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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
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On April 20, 2021, the Human Resources Committee (the “Committee”) of the Board of Directors of Constellation Brands, Inc. (“Constellation” or the “Company”), took the following actions with regard to certain compensatory arrangements for certain of the Company’s senior management personnel, including its Executive Officers.
Stock Option Grants
The Committee granted options to purchase shares of the Company’s Class 1 Common Stock under the Company’s Long-Term Stock Incentive Plan (the “Stock Plan”) to certain of the Company’s management personnel, including its Executive Officers, subject to the Stock Option Agreement with respect to the Stock Plan. The form of Stock Option Agreement was filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2020, and is incorporated herein by reference. The following table sets forth information regarding grants to those individuals identified below:
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Name and Position
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Number of Stock Options
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William A. Newlands,
President and Chief Executive Officer
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51,634
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Robert Sands,
Executive Chairman of the Board
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66,878
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Richard Sands,
Executive Vice Chairman of the Board
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56,846
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Garth Hankinson,
Executive Vice President and Chief Financial Officer
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14,064
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Robert Hanson,
Executive Vice President and President, Wine & Spirits Division
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25,086
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Each of the options granted has a 10-year term, subject to earlier termination upon the occurrence of certain events related to termination of employment. One-fourth of the options become exercisable on each of the first, second, third, and fourth anniversaries of the date of grant, provided that the option holder remains in continuous employment with the Company or any of its subsidiaries until each such date. The options will continue to vest upon the Retirement (as that term is defined in the Stock Option Agreement) of the recipient at any time on or after November 1, 2021, and can vest at an earlier date upon the death or Disability (as that term is defined in the Stock Option Agreement) of the recipient of the grant. Under the Stock Option Agreement, options become fully exercisable in the event of a termination without Cause or a termination for Good Reason within the 24-month period following a Change in Control (as each term is defined in the Stock Option Agreement or the Stock Plan). The exercise price of each option is $238.31, which is is equal to the closing price of the Company’s Class A Common Stock (into which, subject to certain requirements, shares of the Company’s Class 1 Common Stock are convertible on a one-for-one basis) on the New York Stock Exchange on April 20, 2021.
Restricted Stock Unit Grants
The Committee granted restricted stock units under the Stock Plan to certain of the Company’s management personnel, including certain of its Executive Officers, subject to the provisions of Restricted Stock Unit Agreements, the form of which is filed herewith as Exhibit 10.2 and incorporated herein by reference. The restricted stock units entitle the grantee to receive a single share of the Company’s Class A Common Stock for each restricted stock unit granted under the Stock Plan. The following table sets forth information regarding grants to those individuals identified below:
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Name and Position
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Number of Units
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William A. Newlands,
President and Chief Executive Officer
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6,610
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Garth Hankinson,
Executive Vice President and Chief Financial Officer
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1,801
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Robert Hanson,
Executive Vice President and President, Wine & Spirits Division
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3,211
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Unvested restricted stock units under each of the grants are subject to forfeiture upon the occurrence of certain events related to termination of employment. One-fourth of the awarded units vest on each of the first, second, third, and fourth anniversaries of May 1, 2021, provided that the recipient of the grant remains in continuous employment with the Company or any of its subsidiaries until each such date. The grants will continue to vest upon the Retirement (as that term is defined in the Restricted Stock Unit Agreement) of the recipient at any time on or after November 1, 2021, and can vest at an earlier date upon death or RSU Disability (as that term is defined in the Restricted Stock Unit Agreement) of the recipient of the award. Under the terms of the Restricted Stock Unit Agreement, grants become fully vested in the event of a termination without Cause or a termination for Good Reason within the 24-month period following a Change in Control (as each term is defined in the Stock Plan or the Restricted Stock Unit Agreement).
Performance Share Unit Grants
The Committee granted performance share units to be settled in the Company’s Class A Common Stock under the Stock Plan to certain of the Company’s management personnel, including certain of its Executive Officers, subject to the provisions of Performance Share Unit Agreements. The form of Performance Share Unit Agreement was filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 1, 2020, and is incorporated herein by reference. The number of shares of the Company’s Class A Common Stock to be issued pursuant to the performance share units will depend upon the Company’s Relative Total Stockholder Return (as that term is defined in the Performance Share Unit Agreement) during the period from March 1, 2021 through February 29, 2024. The following table sets forth information regarding target awards to those individuals identified below:
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Name and Position
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Number of Units
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William A. Newlands,
President and Chief Executive Officer
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6,610
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Garth Hankinson,
Executive Vice President and Chief Financial Officer
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1,801
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Robert Hanson,
Executive Vice President and President, Wine & Spirits Division
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3,211
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Unvested performance share units are subject to forfeiture upon the occurrence of certain events related to termination of employment. A participant may vest in his right to receive the applicable number of performance share units if the participant remains in continuous employment with the Company or any of its subsidiaries until May 1, 2024. The participant will only vest in his right to receive the performance share units if the Company achieves certain Relative Total Stockholder Return results as set forth in the Performance Share Unit Agreement. In the event a recipient of an award retires (as the term “Retirement” is defined in the Performance Share Unit Agreement) at any time on or after November 1, 2021 and prior to May 1, 2024, vested awards are payable on a pro rata basis (as set forth in the Performance Share Unit Agreement) and settled between May 1, 2024 and May 15, 2024 (consistent with the settlement date for participants with continuing employment). Target awards can vest at an earlier date upon the death or PSU Disability (as that term is defined in the Performance Share Unit Agreement) of the recipient of the award. Under the terms of the Performance Share Unit Agreement, grants shall vest at target in the event of a termination without Cause or a termination for Good Reason within the 24-month period following a Change in Control (as each term is defined in the Stock Plan or the Performance Share Unit Agreement).
Approval of New Annual Base Salaries
The Committee set new annual base salaries for certain of the Company’s Executive Officers, which salaries will take effect on May 24, 2021. The following table sets forth the new annual base salary levels of the individuals identified below:
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Name
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New Annual Base Salary Level
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William A. Newlands
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$1,300,000
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Robert Hanson
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$836,605
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