Business Context and Reporting Period
This Form 8-K filing by Constellation Brands, Inc. reports on events occurring on April 21, 2017. The filing details actions taken by the Human Resources Committee of the Board of Directors regarding compensatory arrangements for senior management and executive officers.
Key Financial Metrics
This filing does not contain operational financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The only financial data provided relates to executive compensation and stock pricing:
- Stock Price: The closing price of Class A Common Stock on April 21, 2017, was $172.09 per share.
- Stock Option Exercise Price: Set at $172.09 per share for all grants.
Material Changes and Compensation Actions
The Committee approved the following compensatory arrangements effective April 21, 2017 (with salary changes effective May 29, 2017):
Stock Option Grants
Options were granted under the Long-Term Stock Incentive Plan with a 10-year term and a 4-year vesting schedule (25% annually). Full acceleration occurs upon Change in Control terminations.
| Name and Position | Number of Options | Exercise Price |
|---|---|---|
| Richard Sands, Chairman of the Board | 84,970 | $172.09 |
| Robert Sands, President and CEO | 57,772 | $172.09 |
| David Klein, EVP and CFO | 19,159 | $172.09 |
| William F. Hackett, EVP and Chairman, Beer Division | 9,301 | $172.09 |
Restricted Stock Unit (RSU) Grants
RSUs vest 25% annually over four years starting May 1, 2017. Dividend equivalents accrue during the vesting period.
| Name | Number of Units |
|---|---|
| Robert Sands | 7,667 |
| David Klein | 2,543 |
| William F. Hackett | 1,235 |
Performance Share Unit (PSU) Grants
PSUs are settled in Class A Common Stock based on Relative Total Stockholder Return (RTSR) from March 1, 2017, through February 29, 2020. Vesting is contingent on performance targets.
| Name | Target Number of Units |
|---|---|
| Robert Sands | 7,667 |
| David Klein | 2,543 |
| William F. Hackett | 1,235 |
Base Salary Adjustments
New annual base salaries were set to take effect on May 29, 2017:
- Richard Sands: $1,332,500
- Robert Sands: $1,358,900
Guidance, Outlook, and Risks
This filing does not provide financial guidance, outlook, or management commentary on business performance. The primary risks disclosed relate to the forfeiture of unvested equity awards upon termination of employment, except in cases of death, disability, retirement after November 1, 2017, or Change in Control events.
Key Facts for Investor Verification
- Verify the total dilution impact of the 171,202 stock options and 11,444 RSUs granted to executives.
- Confirm the specific Relative Total Stockholder Return (RTSR) performance hurdles required for the PSU grants to vest.
- Note that the salary increases for the Chairman and CEO are effective May 29, 2017.
- Review the attached Exhibits 10.1, 10.2, and 10.3 for the full legal terms regarding Change in Control acceleration and retirement provisions.