Business Context and Reporting Period
This Form 8-K Current Report was filed by Constellation Brands, Inc. on April 27, 2007. The filing addresses corporate governance and executive compensation matters approved by the Human Resources Committee of the Board of Directors on the date of the report.
Key Financial Metrics
This filing does not report historical financial results such as revenue, profit, cash flow, margins, debt, or liquidity. Instead, it defines the performance metrics that will determine executive compensation for the upcoming fiscal year.
- Maximum Individual Bonus: Increased to $5 million per fiscal year for participating executives.
- 2008 Fiscal Year Award Range: Incentive awards for executive officers range from 17.5% to 240% of base salary.
- Performance Period: March 1, 2007, through February 29, 2008.
Material Changes
The filing details the adoption of Amendment Number 3 to the Company's Annual Management Incentive Plan. Key changes include:
- Increasing the maximum bonus cap to $5 million.
- Amending definitions for "Disability," "Retirement," and "Performance Criteria."
- Expanding the list of potential performance measures available to the Committee.
- Establishing specific performance targets for the 2008 fiscal year based on Company-wide or divisional performance.
Guidance, Outlook, and Risks
The filing outlines the criteria for the 2008 Fiscal Year Incentive Awards. Performance will be measured against two primary metrics:
- EBIT (Earnings Before Interest and Taxes): Defined as Operating Income plus Equity in Earnings of Equity Method Investees.
- Free Cash Flow: Defined as Net Cash Provided by Operating Activities minus Purchases of Property, Plant and Equipment.
Contingency: The Amendment to the Annual Management Incentive Plan is effective as of April 27, 2007, but remains subject to shareholder approval.
Investor Verification Checklist
- Verify whether the Amendment Number 3 to the Annual Management Incentive Plan received the required shareholder approval.
- Review the specific weightings assigned to EBIT versus Free Cash Flow in the final 2008 executive compensation calculation.
- Confirm the list of executives eligible for the 2008 Program for Executive Officers.
- Examine Exhibit 99.1 for the full text of the amended plan definitions regarding Disability and Retirement.