232,243
|
|
99.1%
|
Richard Sands (5)
|
|
4,543,861
|
|
1,246,293
|
|
5,790,154
|
|
3.7%
|
|
15,305,664
|
|
65.0%
|
|
1,471,338
|
|
99.2%
|
Robert
Ryder
|
|
77,864
|
|
|
|
77,864
|
|
*(6)
|
|
|
|
*
|
|
531,909
|
|
97.9%
|
W. Keith
Wilson
|
|
26,702
|
|
297,050
|
|
323,752
|
|
*(6)
|
|
|
|
*
|
|
168,903
|
|
93.5%
|
John A. (Jay) Wright
|
|
123,046
|
|
81,400
|
|
204,446
|
|
*(6)
|
|
|
|
*
|
|
276,033
|
|
95.9%
|
Jerry
Fowden
|
|
8,420
|
|
|
|
8,420
|
|
*(6)
|
|
|
|
*
|
|
16,730
|
|
58.9%
|
Barry A.
Fromberg
|
|
21,513
|
|
3,737
|
|
25,250
|
|
*(6)
|
|
|
|
*
|
|
38,000
|
|
76.5%
|
Jeananne K. Hauswald
|
|
16,005
|
|
13,563
|
|
29,568
|
|
*(6)
|
|
|
|
*
|
|
38,000
|
|
76.5%
|
James A.
Locke III
|
|
36,759
|
|
13,563
|
|
50,322
|
|
*(6)(7)
|
|
264
|
|
*
|
|
38,000
|
|
76.5%
|
Paul L.
Smith (8)
|
|
22,938
|
|
9,049
|
|
31,987
|
|
*(6)
|
|
|
|
*
|
|
38,000
|
|
76.5%
|
Keith
E.Wandell
|
|
2,793
|
|
|
|
2,793
|
|
*(6)
|
|
|
|
*
|
|
6,517
|
|
35.9%
|
Mark
Zupan
|
|
14,899
|
|
|
|
14,899
|
|
*(6)
|
|
|
|
*
|
|
36,321
|
|
75.7%
|
All Executive Officers
and Directors as a Group (14 persons) (9)
|
|
7,795,706
|
|
3,581,120
|
|
11,376,826
|
|
7.2% (9)
|
|
22,593,239
|
|
96.0%
|
|
4,636,275
|
|
99.7%
|
*
|
Percentage does not exceed one percent (1%) of the outstanding shares of such class.
|
(1)
|
The numbers and percentages reported with respect to Class A Stock do not take into account shares of Class A Stock that can be received upon
the conversion of Class 1 Option Shares. These shares are not taken into account because, in accordance with the Companys certificate of incorporation, any shares of Class A Stock issued upon conversion of
|
8
|
shares of Class 1 Stock must be sold immediately in connection with the conversion and, therefore, cannot be held by the beneficial owner of the Class 1 Option Shares. However, the numbers of
shares and percentages of ownership taking into account the shares of Class A Stock that can be received upon the conversion of Class 1 Option Shares are provided in footnotes where appropriate.
|
(2)
|
Reflects the number of shares of Class A Stock that can be purchased by exercising stock options that are exercisable on or within sixty (60) days after
May 29, 2012.
|
(3)
|
Reflects the number of shares of Class 1 Stock that can be purchased by exercising stock options that are exercisable on or within sixty (60) days after
May 29, 2012.
|
(4)
|
In accordance with Rule 13d-3 of the Securities Exchange Act of 1934, the percentages reported with respect to Class 1 Stock are calculated on the basis that
(i) the relevant director, executive officer or group holds the shares of Class 1 Stock that can be purchased by exercising Class 1 Option Shares that are exercisable on or within sixty (60) days after May 29, 2012 by such director,
executive officer or group, and (ii) the only outstanding shares of Class 1 Stock are the shares deemed to be held by such director, executive or group, as applicable, and the 11,652 shares of Class 1 Stock outstanding as of May 29, 2012.
The high percentages reported for each director, executive and group are a function of the small number of shares of Class 1 Stock outstanding as of May 29, 2012 and this calculation methodology.
|
(5)
|
See tables and footnotes under the heading Beneficial Security Ownership of More Than 5% of the Companys Voting Common Stock for information with
respect to sole and shared voting or dispositive power and for the numbers and percentages of shares of Class A Stock that would be beneficially owned if Class 1 Option Shares were included in the number of shares of Class A Stock
beneficially owned and assuming the conversion of Class B Stock into Class A Stock. Of the number of shares reported, 2,072,654 shares of Class A Stock and 8,012,712 shares of Class B Stock are included in the numbers reported by both
Robert Sands and Richard Sands. Of the shares reported as beneficially owned by Robert Sands as of May 29, 2012, 4,380,305 shares of Class A Stock and 11,362,712 shares of Class B Stock were pledged, and of the shares reported as
beneficially owned by Richard Sands as of May 29, 2012, 4,328,102 shares of Class A Stock and 11,662,712 shares of Class B Stock were pledged. Of the shares described as pledged in the preceding sentence, 1,919,420 shares of Class A
Stock and 5,012,712 shares of Class B Stock are included in the shares reported as beneficially owned by both Robert Sands and Richard Sands. All of the shares described as pledged are pledged under the facilities described in footnote (10) to
the table under the heading Beneficial Security Ownership of More Than 5% of the Companys Voting Common Stock.
|
(6)
|
If the shares of Class A Stock that can be received upon the conversion of the named individuals Class 1 Option Shares were included in the shares of
Class A Stock beneficially owned by the individual, the individual would beneficially own the shares of Class A Stock as noted below, which for each individual represents less than one percent (1%) of the outstanding Class A
Stock: Mr. Ryder 609,773; Mr. Wilson 492,655; Mr. Wright 480,479; Mr. Fowden 25,150; Mr. Fromberg 63,250; Ms. Hauswald 67,568; Mr. Locke 88,322; Mr. Smith
69,987; Mr. Wandell 9,310; and Mr. Zupan 51,220.
|
(7)
|
Assuming the conversion of Mr. Lockes 264 shares of Class B Stock into Class A Stock, Mr. Locke would beneficially own 50,586 shares of
Class A Stock (88,586 shares of Class A Stock if the shares of Class A Stock that can be received upon the conversion of Mr. Lockes Class 1 Option Shares were included), representing less than one percent (1%) of the
outstanding Class A Stock after such conversion.
|
(8)
|
Of the number of shares reported as beneficially owned by Mr. Smith, 19,535 shares of Class A Stock have been pledged.
|
(9)
|
This group consists of our executive officers and directors as of May 29, 2012. Assuming the conversion into Class A Stock of a total of 22,593,239 shares of
Class B Stock beneficially owned by the executive officers and directors as of May 29, 2012 as a group, this group would beneficially own 33,970,065 shares of Class A Stock, representing 18.9% of the outstanding Class A Stock after
such conversion. If the shares of Class A Stock that can be received upon the conversion of this groups Class 1 Option Shares were included in the shares of Class A Stock beneficially owned by this group of executive officers and
directors, this group would beneficially own (i) 16,013,101 shares of Class A Stock, representing 9.9% of the outstanding Class A Stock, if the shares of Class B Stock beneficially owned by this group were not converted, and
(ii) 38,606,340 shares of Class A Stock, representing 21.0% of the outstanding Class A Stock, if the shares of Class B Stock beneficially owned by this group were converted.
|
9
EXECUTIVE OFFICERS
Information concerning the Companys executive officers and their terms of office can be found in Part I of the Annual Report on
Form 10-K for the fiscal year ended February 29, 2012 (the 2012 Form 10-K).
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Note Regarding
Our Fiscal Years
Our fiscal year ends on the last day of February of each calendar year. Throughout this proxy statement,
fiscal years are referred to by the calendar year in which a fiscal year ends. For example, the fiscal year beginning March 1, 2011 and ending February 29, 2012, which is the primary focus of this Compensation Discussion and Analysis, is
referred to as fiscal 2012.
Executive Summary
The purpose of our executive compensation program is to provide competitive remuneration as our named executive officers implement our strategy, by focusing on what we call our strategic imperatives, and
create stockholder value. Our executive compensation programs seek to promote the achievement of our strategic imperatives focusing for fiscal 2012 on our profitability and cash flow generation and are designed to align executive compensation
to our performance. The short-term bonus and the long-term equity-based compensation opportunities result in compensation that varies with, and ties the compensation of our executives directly to, the performance of our company and its Class A
Stock. We believe this provides a strong link between executive compensation and the performance of our company.
The Human
Resources Committee of our Board of Directors, or the Committee, reviews and approves the elements of our executive compensation program on an annual basis and may modify particular elements of the program to maintain proper alignment with our goals
and strategies and with market practices. In connection with the Committees ongoing efforts, the following events have occurred since the commencement of fiscal 2012:
Key Executive Compensation Actions During Fiscal 2012
|
|
|
Base Salaries
: In setting fiscal 2012 base salaries for our named executive officers, the Committee approved increases of 2.5% for named
executive officers other than our Chairman of the Board (who received no increase). The Committee also completed a special review of the compensation of Mr. Wright in July 2011 in connection with his appointment as our Chief Operating Officer
and approved an off-cycle adjustment of approximately 10% effective to June 1 when Mr. Wright assumed the role of Chief Operating Officer. These increases are believed to be in line with the market.
|
|
|
|
Short-Term Cash Bonus Awards
: In April 2012, the Committee reviewed our performance for fiscal 2012 and approved cash bonus payments to our
named executive officers pursuant to our Annual Management Incentive Plan, or AMIP. In light of our strategic imperatives of improving profitability and maximizing the generation of cash flow, these payments rewarded achievement in comparable
earnings before interest and taxes, or
|
10
|
EBIT, and free cash flow, or FCF. Based on our fiscal 2012 results, the cash bonus awards for fiscal 2012 represented payments at 112.8% of the target award levels the Committee set for the named
executive officers. Fiscal 2012 AMIP results are summarized in the table below:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in
Millions
|
|
Weighting
|
|
Threshold
Performance
Level
|
|
Target
Performance
Level
|
|
Maximum
Performance
Level
|
|
Actual
Fiscal
2012
Results
|
|
Resulting
Bonus
Payout
Factor
|
|
Resulting
Weighted
Payout As a
Percentage of
Each
Executives
Target Bonus
|
Comparable EBIT
|
|
80%
|
|
$724.7
|
|
$775.0
|
|
$813.8
|
|
$768.5
|
|
0.94
|
|
75.2%
|
FCF
|
|
20%
|
|
$575.0
|
|
$650.0
|
|
$725.0
|
|
$715.7
|
|
1.88
|
|
37.6%
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112.8%
|
|
|
|
Long-Term Equity-Based Incentives
: In fiscal 2012, the Committee granted all of our named executive officers (except for our Chairman of the
Board) a combination of performance share units, or PSUs, restricted stock, and stock options. Our Chairman received all of his equity awards in the form of stock options. The Committee granted these awards in order to directly link the value of
compensation they earn to stockholder value creation and to align their interests with those of our stockholders. The Committee again selected earnings per share, or EPS, as the performance measure for these PSUs, as it believed EPS would provide a
link to our strategic plan and to stockholder value creation, would be a measure of managements performance, and would not duplicate the performance metrics already used in our short-term cash bonus plan. In April 2012, the Committee reviewed
our EPS results for fiscal 2012 and certified achievement at 200% of the target award levels set by the Committee in April 2011. In order to receive a payout of these awards, a named executive officer must satisfy service vesting terms generally
requiring continued employment with us until May 2014.
|
|
|
|
Clawback Provisions
: Our fiscal 2012 stock option awards included a provision designed to allow us to clawback or recoup any awards to the
extent required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or other law.
|
|
|
|
Peer Group Revisions
: In light of the sale of a majority of our businesses in the United Kingdom and Australia, the Committee undertook with the
assistance of its independent compensation consultant a review of the composition of our compensation peer group. At the conclusion of this review in July 2011, the Committee approved a revised peer group selected from companies involved with
managing and marketing premium brands and having gross revenues generally between 0.5 and 2.5 times those of the Company. This new peer group is described in more detail below.
|
|
|
|
Stock Ownership Guidelines
: The Board of Directors adopted revised stock ownership guidelines which increased the ownership requirements
applicable to our directors and executive officers.
|
Key Executive Compensation Changes for Fiscal 2013
|
|
|
Base Salaries
: For fiscal 2013, each named executive officer, including our Chairman, received an increase of 2.5% to his base salary. These
increases are believed to be in line with the market.
|
11
|
|
|
Short-Term Cash Bonus Award Changes
: For fiscal 2013, the Committee has approved the addition of organic net sales growth, along with comparable
EBIT and FCF, as the expected means of determining cash bonus payments. The Committee also approved the addition of a requirement that at least threshold comparable EBIT performance be achieved in order for the approval of any fiscal 2013 bonus
payout to our named executive officers. The Committee made these refinements in order to better align our bonus program with our evolving strategic imperatives, which are focused primarily on growing market share and profitability. In addition, the
Committee has approved, subject to the receipt of stockholder approval at the Meeting, the changes to our short-term bonus plan, the AMIP, as described in Proposal 4 below.
|
|
|
|
Long-Term Equity-Based Incentive Award Changes
: First, while the Committee again decided to grant PSUs to all named executive officers, except
for our Chairman, to further enhance the linkage between executive compensation and stockholder value creation, the Committee decided to tie the vesting levels of these awards to our stock price appreciation relative to the companies included in the
S&P 500 Index. This PSU performance measure will be based on fiscal 2013-2015 performance and any payouts will require the satisfaction of a service vesting requirement, generally requiring continued service with us until May 1, 2015.
Second, the Committee reviewed our overall equity grant levels for our named executive officers in connection with a larger review of our equity granting practices with respect to our U.S. employees. In connection with that review, the Committee
reduced the stock option award factors by approximately 10% for all named executive officers, except for our Chairman whose stock option award factor was reduced by approximately 5% due to the fact that he receives his entire annual equity award in
the form of options. Third, instead of granting restricted stock to our named executive officers, other than our Chairman, the Committee decided to grant restricted stock units, or RSUs, as part of the fiscal 2013 equity awards. This change to RSUs
will utilize fewer shares as compared to grants of restricted stock, will simplify the payment of taxes on these awards, and is consistent with the types of restricted equity awards we grant to non-executives. Finally, the Committee has approved,
subject to the receipt of stockholder approval at the Meeting, the changes to our Long-Term Stock Incentive Plan as described in Proposal 5 below.
|
|
|
|
Clawback Provisions
: All fiscal 2013 stock option, RSU and PSU awards included a provision designed to allow us to clawback or recoup any awards
to the extent required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or other law.
|
2011
Say-on-Pay Vote
At the 2011 Annual Meeting of Stockholders, we conducted our initial vote to approve, on an advisory
basis, the compensation of our named executive officers as disclosed in the 2011 Proxy Statement. Stockholders approved our executive compensation at that time with more than 94% of the vote being cast in favor of approval. The Committee considered
the results of that vote and did not make any changes to our named executive officer compensation program in response to the vote.
Philosophy and Objectives
We operate in a highly competitive, complex and international business environment. The ability to attract, motivate and retain employees throughout the organization is critical to our long-term
12
success. Accordingly, the objective of our executive compensation program is to attract, motivate and retain key executives by providing a compensation package that is competitive with the pay
practices of other companies of comparable size, status, and industry with a comparable business model.
The compensation
program for our named executive officers consists of fixed compensation (base salary), variable compensation (cash bonus payments and equity awards), and certain perquisites and other benefits. We have designed the elements of executive compensation
to operate together in a manner that seeks to reward our named executive officers for their respective abilities and day-to-day service, assistance with the achievement of annual goals and financial targets, and contributions toward enhancing
long-term stockholder value.
We feel the overall design of our executive compensation program has provided the intended
results, and we continue to periodically review the program elements in an effort to maintain or improve the alignment of the executive compensation program with our strategic imperatives. We believe our compensation is market competitive and
has resulted in the attraction and retention of executives who can contribute to our future success. In addition, we believe the program creates a strong linkage between pay and performance through our bonus and equity awards such that executives
will receive higher compensation in our more successful periods and lower compensation during less successful periods.
How Executive
Compensation is Established
The Committee discharges the Boards responsibilities relating to executive compensation,
including the annual review and approval of named executive officer compensation. Management personnel within our Human Resources Department support the Committee in its work. Executive officers, including the Chairman of the Board, the President
and Chief Executive Officer, and the Executive Vice President and Chief Human Resources and Administrative Officer, make recommendations and provide information to, and answer questions from, the Committee as the Committee fulfills its
responsibilities regarding executive compensation during each fiscal year. The Committee engages an independent compensation consultant to assist with its review and analysis of executive compensation and to provide data and advice on matters
relating to executive officer compensation. Since August 2008, Towers Watson has served as the Committees consultant.
Peer Group
In making its executive compensation decisions, the Committee evaluates each element of our executive compensation program, including comparing our practices against those of a specific peer group of
consumer product companies. In establishing this peer group, the Committee worked with its independent compensation consultant and sought to ensure that the group consisted of companies of appropriate size, type and complexity by reviewing metrics
such as gross revenues, enterprise value, international operations, and market capitalization. The Committee determined that the inclusion of a pro rata share of the revenues of our domestic and international joint ventures was appropriate for the
purpose of determining the composition of the peer group.
13
The peer group considered by the Committee for most of its key fiscal 2012 named executive
officer compensation decisions (including prior to setting base salaries, short-term incentive targets and equity grants for fiscal 2012 in April 2011) consisted of the following companies:
|
|
|
Brown-Forman Corporation
|
|
Hershey Company
(The)
|
Campbell Soup Company
|
|
Hormel Foods
Corporation
|
ConAgra Foods, Inc.
|
|
Kellogg
Company
|
Dean Foods Company
|
|
Lorillard,
Inc.
|
Del Monte Foods Company
|
|
Molson Coors Brewing
Company
|
Dr. Pepper Snapple Group, Inc.
|
|
Reynolds American
Inc.
|
Fortune Brands, Inc.*
|
|
J. M. Smucker
Company (The)
|
H. J. Heinz Company
|
|
|
In June
and July 2011, the Committee reviewed the composition of our peer group and established a revised peer group of companies listed below:
|
|
|
Beam Inc.
|
|
Harley-Davidson,
Inc.
|
Brown-Forman Corporation
|
|
H. J. Heinz
Company
|
Campbell Soup Company
|
|
Hershey Company
(The)
|
Church & Dwight Co., Inc.
|
|
Lorillard,
Inc.
|
Clorox Company (The)
|
|
McCormick &
Company, Inc.
|
Coach, Inc.
|
|
Mead Johnson
Nutrition Company
|
Diageo plc
|
|
Molson Coors Brewing
Company
|
Dr. Pepper Snapple Group, Inc.
|
|
Ralph Lauren
Corporation
|
Energizer Holdings, Inc.
|
|
Revlon,
Inc.
|
Estée Lauder Companies Inc. (The)
|
|
J. M. Smucker Company (The)
|
In establishing this revised peer group, the Committee sought to identify companies that manage and
market portfolios of premium brands and that are of appropriate size, type and complexity. In doing so, the Committee reviewed metrics such as gross revenues (targeting companies between 0.5 and 2.5 times those of the Company) and margin structure.
The Committee determined that a pro rata portion of revenues from our Crown Imports LLC joint venture should be considered for the purpose of establishing this peer group. To the extent possible, the Committee also sought to include a number of
peers from the beverage alcohol industry. The Committee reviewed data regarding this new peer group prior to making an off-cycle salary adjustment for Mr. Wright in July 2011 and prior to setting base salaries, short-term incentive targets, and
equity grants for fiscal 2013.
In addition to its review of peer group executive compensation data, the Committee may receive
general executive compensation survey data when insufficient peer group data is available for a specific executive position or as another means of performing market checks of its overall compensation program or the individual components thereof.
This information helps ensure that the Committee makes well-informed decisions regarding executive compensation matters. Throughout this Compensation Discussion and Analysis, the peer group and other survey data is sometimes referred to as
applicable market data.
14
Compensation of Named Executive Officers (other than the Chairman of the Board)
The Committee reviews the executive compensation program on an annual basis with awards and adjustments being made at a
regularly scheduled meeting of the Committee, usually in early April. Compensation decisions may be made at other times of the year in the case of promotions, new hires, or changes in responsibilities. For example, the Committee completed a special
review of Mr. Wrights salary in July 2011, and decided to make an adjustment at that time in connection with his appointment as our Chief Operating Officer. In making these determinations, the Committee may consider our performance, the
performance of our named executive officers, executive compensation information from its independent compensation consultant, and compensation and benefit recommendations from management. The Committee also annually reviews tally sheets comparing
current and proposed base salaries, short-term cash bonus awards, and long-term equity-based incentive awards.
Our executive
compensation program generally aims to provide our named executive officers with target cash compensation approximating the midpoint of that of our peer group companies. In order to align the interests of our named executive officers with those of
our stockholders, the Committee allocates a majority of the annual compensation opportunity for our named executive officers to performance based awards in the form of short-term cash bonuses and long-term equity-based incentive awards. However,
other than the fact that cash bonuses and equity grants are based upon base salary amounts, the Committee does not have a policy regarding the specific allocation of compensation between short-term and long-term compensation or between cash and
non-cash compensation.
The Committee places an emphasis on long-term equity-based incentive awards in our
executive compensation program, and on stock options and PSUs in particular, as it believes this causes executives to focus on long-term stockholder value. With respect to stock options, for example, named executive officers will only realize
compensation from these awards to the extent our stock price appreciates. In April 2010, the Committee decided to allocate equity compensation to our named executive officers (other than the Chairman of the Board) on the following basis starting in
fiscal 2011 approximately 50% in options, 25% in restricted stock and 25% in PSUs. At that time, these equity grants for named executive officers were generally positioned at or above the 75
th
percentile of the applicable market data with our Chief Executive
Officer positioned between the 50
th
and 75
th
percentile of the applicable market data. During fiscal 2012, the
Committee reconsidered equity award levels as part of a larger review of equity-based compensation within our U.S. organization. In connection with that review, the Committee lowered the formula for issuing stock option awards starting in fiscal
2013 for all of our named executive officers.
Compensation of the Chairman of the Board
Prior to July 2007, Richard Sands served as our Chairman of the Board and Chief Executive Officer. He transitioned from the role of Chief
Executive Officer in July 2007 and has remained our Chairman of the Board and a member of management since that time.
The
Committee determined that, starting in fiscal 2011, the total direct compensation opportunity (that is, salary, potential bonus at target level and equity awards) for the Chairman of the Board should approximate 85% of the Chief Executive
Officers total direct compensation opportunity. The Committee received data from its independent compensation consultant indicating that this level of compensation approximates the median of the applicable market data. As a result of this
determination, the Committee decided not to increase Mr. Sands salary for fiscal 2011 or fiscal 2012
15
in order to bring the Chairmans compensation in line with this target. For these same years, the Committee decided to provide Mr. Sands with 100% of his equity awards in the form of
stock options since this form of equity award provides a stronger link to the creation of long-term stockholder value than restricted stock or PSUs based on EPS performance.
The Committee reviewed this approach with its independent compensation consultant in January 2012 and agreed to continue the practice of targeting the Chairmans compensation at 85% of that of the
Chief Executive Officer. As the Chairmans targeted level of compensation had been achieved at that time, in April 2012 the Committee decided to award the Chairman a fiscal 2013 salary increase of 2.5% in order to maintain this level of
compensation. The Committee also determined that Mr. Sands should continue to receive all of his equity awards in the form of stock options.
Elements of Compensation and Analysis of Compensation Decisions
The
elements of compensation for our named executive officers consist of the following:
|
|
|
short-term cash bonus awards;
|
|
|
|
long-term equity-based incentive awards; and
|
|
|
|
perquisites and other benefits.
|
Pay Mix
The Committee believes that a significant portion of each named
executive officers compensation opportunity should be at risk in order to align the interests of our executives with those of our stockholders. As shown below, approximately 76% to 83% of our named executive officers total annual
compensation opportunity is at risk and dependent on our performance results since it is received in the form of short-term cash bonus incentives and long-term equity-based incentives.
Fiscal 2012 Named Executive Officer Pay Mix
(Excluding Chairman of the Board)
Base Salary
The Committee considers base salary adjustments on an annual basis as part of its comprehensive review of executive compensation matters, usually in early April. In April 2011, the Committee approved a
2.5% increase for each named executive officer at that time (other than the
16
Chairman of the Board) based on the Committees consideration of market practices and our performance. The Committee may also approve mid-year base salary adjustments in the event of a new
hire, promotion or other significant change in responsibilities. Mr. Wright received such an increase effective in June 2011 after the Committee completed a special compensation review in connection with Mr. Wrights elevation to the
role of Chief Operating Officer. Salaries for our named executive officers for fiscal 2012 appear in the Summary Compensation Table below.
In April 2012, the Committee also awarded each named executive officer (including the Chairman of the Board) a salary increase of 2.5% for fiscal 2013 after considering market practices and our
performance.
We set base salary levels for our named executive officers to provide current compensation
for their day-to-day services during the fiscal year, taking into account their individual roles and responsibilities as well as their respective experience and abilities. We generally seek to pay our named executive officers base compensation near
the 50
th
percentile suggested by the applicable market
data. The Committee may decide, however, to set an individual executives salary at an amount above or below this level. These variations may occur due to reasons such as the specific expertise of an executive, the complexity or criticality of
the business managed by the executive, an executives tenure in the role, and concerns regarding internal pay equity.
Short-Term Cash Bonus Awards
In addition to their base salaries, our named executive officers, like other eligible members of management, have the opportunity to earn short-term cash bonuses based on Company performance. The
Committee views these bonuses as an integral element of the entire compensation package.
Annual Management Incentive Plan
Fiscal 2012
The AMIP serves as the primary mechanism for short-term performance based incentive bonuses. The
Committee administers an annual program under the plan in order to accomplish the following objectives:
|
|
|
to motivate executive officers to achieve our profit and other key goals;
|
|
|
|
to support our annual planning, budget and strategic planning processes;
|
|
|
|
to provide compensation opportunities that are competitive with those of other beverage alcohol, industry-related or peer companies in order to attract
and retain key executives; and
|
|
|
|
to design a portion of our annual compensation expense to be variable and based on our performance rather than fixed.
|
We believe these goals have been achieved during fiscal 2012. As described below, the Committee ultimately awarded bonus payments for fiscal 2012 based
on comparable EBIT at between threshold and target levels and FCF performance above the target level and near the maximum level established at the beginning of the year.
The AMIP allows the Committee to exercise negative discretion to reduce, but not increase, an award under the plan. In April 2011, the Committee established an eligible bonus pool under the plan for
fiscal 2012 equal to 0.50% of our EBIT for each of Mr. Robert Sands and Mr. Richard Sands and
17
0.25% of our EBIT for each other named executive officer. The plan defines EBIT as the sum of our operating income plus equity in earnings of equity method investees, and the Company views this
as a measure of its profitability. In each case in accordance with the provisions of Internal Revenue Code Section 162(m), the plan provides that the effects of extraordinary items, such as certain unusual or nonrecurring items of gain or loss,
the effects of mergers, acquisitions, divestitures, spin-offs or significant transactions, among other items specified in the plan, are excluded in calculating EBIT for this purpose. Consistent with the plan, no individual award for a fiscal year
may exceed $5 million and the Committee reserved the right to exercise its negative discretion at the end of fiscal 2012 to reduce or eliminate an award to any named executive officer and to consider such quantitative and qualitative factors it
deems appropriate in making such determinations.
In April 2012, the Committee met to review our actual fiscal 2012
performance and to consider payouts to participants. After reviewing our fiscal year performance against the applicable performance criteria, the Committee confirmed that, prior to any application of negative discretion by the Committee, our fiscal
2012 EBIT and corresponding eligible bonus pools for each named executive officer were as follows:
Annual Management
Incentive Plan
Results for Fiscal 2012 Prior to the Application of Negative Discretion
|
|
|
|
|
|
|
Named Executive Officer
|
|
Eligible Bonus Pool Calculation
|
|
Fiscal 2012 EBIT (as
Calculated Pursuant
to the Plan)
|
|
Eligible Bonus Pool
(Before the Application of Negative
Discretion)
|
Chairman of the Board; and President and Chief Executive Officer
|
|
0.50% of fiscal 2012 EBIT
|
|
$768,500,000
|
|
$3,842,500
|
Each other named executive officer
|
|
0.25% of fiscal 2012 EBIT
|
|
$768,500,000
|
|
$1,921,250
|
The Committee then considered whether and how to apply negative discretion to these amounts. In doing so,
the Committee took into account the following:
|
|
|
the named executive officers position;
|
|
|
|
the named executive officers base salary earned in fiscal 2012; and
|
|
|
|
Company performance for fiscal 2012 with respect to certain specified financial performance goals the Committee established at the beginning of the
year.
|
The Committee first considered individual incentive award opportunities depending on the
executives position. The Committee established these opportunities as a percentage of each named executive officers fiscal 2012 base salary with the understanding that they were competitive with the market and placed at risk an
appropriate amount of the executives compensation.
Annual Management Incentive Plan
Fiscal 2012 Award Levels for the Application of Negative Discretion
|
|
|
|
|
|
|
Named Executive Officer
|
|
Threshold
|
|
Target
|
|
Maximum
|
Chairman of the Board; and President and Chief Executive
Officer
|
|
30%
|
|
120%
|
|
240%
|
Each other named executive officer
|
|
17.5%
|
|
70%
|
|
140%
|
18
These percentages assume that the same threshold, target or maximum performance is achieved
for each applicable performance criteria utilized by the Committee in its application of negative discretion. Accordingly, an incentive award payment under the Committees application of negative discretion for fiscal 2012 could have been less
than the threshold percentage set forth above if a threshold level was not achieved for one or more of the criteria.
The
Committee chose comparable EBIT and FCF as the applicable performance criteria to use in its application of negative discretion, as these criteria represent key drivers of our short-term business success. We believe that comparable EBIT serves as a
measure of our profitability, while FCF reflects our ability to generate the cash required to operate the business and pay down debt. Comparable EBIT is EBIT excluding restructuring charges, acquisition-related integration costs and unusual items.
The Committee can also make further adjustments for restructuring and acquisition-related activities that, had they been known at the beginning of the performance period, would have impacted the Companys projections. FCF is equal to net cash
provided by (used in) operating activities less purchases of property, plant and equipment. For all named executive officers, these criteria are reviewed on a company-wide basis. In exercising their negative discretion right, the Committee elected
to apply the following criteria weightings to determine awards for named executive officers: 80% for comparable EBIT and 20% for FCF.
In April 2011, the Committee established target levels for the comparable EBIT and FCF metrics corresponding to the expected level of performance under our fiscal 2012 operating plan. This operating plan
was reviewed with and approved by the Board in April 2011. With the assistance of the Human Resources Department, the Committee had also established at that time a range of performance level award opportunities from threshold to maximum by
considering a variety of factors, including the minimal acceptable growth for each performance criterion, our strategic direction and focus, and the various risks and uncertainties we face. The Committee established performance targets intended to
be appropriately challenging at all levels, including the threshold level, but attainable with increasing difficulty for each level beyond threshold upon achievement of the strategic objectives of the business. Threshold levels were expected to be
appropriately challenging but achievable under normal circumstances. Target levels would be achieved if the Company performed as expected under our operating plan. Maximum levels would be achievable only with exceptional performance versus our
operating plan.
In April 2012, the Committee determined that it would be appropriate to consider these fiscal 2012
performance levels in applying negative discretion. The Committee then completed its application of negative discretion by comparing fiscal 2012 performance against the performance levels the Committee had established at the beginning of fiscal 2012
in April 2011. At the conclusion of its review, the Committee then certified awards to the named executive officers based on the following performance levels and actual results:
19
Annual Management Incentive Plan
Fiscal 2012 Performance Levels and Results under the
Application of Negative Discretion
|
|
|
|
|
|
|
|
|
Performance
Criteria
|
|
Threshold
Performance
Level
|
|
Target
Performance
Level
|
|
Maximum
Performance
Level
|
|
Fiscal 2012
Results
|
Comparable EBIT
|
|
$724.7 million
|
|
$775 million
|
|
$813.8 million
|
|
$768.5 million, equal to 94% of a target payout (for performance
between threshold and target levels)
|
FCF
|
|
$575 million
|
|
$650 million
|
|
$725 million
|
|
$715.7 million, equal to 188% of a target payout (for performance between target and
maximum levels)
|
Based on the weighting of comparable EBIT (80%) and FCF (20%), the Committee applied negative
discretion to reduce awards from the eligible bonus pool amounts to 112.8% of the target payouts. The resulting AMIP awards paid to the named executive officers for fiscal 2012 are set forth below and also appear in the Summary Compensation Table
under the Non-Equity Incentive Plan Compensation column.
Summary of Fiscal 2012 Annual Management Incentive
Plan Results
|
|
|
|
|
Named Executive Officer
|
|
Eligible Bonus Pool ($)
|
|
Actual Awards Based on
Fiscal 2012 Performance
under the Application of
Negative Discretion ($)
|
Robert Sands
|
|
3,842,500
|
|
1,627,656
|
Richard Sands
|
|
3,842,500
|
|
1,597,294
|
Robert Ryder
|
|
1,921,250
|
|
465,647
|
W. Keith Wilson
|
|
1,921,250
|
|
424,999
|
John A. (Jay) Wright
|
|
1,921,250
|
|
450,626
|
Annual Management Incentive Plan Fiscal 2013
In April 2012, the Committee established the bonus pool under the AMIP for fiscal 2013. The Committee adopted the same methodology as it
used for the fiscal 2012 program, establishing a bonus pool equal to 0.5% of our fiscal 2013 EBIT for each of Mr. Robert Sands and Mr. Richard Sands and 0.25% of our fiscal 2013 EBIT for each of our other named executive officers. The
Committee reserved the right to reduce or eliminate awards based on such quantitative and qualitative factors as it deems appropriate. The Committee approved the inclusion of organic net sales growth, in addition to comparable EBIT and FCF, as the
factors it expects to use when calculating fiscal 2013 bonus amounts. Accordingly, it established a range of fiscal 2013 performance levels for each of these measures, which it expects to weight as follows: 40% comparable for EBIT, 40% for organic
net sales growth, and 20% for FCF. In doing so, the Committee determined it would be appropriate to require at least threshold comparable EBIT performance in order for named executive officers to earn any bonus payout for fiscal 2013. The Committee
made these refinements in order to better align the program with our evolving strategic imperatives, which are focused primarily on growing market share and profitability.
20
Other Cash Bonus Awards
In addition to any payments under the AMIP, the Committee has discretion to pay cash bonuses outside of that plan. Such payments might be
paid to executives, for example, after the closing of a significant acquisition or other transaction. No named executive officer received such a payment in fiscal 2012.
Long-Term Equity-Based Incentive Awards
Equity Award Granting
Practices
The Committee (as well as the full Board) has the flexibility to award non-qualified stock options, restricted
stock, stock appreciation rights, and other stock-based awards, such as RSUs and PSUs, under our Long-Term Stock Incentive Plan. The Committee grants options to purchase Class 1 Stock to individuals subject to U.S. taxation, including named
executive officers, and options to purchase Class A Stock to other participants. Prior to fiscal 2013, the Committee granted restricted stock to individuals subject to U.S. taxation, including named executive officers, and RSUs to other
participants. Starting in fiscal 2013, the Committee granted RSUs, instead of restricted stock, to all participants other than non-management directors. All restricted stock and RSUs relate to Class A Stock.
The Committee annually considers equity awards to named executive officers at the regularly scheduled meeting at which it considers
annual compensation-related actions and awards, including the grant of equity awards to other eligible employees around the world. The Committee generally grants new employee awards, awards associated with promotions, and awards associated with
significant business activities at regularly scheduled meetings of the Committee, which may or may not be one at which other compensation-related decisions are made. In addition, the Committee has delegated to our Chief Human Resources Officer
limited authority to grant stock option awards provided that (i) the recipient is at or below the level of Vice President, (ii) any such award is not for more than 5,000 shares of our Class A Stock or Class 1 Stock, and (iii) the
number of shares and the terms and conditions for such grants are consistent with the past practices of the Committee. The Chief Human Resources Officer did not exercise this authority in fiscal 2012. All stock option awards under our Long-Term
Stock Incentive Plan are priced at the closing price of our Class A Stock on the date of grant. (As no trading market exists for the Class 1 Stock, the fair market value of a share of Class 1 Stock is deemed to be equal to the fair market value
of a share of Class A Stock unless the Committee determines otherwise.)
The Board considers equity awards to the
directors pursuant to our non-management director compensation policy as described more fully below under the heading Director Compensation. The Board generally approves these annual awards to directors at the Board meeting immediately
following each Annual Meeting of Stockholders. As directors serve annual terms, such awards are intended to coincide with the beginning of their term of office. For example, the Board approved fiscal 2012 equity awards for directors on July 21,
2011 following the Annual Meeting of Stockholders held earlier that day. The Board may also grant equity awards upon the appointment of a new member of the Board. Since Mr. Wandell was appointed to the Board on the day of the 2011 Annual
Meeting of Stockholders, he received a full annual grant of stock option and restricted stock awards at that time.
21
We do not backdate equity awards and do not time awards of equity so that they are
intentionally made prior to the announcement of favorable information or subsequent to the announcement of unfavorable information.
Named Executive Officer Awards Fiscal 2012
In fiscal 2012, the
Committee granted stock options, restricted stock, and PSUs to our named executive officers. The use of equity-based awards, together with the stock ownership guidelines described below, directly ties our executives interests to the value and
appreciation of our Class A Stock. These awards also assist in the retention of executives as they vest over a period of employment with us. The Committee considers granting equity-based awards as part of its annual review of executive
compensation, usually in early April.
The Committee included stock options as a significant element of annual compensation
for each named executive officer, as the Committee believes the value of options has a direct link to the creation of stockholder value. For each named executive officer other than the Chairman of the Board, the Committee also granted restricted
stock to provide for diversification and retention value in our equity program. Finally, in order to further diversify our mix of equity awards in a manner more consistent with our peer group and to enhance the linkage between executive compensation
and performance, the Committee awarded PSUs to all named executive officers (other than the Chairman of the Board) commencing in fiscal 2011. When doing so, the Committee determined that it would be appropriate to keep overall long-term equity-based
incentive award values constant and to replace a portion of value formerly awarded as stock options with PSUs. In particular, for all named executive officers (except for the Chairman of the Board) the Committee determined that the allocation of
such awards should be approximately 50% in stock options, 25% in restricted stock, and 25% in PSUs. As stated in the Compensation of the Chairman of the Board subsection above, the Committee determined that it would again be advisable
for the Chairman of the Board to receive all of his equity-based awards in the form of stock options.
The Committee awarded
stock options, restricted stock, and PSUs to our named executive officers in fiscal 2012 after taking into account the executives positions and salaries, so that more senior executives received a greater portion of their compensation through
equity-based incentives. Specifically, the Committee awarded options, restricted stock and PSUs using the following methodology:
Fiscal 2012 Long-Term Equity-Based Incentive Award Methodology
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Stock Option
Award
|
|
Restricted Stock
Award
|
|
PSU
Award (at Target)
|
|
|
Chairman of the Board
|
|
7.9 x salary ÷
grant date stock price
|
|
Not applicable
|
|
Not applicable
|
|
|
President and Chief Executive Officer
|
|
4.87 x salary ÷
grant date stock price
|
|
1.0 x salary
÷
grant date stock price
|
|
1.0 x salary ÷
grant date stock price
|
|
|
Each other named executive officer
|
|
3.67 x salary ÷
grant date stock price
|
|
0.6 x salary
÷
grant date stock price
|
|
0.6 x salary ÷
grant date stock price
|
|
|
The Committee selected EPS as the performance metric for the PSUs granted in fiscal 2012, as EPS would
provide a link to the Companys strategic plan and to stockholder value creation, would be a measure of managements performance, and would not duplicate the performance metrics already used in our AMIP. While PSU awards granted in fiscal
2011 contained a three-year performance
22
period and a similar three-year service vesting period, the Committee determined that, due to the difficulty of forecasting EPS results over a three-year period, the PSUs granted in fiscal 2012
would consist of a one-year performance period and a three-year service vesting period. For this purpose, EPS would be calculated under generally accepted accounting principles as adjusted for non-recurring items in accordance with the terms of the
Long-Term Stock Incentive Plan. This amount is consistent with the Companys reported comparable EPS results.
The
Committee established target levels for fiscal 2012 EPS corresponding to the expected level of performance under our operating plan. With the assistance of the Human Resources Department, the Committee had also established at that time a range of
performance level award opportunities from threshold to maximum by considering a variety of factors, including the minimal acceptable growth for EPS, our strategic direction and focus, and the various risks and uncertainties we face. The Committee
established performance targets intended to be appropriately challenging at all levels, including the threshold level, but attainable with increasing difficulty for each level beyond threshold upon achievement of the strategic objectives of the
business. The threshold level, which would equate to a payout of 25% of a target award, was expected to be appropriately challenging but achievable under normal circumstances. The target level would be achieved if the Company performed as expected
under our operating plan. The maximum level, which would equate to a payout of 200% of a target award, was expected to be achievable only with exceptional performance.
In April 2012, the Committee reviewed fiscal 2012 EPS performance against the levels established at the beginning of the fiscal year and certified achievement at 200% of target. Accordingly, if a named
executive officer meets the service vesting requirement that generally requires continued service until May 1, 2014, he will receive 200% of the target amount of his fiscal 2012 PSU award.
Long-Term Stock Incentive Plan
Fiscal 2012 PSU Award Performance Levels and Results
|
|
|
|
|
|
|
|
|
Performance
Criteria
|
|
Threshold
Performance
Level
|
|
Target
Performance
Level
|
|
Maximum
Performance
Level
|
|
Fiscal 2012
Results
|
EPS
|
|
$1.78
|
|
$1.95
|
|
$2.08
|
|
$2.34, equal to 200% of target payout (for performance above the maximum
levels) upon satisfaction of the service vesting requirements
|
More information concerning these stock option awards, restricted stock awards and PSUs can be found
below in the Summary Compensation Table and the Grants of Plan-Based Awards in Fiscal 2012 table.
Named Executive Officer
Awards Fiscal 2013
In April 2012, the Committee determined that it was important to retain a mix of equity awards
as a significant element of compensation for all named executive officers (other than the Chairman of the Board) and that it would be advisable for the Chairman of the Board to continue to receive all of his equity compensation in the form of stock
options.
23
The Committee determined that it would be advisable to retain stock options as a significant
portion of these awards. Instead of issuing restricted stock, however, the Committee decided to issue RSUs, which would not involve the issuance of any actual shares of stock until vesting. The granting of RSUs instead of restricted stock is
consistent with the approach the Company uses for similar awards outside of the U.S. and will be more administratively convenient for the Company and recipients, including the named executive officers. With respect to PSUs, the Committee determined
that it would be appropriate to base awards on a measure of relative stockholder return instead of EPS. Accordingly, the Committee issued fiscal 2013 PSU awards whose ultimate payout level, if any, will depend on our fiscal 2013-2015 performance
with respect to our stock price performance as compared to the other companies in the S&P 500 Index. In addition, an executive must generally remain an employee until May 1, 2015 in order for the award to vest.
In April 2012, the Committee also reconsidered the overall equity grant levels for our named executive officers in connection with a
larger review of our equity granting practices in the U.S. In connection with that review, the Committee lowered stock option award factors for our named executive officers starting in fiscal 2013 by approximately 10% for each named executive
officer, except for our Chairman whose reduced stock option award factor was approximately 5% due to the fact that he receives his entire annual equity award in the form of options.
The Committee awarded stock options, RSUs and PSUs to our named executive officers in fiscal 2013 after taking into account the
executives positions and salaries, so that more senior executives received a greater portion of their compensation through equity-based incentives. Specifically, the Committee awarded options, RSUs and PSUs using the following methodology:
Fiscal 2013 Long-Term Equity-Based Incentive Award Methodology
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Stock Option
Award
|
|
RSU
Award
|
|
PSU
Award (at Target)
|
|
|
Chairman of the Board
|
|
7.51 x salary ÷
grant date stock price
|
|
Not applicable
|
|
Not applicable
|
|
|
President and Chief Executive Officer
|
|
4.38 x salary ÷
grant date stock price
|
|
1.0 x salary
÷
grant date stock price
|
|
1.0 x salary ÷
grant date stock price
|
|
|
Each other named executive officer
|
|
3.30 x salary ÷
grant date stock price
|
|
0.6 x salary
÷
grant date stock price
|
|
0.6 x salary ÷
grant date stock price
|
|
|
Stock Ownership Guidelines
In order to further align the interests of our executive officers, including our named executive officers, with the long-term interests
of our stockholders, the Board has established guidelines for the amounts of our common stock that our executive officers should beneficially own. These guidelines were reviewed by the Board in October 2011, and the guidelines were increased at all
levels. In establishing these guidelines for stock ownership, we considered the length of an executive officers tenure. We allow individuals five years in which to reach the applicable ownership guideline. Ownership guidelines can be satisfied
by the ownership of stock, unvested restricted stock or RSUs, unvested PSUs after the performance period has been completed and the Committee has established the number of shares that will be issued upon satisfaction of the service requirement, and
vested stock options. The current guidelines for our executive officers are as follows:
24
|
|
|
Executive Officer
|
|
Stock Ownership Guideline
|
Chairman
of the Board
|
|
6 times base salary
|
President and Chief Executive Officer
|
|
6 times base salary
|
Executive Vice Presidents
|
|
3 times base salary
|
As of February 29, 2012, each of our named executive officers had either met his respective guideline or was within
the five-year window for doing so.
Other Benefits
Savings Plans and Health and Welfare Benefits
As with other eligible employees, we offer our named executive officers the following retirement savings opportunities and health and welfare benefits in order to help provide a reasonable level of
support during and after employment with us and to attract, maintain, and motivate employees with a competitive benefits package:
|
|
|
Named executive officers who are resident in the U.S. are eligible to participate in our 401(k) and Profit Sharing Plan on the same terms as other
eligible employees. Each year, eligible employees may elect to contribute on a before-tax basis into their plan accounts up to 50% of their annual salary but not in excess of the annual limit set by the Internal Revenue Code and adjusted for
cost-of-living increases. We currently provide a 50% match on the first 6% of salary contributed by the participant to his or her plan account as well as a 3% annual contribution. In addition, at the conclusion of each fiscal year the Committee
analyzes our performance and has discretion to award a supplemental profit sharing contribution.
|
|
|
|
Named executive officers are eligible to participate in our 2005 Supplemental Executive Retirement Plan, which is a non-qualified retirement savings
plan designed to provide participants with the benefit of our annual contributions and supplemental profit sharing contributions that could not be made pursuant to the 401(k) and Profit Sharing Plan due to Internal Revenue Code limitations. Further
detail concerning this plan is provided below under the heading Nonqualified Deferred Compensation.
|
|
|
|
Named executive officers are generally eligible to participate on the same terms as other eligible employees in our 1989 Employee Stock Purchase Plan,
an Internal Revenue Code Section 423 plan that allows employees to purchase shares of Class A Stock at a discount through salary deductions. Due to their levels of stock ownership in our company, neither Mr. Robert Sands nor
Mr. Richard Sands is eligible to participate in this plan.
|
|
|
|
Named executive officers also receive customary employee benefits, such as our medical, dental and vision benefits, long-term and short-term disability
insurance programs, paid time off (vacation/sick leave), and life insurance programs, in the same manner as other eligible employees.
|
25
Severance Benefits
In April 2008, the Committee determined that it was appropriate to standardize our relationships with executive officers and approved the
execution of employment agreements with each of our executive officers, including all of our named executive officers except for Mr. Wright. In approving the execution of these agreements, the Committee believed it appropriate to ensure that
similarly situated executive officers had similar employment terms. In establishing these agreements, we considered information from the Committees compensation consultant at that time regarding existing market practices. During fiscal 2011,
the Committee and its current compensation consultant conducted an in-depth review of these employment terms and current market practices. Although the Committees consultant did not recommend any changes to the existing agreements with our
named executive officers, it did recommend certain changes to future agreements in order to better align with current best practices. Specifically, the Committees independent compensation consultant recommended that we not include in future
agreements severance benefits in the event of retirement, the gross-up of any excise tax payments or the post-employment continuation of airplane or automobile benefits and product allowances. The Committee and management agreed with these
recommendations, and our November 2010 employment agreement with Mr. Wright reflected these revised terms. More information concerning the agreements and amounts payable to named executive officers in the event of a severance or change in
control event are described below under the heading Employment Agreements and Potential Payments Upon Termination or Change-in-Control.
Perquisites
We provide our named executive officers with perquisites and
other personal benefits that we believe to be fair, reasonable and competitive with those offered by comparable companies to their executive officers. The Committee believes these benefits further our objective of attracting, motivating and
retaining key executive talent and assist executive officers in dedicating the appropriate amount of time and attention to business initiatives. Executives pay all personal income taxes that are attributable to the taxable perquisites we provide.
We offer the following benefits to our named executive officers:
|
|
|
Automobile lease or allowance We provide a designated leased vehicle or monthly allowance to our named executive officers. We believe this is
competitive with benefits provided to executives at comparable companies.
|
|
|
|
Car/Driver Services We provide our Chief Executive Officer and our other executive officers with the option of using car/driver services. We
believe this enhances the security of our executive officers and assists them to devote maximum time and attention to our business.
|
|
|
|
Personal use of our corporate aircraft when not needed for business purposes We offer our named executive officers the use of our corporate
aircraft both to enhance their security and to permit them to devote maximum time and attention to our business while away from our offices.
|
|
|
|
Product allowance We provide a product allowance to our named executive officers and believe that the product allowances enhance knowledge and
appreciation of our products and serve as an additional tool to facilitate their role as ambassadors for our brands in both on and off premise retail establishments where making a purchase is important for customer relations and with third parties
who we desire to sample our products. The
|
26
|
current annual allowance is $10,000 for our Chairman of the Board and for our President and Chief Executive Officer and $5,000 for our other named executive officers.
|
|
|
|
Expanded annual physical health review on a voluntary basis We offer our named executive officers an annual comprehensive health physical in
order to encourage them to protect their health.
|
We may provide additional benefits to our named executive
officers in special circumstances, such as the payment of cost of living adjustments, tax preparation fees and tax equalization costs in the event of an expatriate assignment or relocation benefits in the event of a new hire or transfer. The
perquisites and other personal benefits we provided to our named executive officers during fiscal 2012 are quantified below in the Summary Compensation Table.
Accounting Considerations
Accounting for Equity-Based Compensation
We follow the Financial Accounting Standards Board, or FASB, guidance for equity-based compensation in FASB ASC Topic 718
requiring that we recognize in our financial statements the cost resulting from all equity-based payment transactions, including stock options, restricted stock awards, RSUs, and PSUs. As with any significant accounting requirement, we and our Board
have considered and continue to monitor the impact of this guidance. At this time, we continue to believe that equity-based executive compensation serves an important role in our executive compensation program design, and we have not significantly
altered our compensation philosophy or award mix in light of this accounting guidance.
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code provides that certain compensation in excess of $1 million per year paid
to certain executive officers of a company who are employed at year-end may not be deductible by the company unless the compensation qualifies as performance based compensation. The Committee recognizes the benefits of structuring executive
compensation so that, where possible, Section 162(m) does not limit our tax deductions for compensation, and our Long-Term Stock Incentive Plan and Annual Management Incentive Plan have been designed so that the Committee may award performance
based compensation that is not subject to the limits imposed by Section 162(m). Under certain circumstances, such as the payment of cash bonus awards outside of the AMIP and the granting of restricted stock awards and RSUs, the Committee may
decide to award executive compensation in an amount and form that is not deductible under Section
162(m).
Compensation Committee Report
We, the Human Resources Committee of the Board (which committee functions as the compensation committee of the Board), have reviewed and
discussed the Compensation Discussion and Analysis set forth above with the management of the Company, and, based on such review and discussion, have recommended to the Board the inclusion of the Compensation Discussion and Analysis in this Proxy
Statement and, through incorporation by reference to this Proxy Statement, the Companys 2012 Form 10-K.
Human Resources Committee
Jeananne K. Hauswald (Chair)
Jerry Fowden
Keith E. Wandell
27
Compensation Tables and Related Information
The following table sets forth the compensation paid or accrued by us for services rendered for fiscal 2012 (our
fiscal year ended February 29, 2012) by our Chief Executive Officer, our Chief Financial Officer, and our three other most highly compensated executive officers. These individuals are referred to as named executive officers. Where
applicable, the following table also sets forth the compensation paid or accrued by us to these named executive officers for fiscal 2011 (our fiscal year ended February 28, 2011) and fiscal 2010 (our fiscal year ended February 28, 2010).
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
Position
|
|
Year
|
|
Salary
($)
|
|
Stock
Awards
($) (1)
|
|
Option
Awards
($) (2)
|
|
Non-Equity
Incentive Plan
Compensation
($) (3)
|
|
All Other
Compensation
($) (4)
|
|
Total
($)
|
Robert Sands,
President and Chief Executive
Officer
|
|
2012
|
|
1,202,465
|
|
2,318,324
|
|
2,144,045
|
|
1,627,656
|
|
414,391
|
|
7,706,881
|
|
2011
|
|
1,129,647
|
|
2,261,452
|
|
2,144,153
|
|
2,624,397
|
|
310,367
|
|
8,470,016
|
|
2010
|
|
1,102,298
|
|
1,103,235
|
|
3,096,311
|
|
1,269,847
|
|
210,273
|
|
6,781,964
|
Richard Sands,
Chairman of the
Board
|
|
2012
|
|
1,180,034
|
|
|
|
3,409,970
|
|
1,597,294
|
|
504,271
|
|
6,691,569
|
|
2011
|
|
1,136,329
|
|
|
|
3,495,502
|
|
2,639,919
|
|
557,354
|
|
7,829,104
|
|
2010
|
|
1,135,472
|
|
1,136,415
|
|
3,189,486
|
|
1,308,064
|
|
338,829
|
|
7,108,266
|
Robert Ryder,
Executive Vice President
and
Chief Financial Officer
|
|
2012
|
|
589,725
|
|
682,272
|
|
792,436
|
|
465,647
|
|
42,034
|
|
2,572,114
|
|
2011
|
|
554,013
|
|
665,466
|
|
792,479
|
|
750,798
|
|
76,094
|
|
2,838,850
|
|
2010
|
|
540,600
|
|
324,690
|
|
1,062,970
|
|
363,283
|
|
51,422
|
|
2,342,965
|
W. Keith Wilson,
Executive Vice President and
Chief Human
Resources and Administrative Officer
|
|
2012
|
|
538,247
|
|
622,944
|
|
723,263
|
|
424,999
|
|
27,425
|
|
2,336,878
|
|
2011
|
|
505,652
|
|
607,454
|
|
723,286
|
|
685,260
|
|
63,713
|
|
2,585,365
|
|
2010
|
|
493,410
|
|
296,369
|
|
970,194
|
|
331,571
|
|
40,482
|
|
2,132,026
|
John A.
(Jay) Wright,
Executive Vice President and
Chief Operating Officer
|
|
2012
|
|
570,702
|
|
615,116
|
|
714,499
|
|
450,626
|
|
50,134
|
|
2,401,077
|
(1)
|
These amounts represent the full grant date fair value of awards of restricted stock and performance share units (PSUs) granted in each fiscal year noted.
For PSUs, which were first awarded in fiscal 2011, the grant date fair value is based upon the probable outcome of the performance conditions as of the grant date (which was performance at target level). This represents the aggregate amount that we
expected to expense for such grants in accordance with FASB ASC Topic 718 over the grants respective vesting schedules. We do not include any impact of estimated forfeitures related to service-based vesting terms in these calculations. These
amounts reflect our expected aggregate accounting expense for these awards as of the grant date and do not necessarily correspond to the actual values that will be expensed by us or realized by the named executive officers or to our expected
aggregate accounting expense for these awards as of the end of fiscal 2012. If the PSUs granted during fiscal 2012 were included in these calculations at their maximum levels (as opposed to their target levels), the full grant date fair values set
forth for the fiscal 2012 stock awards would be as follows: Mr. Robert Sands $3,477,486; Mr. Richard Sands $0; Mr. Ryder $1,023,408; Mr. Wilson $934,416; and Mr. Wright $922,674. See the
Grants of Plan-Based Awards in Fiscal 2012 table below for additional information regarding awards made during fiscal 2012.
|
(2)
|
These amounts represent the full grant date fair value of awards of stock options granted in each fiscal year noted. This represents the aggregate amount that we
expected to expense for such grants in accordance with FASB ASC Topic 718 over the grants respective vesting schedules. We do not include any impact of estimated forfeitures related to service-based vesting terms in these calculations.
Assumptions used in calculating these values may be found in Note 17 of our financial statements in our 2012 Form 10-K. These amounts reflect our expected aggregate accounting expense for these awards as of the grant date and do not necessarily
correspond to the actual values that will be realized by the named executive officers. See the Grants of Plan-Based Awards in Fiscal 2012 table below for additional information regarding awards made during fiscal 2012.
|
(3)
|
These amounts reflect cash payments made under our Annual Management Incentive Plan in April 2012 for fiscal 2012, in April 2011 for fiscal 2011, and in April 2010 for
fiscal 2010.
|
28
(4)
|
These amounts, as set forth below, include for fiscal 2012 (i) our matching contributions under the 401(k) and Profit Sharing Plan, (ii) our annual
contributions under the 401(k) and Profit Sharing Plan, (iii) our contributions under the 2005 Supplemental Executive Retirement Plan, and (iv) perquisites and other personal benefits. During fiscal 2012, we did not provide to any named
executive officer any tax gross-up or any payments in connection with a separation of employment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
401(k)
and
Profit
Sharing Plan
Matching
Contributions
($)
|
|
|
|
401(k)
and
Profit Sharing
Plan
Annual and
Supplemental
Profit Sharing
Contributions
($)
|
|
|
|
2005
Supplemental
Executive
Retirement
Plan
Contributions
($)
|
|
|
|
Perquisites
and Other
Personal
Benefits
($)
|
|
|
|
Total
All Other
Compensation
($)
|
Robert Sands
|
|
8,818
|
|
|
|
7,350
|
|
|
|
27,419
|
|
|
|
370,804
|
|
|
|
414,391
|
Richard Sands
|
|
8,661
|
|
|
|
7,350
|
|
|
|
26,740
|
|
|
|
461,520
|
|
|
|
504,271
|
Robert Ryder
|
|
8,070
|
|
|
|
7,350
|
|
|
|
9,702
|
|
|
|
16,912
|
|
|
|
42,034
|
W. Keith Wilson
|
|
|
|
|
|
7,350
|
|
|
|
8,213
|
|
|
|
11,862
|
|
|
|
27,425
|
John A. (Jay) Wright
|
|
8,336
|
|
|
|
7,350
|
|
|
|
9,600
|
|
|
|
24,848
|
|
|
|
50,134
|
|
For fiscal 2012, we have changed the methodology for reporting contributions under the 2005 Supplemental Executive Retirement Plan so that, like contributions to our
401(k) and Profit Sharing Plan, such contributions are reported in the year to which they relate, as opposed to the year in which they are approved and ultimately contributed. We have reconciled the All Other Compensation amounts for fiscal 2011 and
fiscal 2010 to be consistent with this approach. Under our previous methodology, the following contributions during fiscal 2012 based on fiscal 2011 performance would have been reported for fiscal 2012: Mr. Robert Sands $86,342;
Mr. Richard Sands $86,994; Mr. Ryder $30,160; Mr. Wilson $25,440; and Mr. Wright $24,888.
|
|
Perquisites and other personal benefits provided to named executive officers in fiscal 2012 are described below and included personal use of our corporate aircraft,
automobile allowances, an automobile lease, car/driver services, physical health review expenses, and product allowances:
|
|
|
|
Mr. Robert Sands $333,718 for personal use of corporate aircraft, $9,969 for automobile allowance, $5,532 for product allowance, and
$21,585 for car/driver services;
|
|
|
|
Mr. Richard Sands $441,551 for personal use of corporate aircraft, $9,969 for automobile allowance, and $10,000 for product allowance;
|
|
|
|
Mr. Ryder $9,969 for automobile allowance, $4,521 for product allowance, and $2,422 for a physical health review;
|
|
|
|
Mr. Wilson $9,969 for automobile allowance and $1,893 for product allowance; and
|
|
|
|
Mr. Wright $16,389 for a leased automobile, $5,000 for product allowance, and $3,459 for a physical health review.
|
|
Values noted above for the personal use of our corporate aircraft represent the aggregate incremental cost to us for such use. The aggregate incremental cost of
personal use of the corporate aircraft includes (i) the cost of fuel (using aircraft-specific average consumption rates per hour and aircraft-specific average fuel costs), (ii) ordinary aircraft maintenance (using aircraft-specific average
maintenance costs per hour), and (iii) specific trip-related expenses, including crew hotel and meals, on-board catering, trip-related landing fees, hangar and parking costs, and similar costs. Since our aircraft are used primarily for business
travel, the methodology excludes fixed, capital and similar costs. In instances where family members or guests fly on our aircraft as additional passengers on business flights with an executive, the aggregate incremental cost to us is
de
minimis
in amount, and no amount is reflected in the table for these additional passengers.
|
29
Grants of Plan-Based Awards in Fiscal 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Possible
Payouts Under
Non-Equity
Incentive
Plan
Awards
|
|
|
|
Estimated Future Payouts Under
Equity Incentive Plan
Awards(2)
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(3)
|
|
|
|
All
Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(4)
|
|
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)(5)
|
|
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
($)(6)
|
|
Name
|
|
Grant
Date
|
|
Target
($)(1)
|
|
|
|
Threshold
(#)
|
|
|
|
Target
(#)
|
|
|
|
Maximum
(#)
|
|
|
|
|
|
|
|
|
|
Robert Sands
|
|
NA
|
|
3,842,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/5/11
|
|
|
|
|
|
14,068
|
|
|
|
56,270
|
|
|
|
112,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,159,162
|
|
|
4/5/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,270
|
|
|
|
|
|
|
|
|
|
|
|
|
1,159,162
|
|
|
4/5/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
274,000
|
|
|
|
20.60
|
|
|
|
|
2,144,045
|
|
Richard Sands
|
|
NA
|
|
3,842,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/5/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
435,780
|
|
|
|
20.60
|
|
|
|
|
3,409,970
|
|
Robert Ryder
|
|
NA
|
|
1,921,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/5/11
|
|
|
|
|
|
4,140
|
|
|
|
16,560
|
|
|
|
33,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
341,136
|
|
|
4/5/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,560
|
|
|
|
|
|
|
|
|
|
|
|
|
341,136
|
|
|
4/5/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,270
|
|
|
|
20.60
|
|
|
|
|
792,436
|
|
W. Keith Wilson
|
|
NA
|
|
1,921,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/5/11
|
|
|
|
|
|
3,780
|
|
|
|
15,120
|
|
|
|
30,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
311,472
|
|
|
4/5/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,120
|
|
|
|
|
|
|
|
|
|
|
|
|
311,472
|
|
|
4/5/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,430
|
|
|
|
20.60
|
|
|
|
|
723,263
|
|
John A. (Jay) Wright
|
|
NA
|
|
1,921,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/5/11
|
|
|
|
|
|
3,733
|
|
|
|
14,930
|
|
|
|
29,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
307,558
|
|
|
4/5/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,930
|
|
|
|
|
|
|
|
|
|
|
|
|
307,558
|
|
|
4/5/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,310
|
|
|
|
20.60
|
|
|
|
|
714,499
|
|
(1)
|
This amount represents the eligible bonus pool that was established for each named executive officer for fiscal 2012 under our Annual Management Incentive Plan. It does
not represent an actual payout to the named executive officer. No threshold or maximum levels were associated with the creation of these eligible bonus pools. The method for determining these amounts as well as the actual awards for named executive
officers for fiscal 2012 are described above under the heading Short-Term Cash Bonus Awards and subheading Annual Management Incentive Plan Fiscal 2012 in the Compensation Discussion and Analysis. The actual award paid
to each named executive officer under the plan for fiscal 2012 is set forth above in the Summary Compensation Table under the Non-Equity Incentive Plan Compensation column.
|
(2)
|
This represents the number of shares of Class A Stock that may be issued to the named executive officer pursuant to the terms of a PSU award granted under our
Long-Term Stock Incentive Plan. The terms of these awards are described above under the heading Long-Term Equity-Based Incentive Awards and subheading Named Executive Officer Awards Fiscal 2012 in the Compensation
Discussion and Analysis and below in the Outstanding Equity Awards at February 29, 2012 table. After the conclusion of fiscal 2012, the Human Resources Committee certified that our performance would equate to a maximum award payout on the
May 1, 2014 vesting date.
|
(3)
|
This represents the number of restricted shares of Class A Stock granted to the named executive officer under our Long-Term Stock Incentive Plan. These restricted
stock awards are scheduled to vest 25% per year at each of the first four annual anniversaries of May 1, 2011. Further information concerning these awards can be found above under the heading Long-Term Equity-Based Incentive
Awards and subheading Named Executive Officer Awards Fiscal 2012 in the Compensation Discussion and Analysis and below in the Outstanding Equity Awards at February 29, 2012 table.
|
(4)
|
This represents the number of options to purchase shares of Class 1 Stock granted to the named executive officer under our Long-Term Stock Incentive
Plan. These options are scheduled to vest and become exercisable 25% per year at each of the first four annual anniversaries of the grant date. Further information concerning these awards can be found above under the heading Long-Term
Equity-Based Incentive Awards and subheading Named Executive Officer Awards Fiscal 2012 in the Compensation Discussion and Analysis and below in the Outstanding Equity Awards at February 29, 2012 table. No trading
market exists for the Class 1 Stock. Class 1 Stock may be converted into shares of Class A Stock on a one-for-one basis, provided such conversion is permitted only if the holder immediately sells the Class A Stock acquired upon conversion
in a market transaction or to an unrelated party in a bona fide private sale. Under the plan, the
|
30
|
fair market value of a share of Class 1 Stock is equal to the fair market value of a share of Class A Stock unless our Human Resources Committee determines otherwise.
|
(5)
|
The exercise price of these options, which relate to Class 1 Stock (for which there is no public trading market), is the closing price of a share of Class A Stock
on the grant date.
|
(6)
|
These amounts represent the full grant date fair value of the PSUs, restricted stock and stock options, respectively, granted in fiscal 2012. This represents the
aggregate amount that we expected to expense for such grants in accordance with FASB ASC Topic 718 over the grants respective vesting schedules. We do not include any impact of estimated forfeitures related to service-based vesting terms in
these calculations. These amounts reflect our expected aggregate accounting expense for these awards as of the grant date and do not necessarily correspond to the actual values that will be expensed by us or realized by the named executive officers.
For PSUs, the grant date fair value is based on the probable outcome of the performance conditions as of the grant date. In particular, we assumed that the PSUs would eventually be paid out at target levels. Assumptions used in calculating these
values with respect to stock option awards may be found in Note 17 of our 2012 Form 10-K.
|
Outstanding Equity Awards at February 29, 2012
The following table presents information concerning outstanding
stock option, restricted stock, RSU and PSU awards to each of the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(1)
|
|
Stock Awards(2)
|
Name
|
|
Grant
Date
|
|
Grant
Type
(3)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price
($)(4)
|
|
Option
Expiration
Date
(5)
|
|
Number of
Shares or
Units of
Stock that
Have Not
Vested
(#)(6)
|
|
Market
Value of
Shares or
Units
of
Stock that
Have Not
Vested
($)(7)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(8)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have
Not
Vested
($)(7)
|
Robert Sands
|
|
4/2/03
|
|
SO
|
|
107,600
|
|
|
|
11.7950
|
|
4/2/13
|
|
|
|
|
|
|
|
|
|
|
4/3/03
|
|
SO
|
|
60,000
|
|
|
|
11.7500
|
|
4/3/13
|
|
|
|
|
|
|
|
|
|
|
4/6/04
|
|
SO
|
|
191,800
|
|
|
|
16.6300
|
|
4/6/14
|
|
|
|
|
|
|
|
|
|
|
12/23/04
|
|
SO
|
|
40,000
|
|
|
|
23.0200
|
|
12/23/14
|
|
|
|
|
|
|
|
|
|
|
4/7/05
|
|
SO
|
|
128,000
|
|
|
|
27.2350
|
|
4/7/15
|
|
|
|
|
|
|
|
|
|
|
4/5/06
|
|
SO
|
|
30,000
|
|
|
|
25.8800
|
|
4/5/16
|
|
|
|
|
|
|
|
|
|
|
4/5/06
|
|
SO
|
|
164,800
|
|
|
|
25.8800
|
|
4/5/16
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
SO
|
|
315,343
|
|
|
|
20.7900
|
|
4/3/17
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
SO
|
|
48,750
|
|
|
|
20.7900
|
|
4/3/17
|
|
|
|
|
|
|
|
|
|
|
4/18/07
|
|
SO
|
|
16,250
|
|
|
|
22.2700
|
|
4/18/17
|
|
|
|
|
|
|
|
|
|
|
7/26/07
|
|
SO
|
|
4,384
|
|
|
|
22.0800
|
|
7/26/17
|
|
|
|
|
|
|
|
|
|
|
1/2/08
|
|
SO
|
|
30,000
|
|
|
|
23.4800
|
|
1/2/18
|
|
|
|
|
|
|
|
|
|
|
4/1/08
|
|
SO
|
|
318,225
|
|
106,075
|
|
19.1200
|
|
4/1/18
|
|
|
|
|
|
|
|
|
|
|
4/1/08
|
|
RS
|
|
|
|
|
|
|
|
|
|
14,150
|
|
309,036
|
|
|
|
|
|
|
4/6/09
|
|
SO
|
|
349,096
|
|
349,094
|
|
11.8500
|
|
4/6/19
|
|
|
|
|
|
|
|
|
|
|
4/6/09
|
|
RS
|
|
|
|
|
|
|
|
|
|
46,550
|
|
1,016,652
|
|
|
|
|
|
|
4/5/10
|
|
SO
|
|
82,583
|
|
247,747
|
|
16.6700
|
|
4/5/20
|
|
|
|
|
|
|
|
|
|
|
4/5/10
|
|
RS
|
|
|
|
|
|
|
|
|
|
50,872
|
|
1,111,044
|
|
|
|
|
|
|
4/5/10
|
|
PSU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,745
|
|
2,222,111
|
|
|
4/5/11
|
|
SO
|
|
|
|
274,000
|
|
20.6000
|
|
4/5/21
|
|
|
|
|
|
|
|
|
|
|
4/5/11
|
|
RS
|
|
|
|
|
|
|
|
|
|
56,270
|
|
1,228,937
|
|
|
|
|
|
|
4/5/11
|
|
PSU
|
|
|
|
|
|
|
|
|
|
112,540
|
|
2,457,874
|
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(1)
|
|
Stock Awards(2)
|
Name
|
|
Grant
Date
|
|
Grant
Type
(3)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price
($)(4)
|
|
Option
Expiration
Date
(5)
|
|
Number of
Shares or
Units of
Stock that
Have Not
Vested
(#)(6)
|
|
Market
Value of
Shares or
Units
of
Stock that
Have Not
Vested
($)(7)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(8)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have
Not
Vested
($)(7)
|
Richard Sands
|
|
4/2/03
|
|
SO
|
|
152,200
|
|
|
|
11.7950
|
|
4/2/13
|
|
|
|
|
|
|
|
|
|
|
4/3/03
|
|
SO
|
|
60,000
|
|
|
|
11.7500
|
|
4/3/13
|
|
|
|
|
|
|
|
|
|
|
4/6/04
|
|
SO
|
|
242,800
|
|
|
|
16.6300
|
|
4/6/14
|
|
|
|
|
|
|
|
|
|
|
12/23/04
|
|
SO
|
|
40,000
|
|
|
|
23.0200
|
|
12/23/14
|
|
|
|
|
|
|
|
|
|
|
4/7/05
|
|
SO
|
|
156,200
|
|
|
|
27.2350
|
|
4/7/15
|
|
|
|
|
|
|
|
|
|
|
4/5/06
|
|
SO
|
|
201,000
|
|
|
|
25.8800
|
|
4/5/16
|
|
|
|
|
|
|
|
|
|
|
4/5/06
|
|
SO
|
|
30,000
|
|
|
|
25.8800
|
|
4/5/16
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
SO
|
|
315,343
|
|
|
|
20.7900
|
|
4/3/17
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
SO
|
|
48,750
|
|
|
|
20.7900
|
|
4/3/17
|
|
|
|
|
|
|
|
|
|
|
4/18/07
|
|
SO
|
|
16,250
|
|
|
|
22.2700
|
|
4/18/17
|
|
|
|
|
|
|
|
|
|
|
7/26/07
|
|
SO
|
|
70,483
|
|
|
|
22.0800
|
|
7/26/17
|
|
|
|
|
|
|
|
|
|
|
1/2/08
|
|
SO
|
|
30,000
|
|
|
|
23.4800
|
|
1/2/18
|
|
|
|
|
|
|
|
|
|
|
4/1/08
|
|
SO
|
|
327,750
|
|
109,250
|
|
19.1200
|
|
4/1/18
|
|
|
|
|
|
|
|
|
|
|
4/1/08
|
|
RS
|
|
|
|
|
|
|
|
|
|
14,575
|
|
318,318
|
|
|
|
|
|
|
4/6/09
|
|
SO
|
|
359,600
|
|
359,600
|
|
11.8500
|
|
4/6/19
|
|
|
|
|
|
|
|
|
|
|
4/6/09
|
|
RS
|
|
|
|
|
|
|
|
|
|
47,950
|
|
1,047,228
|
|
|
|
|
|
|
4/5/10
|
|
SO
|
|
134,630
|
|
403,890
|
|
16.6700
|
|
4/5/20
|
|
|
|
|
|
|
|
|
|
|
4/5/11
|
|
SO
|
|
|
|
435,780
|
|
20.6000
|
|
4/5/21
|
|
|
|
|
|
|
|
|
Robert Ryder
|
|
6/27/07
|
|
SO
|
|
150,000
|
|
|
|
24.1300
|
|
6/27/17
|
|
|
|
|
|
|
|
|
|
|
1/2/08
|
|
SO
|
|
30,000
|
|
|
|
23.4800
|
|
1/2/18
|
|
|
|
|
|
|
|
|
|
|
4/1/08
|
|
SO
|
|
109,275
|
|
35,425
|
|
19.1200
|
|
4/1/18
|
|
|
|
|
|
|
|
|
|
|
4/1/08
|
|
RS
|
|
|
|
|
|
|
|
|
|
4,175
|
|
91,182
|
|
|
|
|
|
|
4/6/09
|
|
SO
|
|
59,923
|
|
119,844
|
|
11.8500
|
|
4/6/19
|
|
|
|
|
|
|
|
|
|
|
4/6/09
|
|
RS
|
|
|
|
|
|
|
|
|
|
13,700
|
|
299,208
|
|
|
|
|
|
|
4/5/10
|
|
SO
|
|
30,523
|
|
91,567
|
|
16.6700
|
|
4/5/20
|
|
|
|
|
|
|
|
|
|
|
4/5/10
|
|
RS
|
|
|
|
|
|
|
|
|
|
14,970
|
|
326,945
|
|
|
|
|
|
|
4/5/10
|
|
PSU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,940
|
|
653,890
|
|
|
4/5/11
|
|
SO
|
|
|
|
101,270
|
|
20.6000
|
|
4/5/21
|
|
|
|
|
|
|
|
|
|
|
4/5/11
|
|
RS
|
|
|
|
|
|
|
|
|
|
16,560
|
|
361,670
|
|
|
|
|
|
|
4/5/11
|
|
PSU
|
|
|
|
|
|
|
|
|
|
33,120
|
|
723,341
|
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(1)
|
|
Stock Awards(2)
|
Name
|
|
Grant
Date
|
|
Grant
Type
(3)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price
($)(4)
|
|
Option
Expiration
Date
(5)
|
|
Number of
Shares
or
Units of
Stock that
Have Not
Vested
(#)(6)
|
|
Market
Value of
Shares or
Units
of
Stock that
Have Not
Vested
($)(7)
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)(8)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)(7)
|
W. Keith Wilson
|
|
12/23/04
|
|
SO
|
|
40,000
|
|
|
|
23.0200
|
|
12/23/14
|
|
|
|
|
|
|
|
|
|
|
4/7/05
|
|
SO
|
|
29,000
|
|
|
|
27.2350
|
|
4/7/15
|
|
|
|
|
|
|
|
|
|
|
4/5/06
|
|
SO
|
|
50,800
|
|
|
|
25.8800
|
|
4/5/16
|
|
|
|
|
|
|
|
|
|
|
4/5/06
|
|
SO
|
|
30,000
|
|
|
|
25.8800
|
|
4/5/16
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
SO
|
|
98,500
|
|
|
|
20.7900
|
|
4/3/17
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
SO
|
|
48,750
|
|
|
|
20.7900
|
|
4/3/17
|
|
|
|
|
|
|
|
|
|
|
4/18/07
|
|
SO
|
|
16,250
|
|
|
|
22.2700
|
|
4/18/17
|
|
|
|
|
|
|
|
|
|
|
1/2/08
|
|
SO
|
|
30,000
|
|
|
|
23.4800
|
|
1/2/18
|
|
|
|
|
|
|
|
|
|
|
4/1/08
|
|
SO
|
|
1,345
|
|
33,250
|
|
19.1200
|
|
4/1/18
|
|
|
|
|
|
|
|
|
|
|
4/1/08
|
|
RS
|
|
|
|
|
|
|
|
|
|
3,800
|
|
82,992
|
|
|
|
|
|
|
4/6/09
|
|
SO
|
|
|
|
109,384
|
|
11.8500
|
|
4/6/19
|
|
|
|
|
|
|
|
|
|
|
4/6/09
|
|
RS
|
|
|
|
|
|
|
|
|
|
12,504
|
|
273,087
|
|
|
|
|
|
|
4/5/10
|
|
SO
|
|
|
|
83,572
|
|
16.6700
|
|
4/5/20
|
|
|
|
|
|
|
|
|
|
|
4/5/10
|
|
RS
|
|
|
|
|
|
|
|
|
|
13,665
|
|
298,444
|
|
|
|
|
|
|
4/5/10
|
|
PSU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,330
|
|
596,887
|
|
|
4/5/11
|
|
SO
|
|
|
|
92,430
|
|
20.6000
|
|
4/5/21
|
|
|
|
|
|
|
|
|
|
|
4/5/11
|
|
RS
|
|
|
|
|
|
|
|
|
|
15,120
|
|
330,221
|
|
|
|
|
|
|
4/5/11
|
|
PSU
|
|
|
|
|
|
|
|
|
|
30,240
|
|
660,442
|
|
|
|
|
John A. (Jay) Wright
|
|
6/29/06
|
|
SO
|
|
30,000
|
|
|
|
26.2400
|
|
6/29/16
|
|
|
|
|
|
|
|
|
|
|
4/3/07
|
|
SO
|
|
51,400
|
|
|
|
20.7900
|
|
4/3/17
|
|
|
|
|
|
|
|
|
|
|
4/1/08
|
|
SO
|
|
51,075
|
|
17,025
|
|
19.1200
|
|
4/1/18
|
|
|
|
|
|
|
|
|
|
|
6/25/08
|
|
RSU
|
|
|
|
|
|
|
|
|
|
2,150
|
|
46,956
|
|
|
|
|
|
|
4/6/09
|
|
SO
|
|
86,710
|
|
86,710
|
|
11.8500
|
|
4/6/19
|
|
|
|
|
|
|
|
|
|
|
4/6/09
|
|
RS
|
|
|
|
|
|
|
|
|
|
7,564
|
|
165,198
|
|
|
|
|
|
|
9/29/09
|
|
RS
|
|
|
|
|
|
|
|
|
|
65,147
|
|
1,422,810
|
|
|
|
|
|
|
4/5/10
|
|
SO
|
|
27,520
|
|
82,560
|
|
16.6700
|
|
4/5/20
|
|
|
|
|
|
|
|
|
|
|
4/5/10
|
|
RS
|
|
|
|
|
|
|
|
|
|
13,500
|
|
294,840
|
|
|
|
|
|
|
4/5/10
|
|
PSU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,000
|
|
589,680
|
|
|
4/5/11
|
|
SO
|
|
|
|
91,310
|
|
20.6000
|
|
4/5/21
|
|
|
|
|
|
|
|
|
|
|
4/5/11
|
|
RS
|
|
|
|
|
|
|
|
|
|
14,930
|
|
326,071
|
|
|
|
|
|
|
4/5/11
|
|
PSU
|
|
|
|
|
|
|
|
|
|
29,860
|
|
652,142
|
|
|
|
|
(1)
|
Options granted prior to April 18, 2007 relate to Class A Stock. Options granted on or after April 18, 2007 relate to Class 1 Stock. The vesting schedule
for all option awards set forth in the table that were not fully vested on February 29, 2012 is 25% per year at each of the first four annual anniversaries of the grant date. In addition, all such options would vest upon a named executive
officers retirement (which requires the executive to be 60 years of age and have 10 years of service with us), death or disability or upon a change in control of the Company.
|
(2)
|
Unvested restricted stock and RSU awards and PSU awards whose performance periods have been completed (but whose related service vesting periods extend beyond fiscal
2012) are reflected in the first two columns of this section, while PSUs with performance periods extending beyond fiscal 2012 are reflected in the final two columns.
|
33
(3)
|
This column indicates whether the award is a stock option award (SO), restricted stock award (RS), restricted stock unit award
(RSU), or performance share unit award (PSU).
|
(4)
|
The exercise price of an option, whether it relates to Class A Stock or Class 1 Stock, is the closing price for a share of Class A Stock on the grant date.
(The information in this table reflects, where applicable, the effects of subsequent stock splits effectuated through stock dividends.) Since October 12, 1999, Class A Stock has traded on the New York Stock Exchange.
|
(5)
|
All option awards set forth in the table were granted with ten-year terms.
|
(6)
|
Except as noted below, the vesting schedule for all restricted stock and RSU awards is 25% per year at each of the first four annual anniversaries of May 1 of
the year of grant. For example, a restricted stock award granted on April 5, 2011 will vest 25% per year at each of the first four annual anniversaries of May 1, 2011. Mr. Wrights September 29, 2009 restricted stock
award is subject to cliff vesting whereby 100% of the award will vest on May 1, 2013. In addition, all such restricted stock and RSU awards would vest upon a name executive officers death or disability or upon a change in control of the
Company.
|
|
The vesting of the April 5, 2011 PSU awards is based on our EPS results for fiscal 2012. In April 2012, the Human Resources Committee certified that the fiscal
2012 EPS results equated to a maximum level of achievement, and the number of units associated with this performance level are included in this column. To receive a payout of any such award, a named executive officer must remain in continuous
employment with us until May 1, 2014. In the event a named executive officer dies or becomes disabled prior to that date or upon a change in control of the Company, the named executive officer would receive a target award equal to half of the
amount set forth in this column.
|
(7)
|
These amounts are based on the closing price of $21.84 for a share of Class A Stock on the New York Stock Exchange on February 29, 2012.
|
(8)
|
The vesting of the April 5, 2010 PSU awards will be determined based on our EPS results for fiscal 2013. To receive a payout of any such award, a named executive
officer must generally remain in continuous employment with us until May 1, 2013. In addition, these PSU awards also provided for the opportunity to earn an interim award if we met a certain EPS target for fiscal 2011 (and if the named
executive officer remained in continuous employment with us until May 1, 2011). As our EPS results for fiscal 2011 exceeded the interim target, each named executive officer earned a payout of 50% of his target PSU award on May 1, 2011. The
shares that were issued during fiscal 2012 in connection with the achievement of the interim PSU target are reflected in the Option Exercises and Stock Vested in Fiscal 2012 table below.
|
|
Based on our fiscal 2012 EPS performance, the amounts set forth in this column represent a payout at the maximum level (less the 50% of the named executive
officers target award that was paid out as the interim award on May 1, 2011). The actual payout, if any, for these PSUs will be determined based on our EPS results for fiscal 2013 (and whether the named executive officers remain in
continuous employment with us until May 1, 2013). Any such actual payout may be less than the amount reflected in this column. In addition, the PSUs would vest at target level (reduced for the 50% of the target award paid out as the interim
award) in the event of a named executive officers earlier death or disability or upon a change in control of the Company. Such target amounts reduced for the interim award for each named executive officer would be as follows: Mr. Robert
Sands 33,915 shares; Mr. Ryder 9,980 shares; Mr. Wilson 9,110 shares; and Mr. Wright 9,000 shares.
|
34
Option Exercises and Stock Vested in Fiscal 2012
The following table presents information concerning stock option exercises and shares of stock acquired upon vesting of
restricted stock, RSU and PSU awards by each of the named executive officers in fiscal 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Option Awards
|
|
Stock
Awards
|
|
Number of
Shares
Acquired on
Exercise (#)
|
|
|
|
Value
Realized on
Exercise ($)(1)
|
|
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
|
|
Value
Realized on
Vesting ($)(2)
|
|
|
Robert
Sands
|
|
|
|
|
|
|
|
|
|
88,298
|
|
|
|
1,976,992
|
|
|
Richard
Sands
|
|
|
|
|
|
|
|
|
|
38,550
|
|
|
|
863,135
|
|
|
Robert
Ryder
|
|
|
|
|
|
|
|
|
|
25,995
|
|
|
|
582,028
|
|
|
W. Keith
Wilson
|
|
244,916
|
|
|
|
1,605,386
|
|
|
|
23,718
|
|
|
|
531,046
|
|
|
John A.
(Jay) Wright
|
|
|
|
|
|
|
|
|
|
19,433
|
|
|
|
435,105
|
|
|
(1)
|
These amounts reflect the aggregate of the differences between the exercise price of the option and the market price of a share of Class A Stock at the time of
exercise for each option exercise by a named executive officer in fiscal 2012.
|
(2)
|
For each named executive officer, these amounts are based on the closing price of $22.39 for a share of Class A Stock on the New York Stock Exchange on
April 29, 2011 (being the last trading day prior to the vesting date of May
1, 2011).
|
Retirement Benefits
We maintain the Constellation Brands, Inc. 401(k) and Profit Sharing Plan, a defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code. This plan allows us to make tax-favored retirement savings available to all eligible U.S. employees, including the named executive officers. Additional detail regarding this plan is included above in
the Compensation Discussion and Analysis under the heading Other Benefits and subheading Savings Plans and Health and Welfare Benefits.
Participants may choose to direct the investment of their accounts under the plan in an array of third-party managed investment options as selected by plan fiduciaries from time to time or through a
self-directed brokerage account. All participants are 100% vested in their contributions, the annual contributions made by us, and any earnings on these contributions. Our matching contributions and any supplemental profit sharing contributions and
the earnings on those amounts vest at the rate of 20% a year at the end of each year of service until the participant is 100% vested. The Human Resources Committee did not award supplemental profit sharing contributions for fiscal 2012. See footnote
(4) to the Summary Compensation Table above for additional information about our contributions to the accounts of the named executive officers.
Nonqualified Deferred Compensation
In addition
to our 401(k) and Profit Sharing Plan, certain U.S. employees, including each of the named executive officers, also are eligible to participate in our 2005 Supplemental Executive Retirement Plan, which is a nonqualified retirement savings plan. The
2005 Supplemental Executive Retirement Plan and its predecessor plan, the Supplemental Executive Retirement Plan (in which employees, including named executive officers, may have balances but to which no further
35
contributions will be made), are designed to provide participants with the benefit of our annual contributions and, if applicable, supplemental profit sharing contributions that could not be made
to the 401(k) and Profit Sharing Plan due to Internal Revenue Code limitations. The 2005 Supplemental Executive Retirement Plan is also designed to satisfy Section 409A of the Internal Revenue Code.
Once a year, participants may choose to direct the investment of their accounts under the plans in an array of third-party managed
investment options that are similar to those offered under our 401(k) and Profit Sharing Plan as selected by the plan fiduciaries from time to time. Contributions to the 2005 Supplemental Executive Retirement Plan currently vest consistently with
the vesting of our matching contributions and supplemental profit sharing contributions under the 401(k) and Profit Sharing Plan. Accounts are distributed in a single lump sum upon a separation from service and in accordance with Section 409A.
For each of fiscal 2012, fiscal 2011, and fiscal 2010, the Company contributed to the 2005 Supplemental Executive Retirement
Plan on behalf of each participant, including the eligible named executive officers, a sum equal to the amount of our annual contribution and the supplemental profit sharing contribution, if any, that a participant would have otherwise received
under the 401(k) and Profit Sharing Plan on the portion of his or her salary that exceeded the applicable Internal Revenue Code limits. Named executive officers do not make contributions under the 2005 Supplemental Executive Retirement Plan. See the
table below for additional information, including information concerning our contributions to the accounts of named executive officers for fiscal 2012 (which can also be found in footnote (4) to the Summary Compensation Table).
|
|
|
|
|
|
|
|
|
Name
|
|
Registrant
Contributions
in Last FY
($)(1)
|
|
Aggregate
Earnings
in Last FY
($)(2)
|
|
Aggregate
Withdrawals /
Distributions
($)
|
|
Aggregate
Balance at
Last FYE
($)(3)
|
Robert Sands
|
|
27,419
|
|
(4,222)
|
|
|
|
793,164
|
Richard
Sands
|
|
26,740
|
|
(2,084)
|
|
|
|
960,051
|
Robert Ryder
|
|
9,702
|
|
1,114
|
|
|
|
65,074
|
W. Keith Wilson
|
|
8,213
|
|
3,555
|
|
|
|
119,220
|
John A. (Jay) Wright
|
|
9,600
|
|
402
|
|
|
|
35,073
|
(1)
|
These amounts reflect our contributions credited to the account of each named executive officer for fiscal 2012 under the 2005 Supplemental Executive Retirement Plan.
All of these amounts are reflected in the Summary Compensation Table for fiscal 2012.
|
(2)
|
These amounts represent the aggregate earnings during fiscal 2012 on the accounts held for each named executive officer under the 2005 Supplemental Executive Retirement
Plan and, if applicable, our predecessor plan. None of these amounts are reflected in the Summary Compensation Table.
|
(3)
|
These amounts represent the fiscal 2012 year end aggregate balance of the accounts held for each named executive officer under the 2005 Supplemental Executive
Retirement Plan and, if applicable, our predecessor plan. The following portions of these amounts were reflected in our Summary Compensation Tables in previous years: Mr. Robert Sands $446,724; Mr. Richard Sands $548,591;
Mr. Ryder $26,661; Mr. Wilson $26,376; and Mr.
Wright $0.
|
Employment Agreements and Potential Payments upon Termination or
Change in Control
Employment Agreements
We entered into employment agreements with each of our named executive officers, with the exception of Mr. Wright, in May 2008. In October 2010, we revised our form of executive employment
36
agreement for incoming executive officers based on a review conducted by our Human Resources Committee with the assistance of its compensation consultant. In November 2010, the Company entered
into an executive employment agreement with Mr. Wright, who became a named executive officer for fiscal 2012.
The
current term of the agreements with each of our named executive officers expires at the end of our fiscal year, at which time they each automatically renew for an additional one year period. Each agreement will continue to renew for successive one
year periods unless we provide at least 180 days notice of a decision not to renew such agreement. These agreements provide for an initial annual base salary level for each executive, which may be adjusted upward by the Human Resources Committee.
The following table presents the minimum annual base salary levels set forth in the employment agreements for the named executive officers:
|
|
|
Name
|
|
Minimum Base Salary ($)
|
Robert Sands
|
|
1,081,500
|
Richard Sands
|
|
1,114,048
|
Robert Ryder
|
|
530,400
|
W. Keith
Wilson
|
|
484,100
|
John A.
(Jay) Wright
|
|
500,000
|
Actual fiscal 2012 salaries for the named executive officers are set forth above in the Summary Compensation Table. The
employment agreements do not provide for any specific perquisites or other personal benefits for the named executive officers during their terms of employment.
The employment agreements with our named executive officers provide the following benefits in the event an executives employment terminates upon the expiration of the agreement or if the
executives employment terminates during the term of the agreement due to death, due to disability (which requires the executive to be unable to perform his duties for six months as determined by the Board), due to retirement (which requires an
executive to be at least 60 years of age and have 10 years of service) for any executive other than Mr. Wright, is terminated by the executive for good reason (as defined in the agreement), or is terminated by us for any reason
other than for cause (as defined in the agreement):
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in the case of Mr. Robert Sands and Mr. Richard Sands, three (3) times base salary and three (3) times the average annual bonus
paid to the executive over the prior three (3) fiscal years; and in the case of all other named executive officers, two (2) times base salary and two (2) times the average annual bonus paid to the executive over the prior three
(3) fiscal years;
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payments equal to the total monthly cost of the executives medical and dental coverage in effect at the time of termination extending for 36
months in the case of Mr. Robert Sands and Mr. Richard Sands and 24 months in the case of the other named executive officers;
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in the case of all named executive officers, outplacement services for a period of up to 18 months;
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in the case of Mr. Robert Sands and Mr. Richard Sands, continued personal use of our corporate aircraft, when not needed for business
purposes, at comparable levels to that provided over the three-year period prior to termination and continued participation in our annual product allowance program, each for a period of three (3) years following
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37
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termination; and in the case of all other named executive officers (with the exception of Mr. Wright), automobile allowance payments and continued participation in our annual product
allowance program, each for a period of two (2) years following termination; and
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in the case of all named executive officers (with the exception of Mr. Wright), payment of any excise taxes, penalties or interest attributed to
payments related to a change in control under Section 4999 of the Internal Revenue Code on a grossed-up basis.
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In order to receive these benefits, a terminating executive must execute a release in favor of us and agree not to compete with us without our consent for a period of three years in the case of
Mr. Robert Sands and Mr. Richard Sands or two years in the case of the other executives. The agreements also prohibit the executives, for a period of 18 months after termination in the case of Mr. Robert Sands or Mr. Richard
Sands and for a period of 12 months after termination in the case of other named executive officers, from seeking to induce our employees to leave employment with us.
Finally, the agreements provide the executives with certain indemnification rights and prohibit the executives, whether during or after employment, from divulging our confidential information or trade
secrets or using such information in connection with any outside business activity.
Additional information concerning these
agreements is set forth above in the Compensation Discussion and Analysis under the heading Other Benefits and subheading Severance Benefits.
Termination or Change in Control
The following information describes and
quantifies certain compensation and benefits for our named executive officers that would have become payable if a named executive officers employment had terminated on February 29, 2012, based on the terms and conditions of our
agreements, plans, and arrangements. These benefits are in addition to the benefits generally available to salaried employees in the U.S., such as our 401(k) and Profit Sharing Plan, 1989 Employee Stock Purchase Plan, life and disability insurance
programs, and medical, dental and vision benefits.
Many factors can affect the nature and amount of the compensation and
benefits that a named executive officer may receive upon a termination of employment. Factors that could affect these amounts include the nature of or basis for such termination, the timing during the year of any such event, whether and when a named
executive officer decides to exercise stock options and our stock price on that date, that named executive officers age and years of service, and the exercise of discretion by the Board or Human Resources Committee regarding the payment of
compensation and benefits. As of February 29, 2012, no named executive officers (other than Mr. Richard Sands and Mr. Wilson) were eligible for retirement as that term is defined in our executive employment agreement and Long-Term
Stock Incentive Plan.
Severance Benefits
. The severance benefits contained in the employment arrangements for named
executive officers are described above in the Compensation Discussion and Analysis under the heading Other Benefits and subheading Severance Benefits and in the Employment Agreements subsection immediately above.
The following table presents information concerning the severance payments each named executive officer would have received if that executive had qualified for benefits
38
under his respective employment agreement in connection with a termination of employment as of February 29, 2012:
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Name
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Severance
Pay
($)(1)
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Medical
and
Dental
($)(2)
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Aircraft /
Automobile
($)(3)
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Product
Allowance
($)(4)
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Outplacement
Services
($)(5)
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Estimated
Tax
Gross-Ups
($)(6)
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Total
($)
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Robert Sands
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8,998,827
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52,269
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638,156
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30,000
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40,000
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9,759,252
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Richard Sands
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8,954,264
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62,222
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1,122,769
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30,000
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40,000
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10,209,255
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Robert Ryder
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2,189,945
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35,700
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19,200
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10,000
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40,000
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2,294,845
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W. Keith Wilson
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1,998,780
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36,966
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19,200
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10,000
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40,000
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2,104,946
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John A. (Jay) Wright
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1,941,863
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34,846
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NA
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NA
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40,000
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NA
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2,016,709
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(1)
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For Mr. Robert Sands and Mr. Richard Sands, these amounts represent (i) three times the base salary in effect on February 29, 2012 and
(ii) three times the average annual bonus paid during the three most recently completed fiscal years (including fiscal 2012). For the other named executive officers, these amounts represent (i) two times the base salary in effect on
February 29, 2012 and (ii) two times the average annual bonus paid during the three most recently completed fiscal years (including fiscal 2012).
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(2)
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For Mr. Robert Sands and Mr. Richard Sands, these amounts represent the total cost of the executives medical and dental coverage in effect on
February 29, 2012 for a period of 36 months. For the other named executive officers, these amounts represent the total cost of the executives medical and dental coverage in effect on February 29, 2012 for a period of 24 months.
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(3)
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For Mr. Robert Sands and Mr. Richard Sands, these amounts represent the estimated aggregate incremental cost of continued personal use of our aircraft for
three years (when not needed by us for business purposes) at comparable levels to that provided over the three year period prior to February 29, 2012 (including fiscal 2012). For the other named executive officers (except for Mr. Wright),
these amounts represent the total of 24 monthly cash payments pursuant to our annual automobile allowance program as in effect on February 29, 2012.
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(4)
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For Mr. Robert Sands and Mr. Richard Sands, these amounts represent the value of continued participation in our annual product allowance program as in effect
on February 29, 2012 for a period of three years. For the other named executive officers (except for Mr. Wright), these amounts represent the value of continued participation in our annual product allowance program as in effect on
February 29, 2012 for a period of two years.
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(5)
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For the named executive officers, these amounts represent the estimated cost to us for providing an executive with 18 months of outplacement services.
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(6)
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We do not believe that any tax gross-ups would have been incurred in connection with a termination of the employment of any named executive officer on February 29,
2012 whether or not due to a change in control. Pursuant to the terms of his employment agreement, Mr. Wright is not eligible for a tax gross-up for any payment due in connection with a change in control.
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Equity Awards.
The unvested equity awards held by each of the named executive officers are described above in the Outstanding
Equity Awards at February 29, 2012 table. We made each of those awards pursuant to our Long-Term Stock Incentive Plan. In accordance with that plan, except as noted below, no accelerated vesting of stock options, restricted stock, RSUs or PSUs
would have occurred as of February 29, 2012 in the event of a voluntary termination by a named executive officer or an involuntary termination by us, whether with or without cause. Generally, a participant, including any named executive
officer, would (i) forfeit any unvested restricted stock, RSUs and PSUs and (ii) would have either 30 days from termination for stock option grants made prior to July 26, 2007 or 90 days from termination for stock option grants made
on or after July 26, 2007 to exercise vested option awards (or, if earlier, until the option expiration date). However, in the event of death, disability or retirement (which requires a participant to be at least 60 years of age and have 10
years of service), the
39
unvested stock options of a plan participant, including any named executive officer, would then vest and remain exercisable for one year from such event (or, if earlier, until the option
expiration date). Mr. Richard Sands and Mr. Wilson would each have been eligible for such retirement treatment regarding their stock options on February 29, 2012. In the event of death or disability (but not retirement) of a
participant, any unvested restricted stock, RSUs and the target number of PSUs of a plan participant would also vest. Generally, unvested stock options, restricted stock, RSUs and, pursuant to the terms of the PSU agreements, the target number of
PSUs will also vest under the plan in the event of a change in control.
The values of (i) unvested in-the-money stock
options, (ii) restricted stock and RSUs, and (iii) the target award under the unvested PSUs held by each of the named executive officers as of February 29, 2012 (based on the New York Stock Exchange closing price of $21.84 for a share
of Class A Stock on February 29, 2012) were as follows:
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Name
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Unvested
In-the-Money
Stock Options ($)
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Restricted Stock
and RSUs ($)
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Unvested
PSUs at Target ($)
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Robert Sands
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5,396,585
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3,665,669
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1,969,640
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Richard Sands
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6,518,043
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1,365,546
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Robert Ryder
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1,892,574
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1,079,005
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579,634
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W. Keith Wilson
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1,729,867
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984,744
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529,183
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John A. (Jay) Wright
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1,452,601
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2,255,875
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522,631
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Annual Management Incentive Plan Payments.
Our Annual Management Incentive Plan is described above
in the Compensation Discussion and Analysis under the heading Short-Term Cash Bonus Awards and subheading Annual Management Incentive Plan Fiscal 2012. The fiscal 2012 award program adopted under the plan provided
that, in the event a named executive officers employment terminated for any reason prior to the end of the fiscal year, the executive would forfeit all rights to an award under the plan for that year. Since February 29, 2012 was the end
of our fiscal year however, a named executive officer whose employment terminated for any reason as of that date could receive an annual payment for fiscal 2012 as determined in accordance with the plan. Actual payouts under the plan to the named
executive officers for fiscal 2012 are set forth above in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
Supplemental Executive Retirement Plans.
Our supplemental executive retirement plans are described above under the heading Nonqualified Deferred Compensation. In the event of any
termination of employment as of February 29, 2012, each named executive officer (or, in the case of death, the named executive officers beneficiary) would be entitled to receive the value of his respective supplemental executive
retirement plan account balance set forth above in the table included under the heading Nonqualified Deferred Compensation. In addition, because February 29, 2012 was the end of our fiscal year, each named executive officer would
also have received a contribution from us to his 2005 Supplemental Executive Retirement Plan account as approved by the Human Resources Committee in April 2012. These contribution amounts are set forth above in the table included under the heading
Nonqualified Deferred Compensation and in footnote (4) to the Summary Compensation Table.
The plans call for
distributions of vested benefits to the named executive officers to be made by lump sum. Payments under the Supplemental Executive Retirement Plan would be made after the
40
termination event, while payments under the 2005 Supplemental Executive Retirement Plan would be made in compliance with Section 409A of the Internal Revenue Code, usually six months after
termination. The plans would automatically terminate, all participant accounts would vest, and we would make similar lump sum payments of account balances to participants in the event of a change in control as defined by the plans. The aggregate
account balance for each named executive officer as of February 29, 2012 is set forth above under the heading Nonqualified Deferred Compensation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Related Persons
Mr. Robert Sands is Chairman of the Board of The New York Wine and Culinary Center, Inc., a registered New York charity located in Canandaigua, New York (the NYWCC). He served as
President of the NYWCC until February 2012. During fiscal 2012, we made $201,875 in donations to the NYWCC, including $150,000 of donations made in tandem with donations from one or more of the other organizations instrumental in the NYWCCs
founding and continuing operations. From time to time, we use the NYWCC and its services for business meetings or other functions. We pay the NYWCC at not more than its standard rates for these services. During fiscal 2012, we paid $16,365 to the
NYWCC for such services. Throughout the course of the year, various employees volunteer at the NYWCC or serve as uncompensated directors or officers of the NYWCC.
By an agreement dated December 20, 1990, we entered into a split-dollar insurance agreement with a trust established by the late Mr. Marvin Sands of which Mr. Robert Sands is the trustee.
Pursuant to the agreement, in prior years we paid the annual premium on an insurance policy held in the trust, and the trust has reimbursed us for the portion of the premium equal to the economic benefit to Mr. Marvin and/or
Mrs. Marilyn Sands, calculated in accordance with the United States Treasury Department rules then in effect. The policy is a joint life policy payable upon the death of Mrs. Marilyn Sands, as the survivor of the two insureds, with a face
value (including paid up additional insurance) of approximately $8.4 million as of February 29, 2012. Pursuant to the terms of the trust, Mr. Robert Sands (in his individual capacity), Mr. Richard Sands and the children of the late
Dr. Laurie Sands (the deceased sister of Mr. Richard Sands and Mr. Robert Sands) will each receive one-third of the proceeds of the policy (after the repayment of the indebtedness to us out of such proceeds as described below) if they
survive Mrs. Marilyn Sands. While we have made no premium payment on behalf of the trust since fiscal 2002, from the inception of the agreement through the end of fiscal 2002, we paid aggregate premiums, net of reimbursements, of approximately
$2.4 million. The aggregate amount of such unreimbursed premiums constitutes indebtedness from the trust to us and is secured by a collateral assignment of the policy. As of February 29, 2012, the net death benefit under the policy was
approximately $3.7 million. Upon the termination of the agreement, whether by the death of Mrs. Marilyn Sands or earlier cancellation, we are entitled to be repaid by the trust the amount of indebtedness outstanding at that time.
Policy Regarding Related Person Transactions
The Board has adopted a written policy providing that all related person transactions or series of similar transactions required to be disclosed pursuant to Regulation S-K Item 404(a) must be
presented to the Corporate Governance Committee of the Board for pre-approval or ratification. The policy requires each of our directors and executive officers to notify the General Counsel promptly and, wherever possible, in advance of the
occurrence of any potential related person transaction in which such director or executive officer is directly or indirectly involved.
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The General Counsel is responsible for reviewing all potential related person transactions
and taking reasonable steps to ensure that all related person transactions requiring disclosure under Regulation S-K Item 404(a) are presented to the Corporate Governance Committee for pre-approval or ratification by members of the committee in
their discretion at the committees next regularly scheduled meeting or, if deemed appropriate, by consent in lieu of a meeting. No director may engage in a vote to pre-approve or ratify any related person transaction in which he or she or any
member of his or her immediate family has a material interest; provided, however, that such director must provide any information concerning such related person transaction that the Corporate Governance Committee may reasonably request. If a
potential related person transaction involves the General Counsel, the Chief Financial Officer assumes the responsibilities of the General Counsel under the policy with respect to that transaction.
The Corporate Governance Committee may consider all factors it deems relevant when determining whether to approve or ratify a related
person transaction. In the context of evaluating potential transactions, the Corporate Governance Committee may consider, among other factors, the nature of the transaction and the related persons interest in the transaction, the size of the
transaction, whether we are able to engage in a comparable transaction with an unaffiliated party on more favorable terms, the benefit of the transaction to us, and the impact of the transaction on the related person. We are not aware of any related
person transaction required to be reported under Regulation S-K Item 404(a) since the beginning of fiscal 2012 that has not been pre-approved or ratified pursuant to this policy.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who beneficially own
more than 10% of a registered class of our equity securities, to file with the Securities and Exchange Commission reports of ownership and changes in ownership of our Class A Stock, Class B Stock or Class 1 Stock. Executive officers, directors
and greater than 10% stockholders are required to furnish us with copies of all such reports they file. Based solely upon review of copies of such reports furnished to us and related information, we believe all filing requirements were complied with
in a timely manner during fiscal 2012, except that Mr. Robert Sands and Mr. Richard Sands each inadvertently had one late Form 4 filing involving one transaction.
PROPOSAL 1 ELECTION OF DIRECTORS
Director Nominees
The Board has nominated nine (9) directors to be elected by the stockholders at the
Meeting to hold office until the next Annual Meeting of Stockholders and until their successors are elected and qualified. The nominees for election to the Board are Mr. Jerry Fowden, Mr. Barry A. Fromberg, Ms. Jeananne K.
Hauswald, Mr. James A. Locke III, Mr. Richard Sands, Mr. Robert Sands, Mr. Paul L. Smith, Mr. Keith E. Wandell and Mr. Mark Zupan, all of whom are currently serving as directors of the Company until the
Meeting and until their successors are elected and qualified. Of the nine nominees, Mr. Fromberg, Ms. Hauswald and Mr. Smith have been designated as the three (3) nominees to be elected by the holders of Class A Stock,
voting as a separate class. The remaining six (6) nominees are to be elected by the holders of Class B Stock, voting as a separate class.
Each of these nominees was recommended to the Board by the Corporate Governance Committee. In making its recommendation, the Corporate Governance Committee considered (i) the
42
experience, qualifications, attributes and skills of each nominee as set forth in the biographies below, (ii) each directors past performance on and contributions to the Board, and
(iii) which director nominees should be presented for election by the holders of Class A Stock and which director nominees should be presented for election by the holders of Class B Stock. Management does not anticipate that any of the
nominees will become unavailable for any reason, but if that should occur before the Meeting, proxies will be voted FOR another nominee or nominees to be selected by the Board. The reported age of each nominee as presented in the following
biographies is as of June 8, 2012.
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Jerry Fowden
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Director since 2010
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Mr. Fowden,
age 55, has served as Chief Executive Officer of Cott Corporation, a private label non-alcoholic beverage manufacturer, since February 2009 and as a member of Cotts Board of Directors since March 2009. Prior to that, he served as
President of Cotts international operating segments and Interim President, North America from May 2008 to February 2009, and as Interim President of Cotts United Kingdom operating segment from September 2007 to May 2008. He served as
Chief Executive Officer of Trader Media Group Ltd., a media company, and as a member of its parent Guardian Media Group plcs Board of Directors from 2005 until 2007. From 2001 until 2004, he served in a variety of roles with AB InBev S.A.
Belgium, a beverage alcohol company, including President, European Zone, Western, Central and Eastern Europe from 2003 to 2004, Global Chief Operating Officer from 2002 to 2003 and Chief Executive Officer of Bass Brewers Ltd., a subsidiary of AB
InBev S.A. Belgium, from 2001 to 2002. During the past five years, Mr. Fowden also served as a director of Chesapeake Corporation (now known as Canal Corporation). Mr. Fowden is a current chief executive officer of a public company and
brings to the Board his extensive experience in executive leadership, the beverage industry, and international operations.
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Barry A. Fromberg
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Director since 2006
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Mr. Fromberg, age 57, has served as Chief Financial Officer of Hospitalists Now, Inc., a technology-enabled health care services company, since June
2010. Prior to that, Mr. Fromberg was Chief Financial Officer of Goodman Networks, Inc., a telecommunications services company, from March 2010 through May 2010. Mr. Fromberg served as Executive Vice President and Chief Financial
Officer of Dean Foods Company, a food and beverage company, from 1998 until 2006. From 1995 to 1998, Mr. Fromberg served as Chairman and Chief Executive Officer of a subsidiary of Paging Network, Inc., a provider of wireless communications
services, and from 1993 to 1995 he was Senior Vice President and Chief Financial Officer of Paging Network, Inc. He served as Executive Vice President and Chief Financial Officer of Simmons Communications, Inc., a cable television operator, from
1987 to 1993. He is a Certified Public Accountant. Mr. Fromberg has not served as a director of any other public company during the past five years. Mr. Fromberg brings to the Board extensive accounting, audit and financial reporting
expertise, having served as chief financial officer of a public corporation as well as having held senior financial and leadership roles at a variety of public and private corporations over the course of his career.
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Jeananne K. Hauswald
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Director since 2000
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Ms. Hauswald, age 68, has been a managing partner of Solo Management Group, LLC, a corporate finance and investment management consulting company,
since September 1998. From 1987 to her retirement in 1998, Ms. Hauswald was employed by The Seagram Company Ltd., a beverage and entertainment/communications company, where she served in various positions, including Vice President Human
Resources from 1990 to 1993 and Vice President and Treasurer from 1993 to 1998. Ms. Hauswald currently serves on the Board of Directors of Thomas & Betts Corporation and has not
43
served as a director of any other public company during the past five years. Ms. Hauswald brings to the Board extensive experience in the areas of human resource management, corporate
finance, as well as substantial knowledge of the international beverage alcohol industry.
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James A. Locke III
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Director since 1983
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Mr. Locke,
age 70, has been engaged in the practice of business and corporate law, including primarily mergers and acquisitions, since 1971. Currently, Mr. Locke is Senior Counsel to the law firm of Nixon Peabody LLP. From 1996 through January 2008, he
was a partner with Nixon Peabody LLP. He is located in the Rochester, New York office of the firm. Nixon Peabody LLP is the Companys principal outside counsel. Prior to joining Nixon Peabody LLP, Mr. Locke practiced law in Rochester as a
partner with another law firm. Mr. Locke has not served as a director of any other public company during the past five years. Mr. Locke brings to the Board his extensive knowledge in the areas of business and corporate law, corporate
governance, and mergers and acquisitions. He also has had direct experience with the Company and its management since the Company first became a public company, including through his nearly 30 years of service on the Board. As a result, he is able
to have a broad understanding of and provide insight and guidance with respect to the Companys development and strategies. He currently serves as the lead director.
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Richard Sands, Ph.D.
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Director since 1982
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Mr. Sands,
age 61, is the Chairman of the Board of the Company. He has been employed by the Company in various capacities since 1979. Mr. Sands was elected Chairman of the Board in September 1999. He served as Chief Executive Officer from October
1993 to July 2007, as President from May 1986 to December 2002, as Chief Operating Officer from May 1986 to October 1993, and as Executive Vice President from 1982 to May 1986. Mr. Sands has not served as a director of any other public company
during the past five years. Mr. Sands is the brother of Robert Sands, the Chief Executive Officer, and a son of the Companys founder, the late Marvin Sands. He is also a significant stockholder of the Company. Mr. Sands brings to the
Board a depth and breadth of knowledge of the Company based on his more than 30-year career, which includes over 13 years of service as Chief Executive Officer. Mr. Sands has extensive experience with the Companys management, operations
and strategic direction, as well as substantial knowledge regarding the beverage alcohol industry.
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Robert Sands
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Director since 1990
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Mr. Sands,
age 53, is President and Chief Executive Officer of the Company. He was appointed Chief Executive Officer in July 2007 and was appointed President in December 2002. Mr. Sands also served as Chief Operating Officer from December 2002 to July
2007, as Group President from April 2000 through December 2002, as Chief Executive Officer, International from December 1998 through April 2000, as Executive Vice President from October 1993 through April 2000, as General Counsel from June 1986
to May 2000, and as Vice President from June 1990 through October 1993. Mr. Sands has not served as a director of any other public company during the past five years. Mr. Sands is the brother of Richard Sands, the Chairman of the Board,
and a son of the Companys founder, the late Marvin Sands. He is also a significant stockholder of the Company. Mr. Sands brings to the Board over 25 years of experience in a variety of legal, operational and management roles at the
Company, including approximately five years of service as Chief Executive Officer. He also possesses substantial knowledge of, and has extensive relationships within, the beverage alcohol industry.
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Paul L. Smith
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Director since 1997
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Mr. Smith,
age 76, retired from Eastman Kodak Company in 1993 after working there for 35 years. Mr. Smith was employed in various positions at Eastman Kodak Company, the last of which was from
44
1983 to 1993, when he served as Senior Vice President and Chief Financial Officer. Also from 1983 to 1993, he served on the Board of Directors of Eastman Kodak Company. Mr. Smith served a
term on the Financial Accounting Standards Advisory Council. Mr. Smith currently serves on the Board of Directors of Home Properties, Inc. and has not served as a director of any other public company during the past five years. As a former
chief financial officer of an international company, Mr. Smith brings to the Board extensive accounting, audit and financial reporting expertise that is complemented by his extensive experience serving as a director of public companies,
including approximately 15 years of service on our Board.
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Keith E. Wandell
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Director since 2011
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Mr. Wandell,
age 62, is Chairman of the Board, Chief Executive Officer and President of Harley-Davidson, Inc., a global motorcycle manufacturer. He has served as Chairman since February 2012 and as CEO, President and a director since 2009. Mr. Wandell was
formerly the President and Chief Operating Officer of Johnson Controls, Inc., a global manufacturer of automotive, power and building solutions from 2006 to 2009. He also served at Johnson Controls as Executive Vice President from 2005 to 2006,
Corporate Vice President from 1997 to 2005, President of the Automotive Experience business from 2003 to 2006, and President of the Power Solutions business from 1998 to 2003. Mr. Wandell is a current chief executive officer of a public company
and brings to the Board his expertise in executive leadership, international business matters, operations and oversight of a global premium brand. He is also a director of Dana Holding Corporation.
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Mark Zupan, Ph.D.
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Director since 2007
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Mr. Zupan,
age 52, is Dean of the William E. Simon Graduate School of Business Administration at the University of Rochester. He has held this position since January 2004. Mr. Zupan previously served as Dean and Professor of Economics at the University of
Arizonas Eller College of Management from 1997 to 2003. Prior to that, Mr. Zupan taught at the University of Southern Californias Marshall School of Business, where he also served as Associate Dean of masters degree programs.
Mr. Zupan served as a member of the Board of Directors of PAETEC Holding Corp. from 2006 until 2011 and has not served as a director of any other public company during the past five years. Mr. Zupan brings to the Board an in-depth
knowledge of economics, significant leadership experience having served as dean at two prestigious business schools, and a high level of financial literacy.
Additional information concerning the director nominees is set forth under the headings Certain Relationships and Related Transactions above and The Board of Directors and Committees of
the Board below. For information with respect to the number of shares of the Companys common stock beneficially owned by each of the above named director nominees, see the tables and the footnotes thereto under the heading
Beneficial Ownership above.
Director Compensation
Our compensation program for non-management members of the Board currently runs on an annual cycle starting with the first Board meeting
following the Annual Meeting of Stockholders and includes compensation in the form of cash, restricted stock, and stock options.
The cash component of non-management director compensation currently consists of (i) an annual retainer of $60,000, payable in quarterly installments of $15,000, (ii) a Board meeting fee of
$2,500 for each Board meeting attended, (iii) a committee meeting fee of $1,500 for each meeting
45
attended, and (iv) an annual fee of $13,500 (payable in quarterly installments of $3,375) to the Chair of the Audit Committee, an annual fee of $11,000 (payable in quarterly installments of
$2,750) to the Chair of the Human Resources Committee, and an annual fee of $9,000 (payable in quarterly installments of $2,250) to the Chair of the Corporate Governance Committee.
Equity awards are another element of non-management director compensation. Equity awards in the form of stock options, stock appreciation
rights, restricted stock, and other stock-based awards are available for grant under our Long-Term Stock Incentive Plan. Each non-management director currently receives annually, if and as approved by the Board, a stock option grant and a restricted
stock award. Under our current compensation program for non-management directors, (i) the annual stock option grant is not to exceed the number of option shares for Class 1 Stock obtained by dividing $140,000 by the closing price of a share of
Class A Stock on the date of the grant and (ii) the annual restricted stock award is not to exceed the number of restricted shares obtained by dividing $60,000 by the closing price of a share of Class A Stock on the date of grant.
While the Board has the flexibility to determine at the time of each grant the vesting provisions for that grant, historically the stock option grants vest six (6) months following the date of grant and the restricted stock awards vest one
(1) year following the date of grant.
Consistent with this compensation program, on July 21, 2011 we awarded a
stock option to purchase up to 6,517 shares of Class 1 Stock to each non-management director who then served on the Board. These awards reflected an exercise price of $21.48 per share and an exercise period of January 21, 2012 through
July 21, 2021. In addition, on July 21, 2011 each non-management director who then served on the Board also received 2,793 restricted shares of Class A Stock. On the date of these grants, the closing price of Class A Stock was
$21.48 per share. Subject to applicable provisions in the award document, the restricted stock will vest on July 21, 2012 or earlier in the event a director dies or becomes disabled, we undergo a change in control, or the directors term
expires without him or her being renominated other than for cause. As Mr. Wandell joined the Board on July 21, 2011, he received both of these grants.
We reimburse our directors for reasonable expenses incurred in connection with attending Board and Board committee meetings. We also provide our directors with complimentary products having a value of up
to $5,000 per year.
Our current non-management directors are Mr. Fowden, Mr. Fromberg, Ms. Hauswald,
Mr. Locke, Mr. Smith, Mr. Wandell, and Mr. Zupan. The remaining two directors, Mr. Robert Sands and Mr. Richard Sands, who are also employees of the Company, receive no additional compensation for serving as directors.
The Board is expected to consider director compensation at a future Board meeting at which time the compensation paid to
directors may be modified. The Corporate Governance Committee advises the Board with regard to compensation of non-management directors. That committee engaged Towers Watson to assist with its review and analysis of director compensation data and to
provide advice on matters relating to non-management director compensation during fiscal 2012. Management personnel within the Human Resources Department support the Corporate Governance Committee and the Board in their work concerning
non-management director compensation. Executive officers, including the Chairman of the Board, the President and Chief Executive Officer, the Executive Vice President and General Counsel, and the Executive Vice President and Chief Human Resources
and Administrative Officer, may make recommendations or provide information to, or answer questions from, the Corporate Governance Committee and the Board regarding non-management director compensation.
46
Director Compensation in Fiscal 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
or Paid in
Cash
($)
|
|
|
|
Stock
Awards
($)(1)
|
|
|
|
Option
Awards
($)(2)
|
|
|
|
All Other
Compensation
($)(3)
|
|
|
|
Total
($)
|
Jerry Fowden
|
|
86,500
|
|
|
|
59,994
|
|
|
|
50,632
|
|
|
|
|
|
|
|
197,126
|
Barry A.
Fromberg
|
|
92,500
|
|
|
|
59,994
|
|
|
|
50,632
|
|
|
|
|
|
|
|
203,126
|
Jeananne K. Hauswald
|
|
101,000
|
|
|
|
59,994
|
|
|
|
50,632
|
|
|
|
|
|
|
|
211,626
|
James A.
Locke III
|
|
92,500
|
|
|
|
59,994
|
|
|
|
50,632
|
|
|
|
|
|
|
|
203,126
|
Paul L. Smith
|
|
108,750
|
|
|
|
59,994
|
|
|
|
50,632
|
|
|
|
|
|
|
|
219,376
|
Keith E.
Wandell (4)
|
|
48,000
|
|
|
|
59,994
|
|
|
|
50,632
|
|
|
|
|
|
|
|
158,626
|
Mark Zupan
|
|
92,500
|
|
|
|
59,994
|
|
|
|
50,632
|
|
|
|
|
|
|
|
203,126
|
(1)
|
These amounts represent the full grant date fair value of awards of restricted stock granted in fiscal 2012. This represents the aggregate amount that we expected to
expense for such grants in accordance with FASB ASC Topic 718 over the grants respective vesting schedules. We do not include any impact of estimated forfeitures related to service-based vesting terms in these calculations. These amounts
reflect our expected aggregate accounting expense for these awards as of the grant date and do not necessarily correspond to the actual values that will be expensed by us or realized by the directors. The aggregate number of shares of unvested
restricted stock held at the end of fiscal 2012 by each director was 2,793.
|
(2)
|
These amounts represent the full grant date fair value of awards of stock options granted in fiscal 2012. This represents the aggregate amount that we expected to
expense for such grants in accordance with FASB ASC Topic 718 over the grants respective vesting schedules. We do not include any impact of estimated forfeitures related to service-based vesting terms in these calculations. Assumptions used in
calculating these values may be found in Note 17 of our financial statements in our 2012 Form 10-K. All fiscal 2012 option awards to directors fully vested during fiscal 2012, and we completely expensed these awards during fiscal 2012. These amounts
reflect our aggregate accounting expense for these awards and do not necessarily correspond to the actual values that will be realized by the directors. The aggregate number of shares subject to option awards outstanding at the end of fiscal 2012
for each non-management director was: Mr. Fowden 16,730; Mr. Fromberg 41,737; Ms. Hauswald 51,563; Mr. Locke 51,563; Mr. Smith 47,049; Mr. Wandell 6,517; and Mr. Zupan
36,321.
|
(3)
|
The value of perquisites and other personal benefits provided to each of our non-management directors for fiscal 2012 was less than $10,000.
|
(4)
|
Mr. Wandell joined the Board on July 21, 2011, the date of our 2011 Annual Meeting of Stockholders.
|
Compensation Committee Interlocks and Insider Participation
During all of fiscal 2012, Ms. Hauswald served as Chairperson of the Human Resources Committee of the Board and Mr. Fowden has
served as a member of the Human Resources Committee. Mr. Wandell has served as a member of the Human Resources Committee since July 21, 2011. None of these individuals are or have ever been officers or employees of the Company. None of our
executive officers served on the compensation committee or the board of directors of any company that had one or more of its executive officers serving as a member of our Human Resources Committee or Board during fiscal 2012.
The Board of Directors and Committees of the Board
On December 19, 2003, the Board adopted revised Board of Directors Corporate Governance Guidelines containing categorical
standards for determining director independence. These standards, which were most recently revised on October 5, 2011, are designed to satisfy the applicable
47
requirements of the Securities and Exchange Commission and the New York Stock Exchange. The Board of Directors Corporate Governance Guidelines, including the categorical standards, are
available on our website at
www.cbrands.com/investors/corporate-governance
.
The Board has affirmatively determined
that each current member of the Board, other than Mr. Robert Sands and Mr. Richard Sands, meets the categorical standards set by the Board to qualify as an independent director. Therefore, each director, other than Mr. Robert Sands
and Mr. Richard Sands, is independent, and a majority of the members of the current Board are independent. As part of its oversight of director independence, the Board has considered the following relationships. Mr. Locke serves as Senior
Counsel to our principal outside counsel, Nixon Peabody LLP, and as an uncompensated director of Friends of the Constellation Brands-Marvin Sands Performing Arts Center, Inc. (CMAC). CMAC is a registered New York charity to which we make
payments for naming rights and for food and entertainment at CMAC events and for which several of our employees serve as uncompensated officers or directors or otherwise volunteer their time. In the past, we have also made donations to this charity.
During fiscal 2012, one of our subsidiaries entered into an arms length packaging services agreement with Cott Corporation, where Mr. Fowden serves as Chief Executive Officer. During fiscal 2012, we made donations of less than $75,000 to
the University of Rochester. Mr. Richard Sands serves as a member of the Board of Trustees of that entity and Mr. Zupan serves as Dean of the William E. Simon Graduate School of Business Administration at the University of Rochester. We
also made donations of less than $10,000 to the George Eastman House. Messrs. Locke and Smith serve as uncompensated members of the Board of Directors of that charity. These relationships are not considered to be material relationships that would
impair a directors independence under our categorical standards of independence.
Our Board of Directors Corporate
Governance Guidelines provide that there is no pre-determined policy as to whether or not the roles of Chairman of the Board and Chief Executive Officer should be separate and, if the roles are to be separate, whether or not the Chairman of the
Board should be a non-management director. If the Chief Executive Officer serves as Chairman of the Board or if there is a separate Chairman of the Board who is also a member of management, our Corporate Governance Guidelines provide for the
designation of one of the independent directors as lead director. The lead director schedules and presides at executive sessions of non-management directors (and, if any non-management director is not independent, executive sessions of independent
directors) and, as required, facilitates communication between other members of the Board and the Chairman of the Board or the Chief Executive Officer. Since our Chairman of the Board, Mr. Richard Sands, serves as a member of management, a lead
director has been designated. Currently, Mr. Locke serves in this capacity. Our Corporate Governance Guidelines provide that there is no fixed schedule for the rotation of the lead director, although rotation may be desirable from time to time.
We believe this structure is appropriate as it provides us with a Chairman who is a significant stockholder and has provided more than 30 years of service to us, including over 13 years of service as Chief Executive Officer; a current Chief
Executive Officer who is also a significant stockholder and has provided more than 25 years of service to us in a variety of roles, including approximately five years of service as Chief Executive Officer; as well as an independent lead director to
oversee executive sessions of the Board and to facilitate communications as necessary among management and non-management directors.
The Board held seven (7) meetings during fiscal 2012. In addition, the non-management members of the Board, all of whom are independent, meet periodically in regularly scheduled sessions without
management. Stockholders or other interested parties may arrange to communicate directly
48
with the directors, the lead director, or the non-management directors as a group by writing to them in the care of Constellation Brands, Inc., 207 High Point Drive, Building 100, Victor, New
York 14564. We will forward all such communications (other than unsolicited advertising materials).
Committees of the Board
include a standing Audit Committee, Corporate Governance Committee and Human Resources Committee. Each member of these committees is independent in accordance with the applicable requirements of the New York Stock Exchanges listing standards,
the Securities and Exchange Commission, and the categorical standards of independence contained within our Board of Directors Corporate Governance Guidelines. In addition, each committee operates under a written charter that was approved by
the Board and is available on our website at
www.cbrands.com/investors/corporate-governance
.
During fiscal 2012, each
of the incumbent directors attended at least 75% of the total number of meetings held by the Board and each committee of the Board on which he or she served during his or her period of service. Our directors are encouraged to attend each Annual
Meeting of Stockholders, and all directors attended our 2011 Annual Meeting of Stockholders (other than Mr. Wandell who was subsequently elected to the Board by a unanimous vote by the Board of Directors at their meeting immediately following
the 2011 Annual Meeting of Stockholders).
Audit Committee.
The Audit Committee is a standing committee currently
composed of Mr. Smith (Chair), Mr. Fromberg and Mr. Zupan, each of whom the Board has determined is (i) independent (as independence is determined for audit committee members under New York Stock Exchange listing standards) and
(ii) an audit committee financial expert. Mr. Zupans relevant experience includes serving as Dean of the William E. Simon Graduate School of Business Administration at the University of Rochester and as a former member of the Audit
Committee of PAETEC Holding Corp. He also holds a Ph.D. in Economics. Additional information regarding the experience of each committee member is set forth under the heading Director Nominees above. No committee member simultaneously
serves on the audit committees of more than two other public companies. This committee performs the Boards oversight responsibilities as they relate to our accounting policies, internal controls and financial reporting practices. In addition,
this committee maintains a line of communication between the Board and our financial management, internal auditors and independent registered public accounting firm. The Audit Committee held ten (10) meetings during fiscal 2012.
Corporate Governance Committee.
The Corporate Governance Committee is a standing committee currently composed of Mr. Locke
(Chair), Ms. Hauswald and Mr. Smith. This committee functions as the nominating committee of the Board. The Corporate Governance Committee identifies individuals qualified to become Board members consistent with criteria and qualifications
for membership approved by the Board and selects, or recommends that the Board select, director nominees for each annual meeting of stockholders. The Corporate Governance Committee advises the Board concerning the appropriate composition of the
Board and its committees, develops and recommends corporate governance guidelines to the Board, and advises the Board regarding appropriate corporate governance practices and assists the Board in achieving them. Among other matters, this committee
also makes recommendations to the Board with respect to an officer to be designated as Chief Executive Officer, a director to serve as Chairman of the Board, and, if applicable, an independent director to serve as lead director. In addition, this
committee advises the Board with regard to compensation for the non-management directors and reviews related person transactions involving the Company and its directors, officers or significant stockholders. This committee held four
(4) meetings during fiscal 2012.
49
The Corporate Governance Committee identifies potential director candidates from any outside
advisors it may retain, as well as from other members of the Board, executive officers and other contacts. The Corporate Governance Committee has from time to time engaged the services of an independent third-party search firm in order to assist it
in identifying and evaluating potential director candidates who will bring to the Board specific skill sets as established by the Corporate Governance Committee. A third-party search firm identified Mr. Wandell as a potential director
candidate. Mr. Wandells qualifications were subsequently reviewed by the Corporate Governance Committee with the assistance of the search firm, and Mr. Wandell was appointed to the Board effective July 21, 2011 based in part on
the recommendation of the Corporate Governance Committee.
The Corporate Governance Committee will consider director
nominations by our stockholders. Nominations by stockholders must include sufficient biographical information so that the committee can appropriately assess the proposed nominees background and qualifications. In its assessment of potential
candidates, the committee will review the candidates character, wisdom, judgment, ability to make independent analytical inquiries, business experiences, understanding of our business environment, acumen, and ability to devote the time and
effort necessary to fulfill his or her responsibilities, all in the context of the perceived needs of the Board at that time.
Pursuant to our Board of Directors Corporate Governance Guidelines, individual diversity as well as diversity in experience and
areas of expertise are factors that are considered by the Corporate Governance Committee in its assessment of candidates. The Board, however, has not adopted any objective diversity-driven criteria or composition requirements. The Board seeks
individuals having knowledge and experience in such disciplines as finance and accounting, international business, marketing, law, human resources and consumer products. The Board also seeks individuals who bring unique and varied perspectives and
life experiences to the Board. As such, the Corporate Governance Committee assists the Board by recommending prospective director candidates who it believes will enhance the overall diversity of the Board.
To be considered for nomination at the 2013 Annual Meeting of Stockholders, stockholder submissions for nomination should be received in
writing at our offices, to the attention of the Companys Secretary, Constellation Brands, Inc., 207 High Point Drive, Building 100, Victor, New York 14564 no later than February 18, 2013. Potential nominees recommended by a stockholder in
accordance with these procedures will receive the same consideration and be evaluated in the same manner as other potential nominees.
Human Resources Committee.
The Human Resources Committee is a standing committee currently composed of Ms. Hauswald (Chair), Mr. Fowden and Mr. Wandell. This committee functions as
the compensation committee of the Board. The Human Resources Committee fulfills the Boards responsibilities relating to the compensation of our executives, including the Chief Executive Officer, and has engaged a third-party consultant, Towers
Watson, to assist the committee in its review and analysis of executive compensation. Additionally, the Human Resources Committee monitors, among other matters, the following: our human resources policies and procedures as they relate to our goals
and objectives and good management practices; our material policies and procedures which relate to compliance with pertinent human resources laws and regulations, the ethical conduct of the business as it relates to human resources matters, and the
management of human resources capital; and our procedures and internal controls that relate to personnel administration, pay practices and benefits administration. The Human Resources Committee is responsible for evaluating the performance of the
Chief Executive Officer and approves each element of his compensation, as well as the compensation
50
of our other executive officers. This committee presently administers our Long-Term Stock Incentive Plan, Annual Management Incentive Plan, and 1989 Employee Stock Purchase Plan, and reviews our
senior management development and succession plans as well as other important human resources issues. As described above in the Compensation Discussion and Analysis under the heading Long-Term Equity-Based Incentive Awards and subheading
Equity Award Granting Practices, the Human Resources Committee has delegated to our Chief Human Resources Officer limited authority to grant stock option awards in certain circumstances. This committee also reviews with management each
Compensation Discussion and Analysis and, as appropriate, recommends to the Board that it be included in our applicable filings with the Securities and Exchange Commission (SEC). The Human Resources Committee held six (6) meetings
during fiscal 2012.
Risk Oversight
. The Board oversees the management of risks inherent in the operation of our
business, with a focus on the most significant risks that we face. The Board performs this oversight role at multiple levels. In connection with its oversight of our strategic direction as well as operations of our business units and corporate
functions, the Board considers and addresses the primary risks associated with those strategic plans, units and functions on a macro level. In addition, each Board committee addresses the risks specific to the function of that committee. In
particular, the Board committees address the following risks:
|
|
|
As part of its oversight responsibilities, the Audit Committee reviews and assesses our major financial risk exposures and the manner in which such
risks are being monitored and controlled.
|
|
|
|
As part of its oversight of executive compensation matters, the Human Resources Committee considers whether our executive or other compensation
programs and practices give rise to significant risks to us. In April 2012, this committee received a report from its compensation consultant analyzing our executive compensation programs for potential risks created by such programs. The committee
also received a comparable report with respect to our non-executive compensation programs prepared by the human resources, legal, and internal audit departments. This committees review process did not identify any compensation-related risks
that it considered reasonably likely to have a material adverse effect on us.
|
|
|
|
As part of its activities, the Corporate Governance Committee oversees risks related to our governance structure and processes as well as potential
risks arising from related person transactions and our processes for mitigating such risks.
|
We have created
a management committee named the Risk Management Oversight Committee. This committee is comprised of members of management whose job functions relate to a wide variety of risk-sensitive areas, including operations, internal audit, finance,
accounting, legal, and human resources. The committee meets periodically for the purposes of identifying and assessing risks that we face and developing and implementing processes and procedures to manage, mitigate or otherwise address identified
risks. To facilitate the Boards and the Board committees oversight functions as they relate to risk issues, the Risk Management Oversight Committee periodically reports to, and receives comments from, the Board and the Audit Committee.
Compensation Consultant.
As discussed in the Compensation Discussion and Analysis and under the subheading Human
Resources Committee above, the Human Resources Committee directly engaged a compensation consultant, Towers Watson, to assist with its review and analysis of
51
executive compensation matters during fiscal 2012. The scope of services performed generally consisted of the following:
|
|
|
an incentive plan design review;
|
|
|
|
a review of Chairman of the Board compensation;
|
|
|
|
a competitive review of executive compensation;
|
|
|
|
a pay for performance review;
|
|
|
|
an assessment of the difficulty of performance goals;
|
|
|
|
a compensation risk assessment;
|
|
|
|
a review of the Compensation Discussion and Analysis;
|
|
|
|
participation at Human Resources Committee meetings; and
|
|
|
|
periodic updates concerning executive compensation regulations and trends.
|
As discussed under the heading Director Compensation above, the Corporate Governance Committee engaged Towers Watson to
assist with its review and recommendation of non-management director compensation awards in July 2011. The agreement provided that Towers Watson would conduct a competitive review of director pay relative to directors serving at companies within our
executive compensation peer group and include a review of the following:
|
|
|
pay levels by element (e.g., retainer, meeting fees, committee fees);
|
|
|
|
pay levels in aggregate;
|
|
|
|
other pay practices and policies, such as stock ownership guidelines; and
|
|
|
|
recent trends in outside director pay.
|
During fiscal 2012, Towers Watson did not provide us with any significant additional services.
Audit Committee Report
The following
report shall not be deemed incorporated by reference in any filing under the federal securities laws by virtue of any general incorporation of this Proxy Statement by reference and shall not otherwise be treated as filed under the federal securities
laws.
The Audit Committee of the Board provides oversight to our financial reporting process through periodic meetings with
our independent registered public accounting firm, internal auditors and management. Our management is responsible for the preparation and integrity of the financial reporting information and related systems of internal controls. The independent
registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements and our internal control over financial reporting in accordance with the standards of the Public Company Accounting
Oversight Board (United States) and for issuing reports thereon. The Audit Committee, in carrying out its role, relies on our senior management and independent registered public accounting firm.
In connection with the preparation and filing of our 2012 Form 10-K, the Audit Committee met, reviewed and discussed with our management
and with KPMG LLP, our independent registered public accounting firm, our audited financial statements and related disclosures and KPMG LLPs evaluation of our internal control over financial reporting. Also, the Audit Committee discussed with
52
KPMG LLP, with respect to the fiscal year ended February 29, 2012, the matters required to be discussed by Statement on Auditing Standards (SAS) No. 61, as amended by SAS 89
and SAS 90 (AICPA,
Professional Standards
, Vol. 1, Codification of Statements on Auditing Standards AU §380),
Communications with the Audit Committee
, as adopted by the Public Company Accounting Oversight Board in Rule
3200T.
In addition, the Audit Committee has received the written disclosures and the letter from KPMG LLP required by the
Public Company Accounting Oversight Board in Rule 3526,
Communication with Audit Committees Concerning Independence
. The Audit Committee also has discussed with KPMG LLP the independence of that firm as our independent registered
public accounting firm. The Audit Committee has concluded that KPMG LLPs provision of audit and non-audit services to us is compatible with KPMG LLPs independence.
Based on the review and discussions described above, the Audit Committee recommended to the Board that our audited financial statements be included in our 2012 Form 10-K for filing with the Securities and
Exchange Commission.
Audit Committee:
Paul L. Smith (Chair)
Barry A. Fromberg
Mark Zupan
Vote Required
A plurality of the votes cast at the Meeting by the holders of Class A Stock is required for the election of the three (3) directors to be elected by the holders of Class A Stock. A
plurality of the votes cast at the Meeting by the holders of Class B Stock is required for the election of the six (6) directors to be elected by the holders of Class B Stock.
The Board of Directors recommends a vote FOR ALL nominees. Unless authority to vote for one or more of the nominees is
specifically withheld, the shares represented by your proxy, if properly submitted and not revoked, will be voted FOR ALL of the nominees for whom you are entitled to vote.
PROPOSAL 2 RATIFICATION OF THE SELECTION OF KPMG LLP AS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On April 3, 2012, the
Audit Committee determined to engage KPMG LLP to serve as our independent registered public accounting firm for the fiscal year ending February 28, 2013. Although ratification by stockholders of this selection is not required, the selection of
KPMG LLP as our independent registered public accounting firm will be presented to the stockholders for their ratification at the Meeting. If the stockholders do not ratify the selection of KPMG LLP, the Audit Committee will reconsider its choice. A
representative of KPMG LLP is expected to be present at the Meeting and will be given an opportunity to make a statement if he or she so desires and will be available to respond to any appropriate questions.
53
Fees Paid to KPMG LLP
The following table shows the amounts that were billed to us by KPMG LLP during the last two fiscal years for Audit Fees,
Audit-Related Fees, Tax Fees, and All Other Fees, respectively:
|
|
|
|
|
|
|
|
|
Fee Type
|
|
Fiscal Year Ended
February 29, 2012
($)
|
|
|
Fiscal Year Ended
February 28, 2011
($)
|
|
Audit Fees
|
|
|
3,948,237
|
|
|
|
4,604,116
|
|
Audit-Related Fees
|
|
|
371,892
|
|
|
|
179,337
|
|
Tax Fees
|
|
|
84,023
|
|
|
|
124,798
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,404,152
|
|
|
|
4,908,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees.
These amounts relate to the annual audit of our consolidated financial statements
included in our Annual Reports on Form 10-K, annual audit of the effectiveness of our internal control over financial reporting, quarterly reviews of interim financial statements included in our Quarterly Reports on Form 10-Q, services normally
provided by the independent registered public accounting firm in connection with statutory or regulatory filings or engagements for the indicated fiscal year, statutory audits of certain of our subsidiaries, and services relating to filings under
the Securities Act of 1933 and the Securities Exchange Act of 1934.
Audit-Related Fees.
These amounts relate to
professional services for various employee benefit plan audits, an assessment of a system implementation and related controls, and agreed-upon procedures related to the eXtensible Business Reporting Language format.
Tax Fees.
These amounts relate to professional services for tax compliance, tax advice and tax planning.
All Other Fees
. These amounts relate to all products and services provided to the Company by KPMG LLP other than services
disclosed in the categories above. For the years ended February 29, 2012 and February 28, 2011, KPMG LLP did not provide any products or services other than as disclosed above and, consequently, did not bill the Company for any fees other
than as disclosed above.
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy for the pre-approval of audit and non-audit services that may be provided by our independent
registered public accounting firm. The committees policy is to pre-approve all audit and permissible non-audit services provided by KPMG LLP prior to the engagement. Any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget. The Audit Committee has delegated to its Chair authority to pre-approve proposed audit and non-audit services that arise between Audit Committee meetings, provided that the decision to approve
the service is presented at the next scheduled Audit Committee meeting. All audit and non-audit services performed by KPMG LLP during the fiscal years ended February 29, 2012 and February 28, 2011 were pre-approved in accordance with this
policy. These services have included audit services, audit-related services, and tax services. The Audit Committee did not pre-approve any other products or services that did not fall into these categories, and KPMG LLP provided no other products or
services during the past two fiscal years.
54
Vote Required
The adoption of Proposal 2 to ratify the selection of KPMG LLP as our independent registered public accounting firm requires the
affirmative vote of a majority of the votes entitled to be cast by stockholders present in person or represented by proxy at the Meeting. With respect to this proposal, holders of Class A Stock and Class B Stock will vote together as a single
class at the Meeting, with holders of Class A Stock having one (1) vote per share and holders of Class B Stock having ten (10) votes per share.
The Board of Directors recommends a vote FOR the ratification of the selection of KPMG LLP as the Companys independent registered public accounting firm for the fiscal year ending
February 28, 2013. Unless you properly direct otherwise, the shares represented by your proxy, if properly submitted and not revoked, will be voted FOR such proposal.
PROPOSAL 3 ADVISORY VOTE ON EXECUTIVE COMPENSATION
Section 14A of the Securities Exchange Act of 1934 added by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and related Securities and Exchange Commission rules require us to
obtain an advisory vote from our stockholders on the compensation of our named executive officers as disclosed in this Proxy Statement, which is often referred to as a say-on-pay vote.
As described above in the Compensation Discussion and Analysis, we have designed the elements of our executive compensation program to
operate together in a manner that seeks to reward our named executive officers for their respective abilities and day-to-day service, assistance with the achievement of annual goals and financial targets, and contributions toward enhancing long-term
stockholder value. We feel the overall design of our executive compensation program has provided the intended results, and we continue to periodically review the program elements in an effort to maintain or improve the alignment of the executive
compensation program with our strategic imperatives. We believe our compensation is market competitive and has resulted in the attraction and retention of executives who can contribute to our future success. In addition, we believe the program
creates a strong linkage between pay and performance through our bonus and equity awards such that executives will receive higher compensation in more successful periods for the Company and lower compensation during less successful periods.
We conducted our initial say-on-pay vote at the 2011 Annual Meeting of Stockholders. At that meeting, stockholders approved
our executive compensation as disclosed in the 2011 Proxy Statement with more than 94% of the vote being cast in favor of approval. The Committee considered and did not make any changes to our named executive officer compensation program as a result
of that vote.
At the Meeting, we will propose that our stockholders adopt the following resolution:
RESOLVED, that the Companys stockholders approve, on an advisory basis, the compensation of the named
executive officers, as disclosed in the Companys Proxy Statement for the 2012 Annual Meeting of Stockholders pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, including the Compensation
Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.
This vote is not
intended to address specific items of compensation, but rather the overall compensation of our named executive officers and our executive compensation policies and procedures
55
as described in this Proxy Statement. This vote is advisory, which means that the vote is not binding on the Company, the Board, or the Human Resources Committee. Even though it is non-binding,
we will describe in our next Proxy Statement how we considered the results of this vote and how that consideration affected our executive compensation decisions and policies.
The adoption of the foregoing resolution requires the affirmative vote of a majority of the votes entitled to be cast by stockholders present in person or represented by proxy at the Meeting. With respect
to this proposal, holders of Class A Stock and Class B Stock will vote together as a single class at the Meeting, with holders of Class A Stock having one (1) vote per share and holders of Class B Stock having ten (10) votes per
share.
The Board of Directors recommends that the stockholders approve, on an advisory basis, the compensation of the
Companys named executive officers as disclosed in this Proxy Statement and, accordingly, recommends that you vote FOR Proposal 3. Unless you properly direct otherwise, the shares represented by your proxy, if properly submitted and
not revoked, will be voted FOR such proposal.
PROPOSAL 4 PROPOSED AMENDMENT AND
RESTATEMENT OF THE
COMPANYS ANNUAL MANAGEMENT INCENTIVE PLAN
The Human Resources Committee of the Companys Board of Directors has approved, subject to stockholder approval, an amendment and
restatement of the Companys Annual Management Incentive Plan (the Incentive Plan). The purpose of the Incentive Plan is to enable the Company to attract and retain valued Company employees and to provide them with incentives to
attain certain annual financial and performance goals. The Incentive Plan is intended to satisfy the requirements for performance based compensation within the meaning of Section 162(m) of the Internal Revenue Code (Section 162(m)).
The amendment and restatement of the Incentive Plan will (i) add additional performance criteria and refine and clarify
existing performance criteria, (ii) refine and add to the events that constitute an extraordinary item and refine the rules relating to the impact of an extraordinary item on bonus programs, (iii) refine the provisions addressing the
impact of a participants termination of employment on such participants right to all or a portion of a bonus, (iv) refine the provisions addressing the coordination of the Incentive Plan with Section 162(m) and confirm that
provisions designed to comply with Section 162(m) need be applied only to Covered Employees (as defined below), (v) refine the rules that will apply a change in control and conform certain aspects of the change in control provisions with
similar concepts in certain of the Companys debt arrangements, and (vi) make certain other administrative, technical and conforming amendments to the provisions of, and definitions used in, the Incentive Plan.
Section 162(m) requires that stockholders approve the material terms of a performance based incentive compensation plan every five
years if the Company has the ability to change performance targets from year to year. The Incentive Plan was last re-approved by the Companys stockholders on July 26, 2007. Accordingly, by being asked to approve the amendment and
restatement of the Incentive Plan under this proposal, stockholders are being asked again to approve the Incentive Plan.
The
amendment and restatement of the Incentive Plan will become effective upon the approval of the stockholders of the Company. The following discussion summarizes certain provisions of the Incentive Plan as so amended and restated. This summary does
not purport to be complete and is subject to and
56
qualified in its entirety by reference to the full text of the Incentive Plan, which was filed electronically with the Securities and Exchange Commission as an appendix to this Proxy Statement
but is not included in the printed version of this Proxy Statement. A copy of the Incentive Plan is also available from the Companys Secretary at 207 High Point Drive, Building 100, Victor, New York 14564.
Summary of Terms
The Incentive Plan establishes a vehicle for the payment of cash bonuses to participating employees and for tying such bonuses to the performance of the Company with respect to certain performance
criteria. The Incentive Plan is administered by the Human Resources Committee of the Companys Board of Directors, all of whom are outside directors within the meaning of Section 162(m) and are not eligible to participate in
the Incentive Plan.
The Committee establishes specific performance targets corresponding to performance periods for each
employee selected by the Committee to participate in the Incentive Plan. The performance targets are based on one or more performance criteria. The permissible performance criteria under the Incentive Plan consist of the following:
|
|
|
Sales Growth or Net Sales Growth
|
|
Cash Flows from Operating Activities
|
Net Sales*
|
|
Return on Capital
|
Assets or Asset Productivity*
|
|
Return on Equity
|
Operating Expenses / Selling, General and
Administrative Expenses*
|
|
Cost of Goods Sold /
Cost of Product Sold*
|
Cost reductions or cost control
|
|
Return on Invested Capital*
|
Gross Margin or Gross Profit
|
|
Return on Assets / Return on Net Assets
|
Brand Contribution / Contribution after
Marketing*
|
|
Capital Expenditures / Purchases of
property, plant and equipment
|
Operating Income or Net Operating Income
|
|
Net Increase in Cash or Cash Equivalents*
|
Operating Margins / Sales
|
|
Stock Price
|
Return on Operating Revenue
|
|
Market share (volume or value-based)
|
Earnings Before Interest and Taxes
|
|
Total Stockholder Return*
|
Earnings Before Interest, Taxes,
Depreciation and Amortization
|
|
Stockholder Value Added / Economic
Value Added
|
Income Before Income Taxes / Profit
Before Tax*
|
|
Goals relating to acquisitions or
divestitures*
|
Net Income*
|
|
Units sold or depleted
|
Earnings Per Share
|
|
Customer service level*
|
Cash Flow or Free Cash Flow
|
|
Debt Ratio or Debt-to-Equity Ratio*
|
Working Capital or any of its components
(Accounts Receivable, Inventory,
Accounts
Payable)
|
|
New Sales or Depletions or new product
introductions
|
New product introductions or launches*
|
|
|
*
|
Item added by the amendment and restatement of the Incentive Plan.
|
57
Performance criteria may be: (i) established on a corporate, divisional, business unit
or consolidated basis, (ii) measured on an absolute basis or relative basis (e.g., passage of time (such as a year over year growth), as a relative comparison to a peer group, industry index, broad-based index, etc.), (iii) calculated on a
pre-tax or after-tax basis, (iv) calculated on a per share basis, (v) calculated on a generally accepted accounting principles (GAAP) or non-GAAP basis, and/or (vi) calculated for all or a portion of a single year or
calculated over multiple years. To the extent provided in a bonus program, the Committee will adjust performance targets to take into account extraordinary items affecting the Company. Extraordinary items mean:
|
|
|
items presented as such (or other comparable terms) on the Companys audited financial statements;
|
|
|
|
extraordinary, unusual, transition, one-time and/or nonrecurring items of gain or loss (including, but not limited to, charges for reorganizing and
restructuring, discontinued operations and asset write-downs);
|
|
|
|
changes in tax or accounting laws, regulations or principles;
|
|
|
|
the effects of mergers, acquisitions, divestitures, spin-offs or similar significant transactions (including, without limitation, gains or losses on
the disposition of a business or business segment or arising from the sale of assets outside the ordinary course of business);
|
|
|
|
stock split, recapitalization, split-up, or similar change; or
|
To
qualify as an extraordinary item, the item must be identified in the audited financial statements and notes thereto or in the managements discussion and analysis section of the financial statements in a period report filed with the
SEC under the Exchange Act.
Performance targets for Covered Employees (generally, the Chief Executive Officer of
the Company, other officers of the Company subject to the Section 162(m) limitations, and such other officers of the Company as the Committee may designate), must be established while the performance relative to the target remains substantially
uncertain within the meaning of Section 162(m). Concurrently with the selection of the performance targets, the Committee must establish an objective formula or standard for calculating the maximum bonus payable to each participating employee.
The Committee reserves the right to reduce or eliminate a bonus that is to be paid to a Covered Employee. Additionally, the Committee may bifurcate the provisions of the Plan so that the provisions of the Plan that are intended or required to
satisfy the performance based compensation requirements of Section 162(m) are applicable only to bonuses awarded to Covered Employees.
The eligible persons under the Incentive Plan are employees of the Company and its subsidiaries who are selected by the Committee. There are approximately 160 employees currently participating in the
Incentive Plan. The maximum bonus any participating employee can receive in any one fiscal year under the Incentive Plan is $5,000,000. The Incentive Plan may be amended, modified or terminated, in whole or in part, by the Committee from time to
time, but no amendment, modification or termination will be effective without Board and/or stockholder approval if such approval is required to comply with the applicable rules under Section 162(m).
58
Reasons for Approval
The Board of Directors believes that it is desirable and in the best interests of the Company and its stockholders to insure that the
Companys compensation plans comply with the requirements of Section 162(m). Approval of the amendment and restatement of the Incentive Plan is being sought to preserve the Companys ability to deduct performance based compensation
paid to executives. The Board further believes that the Incentive Plan is consistent with the Companys existing policies that establish a relationship between employee compensation and the Companys performance. The Incentive Plan also
serves the Companys interests by granting the Committee discretion both in selecting the criteria by which performance is to be measured and in determining the actual amount of each participating employees bonus within the maximum limits
imposed pursuant to the Incentive Plan.
Vote Required
The adoption of Proposal 4 to approve the amended and restated Annual Management Incentive Plan requires the affirmative vote of a
majority of the votes entitled to be cast by stockholders present in person or represented by proxy at the Meeting. With respect to this proposal, holders of Class A Stock and Class B Stock will vote together as a single class at the Meeting,
with holders of Class A Stock having one (1) vote per share and holders of Class B Stock having ten (10) votes per share.
The Board of Directors recommends that the stockholders approve the amendment and restatement of the Companys Annual Management Incentive Plan in accordance with the periodic approval
requirements of Internal Revenue Code Section 162(m) and, accordingly, recommends that you vote FOR Proposal 4. Unless you properly direct otherwise, the shares represented by your proxy, if properly submitted and not revoked, will
be voted FOR such proposal.
PROPOSAL 5 PROPOSED AMENDMENT AND RESTATEMENT OF THE
COMPANYS LONG-TERM STOCK INCENTIVE PLAN
The Human Resources Committee of the Companys Board of Directors has approved, subject to stockholder approval, an amendment and
restatement of the Companys Long-Term Stock Incentive Plan (the Long-Term Stock Plan). The purpose of the Long-Term Stock Plan is to provide a vehicle for the Company to attract and retain valued Company employees and to provide
them with incentives that are tied to the creation of long-term stockholder value. Relevant aspects of the Long-Term Stock Plan are designed to satisfy the requirements for performance based compensation within the meaning of Section 162(m).
The amendment and restatement of the Long-Term Stock Plan will (i) add additional performance criteria and refine and
clarify existing performance criteria, (ii) refine and add to the events that constitute an extraordinary item and refine the rules relating to the impact of an extraordinary item on performance based Awards (as defined below),
(iii) establish limits on the number of shares that may be granted under an Award to any single participant in a fiscal year, (iv) expressly authorize the award of restricted stock units and performance share units separate from the
category of other stock-based awards, (v) add provisions that require stockholder approval for stock option re-pricings and certain other events, (vi) impose a restriction that no dividends may be paid to a participant on shares of
restricted stock prior to vesting, (vii) add the express flexibility for award
59
agreements to permit the Human Resources Committee to exercise negative discretion with respect to performance based Awards, (viii) provide the Company with a default clawback or
recoupment right where required by law, (ix) refine the provisions addressing the impact of a participants termination of employment on outstanding Awards, (x) refine the provisions addressing the coordination of the
Long-Term Stock Plan with Internal Revenue Code Sections 409A and 162(m) and confirm that provisions designed to comply with Section 162(m) need be applied only to Covered Employees, (xi) grant the Committee the authority in
connection with a merger or acquisition to issue substitute awards in the event that the Company assumes awards granted by another entity, (xii) refine the rules that will apply a change in control and conform certain aspects of the change in
control provisions with similar concepts in certain of the Companys debt arrangements, and (xiii) make certain other administrative, technical and conforming amendments to the provisions of, and definitions used in, the Long-Term Stock
Plan.
Section 162(m) requires that stockholders approve the material terms of an incentive compensation plan every five
years if the Company has the ability to change performance targets from year to year. The Long-Term Stock Plan was last re-approved by the Companys stockholders on July 26, 2007. Accordingly, by being asked to approve the amendment and
restatement of the Long-Term Stock Plan under this proposal, stockholders are being asked again to approve the Long-Term Stock Plan.
The amendment and restatement of the Long-Term Stock Plan will become effective upon the approval of the stockholders of the Company. The following discussion summarizes certain provisions of the
Long-Term Stock Plan as so amended and restated. This summary does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Long-Term Stock Plan, which was filed electronically with the
Securities and Exchange Commission as an appendix to this Proxy Statement but is not included in the printed version of this Proxy Statement. A copy of the Long-Term Stock Plan is also available from the Companys Secretary at 207 High Point
Drive, Building 100, Victor, New York 14564.
Summary of Terms
Awards under the Long-Term Stock Plan may consist of any combination of stock options, stock appreciation rights, restricted stock,
restricted stock units, performance share units or other stock-based awards (collectively, Awards). As used in this section, the phrase Other Stock-Based Awards means all Awards other than stock options, stock appreciation
rights, restricted stock, restricted stock units and performance share units. The aggregate number of shares of the Companys stock available for Awards under the Long-Term Stock Plan is 108,000,000 shares and is not being amended. Awards may
be granted with respect to shares of the Companys Class A Stock or Class 1 Stock. The maximum aggregate number of shares of stock subject to Awards granted under the Long-Term Stock Plan to any one participant during any fiscal year of
the Company are as follows:
|
|
|
|
|
|
Type of Award
|
|
Number of Shares
|
Stock
options
|
|
5,000,000
|
Stock appreciation rights
|
|
1,000,000
|
Restricted
stock
|
|
1,000,000
|
Restricted stock units or performance
share units
|
|
2,000,000
|
Other stock-based awards
|
|
1,000,000
|
60
Awards with respect to the following number of shares of stock were outstanding under the
Long-Term Stock Plan on May 29, 2012:
|
|
|
|
|
|
Type of Award
|
|
|
|
Number of Shares
|
|
Vested and
unvested stock options
|
|
|
|
27,946,987
|
|
Unvested restricted stock
|
|
|
|
1,149,532
|
|
Unvested
restricted stock units
|
|
|
|
705,498
|
|
Unvested performance share units
(1)
|
|
|
|
1,663,605
|
|
(1)
|
Reported at the maximum award level (or 200% of the target award level) for each award.
|
No stock appreciation rights were then outstanding. Based on these figures, plus the number of shares previously issued upon the exercise
of options and stock appreciation rights, the vesting of restricted stock or the vesting of restricted stock units or performance share units, an aggregate of 17,999,301 shares were available for Awards under the Long-Term Stock Plan as of
May 29, 2012. Any Awards granted pursuant to the Long-Term Stock Plan are automatically adjusted to prevent dilution or enlargement in the event of any stock dividend, stock split, reorganization or other event affecting the Companys
capital stock. The market value of the Class A Stock as of May 29, 2012 was $19.51 per share. No trading market exists for the Class 1 Stock.
The Long-Term Stock Plan is generally administered by the Human Resources Committee of the Companys Board of Directors. The Human Resources Committee may delegate its authority to others as provided
in the Long-Term Stock Plan, and the entire Board of Directors may act as the Committee. The amendment and restatement of the Long-Term Stock Plan confirms the Committees authority to delegate administrative or ministerial functions to
officers or employees of the Company. As used in this section, the term Committee means (i) the Human Resources Committee, (ii) a delegate acting under the authority of the Human Resources Committee or (iii) the entire
Board of Directors acting as the Committee, as defined in the Long-Term Stock Plan, as applicable. Under the Long-Term Stock Plan, the Committee is charged with responsibility for selecting the participants and for determining the number and type of
Awards to be granted to each participant, the timing of the Awards, and any other terms and conditions applicable to the Awards.
The persons who are eligible to participate in the Long-Term Stock Plan include directors and employees (including officers) of the Company and its subsidiaries. Currently, seven non-management directors
and approximately 4,400 employees are eligible to participate in the Long-Term Stock Plan; however, only directors and employees selected by the Committee will be granted Awards under the Long-Term Stock Plan. As of May 29, 2012, there were
outstanding Awards granted under the Long-Term Stock Plan with respect to 31,465,622 shares held by approximately 1,300 employees and each of the Companys seven non-management directors.
The Long-Term Stock Plan may be amended, modified or terminated by the Committee from time to time. No amendment, modification or
termination of the Long-Term Stock Plan will be effective without stockholder approval if such approval is required under any applicable law, rule or regulation. The amendment and restatement of the Long-Term Stock Plan adds a requirement that
stockholder approval also be obtained for stock option re-pricings and certain other events. The exercisability of any Award will terminate if the Committee determines that the participant is engaged in competition with the Company or has been
terminated for cause as defined in the Long-Term Stock Plan.
61
Awards previously granted pursuant to the Long-Term Stock Plan will not be affected by the
amendment of the Long-Term Stock Plan and will remain outstanding until they are exercised, expire or otherwise terminate. The following table sets forth the aggregate number of stock options, shares of restricted stock, restricted stock units and
performance share units that have been granted under the Long-Term Stock Plan to certain individuals and groups of individuals at any time through May 29, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual or Group of
Individuals
|
|
Aggregate Granted Number of:(1)
|
|
|
Stock
Options
|
|
|
Shares of
Restricted
Stock
|
|
|
Performance
Share
Units(2)
|
|
|
Restricted
Stock Units
|
|
Robert Sands,
President and Chief Executive Officer
|
|
|
4,615,327
|
|
|
|
273,800
|
|
|
|
345,180
|
|
|
|
48,490
|
|
Richard Sands,
Chairman of the Board
|
|
|
5,475,356
|
|
|
|
154,200
|
|
|
|
|
|
|
|
|
|
Robert Ryder,
Executive Vice President and Chief Financial
Officer
|
|
|
867,230
|
|
|
|
80,620
|
|
|
|
101,580
|
|
|
|
14,270
|
|
W. Keith Wilson,
Executive Vice President and Chief Human
Resources and Administrative Officer
|
|
|
1,238,960
|
|
|
|
73,550
|
|
|
|
92,740
|
|
|
|
13,030
|
|
John A. (Jay) Wright,
Executive Vice President and Chief Operating
Officer
|
|
|
602,320
|
|
|
|
113,207
|
|
|
|
94,240
|
|
|
|
22,790
|
|
All Executive Officers as a
Group
(7 persons) (3)
|
|
|
15,913,273
|
|
|
|
833,677
|
|
|
|
809,520
|
|
|
|
123,270
|
|
All Directors who are not
Executive Officers
as a Group (7 persons)
|
|
|
567,994
|
|
|
|
127,476
|
|
|
|
|
|
|
|
|
|
All employees other than
Executive Officers
as a Group
|
|
|
96,032,561
|
(4)
|
|
|
2,578,316
|
|
|
|
1,158,580
|
|
|
|
1,198,145
|
|
(1)
|
Numbers include all Awards granted even if such Awards expired without exercise, were forfeited or otherwise terminated without shares being issued with respect to such
Awards.
|
(2)
|
Reported at the maximum award level (or 200% of the target award level) for each award.
|
(3)
|
This group consists of the Companys executive officers as of May 29, 2012.
|
(4)
|
This amount includes 306,000 stock appreciation rights granted to employees. No current executive officer or director has received any stock appreciation rights under
the Long-Term Stock Plan.
|
Stock Options
. Under the Long-Term Stock Plan, the Committee may grant Awards
in the form of stock options to purchase shares of Class A Stock and Class 1 Stock. The Committee will, with regard to each stock option, determine the class and number of shares subject to the option, the manner and period during which the
option may be exercised and the exercise price per share of stock subject to the option. The exercise price of stock options granted to participants must be equal to or greater than the fair market value of the shares subject to the stock option on
the date the stock option is granted. For purposes of the Long-Term Stock Plan, the fair market value of a share of Class A Stock is the closing price of the Class A Stock on the New York Stock Exchange or other national stock exchange on
which the Class A Stock is actively traded. The fair market value of a share of Class 1 Stock is equal to the fair market value of a share of Class A Stock unless the Committee determines
62
that such value is not a reasonable proxy for the fair market value of a share of Class 1 Stock, in which case the Committee will determine the fair market value of a share of Class 1 Stock or
establish a methodology for doing so. Unless otherwise determined by the Committee, stock options will become exercisable 25% per year on each of the first four annual anniversaries of the grant (as compared to the default of 20% per year
on each of the first five annual anniversaries as provided in the Long-Term Stock Plan prior to amendment and restatement). The Committee has fixed the terms of recently granted options to employees so that the options vest 25% per year on each
of the first four annual anniversaries of the grant and to non-management directors so that the options fully vest six months after the grant. Upon exercise, the option price may be paid in a manner determined by the Committee, which may include
payment in cash, by delivery of shares of Class A Stock or Class 1 Stock, through a cashless exercise arrangement, or through another method that the Committee deems appropriate. The Long-Term Stock Plan contains provisions to facilitate the
amendment of stock options to purchase shares of Class A Stock so that they represent the right to purchase shares of Class 1 Stock on the same terms.
Stock Appreciation Rights
. The Long-Term Stock Plan authorizes the Committee to grant stock appreciation rights (SARs) either in tandem with a stock option or independent of a stock
option. SARs may be granted with respect to Class A Stock or Class 1 Stock. An SAR is a right to receive a payment equal to the difference between the fair market value of the underlying share on the date the SAR is exercised and the SARs
reference price. A tandem SAR may be granted either at the time of the grant of the related stock option or at any time thereafter during the term of the stock option. Unless otherwise determined by the Committee, an SAR will become exercisable
25% per year on each of the first four annual anniversaries of the grant. The reference price of an SAR will be fixed by the Committee, but the reference price of an SAR must equal or exceed the fair market value of the underlying share on the
date of the grant. Upon the exercise of a stock option as to some or all of the shares covered by a tandem SAR, the related tandem SAR will automatically expire in accordance with the terms and conditions specified in the grant, and vice versa.
Restricted Stock Awards
. The Long-Term Stock Plan authorizes the Committee to grant Awards in the form of restricted
shares of Class A Stock and Class 1 Stock. Such Awards will be subject to such terms, conditions, restrictions, and/or limitations, if any, as the Committee deems appropriate, including restrictions on transferability and continued employment.
The amendment and restatement of the Long-Term Stock Plan adds a restriction that no dividends may be paid to a participant on shares of restricted stock until and unless the participant vests in his or her right to receive such shares.
Restricted Stock Units and Performance Share Units
. The amendment and restatement of the Long-Term Stock Plan expressly authorizes
the Committee to grant Awards in the form of restricted stock units and performance share units relating to shares of Class A Stock and Class 1 Stock. Prior to such amendment and restatement, the Committee granted restricted stock units and
performance share units under its existing authority to grant other stock-based awards. Restricted Stock Units and Performance Share Units are subject to such terms, conditions, restrictions, and/or limitations, if any, as the Committee deems
appropriate, including restrictions on transferability and continued employment. The holder of a restricted stock unit or a performance share unit may receive a payout that is calculated based on the satisfaction of performance goals, service
requirements and/or other terms specified in the Award agreement. The Committee will specify in the Award agreement whether any earned restricted stock units and performance share units will be paid in the form of shares or cash (or in a combination
thereof). The Committee may or may not grant to the holder of restricted stock
63
units or performance share units the right to receive payments corresponding to dividends paid on shares underlying the Award; provided, no dividends may be paid to a participant on any
Restricted Stock Units or Performance Share Units that do not fully vest.
Other Stock-Based Awards
. The Committee may
make Other Stock-Based Awards under the Long-Term Stock Plan. The Other Stock-Based Awards will be subject to such terms, conditions and limitations as the Committee deems appropriate.
Acceleration
. Unless otherwise specified by the Committee in an Award agreement, all awards will vest in full in the event that a
participants employment terminates due to the participants death or disability (as defined in the Long-Term Stock Plan) and, in the case of stock options and SARs only, in the event of the participants
retirement (as defined in the Long-Term Stock Plan). In connection with such accelerated vesting, any Awards that include a performance based vesting schedule will vest assuming that the target level of performance has been
achieved. In the event of a change in control of the Company (as defined in the Long-Term Stock Plan), all of a participants Awards will become immediately vested and exercisable or fully earned at the maximum amount, except as
otherwise determined by the Committee.
Performance Criteria and Targets
. For each restricted stock award, restricted
stock unit, performance share unit and Other Stock-Based Award intended to comply with Section 162(m), the Committee will establish specific performance targets for specified performance periods. The performance targets will be based on one or
more performance criteria. The permissible performance criteria consist of the following:
|
|
|
Sales Growth or Net Sales Growth
|
|
Cash Flows from Operating Activities
|
Net Sales*
|
|
Return on Capital
|
Assets or Asset Productivity*
|
|
Return on Equity
|
Operating Expenses / Selling, General and
Administrative Expenses*
|
|
Cost of Goods Sold /
Cost of Product Sold*
|
Cost reductions or cost control
|
|
Return on Invested Capital*
|
Gross Margin or Gross Profit
|
|
Return on Assets / Return on Net Assets
|
Brand Contribution / Contribution after
Marketing*
|
|
Capital Expenditures / Purchases of
property, plant and equipment
|
Operating Income or Net Operating Income
|
|
Net Increase in Cash or Cash Equivalents*
|
Operating Margins / Sales
|
|
Stock Price
|
Return on Operating Revenue
|
|
Market share (volume or value-based)
|
Earnings Before Interest and Taxes
|
|
Total Stockholder Return*
|
Earnings Before Interest, Taxes,
Depreciation and Amortization
|
|
Stockholder Value Added / Economic
Value Added
|
Income Before Income Taxes / Profit
Before Tax*
|
|
Goals relating to acquisitions or
divestitures*
|
Net Income*
|
|
Units sold or depleted
|
Earnings Per Share
|
|
Customer service level*
|
64
|
|
|
Cash Flow or Free Cash Flow
|
|
Debt Ratio or Debt-to-Equity Ratio*
|
Working Capital or any of its components (Accounts Receivable, Inventory, Accounts Payable)
|
|
New Sales or Depletions or new product introductions
|
New product introductions or launches*
|
|
|
*
|
Item added by the amendment and restatement of the Long-Term Stock Plan.
|
Performance criteria may be: (i) established on a corporate, divisional, business unit or consolidated basis, (ii) measured on an absolute basis or relative basis (e.g., passage of time (such as
a year over year growth), as a relative comparison to a peer group, industry index, broad-based index, etc.), (iii) calculated on a pre-tax or after-tax basis, (iv) calculated on a per share basis, (v) calculated on a GAAP or non-GAAP
basis, and/or (vi) calculated for all or a portion of a single year or calculated over multiple years. Performance targets must be established while the performance relative to the target remains substantially uncertain within the meaning of
Section 162(m) of the Internal Revenue Code. Concurrently with the selection of the performance targets, the Committee must establish an objective formula or standard for calculating the maximum Award granted to each Covered Employee. To the
extent provided in an Award agreement, the Committee will adjust performance targets to take into account extraordinary items affecting the Company. Extraordinary items mean:
|
|
|
items presented as such (or other comparable terms) on the Companys audited financial statements;
|
|
|
|
extraordinary, unusual, transition, one-time and/or nonrecurring items of gain or loss (including, but not limited to, charges for reorganizing and
restructuring, discontinued operations and asset write-downs);
|
|
|
|
changes in tax or accounting laws, regulations or principles;
|
|
|
|
the effects of mergers, acquisitions, divestitures, spin-offs or similar significant transactions (including, without limitation, gains or losses on
the disposition of a business or business segment or arising from the sale of assets outside the ordinary course of business);
|
|
|
|
stock split, recapitalization, split-up, or similar change; or
|
To
qualify as an extraordinary item, the item must be identified in the audited financial statements and notes thereto or in the managements discussion and analysis section of the financial statements in a period report filed with the
SEC under the Exchange Act. The Committee reserves the right to reduce an Award if the Committee deems such reduction is necessary or appropriate.
Covered Employees who are designated by the Committee as participants for a given performance period are only entitled to receive payments of Awards for such period to the extent that the pre-established
objective performance targets set by the Committee for such period are attained. With regard to a particular performance period, the Committee will have the discretion, subject to the Long-Term Stock Plans terms, to select the length of the
performance period, the type(s) of performance criteria to be used, the performance targets that will be used to measure performance for the period, and the performance formula that will be used to determine what portion, if any, of the Award has
been earned for the period. Such discretion shall be exercised by the Committee in writing within the time prescribed by Section 162(m) (generally, the first 90 days of the performance period) and performance for the period will be measured by
the Committee following the end of the performance period.
65
The provisions of the Long-Term Stock Plan may be bifurcated by the Committee so that the
provisions of the Long-Term Stock Plan that are intended or required to satisfy the performance based compensation requirements of Section 162(m) are applicable only to Awards granted to Covered Employees.
U.S. Federal Tax Treatment of Stock Options and SARs
. Stock options granted under the Long-Term Stock Plan are non-qualified stock
options for federal tax purposes. A participant who receives a stock option will not realize income upon the grant of the option. The participant will realize ordinary income at the time of exercise of stock options in the amount of the difference
between the exercise price and the fair market value of the underlying share on the date of exercise multiplied by the number of shares with respect to which the option is exercised. The Company is entitled to a deduction equal to the amount of such
income at the time such income is realized by the participant.
With respect to SARs, participants will not realize any income
at the time of grant. Upon exercise, any cash received and the fair market value on the exercise date of any shares received will constitute ordinary income to the participant. The Company will be entitled to a deduction in the amount of such income
at the time such income is realized by the participant.
Individual income tax consequences may differ with respect to
participants who are resident in jurisdictions outside the United States.
Securities Authorized for Issuance under
Equity Compensation Plans
The following table sets forth information with respect to the Companys compensation
plans under which its equity securities may be issued, as of February 29, 2012. The equity compensation plans approved by security holders include the Long-Term Stock Plan and the Companys Incentive Stock Option Plan, 1989 Employee Stock
Purchase Plan and U.K. Sharesave Scheme.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Plan Category
|
|
Number of
Securities to be
Issued Upon Exercise
of
Outstanding
Options, Warrants
and Rights
|
|
|
Weighted-Average
Exercise Price
of
Outstanding
Options, Warrants
and Rights
|
|
|
Number of Securities
Remaining Available for
Future
Issuance Under
equity Compensation
Plans (excluding
Securities Reflected in
Column (a))
|
|
Equity compensation plans approved by security holders
|
|
|
28,313,004
|
(1)
|
|
$
|
19.03
|
(2)
|
|
|
32,119,590
|
(3)(4)(5)
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
28,313,004
|
|
|
$
|
19.03
|
|
|
|
32,119,590
|
|
(1)
|
Includes 1,178,625 shares of unvested performance share units and 203,082 shares of unvested restricted stock units under the Long-Term Stock Plan. The unvested
performance share units represent the maximum number of shares to be awarded, or 200% of the target shares granted. The Company currently estimates that 200% of the target shares granted will be awarded based upon the current expectations regarding
the achievement of specified performance targets.
|
66
(2)
|
Excludes unvested performance share units and unvested restricted stock units under the Long-Term Stock Plan that can be exercised for no consideration.
|
(3)
|
Includes 7,438,756 shares of Class A Common Stock under the Companys Incentive Stock Option Plan. However, by the current terms of the Incentive Stock Option
Plan, no additional grants of incentive stock options are permitted.
|
(4)
|
Includes 1,715,719 shares of Class A Common Stock under the Companys U.K. Sharesave Scheme. However, by the current terms of the U.K. Sharesave Scheme, no
additional offerings under the U.K. Sharesave Scheme are permitted.
|
(5)
|
Includes 2,233,719 shares of Class A Common Stock under the Companys Employee Stock Purchase Plan remaining available for purchase, of which approximately
126,800 shares are subject to purchase during the current offering period.
|
Reasons for Approval
The Board of Directors believes that it is desirable and in the best interests of the Company and its stockholders to
provide employees and directors with incentives to maintain and enhance the Companys long-term performance. The amendments effected by the amended and restated Long-Term Stock Plan will enable the Company to continue to provide such
incentives. The approval of the amendment and restatement will also benefit the Company by satisfying the requirements of Section 162(m) and thereby preserving the Companys ability to deduct performance based compensation paid to
executives.
Vote Required
The adoption of Proposal 5 to approve the amended and restated Long-Term Stock Incentive Plan requires the affirmative vote of a majority of the votes entitled to be cast by stockholders present in person
or represented by proxy at the Meeting. With respect to this proposal, holders of Class A Stock and Class B Stock will vote together as a single class at the Meeting, with holders of Class A Stock having one (1) vote per share and
holders of Class B Stock having ten (10) votes per share.
The Board of Directors recommends that the stockholders
approve the amendment and restatement of the Companys Long-Term Stock Incentive Plan in accordance with the periodic approval requirements of Internal Revenue Code Section 162(m) and, accordingly, recommends that you vote FOR
Proposal 5. Unless you properly direct otherwise, the shares represented by your proxy, if properly submitted and not revoked, will be voted FOR such proposal.
PROPOSALS 6 AND 7 STOCKHOLDER PROPOSALS
In accordance with applicable regulations, we are including the following stockholder proposals and supporting statements in the forms
proposed by the respective proponents of such proposals.
The Board has considered the stockholder proposals and has recommended a vote against each of the proposals for the reasons set forth following each proposal
. Each of the following
stockholder proposals will be voted on at the Meeting if properly presented by or on behalf of the respective proponent of such proposal.
Proposal 6 Stockholder Proposal Concerning
Equal
Shareholder Voting
Proposal and Stockholder Supporting Statement
:
Mr. Kenneth Steiner of 14 Stoner Avenue, 2M, Great Neck, New York 11021, who has indicated that he owns no less than 500 shares
of our Class A Stock, has given notice that he or his designee intends to make the following stockholder proposal at the Meeting.
67
Equal Shareholder Voting
RESOLVED: Shareholders request that our Board take steps to adopt a plan for all of our companys outstanding
stock to have one-vote per share. This would be all practicable steps including encouragement and negotiation with shareholders, who have 10-votes per share, to request that they relinquish, for the common good of all shareholders, any preexisting
rights, if necessary.
This proposal is not intended to unnecessarily limit our Boards judgment in
crafting the requested change in accordance with applicable laws and existing contracts. This proposal is important because certain shares not owned by the general public have super-sized voting power with 10-votes per share compared to one-vote per
share.
This proposal topic won majority support from our independent, general public shareholders at our
2011 annual meeting.
The danger of giving disproportionate power to insiders is illustrated by Adelphia
Communications. Adelphias dual-class voting stock gave the Rigas family control and contributed to Adelphias participation in one of the most extensive financial frauds ever to take place at a public company. See Securities
and Exchange Commission Litigation Release No. 17627 (July 24, 2002).
The SEC alleged that
Adelphia fraudulently excluded more than $2 billion in bank debt from its financial statements and concealed rampant self-dealing by the Rigas Family. Meanwhile, the price of Adelphia stock collapsed from $20 to 79¢ in
two-years.
With stock having 10-times more voting power our company takes our public shareholder money but
does not let us have an equal voice in our companys management. Without a voice, shareholders cannot hold management accountable.
The merit of this proposal should also be considered in the context of the opportunity for additional improvement in our companys 2011 reported corporate governance in order to make our company more
competitive:
The Corporate Library, an independent investment research firm rated our company Very
High Concern in Takeover Defenses and High Concern in Executive Pay.
The Corporate
Library said there were concerns regarding the compensation paid to the Sands brothers, Chairman Richard Sands and his brother, CEO Robert Sands. In 2010, both received a large grant of options Robert received 330,000 market-priced stock
options and Richard received 538,000 and realized $9 million from the exercise of 932,000 options.
68
Market-priced stock options can provide lucrative financial rewards due to
a rising market alone, regardless of an executives performance. In addition, our company paid for the brothers personal use of the companys plane, totaling $605,000 in 2010. These arrangements suggest that executive pay practices
were not aligned with the interests of non-family shareholders.
Please encourage our board to respond
positively to this proposal for Equal Shareholder Voting Yes on 6.
Company Response
:
We oppose this proposal because we do not believe it is in the best interests of the Company or its stockholders.
The Company was organized in 1972, as the successor to a business founded in 1945 by Marvin Sands, and has grown into the leading premium
wine company in the world. During their more than 65-year history with the Company and its predecessor, the Sands family has aptly demonstrated their commitment to the success of the Company and its stockholders, and the founders sons,
Mr. Richard Sands and Mr. Robert Sands, continue to serve in key positions.
Our basic dual class capital structure,
consisting of both Class A Stock and Class B Stock, dates back to 1986 and was approved by our stockholders at that time. Both classes of stock currently trade on the New York Stock Exchange and since 1986 every stockholder and potential
stockholder has been afforded a full opportunity to learn about the dual class capital structure before deciding whether or not to purchase shares of the Company.
We operate our business in accordance with applicable governance requirements, including those of the New York Stock Exchange. Other than Mr. Richard Sands and Mr. Robert Sands, each member of
the Board qualifies as an independent director. In accordance with their fiduciary duties, our directors carry out their responsibilities in the manner they believe to be in the best interests of the Company and its stockholders.
The adoption of Proposal 6 requires the affirmative vote of a majority of the votes entitled to be cast by stockholders present in person
or represented by proxy at the Meeting. With respect to this proposal, holders of Class A Stock and Class B Stock will vote together as a single class at the Meeting, with holders of Class A Stock having one (1) vote per share and
holders of Class B Stock having ten (10) votes per share.
The Board of Directors recommends that you vote
AGAINST Proposal 6. Unless you properly direct otherwise, the shares represented by your proxy, if properly submitted and not revoked, will be voted AGAINST such proposal.
69
Proposal 7 Stockholder Proposal Concerning
Multiple Performance Metrics
Proposal and Stockholder Supporting Statement
:
Mr. John C. Liu,
Comptroller, City of New York, 1 Centre Street, New York, New York 10007-2341, on behalf of the Boards of Trustees of the New York City Police Pension Fund and the New York City Board of Education Retirement System (the Systems), which
Mr. Liu has indicated own 112,516 and 8,366 shares of our Class A Stock, respectively, has given notice that the Systems intend to make the following stockholder proposal at the Meeting.
MULTIPLE PERFORMANCE METRICS
WHEREAS: The Business Roundtable urges companies to consider a variety of performance metrics, both qualitative and quantitative, in setting performance measures (Business Roundtable: Executive
Compensation, Principles and Commentary January 2007);
WHEREAS: Mercer recommends, among a list of
ten actions that companies should take in 2010 to drive business performance, secure key talent and withstand public scrutiny, that performance metrics cover the range of relevant dimensions of performance (Achieving
Executive Compensation Success in 2010);
WHEREAS: The Conference Board Task Force on Executive
Compensation (September 2009) recommends that a pay for performance program include an appropriate mix of performance metrics that has been evaluated for risk, assesses company and executive performance, and help to drive achievement of
company and business strategy and sustainable performance;
WHEREAS: Many companies (two-thirds of the top
300 publicly traded companies) use multiple performance measures to set short-term incentive pay;
WHEREAS:
Companies are increasingly using multiple performance measures to set long-term incentive pay the number of companies using two or more metrics increased from 45.9% in 2008 to 48.8% in 2010 and the average number of metrics used is 1.68
(Equilar CEO Performance Metric 2010)
WHEREAS: For fiscal 2011, the Company awarded
long-term incentive performance share units based on a single metric, earnings per share (EPS);
WHEREAS:
The Company received weak pay for performance ratings from rating agencies Glass Lewis and Governance Metrics International;
RESOLVED: Shareholders request that the Compensation Committee of the Board of Directors, in setting performance measures for top executives,
70
include multiple weighted metrics that correctly reflect both individual and business accomplishments over an established multiyear period; and, excluding proprietary information, disclose to the
shareholders any changes made in the basket of metrics during the multiyear period.
SUPPORTING STATEMENT
Performance metrics and targets may have contributed to excessive risk-taking, volatile compensation and the
near-economic collapse. Choosing a single variable puts all the risk/reward in one variable. A diligently selected basket of variables, that is tested and validated for correlation between pay and performance, like an index, may help to moderate
volatility and the tendency to take excessive risk.
The Annual Management Incentive Plan also determines
annual incentive based on a single metric, earnings before interest and taxes (EBIT). However, for fiscal 2011, the Committee exercised its negative discretion to adjust bonus downwards and added free cash flow to the mix. The company should
consider using multiple metrics consistently for annual incentive and not just on a discretionary basis.
Company Response
:
We oppose this proposal because we do not believe the requested changes are necessary. We believe the current executive
compensation program established by the Human Resources Committee (the Committee) is appropriately balanced and already reflects a sufficient variety of award types and performance measures from our stockholder-approved plans. We also
believe that it is appropriate for the Committee to maintain full responsibility for crafting and overseeing both the overall executive compensation program and the individual elements and awards under that program in the manner it believes to be in
the best interests of the Company and its stockholders.
Our short-term bonus plan, the Annual Management Incentive Plan, and
our long-term equity compensation plan, the Long-Term Stock Incentive Plan, each contain a list of performance criteria from which the Committee can select in making awards under those programs. Both of these plans have been approved by
stockholders, and amended and restated versions of these plans providing even more performance criteria for use by the Committee are being submitted for approval by stockholders at the Meeting. The Committee consists entirely of independent members
of our Board and has engaged the services of an independent compensation consultant, Towers Watson, to assist it in its work.
The Committee established executive officer short-term bonus awards for each of the past five fiscal years based on the Companys
EBIT or comparable EBIT and free cash flow (FCF) performance. For the past two years, the Committee also granted PSU awards that vest based on the Companys EPS performance. One of these performance share unit (PSU)
awards used a three-year performance period and the other PSU award used a one-year performance period along with an additional two-year service vesting requirement. Finally, for many years the Committee has granted our executive officers stock
options which only have value to the extent our stock price increases after the grant date. Accordingly, the variable portion of our executive officers fiscal 2012 compensation
71
program (other than for our Chairman who did not receive PSU awards) effectively includes
four
separate performance measures comparable EBIT, FCF, EPS and our general
stock price performance.
With the assistance of its compensation consultant, the Committee regularly evaluates our executive
compensation program, including the structure of awards under our bonus and equity plans, and makes changes when it deems them appropriate and in the best interests of the Company. For example, the Committee established the fiscal 2013 short-term
bonus program which focuses the attention of our executive officers on three different performance measures comparable EBIT, FCF and organic net sales growth. The Committee also issued PSU awards which will vest, if at all, based on
the Companys stock price appreciation relative to companies included in the S&P 500 Index. For this award, the Committee selected a three-year performance period. Finally, the Committee again granted stock options to our executive
officers. Accordingly, the variable portion of our executive officers fiscal 2013 compensation program (other than for our Chairman who did not receive PSU awards) will effectively depend on
five
separate performance
measures comparable EBIT, FCF, organic net sales growth, our stock price appreciation relative to companies included in the S&P 500 Index, and our general stock price performance.
Moreover, we believe the variety of elements in our executive compensation program, as well as the number of different performance
measures used in the program, helps control any risks associated with executive compensation. The Committee completes an annual compensation risk assessment designed to identify significant risks that might be created by our executive and
non-executive compensation programs. The Committees independent compensation consultant assists in the review of the executive officer compensation program. These annual reviews have not revealed any compensation-related risks that the
Committee considers reasonably likely to have a material adverse effect on us.
The adoption of Proposal 7 requires the
affirmative vote of a majority of the votes entitled to be cast by stockholders present in person or represented by proxy at the Meeting. With respect to this proposal, holders of Class A Stock and Class B Stock will vote together as a single
class at the Meeting, with holders of Class A Stock having one (1) vote per share and holders of Class B Stock having ten (10) votes per share.
The Board of Directors recommends that you vote AGAINST Proposal 7. Unless you properly direct otherwise, the shares represented by your proxy, if properly submitted and not revoked,
will be voted AGAINST such proposal.
STOCKHOLDER PROPOSALS FOR THE 2013 ANNUAL MEETING
In order for any stockholder proposal submitted pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of
1934 to be included in our Proxy Statement to be issued in connection with our 2013 Annual Meeting of Stockholders, such proposal must be received by us no later than February 18, 2013. Nominations for directors submitted by stockholders must
also be received no later than February 18, 2013.
Any notice of a proposal submitted outside the processes of Rule 14a-8
promulgated under the Securities Exchange Act of 1934 which a stockholder intends to bring forth at our 2013 Annual Meeting of Stockholders will be untimely for purposes of Rule 14a-4 of the Securities Exchange Act of 1934 and our by-laws if it is
received by us after February 18, 2013.
72
AVAILABLE INFORMATION; WEBSITE MATERIALS
We have furnished our financial statements to stockholders by including in this mailing our 2012 Form 10-K (excluding the exhibits
thereto). We are also including in this mailing our 2012 Summary Annual Report to stockholders.
Our Code of Business Conduct
and Ethics, Global Code of Responsible Practices for Beverage Alcohol Advertising and Marketing, Chief Executive Officer and Senior Financial Executive Code of Ethics, policy regarding Communications from Stockholders or Other Interested Parties,
Board of Directors Corporate Governance Guidelines, and the charters of the Audit Committee, the Corporate Governance Committee and the Human Resources Committee are available on our website at
www.cbrands.com/investors/corporate-governance
and are also available in print to any stockholder who requests them. Such requests should be directed to Investor Relations Department, Constellation Brands, Inc., 207 High Point Drive, Building
100, Victor, New York 14564. Additionally, any amendments to, and waivers granted to our directors and executive officers under, our codes of ethics referred to above will be posted in this area of our website.
Throughout this proxy statement, we refer to materials that are available on our website. Such materials are not made a part of this
Proxy Statement and are not incorporated by reference.
OTHER
As of the date of this Proxy Statement, the Board does not intend to present, and has not been informed that any other person intends to
present, any matter at the Meeting other than those specifically referred to in this Proxy Statement. If any other matters properly come before the Meeting, it is intended that the holders of the proxies will act in respect thereto in accordance
with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
DAVID S. SORCE,
Secretary
June 8, 2012
73
Appendix 1
EXPLANATORY NOTE: The Constellation Brands, Inc. Annual Management Incentive Plan is filed herewith pursuant to Instruction 3 of Item 10 of Schedule 14A and is not part of the Proxy Statement.
CONSTELLATION BRANDS, INC.
ANNUAL MANAGEMENT INCENTIVE PLAN
Amended and Restated as of July __,
2012
This Annual Management Incentive Plan (amended and restated as of July __, 2012) is adopted pursuant to
Section 8 of the Plan by the Human Resources Committee of the Companys Board of Directors, and by the stockholders of the Company. The Plan amends and restates in its entirety the Constellation Brands, Inc. Annual Management Incentive
Plan that was approved by the Board of Directors on June 26, 2007, as amended. Certain capitalized terms used in the Plan are defined in Annex A. Bonus programs adopted under the Plan for a Performance Period shall be governed by the terms of
the Plan, or a predecessor plan, in effect at the time the program is adopted.
The Plan is designed
to enable the Company to attract and retain valued employees and to provide them with incentives to attain certain annual performance goals.
The Plan shall
be administered by a Committee of the Companys Board of Directors. This Committee shall consist of at least two members of the Companys Board of Directors, all of whom are (a) outside directors within the meaning of
Section 162(m), and (b) not eligible to participate in the Plan. Subject to the Plan, the Committee shall possess the sole authority, in its discretion, to (i) establish a Bonus program for a Performance Period using such Performance
Criteria and Performance Target(s) as it deems appropriate, (ii) select the Participating Employees who may receive Bonuses under the Plan, (iii) determine the amount of such Bonuses and any terms, conditions or limitations on the payment
of any Bonuses, (iv) interpret and administer the Plan, (v) make and amend rules and regulations relating to the Plan and any Bonus program established for a Performance Period, and (vi) make all other determinations necessary or
advisable for the administration of the Plan. The Committee may delegate its authority and administrative responsibilities under the Plan to the extent permitted by applicable law and Section 162(m).
3.
|
TERMS AND CONDITIONS OF BONUSES
|
The Committee shall determine the employees who may participate in, and rules that will apply to, a Bonus program that it adopts for a
particular Performance Period. Each Participating Employee may receive a Bonus if the Performance Targets and other requirements established by the Committee are attained. The rules for the Bonus program, the Performance Criteria and the Performance
Targets that the Committee adopts for each Performance Period shall be consistent with the terms of the Plan and Section 162(m). When the Committee establishes the terms of a Bonus program for a Performance Period, the Committee will specify
those Extraordinary Items that will be taken into account under the Bonus program to adjust the Performance Targets. Such adjustments shall only be made to the extent permitted under Section 162(m) and shall be made in an equitable manner in
light of the nature of the Performance Targets and the assumptions made by the Committee when establishing the Performance Targets.
The Performance Target with respect to a Performance Criteria will be established by the
Committee in advance of the deadlines applicable under Section 162(m) and while the performance relating to the Performance Target remains substantially uncertain within the meaning of Section 162(m). Different Performance Targets and
Performance Criteria may be established for different Participating Employees. At the time the Performance Target is established, the Committee shall provide, in terms of an objective formula or standard for each Participating Employee, the method
of computing the specific amount that will represent the maximum amount of Bonus payable to the Participant if the Performance Target is attained. The Committee reserves the unilateral right to reduce or eliminate the Bonus that is to be paid to a
Covered Employee upon the attainment of a Performance Target. The Committees discretion to exercise its right to reduce or eliminate a Bonus that is paid to such a Covered Employee shall not result in an increase in an amount that is payable
to another Covered Employee.
Notwithstanding any other provision hereof, no Participating Employee shall
receive a Bonus under the Plan for any fiscal year or other Performance Period in excess of $5 million. Any Bonuses awarded by the Committee under the Plan shall be paid within 30 days after year-end financial results are reported or, if later, as
soon as practicable following the Committees determinations and certification under this Section; provided that it is intended that such Bonus be paid on or before the 15
th
day of the third month following the end of the Companys Performance Period for which the Bonus is paid (e.g.,
if the Performance Period is the Companys fiscal/taxable year, the Bonus will be paid on or before
May 15
th
). Bonuses shall be paid in the form of a
single lump sum cash payment or cash equivalent payment.
No Participating Employee shall receive any payment under the Plan
unless the Committee has certified, by resolution or other appropriate action in writing, that the amount thereof has been accurately determined in accordance with the terms, conditions and limits of the Plan and the applicable Bonus program.
4.
|
TERMINATION OF EMPLOYMENT
|
If
the employment of a Participating Employee terminates prior to end of the Performance Period by reason of such Participating Employees Retirement, Disability, death or involuntary termination without Cause, the Committee will pay a ratable
portion of the applicable Bonus to the Participating Employee subject to the attainment of the applicable Performance Target. Such Bonus, if any, will be paid at the same time Bonuses are paid to similarly situated Participating Employees who do not
terminate employment. The ratable portion of the Bonus shall be determined by multiplying the Bonus that would have been paid to the Participating Employee if the Participating Employee had not terminated employment by a fraction, the numerator of
which is the number of full or partial months during the Performance Period during which the Participating Employee was employed, and the denominator of which is the number of calendar months in the Performance Period.
In the event of a Participating Employees termination for Cause or a Participating Employees voluntary termination of
employment before the last day of the Performance Period, all Bonuses for which the Participating Employee may have been eligible shall be forfeited unless the Committee decides, in its sole discretion, to pay such Bonus or the Participating
Employee has a contractual right to such Bonus in a written employment agreement or similar
- 2 -
contract; provided that any Bonus paid to a Covered Employee in such circumstances will only be paid in accordance with and to the extent permitted by Section 162(m).
The Committee will pay a Bonus to a Participating Employee who terminates employment for any reason on or after the last day of the
Performance Period and before the payment date. The amount of such Bonus would be the Bonus the Participating Employee would have been paid if the Participating Employee had not terminated employment. Such Bonus would be paid at the same time
Bonuses are paid to similarly situated Participating Employees who do not terminate employment.
For purposes of applying the
above rules, the date of termination includes the date a Participant ceases to be employed by the Company or a Subsidiary. Notwithstanding the foregoing, the Committee may establish such other rules it deems necessary or appropriate to apply when a
Participating Employee dies or terminates employment, which rules shall be memorialized in the terms established under the Bonus program for a Performance Period or other written document.
The Company shall
have the right to make all income tax, employment tax and other withholdings required under applicable law from all payments made under the Plan or owed in connection with benefits earned under the Plan.
The Plan
shall not confer upon any Participating Employee any right with respect to continuance as an employee of the Company, nor shall it interfere in any way with the right of the Company to terminate the Participating Employees position as an
employee.
Any
decision made or action taken by the Company, the Committee or the Board of Directors in connection with the creation, amendment, construction, administration, interpretation or effect of the Plan shall be within the absolute discretion of such
entity and shall be conclusive and binding upon all persons. No officer, director or member of the Committee shall have any liability for actions taken or omitted under the Plan by the member or by any other person.
8.
|
AMENDMENT AND DISCONTINUANCE
|
Subject to the requirements of Section 162(m), the Plan or a Bonus program for a Performance Period may be amended, modified or
terminated by the Committee at any time, and all Bonuses shall be subject to the Plan or program as amended from time to time, except that subsequent to a Change of Control the Committee may not amend the Plan or program without the approval of the
Participating Employee whose rights are adversely affected by the amendment. No amendment, modification or termination shall be effective without the approval of the Board of Directors and/or the stockholders if such approval is necessary to comply
with the applicable provisions of Section l62(m).
- 3 -
Notwithstanding other provisions of the Plan, in the event of a Change of Control of the Company, the Performance Period for a
Participating Employee shall end on the date of the Change of Control, and, if appropriate, the Committee shall adjust the Performance Target in an equitable manner to reflect the early termination of the Performance Period. The Participating
Employees Bonus will be calculated by comparing the performance through the date of the Change in Control against the adjusted Performance Target, and a ratable portion of such Bonus shall be paid to the Participating Employee. The ratable
portion of the Bonus shall be determined by multiplying such Bonus by a fraction, the numerator of which is the number of months from the first day of the Performance Period to the date of the Change of Control (including any fractional month) and
the denominator of which is the total number of months in the original Performance Period. Notwithstanding the foregoing, the Committee may establish different rules to apply upon a Change in Control in the Bonus program that is adopted for a
particular Performance Period.
The Plan shall be binding upon any successor to the Company, whether such successor is the
result of a direct or indirect purchase, merger, consolidation or other acquisition of all or substantially all of the business and/or assets of the Company.
10.
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SECTION 162(m) CONDITIONS
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It
is the intent of the Company that the Plan and Bonuses paid to Covered Employees satisfy the applicable requirements of Section 162(m) so that such Bonuses qualify as performance-based compensation. The Plan and any Bonus program adopted for a
Performance Period shall be administered and interpreted consistent with that intent and any provision, application or interpretation of the Plan or any Bonus program adopted for a Performance Period that is inconsistent with this intent shall be
disregarded. Notwithstanding the foregoing, with respect to Bonuses that are intended to qualify as performance-based compensation under Section 162(m), the Committee may adopt non-compliant Section 162(m) provisions that apply upon a
Change in Control or the death or disability of a Covered Employee.
Notwithstanding anything in the Plan to the contrary, the
provisions of the Plan and any Bonus program adopted for a Performance Period may be bifurcated by the Committee so that the provisions of the Plan that are intended or required to satisfy the performance-based compensation requirements of
Section 162(m) are applicable only to Covered Employees. For example, the Committee may establish separate Bonus programs for a Performance Period for Covered Employees and Participating Employees who are not Covered Employees. With respect to
the Bonus program that does not apply to Covered Employees, the Committee can adopt such rules and provisions that it deems appropriate without regard to the terms of the Plan that are required to comply with Section 162(m). For example, the
Committee may design a Bonus program for a Performance Period that covers Participating Employees who are not Covered Employees without being bound by the Plans definitions of Performance Criteria and Extraordinary Items and the limitations on
adjusting Performance Targets.
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11.
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NO FUNDING OF THE PLAN
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The
Company shall not be required to fund or otherwise segregate any cash or any other assets which may at any time be paid to any Participating Employee under the Plan. The Plan shall constitute an unfunded plan of the Company. The Company
shall not, by any provisions of the Plan, be deemed to be a trustee of any property, and any rights of any Participating Employee shall be limited to those of a general unsecured creditor.
Except as
expressly provided by the Committee, no benefit payable under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any such attempted action shall be void. This Section
shall not apply to an assignment of a contingency or payment due after the death of a Participating Employee to such Participating Employees legal representative or beneficiary.
The effective
date of the Plan shall be the date the Plan was initially approved by the Companys stockholders.
Any terms or
provisions used herein which are defined in Section 162(m) shall have the meanings as therein defined.
To the extent
not inconsistent with the provisions of Section 162(m), the Plan shall be construed under the laws of the State of New York.
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Dated: July __, 2012
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CONSTELLATION BRANDS, INC.
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By:
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Title:
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Date of Stockholder Approval: July __, 2012
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ANNEX A
TO
ANNUAL MANAGEMENT INCENTIVE PLAN
CERTAIN DEFINITIONS
Capitalized
terms used in the Plan shall have the meanings set forth below:
Bonus
means a cash payment or payment opportunity under
the Plan.
Cause
means, solely for the purposes of the Plan, gross negligence or willful misconduct or commission of a
felony or an act of moral turpitude determined by the Committee to be detrimental to the best interests of the Company or, if the Participating Employee is subject to a written employment or similar agreement with the Company that has a different
definition of Cause, Cause shall have the meaning set forth in that agreement.
Change of Control
means, unless the Committee specifies otherwise in a Bonus program for a Performance Period:
(a) there shall be consummated
(i) any consolidation or merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which any Shares are to be converted into cash, securities or other property, provided that the consolidation or merger is not with a corporation which was a direct or indirect wholly-owned subsidiary of the Company or a
parent of the Company immediately before the consolidation or merger; or
(ii) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company; or
(b) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or
(c) any person (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) other than any of the Permitted Holders shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of 35% or more of the voting control of the Companys then outstanding common stock, provided that such person shall not be a wholly-owned
subsidiary of the Company immediately before it becomes such 35% beneficial owner of voting control; or
(d) individuals who
constitute the Incumbent Board cease for any reason to constitute at least a majority of the Companys Board of Directors (for this purpose Incumbent Board means at any time those persons who are then members of the Board of
Directors of the Company and who either (i) are members of the Companys Board of Directors on the date hereof, or (ii) have been elected, or have been nominated for election by the Companys stockholders, by the affirmative vote
of at least two-thirds of the directors comprising the Incumbent Board at the time of such election or nomination (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as a nominee for director without objection to such nomination)).
Code
means the Internal Revenue Code of 1986, as amended.
Company
means Constellation Brands, Inc. and its Subsidiaries, except when the context indicates that only the parent company is intended.
Committee
means the committee appointed by the Board of Directors of the Company to administer the Plan as provided in Section 2,
and if no committee is appointed, the Committee shall be the Human Resources Committee.
Covered Employee
means an employee
who is a covered employee as such term is defined under Section 162(m) and such additional employees as the Committee may treat as being subject to the rules that apply to covered employees under Section 162(m).
Disability
means, unless the Committee specifies otherwise in a Participants Award document, a termination of
employment due to the inability of a Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than six months, all as verified by a physician acceptable to, or selected by, the Committee.
Extraordinary Items
means (a) items presented as such (or other comparable terms) on the Companys audited financial
statements, (b) extraordinary, unusual, transition, one-time and/or nonrecurring items of gain or loss (including, but not limited to, charges for reorganizing and restructuring, discontinued operations and asset write-downs), (c) changes
in tax or accounting laws, regulations or principles, (d) the effects of mergers, acquisitions, divestitures, spin-offs or similar significant transactions (including, without limitation, gains or losses on the disposition of a business or
business segment or arising from the sale of assets outside the ordinary course of business), (e) stock split, recapitalization, split-up, or similar change, or (f) share repurchases. To qualify as an Extraordinary Item, the item must be
identified in the audited financial statements and notes thereto or in the managements discussion and analysis section of the financial statements in a period report filed with the SEC under the Exchange Act.
Participating Employee
means an employee of the Company or one of its Subsidiaries selected by the Committee to participate in the
Plan.
Performance Criteria
means one or more of the following performance criteria selected by the Committee for a Bonus
program the Committee adopts for a Performance Period:
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Sales Growth or Net Sales Growth
Net
Sales
Assets or Asset Productivity
Operating
Expenses / Selling, General and
Administrative Expenses
Cost reductions or cost control
Gross Margin or Gross Profit
Brand
Contribution / Contribution after
Marketing
Operating Income or Net Operating Income
Operating Margins / Sales
Return on
Operating Revenue
Earnings Before Interest and Taxes
Earnings
Before Interest, Taxes,
Depreciation and Amortization
Income Before Income Taxes /
Profit Before Tax
Net Income
Earnings Per
Share
Cash Flow or Free Cash Flow
Working
Capital or any of its components
(Accounts Receivable, Inventory, Accounts
Payable)
New product introductions or launches
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Cash Flows from Operating Activities
Return on
Capital
Return on Equity
Cost of Goods
Sold /
Cost of Product Sold
Return on Invested Capital
Return on
Assets / Return on Net Assets
Capital Expenditures / Purchases of
property, plant and equipment
Net Increase
in Cash or Cash Equivalents
Stock Price
Market share
(volume or value-based)
Total Stockholder Return
Stockholder
Value Added / Economic
Value Added
Goals relating to acquisitions or
divestitures
Units sold or depleted
Customer
service level
Debt Ratio or Debt-to-Equity Ratio
New Sales or
Depletions or new product
introductions
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Performance Criteria may be: (a) established on a corporate, divisional, business unit or
consolidated basis, (b) measured on an absolute basis or relative basis (e.g., passage of time (such as a year over year growth), as a relative comparison to a peer group, industry index, broad-based index, etc.) (c) calculated on a
pre-tax or after-tax basis, (d) calculated on a per share basis, (e) calculated on a GAAP or non-GAAP basis, and/or (f) calculated for all or a portion of a single year or calculated over multiple years.
Performance Period
means the fiscal year or years or other period established by the Committee with respect to which the Performance
Targets are set by the Committee.
Performance Target
means one or more specific objective goal or goals (which may be
cumulative or alternative) that are timely set in writing by the Committee for each Participant for the applicable Performance Period with respect to any one or more of the Performance Criteria.
Permitted Holders
means, unless the Committee specifies otherwise in a Bonus program for a Performance Period, (a) Marilyn Sands,
her descendants (whether by blood or adoption), her descendants spouses, her siblings, the descendants of her siblings (whether by blood or adoption), Hudson Ansley, Lindsay Caleo, William Caleo, Courtney Winslow, or Andrew Stern, or the
estate of any of the foregoing individuals, or The Sands Family Foundation, Inc., (b) trusts which are for the benefit of any combination of the individuals and foundation described in clause (a), or any trust for the benefit of any such trust,
or (c) partnerships, limited liability companies or any other entities which are controlled by any combination of the individuals
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described in clause (a) or the estate of any such individuals, The Sands Family Foundation, Inc., a trust referred to in the foregoing clause (b), or an entity that satisfies the conditions
of this clause (c).
Plan
means the Annual Management Incentive Plan (amended and restated as of July __, 2012), as amended
from time to time.
Retirement
means a termination of employment by an employee who is at least 60 years of age and after
at least 10 years of service with the Company. For an individual who becomes employed by the Company in connection with a business acquisition (regardless of the form of the transaction), service shall include the individuals service with the
acquired business, unless the Committee determines otherwise.
Section 162(m)
means Section 162(m) of the Code,
together with the regulations promulgated thereunder, all as amended from time to time.
Shares
means shares of the
Companys Class A Common Stock, par value $.01 per share.
Subsidiaries
means (a) all corporations of which
at least fifty percent of the voting stock is owned by the Company directly or through one or more corporations at least fifty percent of whose voting stock is so owned, and (b) partnerships or other entities in which the Company has, either
directly or indirectly, at least a fifty percent interest in the capital or profits.
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Appendix 2
EXPLANATORY NOTE: The Constellation Brands, Inc. Long-Term Stock Incentive Plan is filed herewith pursuant to Instruction 3 of Item 10 of Schedule 14A and is not part of the Proxy Statement.
CONSTELLATION BRANDS, INC.
LONG-TERM STOCK INCENTIVE PLAN
Amended and Restated as of July __, 2012
This Long-Term Stock Incentive Plan (amended and restated as of July __, 2012) is adopted by the Human Resources Committee of
the Board of Directors of Constellation Brands, Inc., acting in its capacity as the Committee under the Plan, and by the stockholders of the Company. The Plan amends and restates in its entirety the Constellation Brands, Inc. Long-Term Stock
Incentive Plan (amended and restated as of December 6, 2007), as amended, and applies to Awards made on or after July __, 2012. Grants of Awards made under the Plan prior to July __, 2012 shall be governed by the terms of the Plan in effect as
of the date of the Award. Certain capitalized terms used in the Plan are defined in Annex A.
The Plan is designed
to assist the Company in attracting and retaining valued employees and directors and to provide them with incentives to maintain and enhance the Companys long-term performance record by aligning the interests of the Participants and the
stockholders of the Company.
The Plan shall
be administered by the Committee. The Committee shall possess the authority, in its discretion, (a) to determine the employees and directors of the Company to whom Awards shall be granted and the time or times at which Awards shall be granted;
(b) to determine at the time of grant the number of Shares to be subject to each Award; (c) to prescribe the form of the Award Agreement representing such Award; (d) to establish any appropriate terms and conditions applicable to the
Awards including any limitations on grants, vesting or exercisability, and to make any amendments to such Award Agreements or the Awards which may, without limitation, include any acceleration of vesting or exercisability, waiver of any condition or
requirement or taking of other action consistent with the purposes of the Plan; (e) to interpret and construe the Plan and Awards; (f) to make and amend rules and regulations relating to the Plan and Awards; and (g) to make all other
determinations necessary or advisable for the administration of the Plan and Awards. The Committees determinations shall be conclusive and binding on all Participants and all persons claiming under or through any Participant. No member of the
Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any Award granted under the Plan. The Committee may delegate any administrative or ministerial functions under the Plan to officers or employees of
the Company.
No outstanding Award may be exercised and no payment shall be made pursuant to an Award if the Participant to
whom the Award is granted (x) is, or at any time after the date of grant has been, in competition with the Company or its affiliates or (y) has been terminated by the Company for Cause. The Committee shall determine, in its discretion,
whether a Participants actions constitute competition with the Company or its affiliates.
3.
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ELIGIBLE EMPLOYEES AND NON-EMPLOYEE DIRECTORS
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All employees of the Company are eligible to receive Awards under the Plan. Awards may be made to non-employee directors of the Company.
4.
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SHARES AVAILABLE; TYPES OF AWARDS
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Awards may be granted under the Plan with respect to Class A Stock or Class 1 Stock. The aggregate number of shares of Class A Stock and Class 1 Stock available for Awards under the Plan is
one-hundred and eight million (108,000,000) shares. Subject to such aggregate limit, Awards may be granted in any combination of Shares of Class A Stock or Class 1 Stock. Shares subject to Awards may be authorized and unissued Shares or
may be treasury Shares.
Unless the applicable Rules under Section 16(b) of the Exchange Act or Section 162(m) of
the Code require otherwise, the following Shares related to Awards under the Plan may again be available for issuance under the Plan, in addition to the Shares described in the first paragraph of this Section 4: (a) Shares related to
Awards paid in cash; (b) Shares related to Awards that expire, are forfeited or cancelled or terminate for any other reason without issuance of Shares; and (c) any Shares of Restricted Stock that are returned to the Company upon a
Participants termination of employment.
The Committee may make Awards from time to time in any one or more of the
following types singly or in tandem: Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Performance Share Units or Other Stock-Based Awards.
The following rules shall apply to grants of Awards under the Plan:
(a)
Stock Options
: The maximum aggregate number of Shares subject to Stock Options granted under the Plan to any
one Participant during any fiscal year of the Company shall be 5,000,000 Shares.
(b)
Stock Appreciation
Rights
: The maximum aggregate number of Shares subject to Stock Appreciation Rights granted under the Plan to any one Participant during any fiscal year of the Company shall be 1,000,000 Shares.
(c)
Restricted Stock
: The maximum aggregate number of Shares of Restricted Stock granted under the Plan to any one
Participant during any fiscal year of the Company shall be 1,000,000 Shares.
(d)
Restricted Stock Units
and Performance Share Units
: The maximum aggregate number of Shares underlying Awards of Restricted Stock Units or Performance Share Units granted under the Plan to any one Participant during any fiscal year of the Company shall be 2,000,000
Shares.
(e)
Other Stock-Based Awards
: The maximum aggregate number of Shares underlying Awards of
Other Stock-Based Awards granted under the Plan to any one Participant during any fiscal year of the Company shall be 1,000,000 Shares.
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The Committee
may grant Stock Options to a Participant subject to such terms, conditions and provisions as may be specified by the Committee that are consistent with the terms of the Plan and are memorialized in an Award Agreement. Such terms, conditions and
provisions include the following:
(a)
Class of Common Stock
. Whether the Stock Option relates to
Shares of Class A Stock or Class 1 Stock shall be specified.
(b)
Exercise Price
. The exercise
price per Share under each Stock Option shall be specified by the Committee, provided that the exercise price per Share under each Stock Option granted to a Participant shall not be less than the Fair Market Value of a Share to which the Stock
Option relates on the date the Award is granted.
(c)
Duration of Option
. The duration of each Stock
Option shall be specified. Stock Options must be exercised on or before 5:00 p.m. Eastern Time on their expiration date.
(d)
Exercise Terms
. Unless otherwise specified by the Committee, each Stock Option granted under the Plan shall become exercisable in four equal annual installments commencing on the first
anniversary of the date of grant. Stock Options may be partially exercised from time to time during the period extending from the time they first become exercisable in accordance with the terms of the Award until the expiration of the exercise
period specified in the Award Agreement. The Committee may impose such additional or other limitations or conditions on the vesting or exercise of any Stock Option as it deems appropriate.
(e)
Payment of Exercise Price
. A Stock Option shall be exercised upon such notice as is required by the Committee
accompanied by payment in full of the exercise price for the Shares being acquired in such form as the Committee may provide in accordance with Section 10 of the Plan, together with all applicable withholding taxes as provided in
Section 11 of the Plan.
(f)
Amended Stock Option
. The Committee, in its sole discretion, may
authorize the amendment of an outstanding Stock Option that relates to Class A Stock so that such Stock Option, instead, relates to Class 1 Stock. An amendment to an outstanding Stock Option so that it relates to Class 1 Stock instead of
Class A Stock shall not constitute a new grant for purposes of Section 5(b), and such Stock Option shall continue to be treated for all purposes as having been granted on the original grant date of such Stock Option. The Committee shall
have discretion to determine the terms and conditions of such amended Stock Option; provided that such terms and conditions shall, to the extent permissible within the terms and conditions of the Plan, be equivalent to the terms and conditions of
the Stock Option prior to the amendment. The exercise price of the amended Stock Option may not be less than the exercise price of the Stock Option prior to the amendment, and the number of Shares that may be purchased under the amended Stock Option
may not exceed the number of Shares that could have been purchased under
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the Stock Option prior to the amendment, in each case subject to the adjustments in Section 16.
6.
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STOCK APPRECIATION RIGHTS
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The
Committee may grant Stock Appreciation Rights to a Participant subject to such terms, conditions and provisions as may be specified by the Committee that are consistent with the terms of the Plan and are memorialized in an Award Agreement. Stock
Appreciation Rights may be granted by the Committee in Awards which are in tandem with Stock Options or freestanding. Tandem Awards may be granted at the same time as the grant of the related Stock Option or at any time thereafter prior to the end
of the exercise period for the related Stock Option. Each Stock Appreciation Right shall specify whether it relates to Shares of Class A Stock or Class 1 Stock.
(a)
Value
. The value of each Stock Appreciation Right shall be the difference between the Fair Market Value of a
Share to which the Stock Appreciation Right relates on the date of exercise of the Stock Appreciation Right and the reference amount specified in the Award Agreement, which for each Stock Appreciation Right granted in tandem with a Stock Option
shall be not less than the exercise price of the related Stock Option. The reference amount for each Stock Appreciation Right shall not be less than the Fair Market Value of a Share to which the Stock Appreciation Right relates on the date of grant
of the Stock Appreciation Right.
(b)
Duration of Stock Appreciation Right
. The duration of each Stock
Appreciation Right shall be specified. Each tandem Stock Appreciation Right shall specify the Stock Option to which it is related and the terms and conditions under which exercise or expiration of the related Stock Option will result in automatic
expiration of the related Stock Appreciation Right and the terms and conditions on which exercise or expiration of the Stock Appreciation Right will result in automatic expiration of the related Stock Option.
(c)
Exercise Terms
. Unless otherwise specified by the Committee, each Stock Appreciation Right granted under the
Plan shall become exercisable in four equal annual installments commencing on the first anniversary of the date of grant. Stock Appreciation Rights may be partially exercised from time to time during the period extending from the time they first
become exercisable in accordance with the terms of the Award until the expiration of the exercise period specified in the Award Agreement. Exercise of related Stock Options will cause the immediate automatic expiration of related Stock Appreciation
Rights on the terms and conditions specified by the Committee. The Committee may impose in the Award Agreement such additional or other limitations or conditions on the vesting or exercise of any Stock Appreciation Right as it deems appropriate. A
Stock Appreciation Right shall be exercised upon such notice as is required by the Committee.
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The Committee
may grant a Restricted Stock Award to a Participant subject to such terms, conditions and provisions as may be specified by the Committee that are consistent with the terms of the Plan. Each grant of an Award of Restricted Stock shall be evidenced
by an Award Agreement that will specify whether the Shares of Restricted Stock are Class A Stock or Class 1 Stock, the availability of dividends and other distributions with respect to which Shares of Restricted Stock are entitled, the voting
rights, if any, associated with such Shares of Restricted Stock, and the conditions that must be satisfied for the Participant to vest in the Participants right to the Restricted Stock. Notwithstanding the foregoing, no dividends may be paid
to a Participant on Shares of Restricted Stock until and unless the Participant vests in his right to receive such Shares. Restricted Stock Awards may include terms specified by the Committee that make vesting of the Award contingent upon
achievement of one or more Performance Targets within or at the end of a Performance Period, and that require the Committee to certify the extent to which any Performance Target has been satisfied and the number of Shares of Restricted Stock
deliverable as a result thereof, prior to the delivery of any such Shares to the Participant.
8.
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RESTRICTED STOCK UNITS AND PERFORMANCE SHARE UNITS
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The Committee may grant Restricted Stock Units and Performance Share Units to a Participant subject to such terms, conditions and provisions as may be specified by the Committee that are consistent with
the terms of the Plan. Each grant of an Award of Restricted Stock Units or Performance Share Units will be evidenced by an Award Agreement that shall specify the terms of the Award, including the performance measures and/or service requirements, if
any, applicable to the Award, and such other provisions as the Committee shall determine which are not inconsistent with the terms of the Plan. The holder of a Restricted Stock Unit or a Performance Share Unit may receive a payout that is calculated
based on the satisfaction of performance goals, service requirements and/or other terms specified in the Award Agreement. The Committee shall specify in the Award Agreement whether any earned Restricted Stock Units and Performance Share Units shall
be paid in the form of Shares or cash (or in a combination thereof).
Performance Share Units may include terms specified by
the Committee that make vesting of the Award contingent upon achievement of one or more Performance Targets within or at the end of a Performance Period, and that require the Committee to certify the extent to which any Performance Target has been
satisfied and the number of Shares deliverable as a result thereof, prior to the delivery of any such Shares to the Participant.
If provided by the Committee, Participants holding Restricted Stock Units or Performance Share Units will be entitled to receive dividend units with respect to dividends declared with respect to the
Shares underlying such Awards; provided that no dividend units may be paid to a Participant on Restricted Stock Units or Performance Share Units that do not fully vest.
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9.
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OTHER STOCK-BASED AWARDS
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The
Committee may grant Other Stock-Based Awards to a Participant subject to such terms, conditions and provisions as may be specified by the Committee that are consistent with the terms of the Plan. Each grant of an Other Stock-Based Award will be
evidenced by an Award Agreement that shall specify the terms of the Award. Grants of Other Stock-Based Awards may include terms specified by the Committee that make vesting of the Award contingent upon achievement of one or more Performance Targets
within or at the end of a Performance Period, and that require the Committee to certify the extent to which any Performance Target has been satisfied and the number of Shares deliverable as a result thereof, prior to the delivery of any such Shares
to the Participant. An Other Stock-Based Award that has an exercise right may be exercised upon such notice as is required by the Committee to the Company accompanied by payment in full of any exercise price for the Shares or other compensation
being acquired in such form as the Committee may provide in accordance with Section 10 of the Plan, together with all applicable withholding taxes as provided in Section 11 of the Plan.
10.
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PAYMENT FOR PURCHASE OR EXERCISE OF AWARDS
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The exercise price of Stock Options and any Other Stock-Based Awards providing for exercise prices and the purchase price for any Restricted Stock or Other Stock-Based Awards providing for purchase prices
shall be paid to the Company upon exercise or acquisition of such Award in the manner which the Committee may determine which may include by (a) delivery of cash or a check in the amount of the price of the Award, (b) tendering previously
acquired Shares having a Fair Market Value at the time of delivery equal to the price of the Award, (c) in the case of an Award relating to Class A Stock, delivery of irrevocable instructions to a broker or other agent acceptable to the
Company to promptly sell Class A Stock received under the Award and to deliver to the Company the amount of proceeds to pay the price related to such Award, (d) in the case of an Award relating to Class 1 Stock, (i) delivery to the
Companys transfer agent for Class A Stock of any conversion notice or direction necessary to convert Class 1 Stock received under the Award into Class A Stock, and (ii) delivery of irrevocable instructions to a broker or other
agent acceptable to the Company to promptly sell shares of Class A Stock received upon the conversion of the Class 1 Stock received under the Award and to deliver to the Company the amount of proceeds to pay the price related to such Award, or
(e) such other method of payment as the Committee in its discretion deems appropriate, in each case together with all applicable withholding taxes as provided in Section 11. Previously acquired Shares tendered in payment must have been
owned by Participant for at least six months prior to the tender in payment of an Award.
Whenever
required by law in connection with an Award, the Company shall (and whenever permitted by law in connection with an Award the Company may but is not obligated to) require the Participant to remit to the Company an amount sufficient to satisfy any
federal, state and/or local income tax, foreign tax, social charge and employment withholding tax requirements prior to the delivery of any Shares or to take any other appropriate action to satisfy such withholding requirements, including any method
permitted for payment under Section 10 as
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determined by the Committee. To the extent permitted under such rules as the Committee may promulgate and in compliance with any requirements to avoid violations under Section 16(b) of the
Exchange Act and related Rules, the Participant may satisfy such obligation in whole or in part by electing to have the Company withhold Shares from the Shares to which the Participant is otherwise entitled under the Award.
12.
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PERFORMANCE BASED COMPENSATION
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For each Award of Restricted Stock, Restricted Stock Units, Performance Share Units or Other Stock-Based Award intended to qualify as
performance based compensation under Section 162(m), the Committee shall select the applicable Performance Criteria, Performance Period and Performance Target for the Award consistent with the terms of the Plan and
Section 162(m). To the extent provided for in the Award Agreement, the Committee will adjust the Performance Target(s) under an Award to take into account the effects of any Extraordinary Items and such adjustment shall be made equitably in a
manner consistent with the intent of the original Award; provided, however, no such adjustment may be made with respect to any Award to a Covered Employee which is intended to qualify as performance based compensation unless such
adjustment satisfies the requirements of Section 162(m). Notwithstanding the foregoing, to the extent provided for in the Award Agreement, the Committee, in its sole discretion, reserves the right to reduce an Award if the Committee deems such
reduction is necessary or appropriate. The Committee may not increase an Award that is intended to satisfy the requirements of Section 162(m) to a Covered Employee except as permitted in the second preceding sentence.
For Awards which are intended to qualify as performance based compensation under Section 162(m), the Performance Target
with respect to the selected Performance Criteria must be established by the Committee in advance of the deadlines applicable under Section 162(m) and while the performance relating to the Performance Target remains substantially uncertain
within the meaning of Section 162(m). At the time the Performance Targets are established, the Committee shall provide, in terms of an objective formula or standard, the method of computing the specific amount that will represent the maximum
number of Shares or amount of other compensation payable to the Participant if the Performance Target is attained.
The
Committee may select such performance criteria, performance periods and performance targets for Restricted Stock, Restricted Stock Units, Performance Share Units and Other Stock-Based Awards that are not intended to qualify as performance
based compensation under Section 162(m) as it deems appropriate in its sole discretion.
13.
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AWARDS NOT TRANSFERABLE
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Unless
transferability is otherwise permitted under such conditions and rules adopted by the Committee, no Stock Option or Stock Appreciation Right is transferable by the Participant other than (i) by will or the laws of descent and distribution,
(ii) pursuant to a domestic relations order, or (iii) solely with respect to Stock Options, to the extent permitted under the Award or as permitted by the Committee, by gift to family members or by gift or permitted non-cash exchange to
entities beneficially owned by family members or other permitted transferees. Awards that have exercise rights shall be exercisable only by the Participant, the Participants
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legal representative, or the Participants permitted transferees. Shares of Restricted Stock may not be sold or otherwise transferred until the ownership vests in the Participant. Unless
transferability is otherwise permitted under such conditions and rules adopted by the Committee, Restricted Stock Units, Performance Share Units and Other Stock-Based Awards may not be sold or otherwise transferred.
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GENERAL RESTRICTION ON ISSUANCE OF SHARES
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The Company shall not be required to deliver any Shares upon the grant, vesting or exercise of any Award until it has been furnished with such documents as it may deem necessary to insure compliance with
any law or Rules of the SEC or any other governmental authority having jurisdiction under the Plan. Shares of Class 1 Stock will not be represented by certificates, and shares of Class A Stock may not be represented by certificates.
Certificates for shares of Class A Stock, if any, or notices of ownership for Shares delivered upon such grant, vesting or exercise shall bear legends restricting transfer or other restrictions or conditions to the extent required by law or
determined by the Committee. Each Award under the Plan is subject to the condition that, if at any time the Committee shall determine that the listing, registration or qualification of the Shares subject to such Award under any state or federal law
or other applicable Rule, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of the granting of such Awards or the issue or purchase of Shares thereunder, such Awards may not vest or be exercised
in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.
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TERMINATION OF EMPLOYMENT
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The
Committee has the authority to prescribe the rules that apply to an Award upon the termination of a Participants employment, which shall be memorialized in the Participants original or amended Award Agreement or similar document. In the
event that the Award Agreement does not prescribe such rules, the following rules will apply:
(a)
Stock Options and Stock
Appreciation Rights
. If the employment of a Participant terminates by reason of the Participants Retirement, Disability or death, the Participants Stock Options and Stock Appreciation Rights may be exercised by the Participant, the
Participants designated beneficiary or legal representative or permitted transferee at any time on or prior to the earlier of the expiration date of the Stock Options and Stock Appreciation Rights or the expiration of one year after the date
of Retirement, Disability or death but only if, and to the extent that the Participant was entitled to exercise the Stock Options and Stock Appreciation Rights at the date of Retirement, Disability or death and subject to such other terms and
conditions as may be specified in the Award Agreement and the Plan. All Stock Options and Stock Appreciation Rights or any portion thereof not yet vested or exercisable on the date of Retirement, Disability or death shall become immediately vested
and exercisable on the date of termination due to Retirement, Disability or death (except as otherwise provided by the Committee or an employment agreement between the Company and the Participant). Upon termination of the Participants
employment for any reason other than Retirement, Disability or death, any Stock Options and Stock Appreciation Rights may be exercised by the Participant, the Participants designated beneficiary or legal representative or permitted transferee
at any time on
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or prior to the earlier of the expiration date of the Award or the expiration of ninety days after the date of termination but only if, and to the extent that the Participant was entitled to
exercise the Award at the date of termination and subject to such other terms and conditions as may be specified in the Award Agreement and the Plan. All Stock Options and Stock Appreciation Rights or any portion thereof not yet vested or
exercisable on the date of termination other than by reason of Retirement, Disability or death shall terminate immediately on the date of termination (except as otherwise provided by the Committee or an employment agreement between the Company and
the Participant). For purposes of applying the above rules under which an Award will be forfeited, the date of termination includes the date a Participant ceases to be employed by the Company or a Subsidiary.
(b)
Restricted Stock, Restricted Stock Units, Performance Share Units and Other Stock-Based Awards
. If the Participant dies or
incurs a Disability, any unvested Restricted Stock, Restricted Stock Units, Performance Share Units and Other Stock-Based Awards shall vest in full, and with respect to any such Awards that include a performance based vesting schedule, assuming that
the target level of performance has been achieved. Such Awards that vest pursuant to the preceding sentence shall be paid within sixty (60) days after the date of death or Disability. All Restricted Stock, Restricted Stock Units,
Performance Share Units, Other Stock-Based Awards or any portion thereof not yet vested on the date of termination other than by reason of Disability or death shall terminate and be forfeited immediately on the date of termination (except as
otherwise provided by the Committee or an employment agreement between the Company and the Participant). For purposes of applying the above rules under which an Award will be forfeited, the date of termination includes the date a Participant ceases
to be employed by the Company or a Subsidiary.
Unless otherwise determined by the Committee, an authorized leave of absence
pursuant to a written agreement or other leave entitling the Participant to reemployment in a comparable position by law or Rule shall not constitute a termination of employment for purposes of the Plan unless the Participant does not return at or
before the end of the authorized leave or within the period for which re-employment is guaranteed by law or Rule.
In the
event of any change in the capital stock of the Company by reason of any stock dividend, stock split, recapitalization, reorganization, merger, consolidation, split-up, combination, or exchange of shares, or rights offering to purchase capital stock
at a price substantially below fair market value, or of any similar change affecting the capital stock, the number and kind of shares authorized under Section 4 for the Plan (including, to the extent permitted by Section 162(m), the limit
in Section 4 on Awards to any Participant in any fiscal year), the number and kind of shares which thereafter are subject to an Award under the Plan and the number and kind of unexercised Stock Options and Stock Appreciation Rights and the
price per share shall be adjusted automatically consistent with such change to prevent the dilution or enlargement of the rights granted to, or available for, Participants in the Plan.
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The Plan
and any Awards granted under the Plan shall not confer upon any Participant any right with respect to continuance as an employee of the Company, nor shall the Plan or such Awards interfere in any way with the right of the Company to terminate the
Participants position as an employee or director at any time.
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RIGHTS AS A STOCKHOLDER
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The
recipient of any Award under the Plan shall have no rights as a stockholder with respect thereto unless and until the underlying Shares are issued to the recipient, except as otherwise specifically provided by the Committee.
19.
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SECTION 162(m) CONDITIONS
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It
is the intent of the Company that all Awards that are intended to qualify as performance-based compensation under Section 162(m) be granted and interpreted in a manner to satisfy all applicable requirements of Section 162(m). Any
provision, application or interpretation of the Plan inconsistent with this intent to satisfy the standards in Section 162(m) shall be disregarded. Notwithstanding the foregoing, with respect to Awards that are intended to qualify as
performance-based compensation under Section 162(m), the Committee may adopt non-compliant Section 162(m) provisions that apply upon a Change in Control or the death or disability of a Covered Employee.
Notwithstanding anything in the Plan to the contrary, the provisions of the Plan may be bifurcated by the Committee so that the
provisions of the Plan that are intended or required to satisfy the performance-based compensation requirements of Section 162(m) are applicable only to Awards granted to Covered Employees.
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SECTION 409A CONDITIONS
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With
respect to Awards that are subject to Section 409A, the Plan is intended to comply with the requirements of Section 409A and the Plan and provisions of such Awards shall be interpreted and administered in accordance with that intent. To
the extent that the Committee determines that the Plan or any Section 409A Award fails to comply with the requirements of Section 409A, notwithstanding anything to the contrary contained in the Plan or in any Award, the Committee reserves
the right to amend or terminate the Plan and/or amend, restructure, terminate or replace the Award, without the consent of the Participant, to cause the Award to either not be subject to Section 409A or to comply with the applicable provisions
of such section. By way of example, the following rules shall apply:
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Any provision of the Plan that would conflict with the requirements of a Section 409A Award shall not apply to a Section 409A Award.
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Any adjustment or modification to an Award shall be made in compliance with Section 409A (e.g., any adjustment to an Option or Stock Appreciation
Right under Section 21 shall be made in accordance with the requirements of Section 409A).
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For Section 409A Awards, all rights to amend, terminate or modify the Plan or any Award are subject to the requirements and limitations of
Section 409A.
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For Section 409A Awards, any payment or distribution that is triggered upon termination or cessation of employment or a comparable event shall be
interpreted consistent with the definition of separation from service within the meaning of Treasury Regulation Section 1.409A-1(h).
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With respect to amounts payable under a Section 409A Award, in the event that a Participant is a specified employee as defined in
Section 409A, any amount that is payable in connection with the Participants separation from service shall not be paid prior to the date which is six months after the date the Participant separates from service (or, if earlier, the date
the Participant dies). A Participant who is subject to the restriction described in the previous sentence shall be paid on the first day of the seventh month after the Participants separation from service an amount equal to the benefit that
the Participant would have received during such six month period absent the restriction.
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While the Company
intends for Awards to either be exempt from or in compliance with Section 409A, neither the Company nor the Committee shall be liable to any person for the tax consequences of any failure to comply with the requirements of Section 409A or
any other tax consequences relating to Awards under the Plan.
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AMENDMENT AND DISCONTINUANCE
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The Plan and any Award outstanding under the Plan may be amended, modified or terminated by the Committee at any time and all Awards
shall be subject to the Plan, as amended from time to time, except that the Committee may not, without approval of the Participant to whom the Award was granted or his legal representative or permitted transferee adversely affect the rights of such
person under such Award. No amendment, modification, or termination of the Plan shall be effective without stockholder approval if such approval is required under applicable law or Rule or any regulation of the stock market on which the Class A
Stock is traded. Additionally, stockholder approval will be required for any amendment of the Plan that does any of the following: (a) permits the grant of any Stock Option with an exercise price less than the Fair Market Value of the Shares on
the date of grant; (b) reduces the exercise price of an outstanding Stock Option, either by lowering the exercise price or by canceling an outstanding Stock Option and granting a replacement Stock Option with a lower exercise price;
(c) permits the grant of any Stock Appreciation Right with a reference amount that is less than the Fair Market Value of the Shares on the date of grant; or (d) reduces the reference amount of an outstanding Stock Appreciation Right,
either by lowering the reference amount or by canceling an outstanding Stock Appreciation Right and granting a replacement Stock Appreciation Right with a lower reference amount.
(a) The Committee has the authority to prescribe the rules that apply to an Award upon a Change in Control, which shall be memorialized in the Participants original or
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amended Award Agreement or similar document. In the event that the Award Agreement does not prescribe such rules, the following rules will apply. In the event of a Change in Control of the
Company, all of a Participants Awards shall become immediately vested and exercisable or fully earned at the maximum amount, except as otherwise determined by the Committee. Notwithstanding the foregoing, this Section 22 shall not affect
the timing of payment of a Section 409A Award (including vesting if vesting affects the timing of payment) unless the Change in Control also constitutes a change in ownership or effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company within the meaning of Section 409A.
(b) In the event of
a Change in Control, in the discretion of the Committee, each Participant who is a Section 16 insider with respect to whom the Change in Control might result in a violation under Section 16(b) of the Exchange Act, may receive, in exchange
for the surrender of a Stock Option, an amount of cash equal to the difference between the fair market value (based on the kind and amount of any securities, cash, other property or other consideration to be received with respect to each Share in
the Change in Control transaction as determined by the Committee) of the Shares covered by the Award and the exercise price of such Shares under the Stock Option or to receive, in exchange for any other Award, an amount of cash equivalent to such
fair market value had the Participant received the Shares or other compensation as intended under the Award prior to the Change in Control.
(c) Notwithstanding the foregoing, the Plan and any Awards outstanding under the Plan shall be binding upon any successor to the Company, whether such successor is the result of a direct or indirect
purchase, merger, consolidation or other acquisition of all or substantially all of the business and/or assets of the Company.
Notwithstanding any
provision to the contrary, if the Company determines that it is required by law to include an additional clawback or recoupment provision to an Award under the Dodd-Frank Wall Street Reform and Consumer Protection Act or
otherwise, then such clawback or recoupment provision shall automatically apply to the Award, regardless of whether such provision had been included in the Award Agreement.
Notwithstanding any other provision of the Plan, the terms of Substitute Awards may vary from the terms set forth in the Plan to the
extent the Committee deems appropriate to conform, in whole or in part, to the provisions of the awards in substitution for which they are granted.
25.
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PARTICIPANTS IN FOREIGN COUNTRIES
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The Committee shall have the authority to adopt such modifications, procedures, and subplans, in each case which may differ from the terms specified in the Plan, as may be necessary or desirable to comply
with provisions of the laws of foreign countries in which the Company or its Subsidiaries may operate to assure the viability of the benefits from Awards
- 12 -
granted to Participants performing services in such countries and to meet the objectives of the Plan.
The Plan and any
Award made pursuant to it shall be construed under the laws of the State of Delaware.
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Dated: July __, 2012
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CONSTELLATION BRANDS, INC.
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By:
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Title:
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Date of Stockholder Approval: July __, 2012
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ANNEX A
TO
LONG-TERM STOCK INCENTIVE PLAN
CERTAIN DEFINITIONS
Capitalized terms used in the Plan shall have the meanings set forth below:
Award
means, individually or collectively, a grant under the Plan of Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Share Units or Other Stock-Based Awards. Subject to the terms of the Plan, the terms of an Award will be memorialized and set forth in an Award Agreement.
Award Agreement
means a written or electronic agreement setting forth the terms and provisions applicable to Awards
granted under the Plan.
Cause
means, solely for the purposes of the Plan, gross negligence or willful
misconduct or commission of a felony or an act of moral turpitude determined by the Committee to be detrimental to the best interests of the Company or, if the Participant is subject to a written agreement with the Company, cause shall
have the meaning set forth in that agreement.
Change in Control
means, unless the Committee specifies
otherwise in an Award Agreement:
(a) there shall be consummated
(i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which
any Shares are to be converted into cash, securities or other property, provided that the consolidation or merger is not with a corporation which was a direct or indirect wholly-owned subsidiary of the Company or a parent of the Company immediately
before the consolidation or merger; or
(ii) any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the Company; or
(b) the stockholders of the Company
approve any plan or proposal for the liquidation or dissolution of the Company; or
(c) any person (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) other than any of the Permitted Holders shall become the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly
or indirectly, of 35% or more of the voting control of the Companys then outstanding common stock, provided that such person shall not be a wholly-owned subsidiary of the Company immediately before it becomes such 35% beneficial owner of
voting control; or
(d) individuals who constitute the Incumbent Board cease for any reason to constitute at least a majority
of the Companys Board of Directors (for this purpose Incumbent Board
means at any time those persons who are then members of the Board of Directors of the Company and who either (i) are members of the Companys Board of Directors on the date hereof, or
(ii) have been elected, or have been nominated for election by the Companys stockholders, by the affirmative vote of at least two-thirds of the directors comprising the Incumbent Board at the time of such election or nomination (either by
a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director without objection to such nomination)).
Class A Stock
means the class A common stock, par value $.01 per share, of the Company.
Class 1 Stock
means the class 1 common stock, par value $.01 per share, of the Company.
Code
means the Internal Revenue Code of 1986, as amended.
Company
means Constellation Brands, Inc. and its Subsidiaries, except where the context indicates that only the parent
company is intended.
Committee
means the committee appointed from time to time by the Companys Board
of Directors to administer the Plan, and if no committee is appointed, the Committee shall be the Human Resources Committee. The full Board of Directors, in its discretion, may act as the Committee under the Plan, whether or not a Committee has been
appointed, and shall do so with respect to grants of Awards to non-employee directors. The Committee may delegate to one or more members of the Committee or officers of the Company, individually or acting as a committee, any portion of its
authority, except as otherwise expressly provided in the Plan. In the event of a delegation to a member of the Committee, officer or a committee thereof, the term Committee as used herein shall include the member of the Committee,
officer or committee with respect to the delegated authority. Notwithstanding any such delegation of authority, the Committee comprised of members of the Board of Directors and appointed by the Board of Directors shall retain overall responsibility
for the operation of the Plan.
Covered Employee
means an employee who is a covered employee as
such term is defined under Section 162(m) and such additional employees as the Committee may treat as being subject to the rules that apply to covered employees under Section 162(m).
Disability
means, unless the Committee specifies otherwise in a Participants Award Agreement, a
termination of employment due to the inability of a Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than six months, all as verified by a physician acceptable to, or selected by, the Committee; provided that, unless the Committee specifies otherwise in a Participants Award
Agreement, with respect to a Section 409A Award whose payment is triggered by the Participants Disability the six month period referenced above shall be twelve months and the Disability must satisfy the requirements of Section 409A.
Extraordinary Items
means (a) items presented as such (or other comparable terms) on the
Companys audited financial statements, (b) extraordinary, unusual, transition, one-time
- 2 -
and/or nonrecurring items of gain or loss (including, but not limited to, charges for reorganizing and restructuring, discontinued operations and asset write-downs), (c) changes in tax or
accounting laws, regulations or principles, (d) the effects of mergers, acquisitions, divestitures, spin-offs or similar significant transactions (including, without limitation, gains or losses on the disposition of a business or business
segment or arising from the sale of assets outside the ordinary course of business), (e) stock split, recapitalization, split-up, or similar change, or (f) share repurchases. To qualify as an Extraordinary Item, the item must be identified
in the audited financial statements and notes thereto or in the managements discussion and analysis section of the financial statements in a period report filed with the SEC under the Exchange Act.
Fair Market Value
of a Share means (a) with respect to a Share of Class A Stock, the closing price of the
Class A Stock on the New York Stock Exchange or other national stock exchange on which the Class A Stock is actively traded for the date as reported in the Wall Street Journal, Eastern Edition or such other standard reference service as
the Committee may select, and (b) with respect to a Share of Class 1 Stock, (i) the closing price of the Class A Stock on the New York Stock Exchange or other national stock exchange on which the Class A Stock is actively traded
for the date as reported in the Wall Street Journal, Eastern Edition or such other standard reference service as the Committee may select, or (ii) if the Committee shall determine that the fair market value of a share of Class A Stock is
not a reasonable proxy for the fair market value of a share of Class 1 Stock, such fair market value as shall be determined by the Committee or calculated in accordance with one or more methodologies established by the Committee as such
methodologies may be modified or adjusted from time to time by the Committee.
IRS
means the Internal
Revenue Service and, if the context permits, the courts interpreting the Code.
Other Stock-Based Award
means an Award granted pursuant to Section 9 of the Plan which is subject to the terms, conditions and restrictions set forth in the Award Agreement evidencing the Award.
Participant
means any employee of the Company or non-employee director of the Company who has received an Award under the Plan.
Performance Criteria
means one or more of the following performance criteria for a Performance Period selected by the
Committee with respect to an Award:
- 3 -
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Sales Growth or Net Sales Growth
Net
Sales
Assets or Asset Productivity
Operating
Expenses / Selling, General and Administrative Expenses
Cost reductions or cost control
Gross Margin or Gross Profit
Brand
Contribution / Contribution after
Marketing
Operating Income or Net Operating Income
Operating Margins / Sales
Return on
Operating Revenue
Earnings Before Interest and Taxes
Earnings
Before Interest, Taxes,
Depreciation and Amortization
Income Before Income Taxes /
Profit Before Tax
Net Income
Earnings Per
Share
Cash Flow or Free Cash Flow
Working
Capital or any of its components
(Accounts Receivable, Inventory, Accounts
Payable)
New product introductions or launches
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Cash Flows from Operating Activities
Return on
Capital
Return on Equity
Cost of Goods
Sold /
Cost of Product Sold
Return on Invested Capital
Return on
Assets / Return on Net Assets
Capital Expenditures / Purchases of
property, plant and equipment
Net Increase
in Cash or Cash Equivalents
Stock Price
Market share
(volume or value-based)
Total Stockholder Return
Stockholder
Value Added / Economic
Value Added
Goals relating to acquisitions or
divestitures
Units sold or depleted
Customer
service level
Debt Ratio or Debt-to-Equity Ratio
New Sales or
Depletions or new product introductions
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Performance criteria may be: (a) established on a corporate, divisional, business unit or
consolidated basis, (b) measured on an absolute basis or relative basis (e.g., passage of time (such as a year over year growth), as a relative comparison to a peer group, industry index, broad-based index, etc.), (c) calculated on a
pre-tax or after-tax basis, (d) calculated on a per share basis, (e) calculated on a GAAP or non-GAAP basis, and/or (f) calculated for all or a portion of a single year or calculated over multiple years.
Performance Period
means the fiscal year or years or other period established by the Committee with respect to which a
Performance Target is set by the Committee.
Performance Share Unit
means an Award granted to a Participant
pursuant to Section 8 of the Plan whose value is denominated in Shares and is earned by satisfaction of specified performance goals and such other terms and conditions that the Committee may specify.
Performance Target
means one or more specific objective goal or goals (which may be cumulative or alternative) that
are timely set in writing by the Committee for each Participant for the applicable Performance Period with respect to any one or more of the Performance Criteria.
- 4 -
Permitted Holders
means, unless the Committee specifies otherwise in an
Award Agreement, (a) Marilyn Sands, her descendants (whether by blood or adoption), her descendants spouses, her siblings, the descendants of her siblings (whether by blood or adoption), Hudson Ansley, Lindsay Caleo, William Caleo,
Courtney Winslow, or Andrew Stern, or the estate of any of the foregoing individuals, or The Sands Family Foundation, Inc., (b) trusts which are for the benefit of any combination of the individuals and foundation described in clause (a), or
any trust for the benefit of any such trust, or (c) partnerships, limited liability companies or any other entities which are controlled by any combination of the individuals described in clause (a) or the estate of any such individuals,
The Sands Family Foundation, Inc., a trust referred to in the foregoing clause (b), or an entity that satisfies the conditions of this clause (c).
Plan
means the Long-Term Stock Incentive Plan of the Company (amended and restated as of July 27, 2012), as amended from time to time.
Restricted Stock
means Shares granted pursuant to Section 7 of the Plan which are subject to the terms,
conditions and restrictions set forth in the Award Agreement evidencing the Award.
Restricted Stock Units
means an Award granted to a Participant pursuant to Section 8 of the Plan whose value is denominated in Shares and is earned by satisfaction of specified service requirements and such other terms and conditions that the Committee may
specify.
Retirement
means a termination of employment by an employee who is at least 60 years of age and
after at least 10 years of service with the Company. For an individual who becomes employed by the Company in connection with a business acquisition (regardless of the form of the transaction), service shall include the individuals service
with the acquired business, unless the Committee determines otherwise.
Rules
means rules, regulations and
interpretations issued by the governmental authority charged with administering any law and any judicial interpretations applicable thereto.
SEC
means the Securities and Exchange Commission.
Section 409A
means Code Section 409A and the regulations and guidance issued thereunder.
Section 409A Award
means an Award that is subject to and intended to comply with the requirements of
Section 409A.
Section 162(m)
means Code Section 162(m) and the regulations and guidance issued
thereunder.
Shares
means shares of Class A Stock or Class 1 Stock and, with respect to any particular
Award, means the shares of Class A Stock or shares of Class 1 Stock to which such Award relates.
Stock
Appreciation Right
means an Award, granted alone or in connection with a related Stock Option, designated as a Stock Appreciation Right and granted pursuant to the terms
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of Section 6 of the Plan which is subject to the terms, conditions and restrictions set forth in the Award Agreement evidencing the Award and the Plan.
Stock Option
means any nonqualified Stock Option granted pursuant to Section 5 of the Plan which is subject to
the terms, conditions and restrictions set forth in the Award Agreement evidencing the Award and the Plan.
Subsidiaries
means (a) all corporations of which at least fifty percent of the voting stock is owned by the
Company directly or through one or more corporations at least fifty percent of whose voting stock is so owned, and (b) partnerships or other entities in which the Company has, either directly or indirectly, at least a fifty percent interest in
the capital or profits.
Substitute Awards
shall mean Awards granted or Shares issued by the Company in
assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
Other terms: Any other terms used in the Plan which are defined in Sections 83, 162(m), 409A or 421 of the Internal Revenue
Code as amended, or the Rules thereunder or corresponding provisions of subsequent laws and Rules in effect at the time Awards are made under the Plan, shall have the meanings set forth in such laws or Rules.
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Important notic e regarding the Internet availa bilit y of proxy materials for the
Annual Meeting of Stockholders to be held on July 27, 2012: The Companys Proxy Statement and Annual Report to stockhold ers, consisting of th e Companys 2012 Summary Annual Report and Annual Report on Form 10-K, are available at
www.cbrands.com/in vestors.
IF YOU HAVE NOT SUBMIT TED YOUR PROXY VIA THE IN TERNET OR TELEPHONE, FOLD AND
DETACH HERE
PROXY FOR CLASS A COMMON STOCK CONSTELLATION BRANDS, INC.
2012 ANNUAL MEETING OF STOCKHOLDERS JULY 27, 2012
THIS PROXY IS SOLIC ITED BY THE BOARD OF DIRECTORS OF THE COMPANY
You hereby appoin t David S. Sorc e and Thomas J. Mullin, or either of the m, pro xies fo r you with fu ll power of
substitution to vote all share s of Cla ss A Common Stock, par value $.01 per share, of CONSTELLATIO N BRANDS, INC. (the Company) that you would be entitled to vote at th e Annual Meeting of Stockholders of th e Company to be held in th
e Town of Pittsford in the Callahan Theater at the Nazareth College Arts Center, 4245 East Avenue, Rochester, New York 14618, on Friday, July 27, 2012, at 11:0 0 a.m. (l ocal ti me) and any adjo urnment th ereof (t he Meeti ng).
Class A Stockholders, voting as a separate class, are entitled to elect three (3 ) dir ectors at th e
Meeting. Class B Stockholders, voting as a separ ate class, are entitled to elect six (6) dire ctors at the Meeting. Please refe r to th e Proxy Statement fo r details. The number of your shares of Class A Common Stock appears on th e back
of this card.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED BY YOU. THIS PROXY REVOKES ANY
PRIOR PROXY GIVEN BY YOU. UNLESS DIRECTED OTHERWISE, TH E PROXIES WILL VOTE THE SHARES FOR THE ELECTION OF ALL THE NOMINEES LISTED ON THE REVERSE SIDE (P ROPOSAL 1), FOR PROPOSALS 2, 3, 4 AND
5, AGAINST PROPOSALS 6 AND 7, AND IN THE DISCRET IO N OF SAID PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING OR AN Y
ADJOU RNME NT THEREOF.
TO APPROVE THE BOARD OF DIRECTORS RECOMMENDATIONS, SIMPLY SIGN AND DATE ON THE BACK IF YOU ARE SUBMITTING YOUR PROXY
BY MAIL. YOU NEED NOT MARK ANY BOXES.
Address Change/Comments
(Mark the corresponding box on th e reverse si de)
SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
WO# Fu lfi llment#
(Continued on th e other side) 240 46 00000
YOUR VOTE IS IMPORTANT. PLEASE SUBMIT YOUR PROXY TODAY. We encourage Both you are avail
to take ableadvantage 24 hours a ofday, Internet 7 days or a telephone week. votin g.
Internet and telephone
voting is available through 11:59 PM Eastern Time th e day prior to the stockholder meeting date.
INTERNET
http://www.proxyvotin g.com/stza
Use the Internet to submit your proxy. Have your proxy card in hand when you
access the web site.
Constella tion Brands, Inc.
OR TELEPHONE
1-866-540-5760
Use any to uch-tone te le phone to
submit your proxy. Have your proxy card in hand when you call.
If you submit your proxy by In ternet or by
telephone, you do NOT need to mail back your proxy card. To submit your proxy by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
Please note there are two (2) proxy cards, on e for Class A Stockholders and one for Class B Sto ckholders . Sto
ckholders who receive a Cla ss A proxy card and a Class B proxy card must vote th e shares represented by each card separately.
WO# Fulfillment#
240 46 IF YOU HAVE 00000 NOT
SUBMITTED YOUR PROXY VIA THE INTERNET OR TELEPHONE, FOLD AND DETACH HERE
TH E BOARD OF DIRECTORS RECOMMENDS A
VO TE FOR ALL LIS TED DIRECTOR NOMINEES, Plea se mark your votes as
F OR PR OPO SALS
2, 3, 4 AND 5, AND AGAINST PROPOSALS 6 AND 7. in dic ated in th is example X
FOR WITHHOLD *EX
CEPTION S
ALL FOR ALL FOR AGAINST ABSTAIN
1. Proposal to elect as dire ctors 2. Proposa l to ratify th e selection of KPMG LLP as th e Companys of the Company
th e fo llowing ending in dependent Fe bruary registered 28, 2013 public accounting firm fo r the fi scal year nominees as set fo rt h in th e Proxy Statement 3. Proposa l to approve, by an advisory vote, the compensation of CLASS A STOCKHOLDERS are
entitled to vote fo r th e fo llowing Proxy th e Companys Statement named executi ve office rs as disclosed in th e nominees:
01 Bar y A. Fro mberg 4. Proposa l to approve th e amendment and restate ment of th e
02 Jeananne K. Hauswald Companys Annual Management In centive Plan
03 Paul L. Smith
5. Proposa l to approve th e
amendment and restate ment of th e Companys Long-Term Stock In centi ve Plan
IN STRUCTIO NS: To withhold
authorit y to vote fo r any individual THE BOARD OF DIRE CTORS RECOMMENDS A VOTE AGAINST PROPOSALS 6 AND 7. nomin ee, mark the Exceptio ns box above and write each such nomin ees name in the space provided below. FOR
AGAINST ABSTAIN
*Exceptio ns
6. Stoc kholde r proposal concerning Equal Sharehold er Voting
7. Stoc kholde r proposal concerning Multiple Perform ance Metrics
Mark Here fo r Addre ss Chang e or Comments SEE REVERSE
NOTE: Please sig n your name(s ) EXACTLY as your name(s) appear(s ) on this proxy. All joint holders must sign. When signing as attorney, tr ustee, executor, administrator, guardian or
corporate officer, please provide your FULL ti tle .
Signature Signature Date
Important notic e regarding the Internet availa bilit y of proxy materials for the
Annual Meeting of Stockholders to be held on July 27, 2012: The Companys Proxy Statement and Annual Report to stockhold ers, consisting of th e Companys 2012 Summary Annual Report and Annual Report on Form 10-K, are available at
www.cbrands.com/in vestors.
IF YOU HAVE NOT SUBMIT TED YOUR PROXY VIA THE IN TERNET OR TELEPHONE, FOLD AND
DETACH HERE
PROXY FOR CLASS B COMMON STOCK CONSTELLATION BRANDS, INC.
2012 ANNUAL MEETING OF STOCKHOLDERS JULY 27, 2012
THIS PROXY IS SOLIC ITED BY THE BOARD OF DIRECTORS OF THE COMPANY
You hereby appoint David S. Sorc e and Thomas J. Mullin, or either of th em, pro xies for you with fu ll power of
substitution to vote all shares of Cla ss B Common Stock, par value $.01 per share, of CONSTELLATIO N BRANDS, INC. (the Company) that you would be entitled to vote at th e Annual Meeting of Stockholders of th e Company to be held in th e
Town of Pittsford in the Callahan Theater at the Nazareth College Arts Center, 4245 East Avenue, Rochester, New York 14618, on Friday, July 27, 2012, at 11:0 0 a.m. (l ocal ti me) and any adjo urnment th ereof (t he Meeti ng).
Class A Stockholders, voting as a separate class, are entitled to elect three (3 ) dir ectors at th e
Meeting. Class B Stockholders, voting as a separ ate class, are entitled to elect six (6) dire ctors at the Meeting. Please refe r to th e Proxy Statement fo r details. The number of your shares of Class B Common Stock app ears on th e back of
th is card.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED BY YOU. THIS PROXY REVOKES ANY
PRIOR PROXY GIVEN BY YOU. UNLESS DIRECTED OTHERWISE, TH E PROXIES WILL VOTE THE SHARES FOR THE ELECTION OF ALL THE NOMINEES LISTED ON THE REVERSE SIDE (P ROPOSAL 1), FOR PROPOSALS 2, 3, 4 AND
5, AGAINST PROPOSALS 6 AND 7, AND IN THE DISCRET IO N OF SAID PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING OR AN Y
ADJOU RNME NT THEREOF.
TO APPROVE THE BOARD OF DIRECTORS RECOMMENDATIONS, SIMPLY SIGN AND DATE ON THE BACK IF YOU ARE SUBMITTING YOUR PROXY
BY MAIL. YOU NEED NOT MARK ANY BOXES.
Address Change/Comments
(M ark the corresponding box on th e re verse side)
SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
WO# Fu lfi llment#
(Continued on th e other side) 24046-bl 00000
YOUR VOTE IS IMPORTANT. PLEASE SUBMIT YOUR PROXY TODAY. We encourage Both you are avail
to take ableadvantage 24 hours a ofday, Internet 7 days or a telephone week. votin g.
Internet and telephone
voting is available through 11:59 PM Eastern Time th e day prior to the stockholder meeting date.
NTERNET
http://www.proxyvotin g.com/stzb
Use the Internet to submit your proxy. Have your proxy card in hand when you
access the web site.
Constella tion Brands, Inc. OR
TELEPHONE 1-866-540-5760
Use any touch-tone tele phone to submit your proxy. Have your proxy card in hand when you cal .
If you submit your proxy by In ternet or by te lephone, you do NOT need to mail back your proxy card. To submit your proxy by mail, mark, sign and date your proxy card and return it in the
enclosed postage-paid envelope.
Your In ternet or telephone vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy card.
Please note there are two
(2) proxy cards, on e for Class A Stockholders and one for Class B Sto ckholders . Sto ckholders who receive a Cla ss A proxy card and a Class B proxy card must vote th e shares represented by each card separately.
WO# Fulfillment#
24046-bl IF YOU HAVE 00000 NOT SUBMITTED YOUR PROXY VIA THE INTERNET OR TELEPHONE, FOLD AND DETACH HERE
TH E BOARD OF DIRECTORS RECOMMENDS A VO TE FOR ALL LIS TED DIRECTOR NOMINEES,
Plea se mark your votes as
F OR PR
OPO SALS 2, 3, 4 AND 5, AND AGAINST PROPOSALS 6 AND 7. in dic ated in th is example X
FOR WITHHOLD
*EX CEPTION S
ALL FOR ALL FOR AGAINST ABSTAIN
1. Proposal to elect as dire ctors 2. Proposa l to ratify th e selection of KPMG LLP as th e Companys of the Company
th e fo llowing ending in dependent Fe bruary registered 28, 2013 public accounting firm fo r the fi scal year nominees as set fo rt h in th e Proxy Statement 3. Proposa l to approve, by an advisory vote, the compensation of CLASS B STOCKHOLDERS are
entitled to vote for th e fo llowing Proxy th e Companys Statement named executi ve office rs as disclosed in th e nominees:
01 Jerry Fowden 04 Robert Sands 4. Proposa l to approve th e amendment and restate ment of th e
02 James A. Locke I I 05 Keith E. Wandell Companys Annual Management In centive Plan
03 Richard Sands 06 Mark Zupan
5. Proposa l to
approve th e amendment and restate ment of th e Companys Long-Term Stock In centi ve Plan
IN STRUCTIO
NS: To withhold authorit y to vote fo r any individual THE BOARD OF DIRE CTORS RECOMMENDS A VOTE AGAINST PROPOSALS 6 AND 7. nomin ee, mark the Exceptio ns box above and write each such nomin ees name in the space
provided below. FOR AGAINST ABSTAIN
*Exceptio ns 6. Stoc kholde r proposal concerning Equal Sharehold er
Voting
7. Stoc kholde r proposal concerning Multiple Perform ance Metrics
Mark Here fo r Address Chan ge or Commen ts SEE RE VERSE
NOTE: Please sig n your name(s ) EXACTLY as your name(s) appear(s ) on this proxy. All joint holders must sign. When
signing as attorney, tr ustee, executor, administrator, guardian or corporate officer, please provide your FULL ti tle .
Signature Signature Date
Constellation Brands (NYSE:STZ)
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Constellation Brands (NYSE:STZ)
過去 株価チャート
から 7 2023 まで 7 2024