Item 5.02 Departure of Certain officers; Election of Directors; Appointment of Certain
Officers; Compensator Arrangements of Certain Officers.
Retirement of Chief Executive Officer and Director
On February 2, 2017, The Boston Beer Company, Inc. (the Company) announced that Martin F.
Roper intends to retire from his positions as the Companys President and Chief Executive Officer
(CEO) and as a Director of the Company, effective upon the appointment and commencement of
service of his successor to the role of Chief Executive Officer, which is expected to occur in 2017
or early 2018. At that time, Mr. Roper also will retire from all official positions with the
Companys subsidiaries. It is expected that Mr. Roper will continue to be employed by the Company
through February 28, 2018, or such later date as he and his successor agree (his Retirement
Date), to support and assist with the transition of his responsibilities. A special committee of
the Companys Board of Directors has been established to identify and evaluate, with the assistance
of an executive search firm, internal and external candidates to succeed Mr. Roper as CEO.
Retirement Agreements
In connection with Mr. Ropers planned retirement, the Company and Mr. Roper entered into an
agreement, dated February 2, 2017 (the Retirement Letter Agreement), which provides the terms and
conditions for Mr. Ropers continued employment with the Company until his planned retirement.
Pursuant to the terms of the Retirement Letter Agreement, Mr. Roper will serve the Company on a
full-time basis through January 1, 2018 and will continue to provide transition assistance, as
agreed with his successor, until his Retirement Date. Mr. Ropers 2017 compensation arrangements,
including his current annual base salary, previously established 2017 cash incentive bonus
opportunity (without pro-ration for length of service), vesting of outstanding long-term incentive
awards and eligibility to participate in benefit programs generally available to other senior
executives of the Company, continue through December 31, 2017, unless his employment is terminated
prior to January 1, 2018 due to his voluntary resignation or death or by the Company under the
limited circumstances noted below. Commencing January 1, 2018, so long as his successor has then
joined the Company, and until his Retirement Date, Mr. Roper will receive a salary at the annual
rate of $391,500. In the event a successor CEO has not commenced service prior to January 1, 2018,
Mr. Roper will continue to receive a salary at the 2017 annual rate until such time as his
successor joins the Company. Additional compensation for Mr. Ropers service through his Retirement
Date may be awarded in 2018 at the discretion of the Board of Directors or its Compensation
Committee.
Under the terms of the Retirement Letter Agreement, the Company has agreed that it will not
terminate Mr. Ropers employment prior to his Retirement Date, except under certain limited
circumstances involving malfeasance, willful and continued failure to substantially perform duties
or willful violations of the restrictive covenants set forth in the Restrictive Covenant Agreement
described below. Accordingly, absent Mr. Ropers prior death or voluntary retirement or such a
termination for cause, the last tranche of the option granted to Mr. Roper on January 1, 2008 (the
2008 Option) will vest and become exercisable on January 1, 2018 in accordance with its
previously reported terms. Additionally, in consideration of Mr. Ropers commitments under the
Restrictive Covenant Agreement, and provided that Mr. Ropers employment is not terminated by the
Company under the limited circumstances noted above, Mr. Roper will be entitled to a payment (the
Additional Payment) in the amount of $1,500,000 plus the excess of the cash incentive bonus
earned by Mr. Roper as a result of the Companys 2017 performance over $310,000, payable in fifty
four substantially equal consecutive monthly installments, commencing on the first day of the
seventh month following the Retirement Date. The Retirement Letter Agreement also includes a mutual
release of claims and non-disparagement covenants, as well as other provisions customary for
agreements of this type.
As noted above, in connection with Mr. Ropers planned retirement from his position as the
Companys Chief Executive Officer, the Company and Mr. Roper entered into a Proprietary Information
and Restrictive Covenant Agreement dated February 2, 2017 (the Restrictive Covenant Agreement).
The Restrictive Covenant Agreement contains various covenants relating to confidentiality,
non-competition and non-solicitation of Company employees. The restrictive covenants relating to
non-competition and non-solicitation will continue in effect for a period of five (5) years after
Mr. Ropers Retirement Date. In addition to any other remedies available to the Company at law or
in equity, in the event of a breach by Mr. Roper of the non-competition or non-solicitation
provisions of the Restrictive Covenant Agreement, or of his non-disparagement obligations under the
Retirement Letter Agreement, (a) Mr. Roper will forfeit any unpaid Additional Payment amounts and
(b) the Company will be entitled to recover from Mr. Roper an amount equal to the unamortized net
after-tax appreciation, if any, realized, by him from the exercise of that portion of the 2008
Option that will vest on January 1, 2018.
The foregoing summary descriptions of the Retirement Letter Agreement and Restrictive Covenant
Agreement do not purport to be complete and are subject to and qualified in their entirety by the
full text of the Retirement Letter Agreement and Restrictive Covenant Agreement. The Retirement
Letter Agreement and Restrictive Covenant Agreement are filed herewith as Exhibits 10.1 and 10.2,
respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
A copy of the press release announcing the planned retirement of Mr. Roper is attached hereto
as Exhibit 99.1 and is incorporated herein by reference.