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Business Context and Reporting Period

This Form 8-K Current Report was filed by Constellation Brands, Inc. on April 6, 2009. The filing primarily addresses Item 5.02 regarding compensatory arrangements for senior management and Item 7.01 regarding Regulation FD disclosure. The report details actions taken by the Human Resources Committee of the Board of Directors on April 6, 2009, concerning executive salaries, equity awards, incentive plan amendments, and the retirement of Alexander L. Berk.

Key Financial Metrics and Compensation Details

The filing does not report consolidated revenue, profit, cash flow, or debt metrics for the company. Instead, it discloses specific compensation figures and equity grant values for Fiscal 2010 (ending February 28, 2010) and specific transaction bonuses.

Equity Terms: Stock options were granted with an exercise price of $11.85 per share (closing price on April 6, 2009). Restricted stock awards were also valued at $11.85 per share. Both awards vest over four years (25% annually) or immediately upon a change in control.

Transaction Bonus: Alexander L. Berk received a transaction bonus of $260,584 related to the sale of the Company's value spirits business.

Consulting Fee: Mr. Berk will receive $20,833.33 per month for up to one year under a consultant agreement.

Material Changes and Plan Amendments

• Annual Management Incentive Plan (AMIP) Amendment: The Committee adopted Amendment Number 1 to the AMIP, effective April 6, 2009. Key changes include:
  • Reserving the Committee's unilateral right to reduce or eliminate bonuses for "covered employees" even if performance targets are met.
  • Clarifying the timing of bonus payments.
  • Clarifying rules regarding death or termination of employment.
• Fiscal 2010 Incentive Criteria: Potential incentive awards for Fiscal 2010 are set at 0.5% of Earnings Before Interest and Taxes (EBIT) for Richard and Robert Sands, and 0.25% of EBIT for other executive officers. The Committee retains negative discretion to reduce these amounts based on company performance.
• Executive Departure: Alexander L. Berk is retiring on May 31, 2009. His unvested options will fully vest, and vested options remain exercisable until February 28, 2011.

Outlook, Risks, and Unusual Items

Management Commentary: The filing indicates a focus on aligning executive compensation with long-term performance through the vesting schedules of stock options and restricted stock. The amendment to the AMIP introduces a risk of reduced compensation for executives even if targets are met, granting the Board significant discretion.

Unusual Items: The transaction bonus paid to Alexander L. Berk is directly tied to the recent sale of the Company's value spirits business, a significant divestiture event.

Risks: The filing notes that unvested shares and options are subject to forfeiture upon certain termination events. Additionally, the Company's ability to pay bonuses is subject to the Committee's negative discretion.

Key Facts for Investor Verification

• Verify the impact of the value spirits business sale on the Company's future revenue streams and EBIT calculations used for executive bonuses.
• Confirm the total dilution impact of the 2,201,670 stock options and 278,650 restricted shares granted to executives on April 6, 2009.
• Monitor the execution of the consultant agreement with Alexander L. Berk to ensure continuity in the Crown Imports, LLC joint venture with Grupo Modelo.
• Review the specific terms of the AMIP Amendment to understand the extent of the Board's discretion in reducing executive bonuses.
• Check subsequent filings for the actual EBIT figures for Fiscal 2010 to determine the realized value of the incentive awards.