UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 12, 2011
The Boston Beer Company, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts | 001-14092 | 04-3284048 |
|
|
|
One Design Center Place, Suite 850, Boston, MA | 02210 |
Registrant's telephone number, including area code (617) 368-5000
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |
|
|
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
Item 5.02.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
2012 Bonus Opportunities
At its meeting on December 12, 2011, the Compensation Committee of the Companys Board of Directors approved bonus objectives for the Companys named executive officers for 2012 and established Company-wide goals (the Company 2012 Goals) that apply to certain officers and other employees. The Company 2012 Goals consist of achieving total depletions growth of 7.8% and resource efficiencies and cost savings of at least $7.5 million, while maintaining brand health. Assessment of performance against the objectives listed below is within the purview of the Committee.
Chief Executive Officer
The Committee approved primary 2012 bonus opportunities for Martin F. Roper, the Companys President and CEO, equal to 80% of salary, based on achieving objectives as set forth below. The Delivered Gross Profit and Margin and Processing cost goals are based on the Companys current 2012 financial plan.
TABLE 1 CEO BONUS OPPORTUNITY = 80% OF BASE SALARY
Objectives to be Achieved by the Company by FY2012 Year-End | Weight | |
Depletions | Depletions growth of at least 7.8%, excluding new brand | 10% |
Depletions growth greater than the growth rate of the Craft Beer | 15% | |
Delivered Gross Profit | Delivered gross profit of $268 million and delivered gross profit | 15% |
Improvement in | Tracking and measuring wholesaler execution in the areas of the | 10% |
Projects delivering | Combined savings of $7.5 million from delivered gross margin | 10% |
Freshness | Freshest Beer Program successfully implemented for | 15% |
Organizational | Development of new TV campaign that is demonstrably stronger than existing work | 15% |
Improvement of Human Resources capabilities | 5% | |
Improvement of organizational capability to deal with brand complexity | 5% | |
TOTAL | 100% |
2
In addition, the Committee approved a further 2012 bonus opportunity for Mr. Roper equal to 80% of his primary 2012 bonus potential (which would equal an incremental 64% of his base salary) tied to achieving certain goals that would require substantial out-performance by the Company against its 2012 financial plan, as set forth below:
TABLE 2 CEO STRETCH BONUS OPPORTUNITY = 64% OF BASE SALARY
Objectives to be Achieved by the Company by FY2012 Year-End | Weight (against base bonus opportunity) |
Depletions growth at least 2% greater than that of craft and | 20% |
Depletions growth at least 4% greater than that of craft and | 30% |
Achieve processing costs of under $2.00 per case equivalent at | 30% |
TOTAL | 80% |
Chairman
The Committee approved 2012 bonus opportunities for C. James Koch, the Companys Chairman, equal to 100% of salary. Mr. Kochs objectives for 2012 as a percentage of his bonus opportunities are set forth below.
TABLE 3 CHAIRMAN BONUS OPPORTUNITY = 100% OF BASE SALARY
Objectives to be Achieved by the Company or the Chairman by FY2011 Year-End | Weight |
Depletions growth of at least 8%, excluding new brand introductions not Depletions growth of at least 10%, excluding new brand introductions not | 10% 5% |
Depletions growth greater than the growth rate of the Craft Beer category | 20% |
Delivered gross profit of $268 million and delivered gross profit margin of not | 20% |
Freshest Beer Program successfully implemented for wholesalers covering at | 20% |
Investment of time and resources in craft industry initiatives which support | 20% |
TOTAL | 100% |
3
Chief Financial Officer
The Committee approved 2012 bonus opportunities for William F. Urich, the Companys Treasurer and Chief Financial Officer, equal to 50% of his base salary, based on achieving objectives as follows:
TABLE 4 CFO BONUS OPPORTUNITY = 50% OF BASE SALARY
Objectives to be Achieved by the Company or the CFO by FY2012 Year-End | Weight | ||
Company 2012 | The Company meets its Company 2012 Goals | 30%* | |
Resource | Deliver $2.5 million of resource efficiency improvements outside | 15% | |
Support the Operations group in indentifying and executing against | 10% | ||
Lead Operations/Brewing performance improvement | 5% | ||
Procurement | Identify and execute approximately 2% savings for non-contracted | 15% | |
Sales Force | Identify unplanned pricing opportunities (not including | 5% | |
Support New | Develop required back office support system to support A&S | 10% | |
IT | Improve effectiveness, productivity, business impact and efficiency | 10% | |
| TOTAL | 100% |
*
50% payout if depletions grow by at least 5% but less than 7.8%, provided that the Samuel
Adams® brand grows at least 3%
4
Vice President of Operations
The Committee approved 2012 bonus opportunities for Thomas W. Lance, the Companys Vice President of Operations, equal to 50% of his 2012 base salary, based on achieving objectives set forth below. The bonus opportunity is subject to reduction if any product that does not meet quality standards is shipped from a brewery.
TABLE 5 VICE PRESIDENT OF OPERATIONS
BONUS OPPORTUNITY = 50% OF BASE SALARY
Objectives to be Achieved by the Company or Mr. Lance by FY2012 Year-End | Weight | |
Company | The Company meets its Company 2012 Goals | 20%* |
Safety & | Reduce average Total Incident Rate at the breweries to 4.3% | 10% |
Improve Total Quality Aggregate Score (combined brewing and | 10% | |
Resource | Identify and implement $5 million in Delivered Gross Margin | 10% |
Brewery | Develop leadership capabilities, enhance the continuous Maintaining adjusted conversion cost/case without depreciation Reducing adjusted conversion cost/case without depreciation by |
5% 5% |
Freshest Beer | Fully develop and expand to 75% of the Companys volume. | 10% |
Brewery | Implement employee relations strategy that supports a progressive | 10% |
Capacity | Successfully execute capacity/capability projects approved by | 20% |
| TOTAL | 100% |
*
50% payout if depletions grow by at least 5% but less than 7.8%, provided that the Samuel
Adams® brand grows at least 3%
Vice President of Sales
The Committee approved 2012 bonus opportunities for John C. Geist, the Companys Vice President of Sales, equal to 50% of his 2012 base salary, based on achieving objectives as follows:
5
TABLE 6 VICE PRESIDENT OF SALES
BONUS OPPORTUNITY = 50% OF BASE SALARY
Objectives to be Achieved by the Company or Mr. Geist by FY2012 Year-End | Weight | |
Company | The Company meets its Company 2012 Goals | 30%* |
Depletions | Meet Company depletions goals for each brand family. (Weighting | 20% |
Class of Trade | Grow certain key classes of trade to 2012 plan | 20% |
Wholesaler | Improve wholesaler and Company sales force execution of | 15% |
Financial | Price adjustments to exceed 2012 Financial Plan | 7.5% |
Manage expenses of sales force to budget | 7.5% | |
| TOTAL | 100% |
*
50% payout if depletions grow by at least 5% but less than 7.8%, provided that the Samuel
Adams® brand grows at least 3%
Other Executive Officers
The Committee also approved the 2012 bonus opportunity for two other executive officers, which opportunity consists of a combination of the Company achieving its Company 2012 goals and the officers achieving their individual goals. The bonus opportunity for both officers equals 50% of their 2012 base salary. One officer has 20% of the bonus opportunity being the achievement by the Company of the Companys 2012 goals and the other officer has 15% of the bonus opportunity being the achievement by the Company of the Companys 2012 goals.
Equity Compensation
Based on the recommendation of the Compensation Committee, the Board of Directors of the Company, at its meeting on December 13, 2011, approved the following option and restricted stock grants of the Companys Class A Common Stock pursuant to the Companys Employee Equity Incentive Plan.
Contingent Vesting Options
The Board of Directors approved the grant of contingent vesting options for shares of the Companys Class A Common Stock in the aggregate amount of 11,100 shares to two executive officers and one senior manager, effective January 1, 2012, with an exercise price at the fair market value of such Common Stock on the effective date of the grant.
C. James Koch, the Companys founder and Chairman, and Thomas W. Lance, Vice President of Brewing, will each be granted an option for 4,800 shares and the senior manager will be granted an option for 1,500 shares. The number of shares as to which these options may become exercisable in any year is dependent upon the Companys meeting certain 2012 depletions targets, as follows: 50% will be eligible to vest if 2012 depletions excluding new brand introductions are at least 4% over 2011 depletions, and 100% will be eligible to vest if 2012 depletions excluding new brand introductions are 7.8% or more over 2011 depletions. The determination will be made regarding the eligibility for vesting of these options by the Compensation Committee by mid-March 2013. Eligible shares will then vest at the rate of 20% per year over the five-year period commencing January 1, 2012, subject to accelerated vesting in certain specified circumstances. The options will lapse to the extent that the above depletions targets are not met.
6
Special Long-Term Retention Option
The Board of Directors also approved the grant of an option to a senior manager for 7,500 shares of the Companys Class A Common Stock, effective January 1, 2012 with an exercise price at the fair market value of such Common Stock on the effective date of the grant. Sixty percent (60%) of the shares will vest five years from the effective date of grant, with the remaining shares vesting at the rate of 10% each year thereafter. The optionee must be an employee of the Company on the applicable vesting date or the option will lapse as to the non-vested shares.
Restricted Stock Awards
In addition, the Board of Directors approved an aggregate of $1,672,000 in restricted stock grants to be awarded to senior managers and certain key employees of the Company as of January 1, 2012. The restricted stock will vest over the five-year period commencing January 1, 2012, contingent only on continued employment, such that 20% of the shares will vest on January 1 in each of the years 2013 through 2017, subject to accelerated vesting in certain specified circumstances. No executive officers of the Company were awarded restricted stock grants.
Approval of Class B Stockholder
All of the bonus opportunities and equity compensation grants to executive officers described above were approved by the sole holder of the Companys Class B Common Stock.
Item 7.01.
Regulation FD Disclosure.
Increase in Capital Investments in 2012
At its December 13, 2011 meeting, the Companys Board of Directors approved a capital plan for 2012 of approximately $50 million, relating primarily to continued investments in the Companys breweries to support the Freshest Beer Program and the projected growth of the existing brands. This is an increase of more than $15 million over the 2012 capital expenditures that were projected by the Company in its earnings release for the third quarter issued on November 1, 2011. Actual capital investment in 2012 could differ materially from this plan.
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| The Boston Beer Company, Inc. |
|
|
| /s/ Martin F. Roper |
Date: December 16, 2011 | Martin F. Roper |
| Chief Executive Officer |
| (Signature)* |
* Print name and title of the signing officer under his signature.
8