UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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WE ENRICH THE EXPERIENCE OF LIFE BY RESPONSIBLY BUILDING BEVERAGE ALCOHOL BRANDS THAT THRIVE AND ENDURE FOR GENERATIONS.

	LETTER TO STOCKHOLDERS
	NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
2	PROXY SUMMARY
4	ANNUAL MEETING INFORMATION
7	CORPORATE GOVERNANCE
7	Our Board of Directors
8	Board Composition
10	Leadership Structure
11	Board Guidelines and Procedures
14	Best Practices
15	Our Controlling Family Stockholders
16	PROPOSAL 1: ELECTION OF DIRECTORS
21	DIRECTOR COMPENSATION
24	COMPENSATION DISCUSSION AND ANALYSIS
24	Executive Summary
25	Overview of Our Compensation Program
27	The Role of Our Compensation Committee
27	Target Compensation
29	Awards and Payouts in Fiscal 2017: Fixed and Short-Term Compensation
31	Awards and Payouts in Fiscal 2017: Long-Term Compensation
37	Other Compensation Elements
38	Compensation Policies and Practices
39	Compensation Committee Report
40	COMPENSATION TABLES
40	Summary Compensation
42	Grants of Plan-Based Awards
43	Outstanding Equity Awards
45	Option Exercises and Stock Vested
45	Pension Benefits
47	Non-Qualified Deferred Compensation
48	Potential Payments Upon Termination or Change in Control
51	PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
52	PROPOSAL 3: ADVISORY VOTE ON THE FREQUENCY OF FUTUREADVISORY VOTES ON EXECUTIVE COMPENSATION
53	STOCK OWNERSHIP
56	AUDIT MATTERS
59	OTHER INFORMATION

 

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PROXY SUMMARY

In this section we highlight certain information about matters discussed in this Proxy Statement. As it is only a summary, we encourage you to read the entire Proxy Statement before voting.

ANNUAL MEETING OF STOCKHOLDERS

 

Date:	Thursday, July 27, 2017	Location:	Brown-Forman Conference Center
Date:		Thursday, July 23, 2015
	850 Dixie Highway
Time:		9:30 A.M.
		(Eastern Daylight Time)
Location:		Brown-Forman Conference Center
		850 Dixie Highway
		Louisville, Kentucky 40210

PROPOSAL

PROPOSALS FOR STOCKHOLDER VOTING

 

Proposal		Our Board’s voting recommendation		Where to find details
Election of 13 directors		ForFOR all nominees		Pages 15-1916–20
Advisory vote to approve our executive compensation		FOR the proposal		Page 51
Advisory vote on the frequency of future advisory votes on executive compensation		For EVERY THREE YEARS as the frequency offuture advisory votes on executive compensation		Page 52

PERFORMANCE AND COMPENSATION HIGHLIGHTS

We believe that our executive compensation program continues to attract, motivate, reward, and retain a talented and diverse team of executives. These individuals lead us in our efforts to be the best brand builder in the spirits industry, and enable us to deliver superior and sustainable value for our stockholders. We had strong performance during fiscal 2015, and theThe incentive payouts to our executives described in this Proxy Statement reflect this performance.our performance during fiscal 2017.

The following charts compare our Companytrends in Brown-Forman’s performance with respect to total shareholder return, diluted earnings per share, and underlying operating income⁽¹⁾ growth with trends in the compensation of our Chief Executive Officer, Paul C. Varga. These metrics reflect exceptional long-term value generated for our stockholders, and the charts show the alignment ofhow our compensation strategy aligns with that performance.

 

OUR PERFORMANCE IN FISCAL 2017:

(compound annual growth rate; Class B common stock)		(compound annual growth rate)		(in $ millions)

 

(1)

EPS was adjusted to exclude the effect of acquired and divested brands in fiscal 2016 and fiscal 2017. These measures remove the effects of (a) the gain on the sale of Southern Comfort and Tuaca, (b) those transaction-related costs not included in the gain on the sale of Southern Comfort and Tuaca, (c) financing-related costs for the acquisition of BenRiach, and (d) operating activity for the acquired and divested businesses in the non-comparable periods. (With respect to the comparison of fiscal 2017 to fiscal 2016, the non-comparable period comprised all months of both years.) EPS used for fiscal 2016 was $1.63, compared to the reported GAAP value of $2.61, and EPS used for fiscal 2017 was $1.72, compared to the reported GAAP value of $1.71. Both measures are adjusted in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Fiscal 2017 Highlights — Adjusted Measures for Acquired and Divested Brands.”

(2)

Reflects growth in “underlying operating income” over the past fiscal years. “Underlying operating income” is equivalent to “depletion-based operating income” and is not derived in accordance with GAAP. The reasons forWe explain why the Company’s use ofCompany uses this measure are presented in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Non-GAAP Financial Measures,” in our Annual Report on Form 10-K for fiscal 2015.2017.

(2)(3)

Mr. Varga’s total compensation includes base salary, stock appreciation rights, non-equity compensation, and all other compensation as reported in the Fiscal 20152017 Summary Compensation Table on page 39. The40. It also includes performance-adjusted restricted stock award value is shownvalues as reported at the end of the applicable three-year performance period. Mr. Varga’s July 25, 2013 special one-time restricted stock award and changeChanges in pension valuesvalue are excluded.

 

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ANNUAL MEETING INFORMATION

ABOUT YOUR PROXY MATERIALS

Our Board of Directors is soliciting proxies for our upcoming Annual Meeting of Stockholders to be held on July 23, 201527, 2017 (the “Annual Meeting”)Annual Meeting). This means that you can vote “by proxy” at the Annual Meeting—thatMeeting —that is, you can instruct us how you would like your shares to be voted ifat the meeting whether or not you do notpersonally attend.

We are providing you with these proxythis Proxy Statement and accompanying materials to help you make an informed decision on the matters to be considered at the Annual Meeting. We will begin mailing this Proxy Statement and accompanying materials, and also make them available online, on or about June 23, 2015,27, 2017, to holders of record of our Class A and Class B common stock at the close of business on June 15, 2015,19, 2017, which is the “record date” for the Annual Meeting.

This Proxy Statement and our Annual Report to Stockholders, which includes our Form 10-K for fiscal 2015,2017, are available atwww.brown-forman.com/proxy.investors/annual-report/.You may request additional printed copies at any time using the contact information below.

Please let us know as soon as possible how you would like your shares voted. To do this, you may complete, sign, date, and return the enclosed proxy card or voting instruction card, or you may instruct us by telephone or online. See “Voting” below for details.

Contact Information

For information about your stock ownership or other stockholder services, please contact Linda Gering, our Stockholder Services Manager, by telephone at (502) 774-7690, by e-mail at Linda_Gering@b-f.com, or by mail at Brown-Forman Corporation, 850 Dixie Highway, Louisville, Kentucky 40210.

Reducing duplicate mailings. Duplicate Mailings

The Securities and Exchange Commission (SEC) permits us to deliver a single Proxy Statement and Annual Report to stockholders who share the same address and last name, unless we receive contrary instructions from any stockholder in thatthe household. EachEven if your household receives only one Proxy Statement and Annual Report, each stockholder still receives his or her ownwill receive an individual proxy card. We participate in this “householding” process to reduce our printing costs, and postage fees, and to better facilitate voting. If you would like to enroll in this “householding” service,“householding,” or if your household is already enrolled but you prefer to receive a separate copy of the proxy materials and/or opt out of “householding” for next year, please inform us using the contact information above and we will promptly fulfill your request.

ATTENDING THE ANNUAL MEETING

Although only Class A stockholders may vote at the Annual Meeting, Class A and Class B stockholders are welcome to attend if theywho owned their shares as of June 15, 2015.19, 2017, are welcome to attend.

If you plan to attend, please register on or beforeby July 21, 201525, 2017, by contacting Linda Gering using the contact information above. We ask that youPlease bring a form of photo identification to the meeting,ID and, if your shares are registered in the name of a bank, broker, or other holder of record, that you bring documentation of your stock ownership as of the date of record.record date.Please see “Admission Procedures” outlined in the Notice of Annual Meeting for full details.

VOTING

Who May Vote

If you held ourshares of Class A common stock at the close of business on the record date (June 15, 2015)19, 2017), you, or your legal proxies, may vote at the Annual Meeting on all three proposals. At the close of business on the record date, there were 169,062,117 shares of Class A common stock outstanding and entitled to vote at the Annual Meeting. At the close of business on the record date, there were 84,528,000215,189,294 shares of Class AB common stock outstanding, andhowever those shares are not entitled to vote at the Annual Meeting.vote.

If you purchased Class A common stock after the record date, you may vote those shares only if you receive a proxy to do so from the person who held the shares on the record date. Each share of Class A common stock is entitled to one vote. If you receive more than one proxy card or voting instruction card, it is important that you should complete, sign, date, and datereturn each proxy card and each voting instruction card that you receiveone (or follow the telephone or online voting instructions) because theythe cards represent different shares.

 

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ANNUAL MEETING INFORMATION •VOTING

How to Vote

Stockholders of record:record.If you are a Class A stockholder and your shares are registered directly in your name with our stock transfer agent, Computershare, you are considered to be the “stockholder of record” of those shares. If you are a stockholder of record of Class A shares, you can give a proxy to be voted at the meeting:

Unless

•  over the telephone by calling a toll-free number (1-800-652-8683);

•  online(www.investorvote.com/BFB); or

•  by completing, signing, and mailing the enclosed proxy card in the envelope provided.

Even if you are planningplan to vote atattend the meeting, we encourage you to submit a proxy in person, weadvance. We must receive your proxy by 1:00 a.m., Eastern Daylight Time, on Thursday, July 23, 2015.27, 2017, to ensure your vote is recorded. You may override a proxy by following the applicable procedure outlined below in “Changing Your Vote.”

The telephone and online voting procedures have been set up for your convenience and have beenare designed to authenticate your identity, to allowenable you to give voting instructions, and to confirm that those instructions have beenare recorded properly. If you are a stockholder of record and you would likewish to vote by telephone or online, please refer to the instructions set forth on the enclosed proxy card.

By giving your

Your proxy youwill authorize the individuals named on the proxy card to vote your shares for you in accordance with your instructions. These individuals will also have the obligation and authority to vote your shares as they see fit on any other matter properly presented for a vote at the Annual Meeting. If for any reason a director nominee is not available to serve, the personsindividuals named as proxy holders may vote your shares at the Annual Meeting for another nominee. The proxy holders for this year’s Annual Meeting are Geo. Garvin Brown IV, Paul C. Varga, and Matthew E. Hamel.

If you are a stockholder of record and you sign and return your proxy card (or give your proxy by telephone or online) without specifying how you want your shares to be voted, our proxy holders will vote your shares “FOR” the election of each of the nominees to the Board.Board (Proposal 1), “FOR” the advisory resolution to approve our executive compensation (Proposal 2), and for “EVERY THREE YEARS” as the frequency of future advisory votes on executive compensation (Proposal 3). With respect to any other matter that properly comes before the Annual Meeting, the proxy holders will vote your shares as recommended by the Board or, if no recommendation is given, using their own discretion.

“Street name” stockholders:stockholders.If you are a Class A stockholder and your shares are held in a stock brokerage account or by a bank (known as holding shares in “street name”), you have the right to directinstruct your broker or bank how to vote your shares, and the broker or bank is required to vote your shares in accordance with your instructions. To provide those instructions to your broker or bank by mail, please complete, sign, date, and return your voting instruction card in the postage-paid envelope provided by your broker or bank. Alternatively, if the broker or bank that holds your shares offers online or telephone voting, you will receive instructionsinformation from your broker or bank that you must follow in orderabout how to submit your voting instructions online or by telephone.those methods. You also may vote in person at the meeting, but only if you obtain a “legal proxy” from the broker or bank that holds your shares.

If you are a street name stockholder and you do not instruct your broker how to vote, your broker willis not be ablepermitted to vote your shares on any of the election of directors.proposals we will address at the Annual Meeting. This is known as a “broker non-vote.”

Changing Your Vote

If you are astockholder of record, you may change your vote by submitting another proxy by telephone or online, by mailing another properly signed proxy card bearing a later date than your original one, or by attending the Annual Meeting and casting your vote in person. You also may revoke a proxy that you previously provided by delivering timely written notice of revocation of your proxy to our Secretary, Matthew E. Hamel, via mail at Brown-Forman Corporation, 850 Dixie Highway, Louisville, Kentucky 40210, or at Secretary@b-f.com.

If you hold your shares instreet name,and you will needwish to follow thechange or revoke your voting instructions, inplease refer to the materials your broker or bank has provided to you in order to change your or revoke your votingfor instructions.

Voting Privacy

Proxy instructions, ballots, and voting tabulations are handled in a manner that protects the confidentiality of each stockholder’s vote. Your vote will not be disclosed within the Company or to third parties, except as necessary to meet legal requirements, to allow for the tabulation and certification of votes, and to facilitate proxy solicitation. Occasionally, stockholders provide written comments on their proxy cards, which may be forwarded to the Company’s management and the Board.

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ANNUAL MEETING INFORMATION •ANNOUNCEMENT OF VOTING RESULTS

Quorum Requirements

Business can be conducted at the Annual Meeting only if a quorum consisting of a majority of the outstanding shares of Class A common stock is present in person or represented by proxy. Abstentions and broker non-votes, if any, will be counted as present for purposes of establishing a quorum. Broker non-votes are counted as present for purposes of establishing a quorum but will not be considered entitled to vote on the proposal. We do not expect any broker non-votes to occur because the proposal on the agenda for this year’s Annual Meeting is a matter on which brokers do not have discretionary authority to vote.

Votes Needed For Approval

Election of directors: A nominee will be elected if he or she receives a majority of the votes cast, meaning that the number of shares voted “for” a director exceeds the number of shares voted “against” that director (with abstentions not counted as votes cast).

Any other matter properly presented and brought to a vote at the Annual Meeting: Approval requires the affirmative vote of the majority of the shares present in person or represented by proxy and entitled to vote on the matter (with abstentions counted as votes against the proposal).

Dividend Reinvestment and Employee Stock Purchase Plan Shares

Shares of Class A common stock held by participants in Brown-Forman’s dividend reinvestment and employee stock purchase plans are included in your holdings and reflected on your proxy card. These shares will be voted as you direct.

ANNOUNCEMENT OF VOTING RESULTS

We intend to announce the preliminary voting results at the Annual Meeting and to issue a press release later that day. In addition, we will report the voting results by filing a Form 8-K with the SEC within four business days following the Annual Meeting.

PROXY SOLICITATION EXPENSES

Brown-Forman bears the cost of soliciting proxies. Beginning on June 23, 2015,27, 2017, which is the mailing date for these proxy materials, our directors, officers, and other employees may solicit proxies in person or by regular or electronic mail, phone, fax, or online. Directors, officers, and employees of the CompanyThese individuals will not receive no additional compensation for soliciting proxies. We will reimburse banks, brokers, nominees, and other fiduciaries for their reasonable charges and expenses incurred in forwarding our proxy materials to the beneficial owners of our stock held in street name. In addition, we have retained Proxy Express, Inc. to assist with the distribution of proxy materials for a fee of approximately $14,000,$15,000, plus associated expenses.

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		CORPORATE GOVERNANCE

 

OUR BOARD OF DIRECTORS
Our Board is the policy-making body that is ultimately responsible for theBrown-Forman’s business success and ethical climate of the Company.climate. The Board oversees the performance of our senior management team, which is responsible for leading and operating the Company’sBrown-Forman’s business. The Board’s primary responsibilities include retention, evaluation, and succession planning for the Company’s Chief Executive Officer and itsthe Chairman of the Board, as well as oversight of the Company’sour corporate strategy, financial condition, executive compensation policies and practices, and enterprise risk management. The Board may retain such independent advisors as it deems necessary or appropriate to help it perform its duties.   BOARD COMPOSITIONSELECTION OF DIRECTORS How Our Controlled-Company Status Affects OurIn evaluating candidates for Board Our membership, the Corporate Governance and Nominating Committee seeks directors who will represent the long-term best interests of all stockholders. As articulated in our Corporate Governance Guidelines, all Brown-Forman directors should possess the highest personal and professional ethics, integrity, and values. The Board has determined that Brown-Forman is a “controlled company” under New York Stock Exchange (NYSE) rules because more than 50%believes the best directors have the following additional qualities: good judgment, candor, independence, civility, business courage, experience with businesses and other organizations of our Class A voting stock is held by the Brown family,comparable character and Brown family members historically have voted, by an overwhelming majority, for directors nominated by the Board. As a controlled company, we are exempt from NYSE listing standards that require boards to have a majority of independent directors, a fully independent nominating/corporate governance committee,comparable or larger size, and a fully independent compensation committee. Notwithstanding these exemptions, as a matterlack of good corporate governance, the Board has voluntarily chosen to have a Compensation Committee that is composed entirelyconflicts of independent directors that meet the NYSE’s heightened independence standards for compensation committee members. We do avail ourselves of the exemptions from having a majority of independent directors and a fully independent nominating/corporate governance committee. Our Independent Directors Under NYSE listing rules, a director qualifies as “independent” if the board of directors affirmatively determines that the director has no material relationship with the company. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships. While the focus is on independence from management, the Board considers all relevant facts and circumstances in making an independence determination. Our Board recognizes the value of having independent directors on the Board and has determined that six of our directors are independent under NYSE standards. They are: Joan C. Lordi Amble, Patrick Bousquet-Chavanne, Bruce L. Byrnes, John D. Cook, Michael J. Roney, and Michael A. Todman.interest.   The Corporate Governance and Nominating Committee and the Board consider diversity in evaluating candidates for Board membership, though neither has also determinedadopted a formal policy to that Geo. Garvin Brown IV, Paul C. Varga,effect. The Board’s goal is to maintain a well-balanced composition that combines a variety of experiences, backgrounds, skills, and James S. Welch, Jr. are not independent because they are,perspectives to enable the Board, as a whole, to guide Brown-Forman effectively in the pursuit of its strategic objectives. In evaluating potential Board candidates, the Corporate Governance and Nominating Committee considers an individual’s independence; business, professional, or have recently been, members of Company management,public service experience; relevant industry knowledge, experience, and that Dace Brown Stubbs, who is not standing for re-election, is not independent duerelationships; business judgment; financial expertise; international experience; leadership skills; age, gender, race, and other personal characteristics; time availability; and familial relation to her son’s employment with the Company. The Board elected not to make a determination with respect to the independence of Martin S. Brown, Jr., Stuart R. Brown, Sandra A. Frazier, and Augusta Brown Holland. Our Brown Family Directorsour controlling family stockholders.   The CompanyCorporate Governance and Nominating Committee occasionally engages independent search firms to assist in identifying potential Board candidates. The Board has not adopted a formal policy regarding stockholder-nominated director candidates because the committee believes thatthe process it is strategically important for Brown familyfollows to identify and select Board members to be actively engaged in the oversight of the Company. Through participation on the Board, the Brown family’s long-term ownership perspective is brought to bear, in some measure, upon eachhas been appropriate and every matter that the Board considers. Brown family directors also serve as an effective link between the Board and the controlling family stockholders.effective.		BROWN-FORMAN IS A “CONTROLLED “CONTROLLED COMPANY.”   As a publicly traded, family-controlled company, Brown-Forman enjoys a rare governance opportunity in that members of our controlling stockholder family, the Brown family, participate directly on our Board. We believe this governance structure confers ongives us a distinct competitive advantage due largely to the long-term ownership perspective thatbecause Brown family members bring a long-term ownership perspective to our Board. This advantage is sustained by a careful balancing of the roles of our Board, Company management, and our stockholders—stockholders — including the Brown family.

 

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CORPORATE GOVERNANCE •BOARD COMPOSITION

BOARD COMPOSITION

How Our Controlled-Company Status Affects Our Board

Our Board has determined that Brown-Forman is a “controlled company” under New York Stock Exchange (NYSE) rules because more than 50% of our Class A voting stock is held by members of the Brown family.

As a controlled company, we are exempt from NYSE listing standards that require boards to have a majority of independent directors, a fully independent nominating/corporate governance committee, and a fully independent compensation committee. As a matter of good corporate governance, the Board has voluntarily chosen to have a Compensation Committee that is composed entirely of directors who meet the NYSE’s heightened independence standards for compensation committee members. Our Board does not have a majority of independent directors or a fully independent nominating/corporate governance committee.

Our Independent Directors

Under NYSE listing rules, a director qualifies as “independent” if the board of directors affirmatively determines the director has no material relationship with the company. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships. While the focus is on independence from management, our Board considers all relevant facts and circumstances in making an independence determination. Our Board recognizes the value of having independent directors, and has determined that six directors are independent under NYSE standards: Patrick Bousquet-Chavanne, Bruce L. Byrnes, John D. Cook, Kathleen M. Gutmann, Michael J. Roney, and Michael A. Todman.

The Board has determined that Geo. Garvin Brown IV, Campbell P. Brown, Marshall B. Farrer, and Paul C. Varga are not independent because they are, or recently have been, members of Brown-Forman management. The Board elected not to make a determination with respect to the independence of Stuart R. Brown, Laura L. Frazier, and Augusta Brown Holland.

Our Brown Family Directors

We believe it is strategically important for Brown family members to be actively engaged in the oversight of Brown-Forman. Through participation on the Board, the Brown family’s long-term perspective is brought to bear, in some measure, upon each and every matter the Board considers. Brown family directors also serve as an effective link between the Board and the controlling family stockholders.

In addition, Board service allows the Brown family to actively oversee its investment in the Company. Following the Annual Meeting,Currently, the Brown family member directors are expected to be:are: Campbell P. Brown, Geo. Garvin Brown IV, Martin S. Brown, Jr., Stuart R. Brown, Sandra A.Marshall B. Farrer, Laura L. Frazier, and Augusta Brown Holland. Dace Brown Stubbs, a current Brown family director, will not stand for re-election at the Annual Meeting.

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BROWN-FORMAN2017 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

CORPORATE GOVERNANCE •BOARD COMPOSITION

Our Management Directors

The Company

We also believesbelieve it is important, from a corporate governance standpoint, that Companyfor management to be represented on the Board. Current Board members who are also members of Company management are:Currently, Campbell P. Brown, Marshall B. Farrer, and Paul C. Varga serve in dual roles as Board members and James S. Welch, Jr.Brown-Forman executives.

Recent Changes to our BoardBROWN-FORMAN BOARD OF DIRECTORS

As previously disclosed, two new directors from the Brown family, Stuart R. Brown and Augusta Brown Holland, joined the Board effective May 21, 2015. Dace Brown Stubbs, a current Brown family director, will not stand for re-election at the Annual Meeting.

PATRICK BOUSQUET-CHAVANNE			CAMPBELL P. BROWN			GEO. GARVIN BROWN IV
	Executive Director of Customer, Marketing and M&S.com, Marks and Spencer Group PLC			President and Managing Director of Old Forester, Brown-Forman Corporation			Chairman of the Board, Brown-Forman Corporation
STUART R. BROWN			BRUCE L. BYRNES			JOHN D. COOK
	Managing Partner, Typha Partners, LLC			Retired Vice Chairman of the Board, The Procter & Gamble Company			Lead Independent Director; Director Emeritus of McKinsey & Company
MARSHALL B. FARRER			LAURA L. FRAZIER			KATHLEEN M. GUTMANN
	Vice President and Managing Director of Global Travel Retail, Brown-Forman Corporation			Owner and Chairman, Bittners LLC			Chief Sales and Solutions Officer, United Parcel Service, Inc. and Senior Vice President, The UPS Store and UPS Capital
AUGUSTA BROWN HOLLAND			MICHAEL J. RONEY			MICHAEL A. TODMAN
	Founding Partner, Haystack Partners LLC			Retired Chief Executive, Bunzl plc			Retired Vice Chairman, Whirlpool Corporation

PAUL C. VARGA			INDEPENDENT			RECENT CHANGES TO OUR BOARD As previously disclosed, Kathleen M. Gutmann joined the Board on May 24, 2017, as an independent director.
	Chairman & CEO, Brown-Forman Corporation		BROWN FAMILY
			MANAGEMENT
			BROWN FAMILY & MANAGEMENT

2017 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERSBROWN-FORMAN

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CORPORATE GOVERNANCE •LEADERSHIP STRUCTURE

LEADERSHIP STRUCTURE

Chairman of the Board

Our Board believes that the determination of whether to separate or combine the roles of Chairman of the Board and Chief Executive Officer should depend largely upon the identity of the Chief Executive Officer and the composition of the Board at the time. For this reason, it does not have a policy on separation of these roles, but rather evaluates the situation as circumstances change.

on a case-by-case basis. Currently, these roles are separate, although they have been combined in the past. Geo. Garvin Brown IV, a Brown family member, serves as Chairman of the Board. He also serves on our Corporate Governance and Nominating Committee and the Executive Committee of the Board, which he chairs.

Company Chairman and CEO

Paul C. Varga serves as the Company Chairman and Chief Executive Officer.Officer of Brown-Forman. Mr. Varga is the Company’sour highest ranking executive officer and has responsibilityis responsible for the Company’sBrown-Forman’s strategy, operations, and performance. He serves as a member of our Board and of the Board’s Executive Committee.

Lead Independent Director

When a non-independent director holds the office of Chairman of the Board or Presiding Chairman of the Board, as is currently the case, the Board may select one independent director (after considering the recommendation of the Corporate Governance and Nominating Committee) may select one independent director to serve as Lead Independent Director. In September 2012, the Board selectedThe Lead Independent Director, if any, will be elected annually. John D. Cook to servehas served in this role.role since 2012.

As Lead Independent Director, Mr. Cook’s responsibilities are to:

Mr. Cook chaired one executive session of non-management directors in fiscal 2015.2017. Also, because our non-management director group includes directors who are not “independent” under NYSE listing standards, Mr. Cook called and presided over one executive session in fiscal 20152017 that was attended solely by our independent directors.

Why the Board Chose this Leadership Structure

OurThe Board has determined that this leadership structure currently serves the best interests of the CompanyBrown-Forman and its stockholders. Having a Brown family member serve as Chairman of the Board promotes the Brown family’s active oversight of, and engagement and participation in, the Company and its business and reflects the fact that Brown-Forman is controlled by the Brown family. In addition, because Mr. Brown handles the responsibilities attendant toassociated with the position of Chairman of the Board, Mr. Varga our Chief Executive Officer, can focus moreconcentrate on the Company’s strategy and operations, while the Board still has access to his comprehensive knowledge of the Company’s business. The Lead Independent Director position provides leadership to, and fosters coordination among, our independent directors, enabling them to better fulfill their role of bringing expert outside perspectives to the Board.

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CORPORATE GOVERNANCE •BOARD GUIDELINES AND PROCEDURES

BOARD GUIDELINES AND PROCEDURES

Corporate Governance Guidelines

The Board believes that transparency is a hallmark of good corporate governance. TheTo that end, the Board has adopted Corporate Governance Guidelines that provide a framework for the Board to exercise its duties. Among other things, these guidelines contain policies and requirements regarding: director qualifications; director responsibilities, including the Lead Independent Director’s role; meetings and attendance; committee composition and responsibilities; director compensation; and director access to management and independent advisors. The guidelines also require an annual self-assessment by the Board. The Corporate Governance Guidelines are published on our website atwww.brown-forman.com/about/corporate-governancecorporate-governance/guidelines//guidelines/.

Board and Committee Self-Assessment

Each year, ourThe Corporate Governance Guidelines require the Board and eachto conduct an annual self-assessment. Each Board committee (except the Executive Committee) also annually assesses how it performed during the preceding 12 months. Thetwelve-month period. These assessment procedures they follow vary, from requiring members to complete questionnaires that call for both quantitative responses and allow for free-ranging comments, to having an independent third party interview each member and then synthesize themes that emerge.

Director Service

The Board is authorized to fix the numbersize of directors to serve on the Board from time to time, withinat a range ofnumber between three toand seventeen members. Directors are elected each year at the Annual Meeting by a majority of the votes cast by our Class A stockholders. Once elected, a director holds office until the next Annual Meeting of Stockholders or until his or hera successor is elected and qualified, unless he or shethe director first resigns, retires, or is removed. Directors are not subject to term limits. Alimits but a director may not stand for re-election to the Board after he or she has reachedreaching the age of 71. However, inIn exceptional circumstances, the Board may ask a director to remain on the Board until a given date if his or herthe director’s continued service would significantly benefit the Company.Brown-Forman. Service of a director beyond the age of 71 requires approval by two-thirds of the other directors following a recommendation by the Corporate Governance and Nominating Committee.Committee and the approval of two-thirds of the Board (not including the director under consideration).

Board Meetings

The Board held six regular meetings and oneno special meetingmeetings during fiscal 2015.2017. Absent an appropriate reason, all directors are expected to attend the Company’s Annual Meeting, of Stockholders, all Board meetings, and all meetings of each committee on which they serve. Each directorAll directors attended 75%90% or more of the aggregate meetings of the Board and committees on which he or shethey served during fiscal 2015.2017. All directors then serving attended the 20142016 Annual Meeting of Stockholders.

Board Committees

Our Board has the following four standing committees: Audit Committee, Compensation Committee, Corporate Governance and Nominating Committee, and Executive Committee. Each Board committee operates under a written charter that is posted on our company website atwww.brown-forman.com/about/corporate-governance/committee-compositioncommittee-composition//. Each Board committee conducts an annual self-assessment (except the Executive Committee) and may hire independent advisors as it finds necessary or appropriate.

Audit Committee members must satisfy director independence standards prescribed by the NYSE and mandated by the Sarbanes-Oxley Act. Each member of our Audit Committee satisfies all of these heightened independence standards. The Board has determined that each member of our Audit Committee is also “financially literate” within the meaning of the NYSE rules, and that Mr. Todman is an “audit committee financial expert” under SEC rules.

The Compensation Committee assists the Board in fulfilling the Board’s duties relating to the compensation of our directors, executive officers, and employees. 2017 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERSBROWN-FORMAN

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CORPORATE GOVERNANCE •BOARD GUIDELINES AND PROCEDURES

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BROWN-FORMAN2017 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

CORPORATE GOVERNANCE •BOARD GUIDELINES AND PROCEDURES

Board’s Role in Risk Oversight

The Board believes that its current leadership structure best enables it to fulfill its risk oversight function. Our Corporate Governance Guidelines require the Board to ensure thatwe implement appropriate processes are in place for managing enterprise risk, and our Board considers risk oversight to be an integral part of its role in the Company’s strategic planning process. At its meetings, theThe Board regularly and actively considers how strategic decisions affect the Company’sBrown-Forman’s risk profile.

While the Board has ultimate oversight responsibility for the risk management process, certain committees also take onhave important supplementary roles relating to the Board’s risk oversight function.in that process. During fiscal 2015,2017, the Board tasked the followingits committees to assist it with the responsibilities outlined below:

These committees met regularly with members of management and outside advisors, as necessary, and providedreported to the Board regular reportsregularly on their risk oversight and mitigation activities. The Audit Committee discussed the Company’s enterprise risk management program with the Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, General Counsel, and Director of Internal Audit. In addition, certain management committees—themanagement’s Disclosure Controls Committee and theEnterprise Risk Committee—Management Committee both play an integral role in making sure that relevant risk-related information is reported to senior management and the Board as directly and quickly as possible. Further, our management Ethics, Compliance and Risk Team, comprising a number of senior executives and subject matter experts, meets throughout the year to address issues related to risk, ethics, and compliance; to coordinate the work of those areas; and to oversee the formulation and promulgation of company policies and the training of employees in compliance with them.

Communication with ourOur Board

Stockholders and other interested parties may communicate with our directors, including the non-management directors or the independent directors as a group, by writing to our Secretary, Matthew E. Hamel, at 850 Dixie Highway, Louisville, Kentucky 40210, or at Secretary@b-f.com. The Secretary’s office will forward written communications to the individual director or group of directors to whom they are addressed, with copies to all other directors.

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CORPORATE GOVERNANCE •COMPANY BEST PRACTICES

BEST PRACTICES

Brown-Forman has long believed that good corporate governance is essential to the Company’s long-term success. We continually evaluate our corporate governance practices in the context of our controlled-company status to address the changing regulatory environment, and adopt those practices that we believe are in the best for Brown-Forman.interests of Brown-Forman and all of our stockholders.

Code of Conduct

The Company has adopted the Brown-Forman Code of Conduct which contains our standardsexpresses its expectations of ethical behavior for all of our employees and directors. The Code of Conduct includes our Code of Ethics for Senior Financial Officers, which reflects the Company’s expectation that all of our financial, accounting, reporting, and auditing activities of the Company are towill be conducted in strict compliance with all applicable rules and regulations and underwill conform to the highest ethical standards. Brown-Forman encourages its employees to “speak up” when aware of a potential code of conduct violation and provides multiple channels for doing so, including anonymously. The Code of Conduct, including reporting channels, and the Code of Ethics for Senior Financial Officers can be found on our website atwww.brown-forman.com/about/corporate-governance/code-of-ethics/andwww.brown-forman.com/about/corporate-governance/code-of-ethics-for-senior-financial-officers/.

Disclosure Controls Committee

The Company has a Disclosure Controls Committee which is composed of members of management. This committee has established controls and procedures designed to ensure that information that the CompanyBrown-Forman may be required to disclose is gathered and communicated to the committee and that anyall required disclosure isdisclosures are made in a timely and accurate manner. The committee has implemented a financial review process that enables our Chief Executive Officer and Chief Financial Officer to certify our quarterly and annual financial reports, and also is responsible for developing and implementingas well as procedures designed to ensure our compliance with SEC Regulation FD (Fair Disclosure).

Risk Committee

The mission of the Enterprise Risk Management (ERM) Committee, which is composed of members of management, leads the Company’s enterprise risk management program (ERMP). The objective of the ERMP is to protectensure that all of Brown-Forman’s major risks are identified and evaluated. The ERM Committee also identifies the long-term viability of the Company’s business through the identificationindividuals and management of risk. The ERMP includes the development and implementation of our risk management policies and specific governance structures and the oversight of our processes for identifying, assessing, and mitigating risk. In support of the ERMP’s objectives, the Risk Committee isteams who are responsible for identifying criticalmitigating risks, the Company faces; assessing the adequacy of measuresand ensures that mitigation plans are in place to managemitigate the Company’s significant risks. The ERM Committee reports to the Audit Committee regarding its policies and processes. In addition, the ERM Committee reports to the Board at least annually regarding the top risks facing Brown-Forman, and periodically updates the Board on the mitigation plans related to those risks; communicating the role of all employees in the ERMP; and integrating the discussion of risk into decision-making processes.risks.

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BROWN-FORMAN2017 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

CORPORATE GOVERNANCE •OUR CONTROLLING FAMILY STOCKHOLDERS

OUR CONTROLLING FAMILY STOCKHOLDERS

As noted above, Brown-Forman has an engaged family stockholder base with a long-term ownership perspective. We view our status as a publicly traded, family-controlled company as a distinct competitive advantage, and we believe that a strong relationship with the Brown family is essential to our growth, independence, and ability to create long-term value creation for all stockholders. The Company conducts its interactionsManagement interacts with Brown family members in a manner consistent with all applicable laws and regulations. We actively cultivate our relationship with the Brown family through a numbervariety of different channels, as detailed below.

Brown-Forman/Brown Family Shareholders Committee

In 2007, Geo. Garvin Brown IV and Paul C. Varga organized the Brown-Forman/Brown Family Shareholders Committee, (FSC), which they continue to co-chair. The FSCThis committee provides a forum for frequent, open, and constructive dialogue between the CompanyBrown-Forman and its controlling family stockholders. It includes several non-family Company executives in addition to Mr. Varga and has formed subcommittees to engage certainThe Brown Family Shareholders Committee engages the Brown family members on topics of mutual interest such as family corporatethe Company and industry, governance, Brown-Forman philanthropy,ownership, and Brown family stockholder education.philanthropy.

Director of Family Shareholder Relations

The Director of Family Shareholder Relations, a Brown-Forman employee, works with Companyother employees and certain Brown family members to develop and implement policies and practices designed to further strengthen the relationship between the CompanyBrown-Forman and the Brown family.

Brown Family Member Employees

The CompanyBrown-Forman employs eleventen Brown family members, at various levels. Some Brown family employeessome of whom participate on Company management committeesteams that oversee strategic and operational matters. Participation on these committees enables our Brown family employees to contribute their perspectives toon the important issues facingwe confront. In addition to their management contributions, the Company.Brown family employees play a critical role in upholding the Brown-Forman corporate culture.

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				PROPOSAL 1:
		ELECTION OF DIRECTORS

This section provides information about our thirteen director nominees, including the experience, qualifications, attributes, and skills that enable them to make valuable contributions to our Board in light of our business and our status as a family-controlled company.Board.

All of our director nominees are current directors of Brown-Forman. Each director was elected by the stockholders at the Company’s 2014our 2016 Annual Meeting except for Stuart R. Brown and Augusta Brown Holland,Kathleen M. Gutmann, who werewas appointed to the Board in May 2015.2017. Kathleen M. Gutmann was recommended for appointment to the Board by the Corporate Governance and Nominating Committee following a process conducted with the assistance of a third-party executive search firm.

The Board unanimously recommends a vote “FOR” the election of each of the director nominees.nominee.

Your shares will be voted“FOR”the election of all director nominees listed below unless you directinstruct the proxy holders to vote against, or to abstain from voting for, one or more of the nominees. If any nominee becomes unable to serve before the meeting, the proxy holders may vote for a substitute nominee if the Board has designated one. As of the date of this Proxy Statement, it is the Board’s understanding thatBoard believes each nominee is prepared to serve if elected.

NOMINEES

 

PATRICK BOUSQUET-CHAVANNE
Joan C. Lordi Amble Director since 2011 Age 62 Committees: »    Audit (Chair)		Retired in 2011 from American Express as Executive Vice President, Finance; Executive Vice President and Comptroller of American Express Company from 2004 to 2011; Chief Financial Officer and Chief Operating Officer of GE Capital Markets from 2003 to 2004; Vice President and Controller of GE Capital Services from 1994 to 2003. QUALIFICATIONS AND SKILLS: Extensive experience in corporate governance, finance, accounting, operations, financial controls, Sarbanes-Oxley compliance, Six Sigma quality, and risk management. In addition, Ms. Amble brings to the Board international and strategic planning expertise. OTHER DIRECTORSHIPS: Zurich Insurance Group Ltd. since April 2015; Booz Allen Hamilton Holding Corporation since 2012; Sirius XM Radio (previously XM Satellite Radio Holdings, Inc.) since 2006; Broadcom from 2009 to 2011.
Patrick Bousquet-Chavanne   Director since 2005 Age 5759   Committees: » - Compensation (Chair) »- Corporate Governance and Nominating		CURRENT AND PAST POSITIONS Executive Director, Marketing and International, Positions at Marks and Spencer Group PLC,PLC: - Executive Director of Customer, Marketing and M&S.com since July 2014;2016 - Executive Director of Marketing and International from 2014 to 2016 - Executive Director, Marketing and Business Development Marks and Spencer Group PLC, from 2013 to 2014;2014 - Corporate Director of Strategy and Business Development Marks and Spencer Group PLC, from 2012 to 2013; Co-Chairman of2013 Positions at Yoostar Entertainment GroupGroup: - Co-Chairman from 2010 to 2012;2012 - President and Chief Executive Officer of Yoostar from 2009 to 2012; President and Chief Executive Officer of T-Ink Technologies, Inc. from 2008 to 2009; Group President of The Estée Lauder Companies Inc. from 2001 to 2008; President of Estée Lauder International, Inc. from 1998 to 2001.2012		QUALIFICATIONS AND SKILLS   QUALIFICATIONS AND SKILLS:- Senior management and board experience at one of the world’s leading manufacturers and marketers of branded consumer goods, including experience with implementing strategy, implementation, branding, licensing, distribution, digital, and international expansion. In addition, Mr. Bousquet-Chavanne has experience from Estée Lauderexpansion - Experience dealing with governance issues relevant to family-controlled public companies.companies   OTHER DIRECTORSHIPS:DIRECTORSHIPS - Marks and Spencer Group PLC since 2013;2013 - HSNi Corporation from 2008 to 2013.2013

 

CAMPBELL P. BROWN
Director since 2016 Age 49		CURRENT AND PAST POSITIONS Positions with Brown-Forman and affiliates: - President and Managing Director of Old Forester, our founding bourbon brand, since 2015 - Led the wine and spirits portfolio in Canada and the Midwest region of the U.S. - Served in the emerging markets of India, the Philippines, and Turkey - Various other positions over a 23-year career - Founding member of Brown-Forman/Brown Family Shareholders Committee since 2007		QUALIFICATIONS AND SKILLS - Business and industry experience gained by serving in operational, management, and executive positions within the Company - Deep knowledge of family corporate governance - Perspective as a fifth generation Brown family stockholder - A history of service on the Brown-Forman/ Brown Family Shareholders Committee, which demonstrates his ability to represent the long-term interests of shareholders OTHER DIRECTORSHIPS - Republic Bank and Trust Company since 2008

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ELECTION OF DIRECTORS•NOMINEES

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ELECTION OF DIRECTORS •NOMINEES

		ELECTION OF DIRECTORS—NOMINEESJOHN D. COOK

Bruce L. Byrnes   Director since 20102008; Age 67Lead Independent Director since 2012   Committees:Age 64 »    Audit »    CorporateCommittees: -Compensation -Corporate Governance and Nominating (Chair) -Audit -Executive		Vice Chairman of the Board for The Procter & Gamble Company from 2002 to 2008. Mr. Byrnes retired in 2008 following a 38-year career at P&G, during which he held the following positions, among others: Vice Chairman, Global Brand Building Training from 2007 to 2008; Vice Chairman, Global Household Care Division from 2004 to 2007.CURRENT AND PAST POSITIONS   QUALIFICATIONS AND SKILLS: Executive leadership of a global consumer goods company; expertise in brand building and brand management; financial expertise; international marketing and operational experience; and corporate strategy.Positions with McKinsey & Company:   OTHER DIRECTORSHIPS: Boston Scientific Corporation from 2009 to May 2015; Cincinnati Bell, Inc.- Director Emeritus - Director from 2003 to 2013; Diebold, Incorporated from 2010 to April 2015.
John D. Cook Director since 2008 Age 62 Committees: »    Compensation »    Corporate Governance and Nominating (Chair)		Director Emeritus, McKinsey & Company; Director, McKinsey & Company from 2003 to 2008. Earlier in his career, Mr. Cook worked in brand management at The Procter & Gamble Company, and more recently, held the number two management position at The Kellogg Company.QUALIFICATIONS AND SKILLS   QUALIFICATIONS AND SKILLS:- Skills gained during his 32-yeara 40-year career advising and managing consumer products companies. He brings to the Board leadership,companies and creating shareholder value - Leadership and senior management experience financial expertise, marketing skills, - Financial and international expertise experience - Marketing skills - Experience with strategic acquisitions and integrations and a history of shareholder value creation.   OTHER DIRECTORSHIPS - Winona Capital Management since 2007

MARSHALL B. FARRER
Sandra A. Frazier   Director since 20062016 Age 4346		Founder and Partner, Tandem Public Relations, LLC, since 2005; Public Relations Account Manager at Doe Anderson, Inc., from 2002 to 2005; Project Assistant at Schneider Associates Public Relations from 2000 to 2001.CURRENT AND PAST POSITIONS   Positions with Brown-Forman and affiliates: - Vice President, Managing Director of Global Travel Retail, which includes Duty Free, Military, Cruise, and Transportation sales globally since 2015 - Led the global Jack Daniel’s Tennessee Honey brand team from 2014 to 2015 - Managing director of the Australia/Pacific region from 2010 to 2014 - Led the Latin America & Caribbean region from 2006 to 2009 - Various other positions over a 19-year career - Founding member of Brown-Forman/Brown Family Shareholders Committee since 2007 - Member of the Brown-Forman Management Executive Committee from 2007 to 2009		QUALIFICATIONS AND SKILLS: LeadershipSKILLS - Business and industry experience gained from serving in operational, management, skills gained through founding and managing a public relations firm, communication skills, strategic thinking, and community relations experience. In addition, Ms. Frazier brings toexecutive positions within the Board her perspectiveCompany - Deep knowledge of family corporate governance - Perspective as a fifth generation Brown family stockholder.stockholder - A history of service on the Brown-Forman Executive Committee and Brown-Forman/ Brown Family Shareholders Committee, which demonstrates his ability to represent the long-term interests of shareholders

LAURA L. FRAZIER
OTHER DIRECTORSHIPS: The Al J. Schneider CompanyDirector since 2014; The Glenview Trust Company2016 Age 59		CURRENT AND PAST POSITIONS Bittners (a more than 160-year-old interior and commercial design firm), Owner, Chairman, and past-CEO Positions with Brown-Forman and affiliates: - Member of the board of directors of Lenox, Inc., a former subsidiary, from 1999 to 2005 - Founding member of Brown-Forman/Brown Family Shareholders Committee since 2011; Commonwealth Bank2007		QUALIFICATIONS AND SKILLS - Executive leadership and Trust Company from 2006entrepreneurial management skills - Perspective as a fifth generation Brown family stockholder - A history of service on the Brown-Forman/ Brown Family Shareholders Committee, which demonstrates her ability to 2010. represent the long-term interests of shareholders

 

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		2015 BROWN-FORMAN2017 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

BROWN-FORMAN

ELECTION OF DIRECTORS •NOMINEES

KATHLEEN M. GUTMANN

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		ELECTION OF DIRECTORS—NOMINEES

Augusta Brown Holland   Director since May 20152017 Age 3948		CURRENT AND PAST POSITIONS Since 2006, Founding Partner, Positions with United Parcel Service: - Chief Sales and Solutions Officer and Senior Vice President of The UPS Store and UPS Capital since 2015 - Senior Vice President of Worldwide Sales and Solutions from 2014 to 2015 - President of Worldwide Sales from 2011 to 2014		QUALIFICATIONS AND SKILLS - Experience with directing long-term strategy as a member of the UPS Management Committee - Oversight of P&L for UPS Capital, a UPS subsidiary that provides supply chain, financial, insurance, and payment solutions, and The UPS Store, a franchise system of retail shipping, mailbox, print, and business service centers

AUGUSTA BROWN HOLLAND
Director since 2015 Age 41		CURRENT AND PAST POSITIONS - Haystack Partners LLC known for its nationally acclaimed work in developing The Green Building in the NuLu East Market Street District of Louisville, Kentucky.(environmentally conscious real estate development), Founding Partner since 2006 - Founding member of Brown-Forman/Brown Family Shareholders Committee since 2007.2007		QUALIFICATIONS AND SKILLS   QUALIFICATIONS AND SKILLS:- Extensive knowledge of downtownurban planning and revitalization and environmentally-environmentally friendly development. Mrs. Holland also servesdevelopment - Experience serving on numerous civic boards. She brings to the Board her perspectiveboards - Perspective as a fifth generation Brown Family shareholder, and herfamily stockholder - A history of service on the Brown-Forman/Brown Family Shareholders Committee, which demonstrates her ability to represent the long-term interests of shareholders. shareholders

MICHAEL J. RONEY
Michael J. Roney   Director since 2014 Age 6163   Committees: » - Compensation (Chair)		CURRENT AND PAST POSITIONS Bunzl plc, Chief Executive of BunzlOfficer from 2005 to 2016		QUALIFICATIONS AND SKILLS - Extensive senior management and executive leadership experience - Deep expertise in multinational production, distribution, and operations - Financial expertise - International mergers and acquisitions experience OTHER DIRECTORSHIPS - Next plc since 2005; Director of BunzlFebruary 2017, Deputy Chairman and Chairman Designate - Grafton Group plc since 2003; and Non-executive Director ofMay 2016, Non-Executive Chairman since January 1, 2017 - Johnson Matthey plc from 2007 to 2014.2014, Senior Independent Director QUALIFICATIONS AND SKILLS: Extensive senior management and executive leadership experience; deep expertise in multi-national production, distribution, and operations; financial expertise; and international mergers and acquisitions experience. OTHER DIRECTORSHIPS:- Bunzl plc since 2003; Johnson Matthey plc from 20072003 to 2014. 2005, Non-Executive Director

 

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ELECTION OF DIRECTORS •NOMINEES

MICHAEL A. TODMAN
Michael A. Todman   Director since 2014 Age 5759   Committees: » - Audit (Chair)		CURRENT AND PAST POSITIONS Positions with Whirlpool and affiliates: - Vice Chairman, Whirlpool Corporation since November 2014;from 2014 to 2015 - President, Whirlpool International from 2009 to November 2014;2014 - President, Whirlpool North America from 2007 to 2009.2009		QUALIFICATIONS AND SKILLS   QUALIFICATIONS AND SKILLS:- Extensive knowledge and experience in multinational operations, sales and distribution, and manufacturing; extensivemanufacturing - Executive leadership of large multinational organizations; and financial expertise.organizations - Financial expertise   OTHER DIRECTORSHIPS: Whirlpool Corporation since 2006;DIRECTORSHIPS - Newell Rubbermaid, Inc. since 2007.2007 - Prudential Financial, Inc. since 2016 - Whirlpool Corporation from 2006 to 2015

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		ELECTION OF DIRECTORS—NOMINEES

PAUL C. VARGA
Paul C. Varga   Director since 2003 Age 5153   Committees: » - Executive		CURRENT AND PAST POSITIONS A 28-year employee of Brown-Forman. Company Chairman since 2007; Positions with Brown-Forman and affiliates: - Chief Executive Officer since 2005;2005 - Chairman since 2007 - President and Chief Executive Officer of Brown-Forman Beverages (a division of Brown-Forman) from 2003 to 2005;2005 - Global Chief Marketing Officer for Brown-Forman Spirits from 2000 to 2003.2003		QUALIFICATIONS AND SKILLS   QUALIFICATIONS AND SKILLS:- In-depth knowledge of the Company’s business, operations, and strategy; extensivestrategy gained during his 30-year career - Extensive knowledge of the beverage alcohol industry; salesindustry - Sales and marketing expertise;and financial expertise; and strategicexpertise - Strategic thinking, leadership, management, consensus-building, and communication skills.skills   OTHER DIRECTORSHIPS: Macy’s, Inc., since 2012.DIRECTORSHIPS   - Macy’s, Inc. since 2012

 

James S. Welch, Jr. Director since 2007 Age 56 Committees: »    Executive		A 26-year employee of Brown-Forman. Company Vice Chairman, Executive Director of Corporate and Civic Affairs since 2015; Vice Chairman, Executive Director of Corporate Affairs, Strategy, and Diversity from 2012 to 2015; Vice Chairman, Executive Director of Corporate Affairs, Strategy, Diversity, and Human Resources from 2007 to 2012; Vice Chairman, Executive Director of Corporate Strategy and Human Resources from 2003 to 2007; Senior Vice President and Executive Director of Human Resources from 1999 to 2003. QUALIFICATIONS AND SKILLS: Extensive leadership, management, and operational experience gained during his tenure as a Company employee, as well as experience with corporate strategy, organizational effectiveness, and public affairs. In addition, Mr. Welch is actively involved in leadership roles on local civic boards.

Family Relationships.relationships. No family relationship—relationship — first cousin or closer—closer — exists between any two directors, executive officers, or personsindividuals nominated or chosen by the Company to become a director or executive officer, except thatfor the following relationships between Brown family directors: Geo. Garvin Brown IV and Campbell P. Brown are brothers, and Marshall B. Farrer is the nephew of Dace Brown Stubbs,their first cousin; and Martin S. Brown, Jr., Stuart R. Brown and Augusta Brown Holland are first cousins.

 

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DIRECTOR COMPENSATION

OVERVIEW

Our directors serve one-year terms that begin with their election at an Annual Meeting and end immediately upon the election of directors at the next year’s Annual Meeting (a period weMeeting. We refer to this period as a “Board Year” for director compensation purposes).purposes.

Our non-employee director compensation consists of an annual Board retainer, a Chair of the Board retainer, a Lead Independent Director retainer, committee member retainers, committee chair retainers, and meeting fees. To align the interests of our non-employee directors with those of our stockholders, our non-employee directors receive their Board retainers in a combination of cash and equity. Non-employee directors receive meeting fees only if they attend more than eight meetings (Board), ten meetings (Audit Committee), or six meetings (Compensation Committee and Corporate Governance and& Nominating Committee). The Compensation Committee believes that this compensation structure appropriately reflects the importance of directors’ active participation at Board and committee meetings.

 

The Compensation Committee reviews, with the assistance of its independent consultant Frederic W. Cook & Co. (FWC) information each year related to the competitiveness of non-employee Director Compensation Structurecompensation and, from time to time, recommends adjustments to its compensation structure to ensure both continued competitiveness and the appropriate compensation. Based upon the review of this information in fiscal 2017, FWC recommended, and the Board confirmed and approved, no changes to the existing retainers and fees listed below.

 

DIRECTOR COMPENSATION STRUCTURE
Pay Element				Amount
Lead Independent Director Retainer				$30,000
Paid in six installments over the Board Year.				$30,000
Board Retainer					$175,000 total
Directors may elect to receive their cash retainer in equity. Directors who have satisfied our stock ownership guidelines may elect to receive up to 100% of the retainer in cash, including the equity retainer.			The cash retainer is paid in six installments over the Board Year.	»   $65,000$185,000 total •  $70,000 cash »   $110,000•  $115,000 equity (deferred stock units)
Meeting Fees				No fee is paid unless the director attends more than eight meetings (Board).	Board	$5,000 per meeting
No meeting fees were paid for the 2015 Board Year.
				No fee is paid unless the director attends more than ten meetings (Audit) or six meetings (Compensation and Corporate Governance & Nominating).	Audit, Compensation, and Corporate Governance & Nominating	$2,500 per meeting $1,250 per telephonic meeting
Committee Member Retainers		Audit		$25,000
Paid in six installments over the Board Year.		Compensation		$17,50020,000
		Corporate Governance & Nominating		$15,00020,000
Committee Chair Retainers				$20,000
(Audit, Compensation, and Corporate Governance and& Nominating)
Paid in six installments over the Board Year. If a director chairs more than one committee, he or she will receive multiple chair retainers.		$20,000
Non-Employee Chair of the Board Retainer Paid in six installments over the Board Year.		$625,000

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DIRECTOR COMPENSATION  •  OVERVIEW

Deferred Stock Units

Our Deferred Stock Unit (DSU) program for non-employee directors allows us to issue both Class A common DSUs and Class B common DSUs. Each DSU represents the right to receive one share of the Company’sBrown-Forman’s Class A or Class B common stock, based on the closing price of the shares on the date the award is made. After a non-employee director’s Board service ends, his or her DSUs are paid out in shares of Class A or Class B common stock following a six-month waiting period. Directors may elect to receive this distribution either in a single lump sum or in ten equal annual installments.

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		DIRECTOR COMPENSATION—OVERVIEW

 

On each dividend payment date, non-employee directors who hold DSUs are credited with additional DSUs equivalent to the cash dividends on the number of shares represented by the DSUs they held on the record date for that dividend. These dividend credits are calculatedconverted to additional DSUs based on the market value of the Class A or Class B common stock as of the dividend payment date.

If a director’s Board service ends during a Board Year, the DSUs attributable to the remainder of that Board Year and any corresponding dividend-equivalent DSUs, do not vest and are forfeited.

Employee Directors

In addition to his regular compensation as a Brown-FormanPaul C. Varga, Campbell P. Brown, and Marshall B. Farrer are our employee we separately paid Geo. Garvin Brown IV $145,000 per year for his service as Chairman of the Board. Beginning in fiscal 2013, the value of this payment was included in Mr. Brown’s target long-term incentive compensation. Otherwise, wedirectors. They do not pay our employee directors (Paul C. Varga and James S. Welch, Jr.)receive any compensation for serving on our Board, any of its committees, or on the boards or equivalent bodies of any of our subsidiaries. For additional information on Geo. Garvin Brown IV’s compensation as a Brown-Forman employee, please see the “Certain Relationships and Related Transactions” section, which begins on page 58.

Stock Ownership Guideline

Our stock ownership guideline for non-employee directors is equal to five times the value of the annual board retainer, (with a current guideline of $875,000).which in fiscal 2017 was $925,000. When considering whether a non-employee director has satisfied the stock ownership guideline, the Compensation Committee includes DSUs as well as Class A or Class B common stock held directly. The value of any unexercised stock-settled stock appreciation rights (SSARs) is not included. Any non-employee director who has not yet met the stock ownership guideline willmust elect to receive at least 60% of his or her annual equity board retainer in DSUs.

Expense Reimbursement

We reimburse all directors for reasonable and necessary expenses they incur in performing their duties as directors. WeIn addition, we provide a travel stipend of $3,000 per meeting to directors who must travel to Board meetings from outside the United States.

Continuing Education Allowance

The CompanyBrown-Forman covers the cost, up to $10,000 per director per Board Year, of continuing education programs to support our directors’ efforts to remain current on best practices in board governance, industry matters, or other business topics relevant to their boardBoard service.

Events

We occasionally invite our directors and their spouses to certain events, including strategy retreats, retirement celebrations, award dinners, and similar events.functions. We believe these occasions provide valuable opportunities for our directors to establish and develop relationships with our senior executives, long-term stockholders, employees, and each other, furthering our objective of having a strong and cohesive Board.board.

 

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		DIRECTOR COMPENSATION—FISCAL 2015 DIRECTOR COMPENSATION

DIRECTOR COMPENSATION  •  FISCAL 2017 DIRECTOR COMPENSATION

 

FISCAL 20152017 DIRECTOR COMPENSATION

The following table shows the compensation we paid to our non-employee directors for their service in fiscal 2015.2017.

FISCAL 2017 DIRECTOR COMPENSATION TABLE

 

Fiscal 2015 Director Compensation Table

Name		Fees Earned or Paid in Cash (1)				DSU Awards (2) (3)				All Other Compensation		Total				Fees Earned or Paid in Cash(1)				DSU Awards(2)(3)				All Other Compensation(4)				Total
Joan C. Lordi Amble		$	85,750			$	175,000			—		$	260,750
Joan C. Lordi Amble(5)																	$13,615				$—				$—				$13,615
Patrick Bousquet-Chavanne			75,500				175,000			—			250,500				59,394				185,000				15,000				259,394
Martin S. Brown, Jr.			180,000				—			—			180,000
Geo. Garvin Brown IV																	517,727				312,500				18,000				848,227
Martin S. Brown Jr.(5)																	45,066				—				—				45,066
Stuart R. Brown																	185,227				—				—				185,227
Bruce L. Byrnes			125,000				110,000			—			235,000				116,477				115,000				—				231,477
John D. Cook			111,250				175,000			—			286,250				115,158				185,000				—				300,158
Sandra A. Frazier			180,000				—			—			180,000
Laura L. Frazier																	172,567				—				—				172,567
Sandra A. Frazier(5)																	45,066				—				—				45,066
Augusta Brown Holland																	85,227				115,000				—				200,227
Michael J. Roney			28,500				175,000			—			203,500				26,061				185,000				18,000				229,061
Dace Brown Stubbs			92,500				87,500			—			180,000
Michael A. Todman			11,651				175,000			—			186,651				115,133				115,000				—				230,133

 

(1)

Amounts in this column reflect fees earned during fiscal 20152017 and include: annual Board retainer, if paid in cash; Lead Independent Director fee; annual committee chair and committee member retainers; non-employee chair of the Board retainer, if paid in cash; and any Board and committee meeting fees.

(2)

DSUs represent the right to receive one share of Class A or Class B common stock, and are determined by dividing the cash value of the compensation being paid in DSUs by the closing price of Class A or Class B common stock on the date of grant. DSU awards for the 20152017 Board Year were granted on July 24, 2014.28, 2016. The closing pricesprice of our Class A and Class B common stock on that date were $90.25 and $91.97, respectively.was $105.14. On dividend payment dates, outstanding DSUs are credited with dividend-equivalent DSUs. For the 2015 Board Year, Ms. Amble, Mr. Bousquet-Chavanne, Mr. Cook, Mr. Roney, and Mr. Todman elected to receive their full Board retainer in DSUs.

(3)

The aggregate number of SSARs, DSUs, and DSUsRestricted Stock Units (RSUs) outstanding for each of our non-employee directors as of April 30, 20152017, is set forth below. All SSARs shown are fully vested and exercisable. Annual grants of DSUs vest over the course of the Board Year. Outstanding SSARs and RSUs for Geo. Garvin Brown IV represent awards granted to him while he was an executive for Brown-Forman. Mr. Brown’s outstanding time-based RSUs will vest as follows, assuming his continued service on the Board: 6,852 RSUs vest on April 30, 2018, and 760 RSUs vest on April 30, 2019.

 

Name		DSUs Outstanding Class A as of April 30, 2015				DSUs Outstanding Class B as of April 30, 2015				Class B SSAR / Options Outstanding as of April 30, 2015				DSUs Outstanding Class A as of April 30, 2017		DSUs Outstanding Class B as of April 30, 2017		Class B SSAR Outstanding as of April 30, 2017		Class B Time-Based Restricted Stock Units as of April 30, 2017
Joan C. Lordi Amble			3,412				2,297				—			9,179		4,252		—		—
Patrick Bousquet-Chavanne			4,380				5,117				47,045			15,773		10,526		—		—
Geo. Garvin Brown IV														12,485		—		12,512		7,612
Martin S. Brown, Jr.			—				1,709				23,053			—		3,163		24,494		—
Stuart R. Brown														—		—		—		—
Bruce L. Byrnes			2,684				3,321				—			9,747		6,831		—		—
John D. Cook			4,380				5,117				21,752			15,773		10,526		43,504		—
Laura L. Frazier														—		—		—		—
Sandra A. Frazier			—				1,709				23,053			—		3,163		24,494		—
Augusta Brown Holland														3,424		—		—		—
Michael J. Roney			2,499				—				—			11,909		—		—		—
Dace Brown Stubbs			2,190				3,413				23,053
Michael A. Todman			1,959				—				—			8,259		—		—		—

 

(4)						Reflects taxable travel stipend amounts paid during fiscal 2017 to directors who traveled to Board meetings from outside of the United States.
22(5)	Ms. Joan C. Lordi Amble, Mr. Martin S. Brown Jr., and Ms. Sandra A. Frazier’s service as directors ended on July 28, 2016, at the 2016 Annual Meeting. The amounts set forth under “Fees Earned or Paid in Cash” represent the fees earned for their service for part of fiscal 2017.

BROWN-FORMAN

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		COMPENSATION DISCUSSION AND ANALYSIS

This section describes our executive compensation philosophy and objectives, and programs,the decisions of the Compensation Committee (Committee) regarding the compensation of our Named Executive Officers or “NEOs,” and the factors that contributed to those decisions.(NEOs). For fiscal 2015,2017, our NEOs were:

 

Name		Title
Paul C. Varga		Company Chairman and Chief Executive Officer
Jane C. Morreau		Executive Vice President and Chief Financial Officer
James S. Welch, Jr.		Company Vice Chairman, Executive Director of Corporate and Civic Affairs
Mark I. McCallum		Executive Vice President, President Jack Daniel’s Brands
Jill A. Jones		Executive Vice President, President, North America and Latin America Regions,NAR, CCSA, IMEA and GTR
Lawson E. Whiting	Executive Vice President, Chief Brands and Strategy Officer

EXECUTIVE SUMMARY

Pay for Performance

We believe in pay for performance and we aim to achieve this objective primarily through our short-termshort- and long-term incentive programs. These programs useutilize key performance metrics to compare our performance relative to that of our peers. We prioritizebelieve the use of peer metrics in our incentive plans because we believe that focusing on external measures rather than internal goals:these metrics:

»

•

is the clearest way to demonstrate the value we provide forprovided to our stockholders;

»

•

ensures that we hold ourselves to a performance standard that is as objective as possible;

»

•

reinforces a competitive and innovative mindset among our leadership; and

»

•

ensures that the incentive payments are appropriate.

We believe thatone of the best reflectionmeasures of the value that our NEOs bring to the Company created by our NEOs is the return provided to our stockholders relative to the returns of other companies within our industry.

In this respect, our long-term performance has outperformed both companies withinin our industry as well asand the broader S&P 500, as shown in the chartcharts below:

 

Brown-Forman Total Shareholder Return vs. Earnings Per Share vs.BROWN-FORMAN TOTAL SHAREHOLDER RETURN VS. EARNINGS PER SHARE VS. CEO Total Compensation GrowthTOTAL COMPENSATION GROWTH(1)				Total Shareholder ReturnTOTAL SHAREHOLDER RETURN (TSR): Brown-Forman vs. Industry vs. BROWN-FORMAN VS. INDUSTRY VS. S&P 500(2)

 

(1)

Compares total shareholder return of Brown-Forman Class B common stock and diluted earnings per share (percent growth over prior fiscal year) with the increase in Mr. Varga’s total compensation (percent growth over prior fiscal year), which. Mr. Varga’s compensation includes base salary, stock appreciation rights, non-equity compensation, and all other compensation as reported in the Fiscal 2015 Summary Compensation Table on page 39. Performance-adjustedTable. It also includes the performance-adjusted restricted stock award value is shownvalues as reported at the end of the applicable three-year performance period. Mr. Varga’s July 25, 2013 special one-time restricted stock award and change in pension values are excluded.

(2)	Represents the averagecompound annual growth rate of TSR. Industry total shareholder return is based on ana weighted average of comparable companies within the distilled spirits industry.

 

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		COMPENSATION DISCUSSION AND ANALYSIS—EXECUTIVE SUMMARY

COMPENSATION DISCUSSION AND ANALYSIS  •  OVERVIEW OF OUR COMPENSATION PROGRAM

 

As a result of athe Committee’s annual review conducted during fiscal 2015,process, it was determined that the Committee found that total target direct compensation for our CEO and other NEOs was below the market median with the exceptionwhen compared to our compensation peer group listed on page 28. In light of Mr. Welch. Based on this review we believe that our executive compensation program delivers exceptional value to our stockholders, particularly in light ofconsidering the combination of strong returns accompanied by best-in-classand financial performance by the Companythat Brown-Forman and its management team have delivered over multiple years.

Performance-Based Payouts for Fiscal 20152017

Brown-Forman delivered strong performance in fiscal 2015 with payouts reflecting2017 reflected the alignment ofbetween executive pay with company performance:

CASH INCENTIVEScompensation and Brown-Forman’s performance.

 

CASH INCENTIVES

»

•

We reported 9.4%7% growth in underlying operating income,(1), above our predicted growth target for industry peers of 6%5%. As a result, the Company performance measure of the short-term cash incentives paid out at 157%127% of target.

»

•

Our long-term cash incentive measures theincentives measure three-year performance of our1) absolute underlying operating income (40% weighting), our2) relative underlying operating income compared to industry peers (40% weighting), and the3) achievement of key long-term strategic objectives in our B-FBF 150 corporate strategy (20% weighting). Our performance on these measures for the fiscal 2013-20152015–2017 performance period resulted in a payout of 169%143% of target.

EQUITY-BASED INCENTIVES

We use equity-based incentive compensation as a means of aligningto align the long-term economic interests of our executives with those of our stockholders. We offer our NEOs two types of equity-based incentives: performance-based restricted Class A common stock and stock appreciation rights settled in shares of Class B common stock.

 

»

•

Performance-based restricted stock awards for the fiscal 2013-20152015–2017 performance period were converted into restricted shares shortly after the conclusion of fiscal 2015.2017. The conversion was based on the cumulative total shareholder return of our Class B common stock compared to that of the companies constituting the Standard & Poor’s (S&P) Consumer Staples Index. Our relative performance against this group over the performance period was at the 64th11th percentile, resulting in performancea threshold payout at 118%50% of target.

»

•

Payouts of our stock-settled stock appreciation rights are determined by the increase of our Class B stock price above the awards’ stated grant price. Please see pages 42-43 for a list of outstanding stock-settled stock appreciation rights for each NEO.

Advisory Votes on Executive Compensation

AtIn our first “say-on-pay” vote in our 2014 Annual Meeting, our stockholders voicedexpressed overwhelming support for the compensation of our NEOs, with more than 99% of the votes cast approving the advisory “say-on-pay” resolution. The Committee considered thethese results of this vote as one factorof many factors in its executive compensation decisions for fiscal 2015, 2016, and 2017, and did not make any material changes to the executive compensation program as a result of the say-on-pay vote. program.

Following the expressed preference of our stockholders, the Committee willBrown-Forman expects to continue to conduct future advisory votes on executive compensation every three years, but reserves the right to conduct votes more frequently in order to seek additional feedback from our stockholders.

(1)

“Underlying operating income” is equivalent to “depletion-based operating income” and is not derived in accordance with GAAP. The reasons for the Company’s use of this measure are presented in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Non-GAAP Financial Measures,” in our Annual Report on Form 10-K for fiscal 2015.

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		COMPENSATION DISCUSSION AND ANALYSIS—OVERVIEW OF OUR COMPENSATION PROGRAM

As in past years, the Committee will consider the results of this year’s “say-on-pay” advisory vote (Proposal 2 on page 51) in its future executive compensation decisions.

 

OVERVIEW OF OUR COMPENSATION PROGRAM

Compensation Objectives and Principles

The objective of our executive compensation program is to attract, motivate, reward, and retain a diverse team of talented executives who will lead the CompanyBrown-Forman to produce superior, sustainable and superior long-term value for our stockholders.

Our

As a family-controlled company, our history guides our perspective on executive compensation is informed by our history. As we are a family-controlled company, memberscompensation. Members of the Brown family have historically served as our senior leadership, and their compensation was modest by competitive market standards. ThisWhile this was not a major concern at the time given their significant stock holdings, as increases in the value of Brown-Forman’s stock and the payment of dividends were considered to be the most important forms of compensation for Brown family members.

In recent years however, employees other than Brown family members have more frequently held our most senior executive positions,positions. These individuals have less substantial ownership in the Company and, all of our current NEOs are from outside the Brown family. The stockholdings of our non-Brown family executives are not as substantial and, therefore, have required the continued evolution ofa result, our compensation structure has evolved over time to better reflect the competitive landscape for executive talent.

Our compensation In order to remain competitive, as well as ensure our alignment with the interests of the Brown Family and our stockholders, we have established programs that remain focused on creating long-term value, reinforcing financial accountability, and delivering outstanding operational performance that drivesoutcomes to drive sustained performance of Brown-Forman’s stock.

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COMPENSATION DISCUSSION AND ANALYSIS  •  OVERVIEW OF OUR COMPENSATION PROGRAM

Our company vision is “Building Forever,” which reflects our long-term perspective and desire to remain a strong, independent company indefinitely. We aim to “enrich the experience of life by responsibly building beverage alcohol brands, in our own way, that thrive and endure for generations.” We have identified specific strategic ambitions, known as the BF 150, that support our mission and vision as they represent objectives we believe are necessary to position our enterprise for success in the year 2020, coinciding with our 150th anniversary. These priorities include:
•	Building brands and businesses that create stockholder value;
•	Keeping Jack Daniel’s Tennessee Whiskey strong, healthy, and relevant to consumers worldwide;
•	Continuing to be the global leader in American whiskey;
•	Growing our Finlandia and Herradura portfolios;
•	Growing our business in the United States, our largest market;
•	Growing our non-U.S. developed and emerging markets;
•	Engaging our stockholders, including our controlling family stockholders;
•	Pursuing well-balanced capital deployment strategies; and
•	Being responsible in everything we do.
We believe that our executive compensation program enhances our ability to achieve these priorities in a manner that is aligned with our vision, mission, and values.

Compensation Elements

Principal elements of compensation for our NEOs include:

•	base salary (including holiday bonus);
•	short-term (one-year) performance-based cash compensation;
•	long-term (three-year) performance-based cash compensation;
•	long-term equity-based incentive compensation (stock-settled stock appreciation rights and performance-based restricted stock);
•	benefits and limited perquisites that are generally available to all senior executives; and
•	limited post-employment compensation and other benefits.

Measuring Performance

To measure our financial performance, we use a metric called “underlying depletion-based operating income”, which is equivalent to “underlying operating income” andincome.” This number is determined by adjusting GAAP operating income for the effect of foreign currency changes, the effect of estimated net changes in distributor inventories for our brands, and certain other items that we believe do not reflect the underlying performanceeffect of our business. Despite using these two terms interchangeably within our plans, all references herein will be to “underlying operating income”. acquisitions and divestitures.

The Committee believes that the most relevant measures of our performance are:

 

»

•

strong and sustained growth in underlying operating income, both on an absolute basis and relative to our industry peers,

»•	progress toward our long-term strategic goals, and
•	our three-year total shareholder return relative to the S&P Consumer Staples Index, andIndex.

»

continued progress against the Company’s strategic long-term ambitions.

Performance Metrics for Brown-Forman Incentive Plans

 

FISCAL 2017 PERFORMANCE METRICS FOR BROWN-FORMAN INCENTIVE PLANS
Performance-Based Component		Performance Measures(1)
Short-Term Cash Incentive		»   80% Weighting: Underlying operating income growth(1)relative to predicted growthexpected performance among industry peers »    20% Weighting: Individual performance
Long-Term Cash Incentive(2)		»   40%30% Weighting: Underlying operating income growth compared to sustained growth of 8% »   40% 30% Weighting: Underlying operating income growth compared to industry peers »   20% 40% Weighting: Progress towards the Company’stoward long-term quantitative and qualitative strategic goals
Performance-Based Restricted Stock		Total shareholder return relative to S&P Consumer Staples Index
Stock Appreciation Rights		Stock price growth above grant price

 

(1)

“Underlying operating income” is equivalent to “depletion-based operating income” and is not derived in accordance with GAAP. The reasons forWe explain why the Company’s use ofCompany uses this measure are presented in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Non-GAAP Financial Measures,” in our Annual Report on Form 10-K for fiscal 2015.2017.

(2)

Weightings for our long-term cash incentives were adjusted beginning with the fiscal 2016 grants. Please see page 32 for more information.

Competitive Compensation

We aspire to provide target compensation for our NEOs that approximates median target compensation observed amongdelivered to executives in similar positions at companies we consider to be competitorscompetition for senior executive talent. We believe that by providing strong, competitive target compensation aligned towith performance we enhanceenhances our ability to secure the right executive leadership while driving the right results for our Company.stockholders.

To ensure that we meet this objective, the Committee reviews and compares Brown-Forman’s compensation practices towith those of a group of high-performing, brand-building consumer products companies with similar financial characteristics. During fiscal 2015, theThe Committee reviewed and revisedreviews this group of companies annually to ensure continued alignment with the characteristics of Brown-Forman.they continue to meet these criteria. These updatescompanies are describedlisted on page 28.

 

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		COMPENSATION DISCUSSION AND ANALYSIS—THE ROLE OF OUR COMPENSATION COMMITTEE

COMPENSATION DISCUSSION AND ANALYSIS  •  TARGET COMPENSATION

THE ROLE OF OUR COMPENSATION COMMITTEE

The Committee serves a critical role in our compensation governance. Through providing independent oversight and thought leadership on executive compensation and its relationship to Company performance, the Committee establishes performance objectives that correlate pay and performance. The Committee, with the assistance of its independent compensation consultant, FWC, establishes compensation for our NEOs and other designated executive officers, and helps the Board fulfill its duties relating to the compensation of our directors, officers, and employees. The Committee also has the sole authority, on behalf of the Board, to determine the compensation of our CEO.

The Committee is composed of three independent directors — Messrs. Roney (Chair), Bousquet-Chavanne, and Cook. Each member of the Committee qualifies as an independent director under the NYSE’s heightened independence standards for Compensation Committee members of non-controlled companies, as a non-employee director under SEC rules, and as an outside director under regulations adopted pursuant to Section 162 of the Internal Revenue Code. As a “controlled company,” Brown-Forman is not required to meet all of these standards, but we believe that doing so is in the best interests of our Company and our stockholders.

The Committee’s deliberations and decisions are informed by the diverse experience of its members, input from certain members of management, advice from FWC, and access to functional experts in our human resources department.

 

Sound Pay Practices

We avoid certain pay practices that we believe do not support the objectives of our executive compensation program or our culture. We do not offer our NEOs employment agreements, non-performance-based cash payments not linked to performance (other than salary and holiday bonus), tax gross-ups, excessive perquisites, or severance and/or change in controlchange-in-control agreements. We also have adopted an Incentive Compensation Recoupment Policy (commonly known as a “clawback” policy) that permits the CompanyBrown-Forman to seek recovery of incentive compensation paid or awarded in the event of a subsequent financial restatement due to material noncompliance with financial reporting requirements, or the discovery of an error in the calculation of the incentive compensation that was awarded or paid.

Each year we conduct an assessmentassess and evaluation ofevaluate potential compensation-related risks. Based upon this year’s review, the Companymanagement and the Committee have concluded that our compensation policies and practices do not create any risk that is reasonably likely to have a material adverse effect on the Company.Brown-Forman. This is our intent and it is consistent with our findings in prior fiscal years.

Compensation Elements

Principal elements of compensation for our NEOs include:

 

»

base salary (including holiday bonus);

»

short-term (one-year) cash incentive compensation;

»

long-term (three-year) cash incentive compensation;

»

long-term equity incentive compensation (including stock-settled stock appreciation rights and performance-based restricted stock);

»

benefits and limited perquisites that are generally available to all senior executives; and

»

retirement benefits and a limited number of other post-employment compensation and benefits.

The Compensation Consultant

As an independent compensation advisor, FWC reports directly to the Committee and attends meetings as requested. FWC provides the Committee with information on external compensation trends and guidance on the compensation of our CEO and other NEOs, and also reviews this Compensation Discussion and Analysis. In addition, FWC provides independent advice to the Board on director remuneration, assists with the Board and Committee self-assessment process, and acts as the Committee’s advisor in working with management. FWC provides no other services to Brown-Forman or management.

 

		Our company vision is “Building Forever,” which reflects our long-term perspective and desire to remain a strong, independent company indefinitely. We aim to “enrich the experience of life by responsibly building beverage alcohol brands, in our own way, that thrive and endure for generations.” We have identified specific strategic ambitions that support our mission and vision as they represent objectives we believe are necessary to position our enterprise for success in the year 2020, coinciding with our 150th anniversary. These priorities include: In accordance with SEC and NYSE requirements, the Committee has reviewed the independence of FWC and determined that no conflict exists that would compromise the independence of the advice the firm provides.   »    Building brands and businesses that create stockholder value; »    Keeping Jack Daniel’s Tennessee Whiskey strong, healthy, and relevant to consumers worldwide; »    Continuing to be the global leader in American whiskey; »    Growing our Finlandia and Herradura portfolio; »    Growing our business in the United States, our largest market; »    Growing our non-U.S. developed and emerging markets; »    Engaging our stockholders, including our controlling family stockholders; »    Pursuing well-balanced capital deployment strategies; and »    Being responsible in everything we do. We believe that our executive compensation program enhances our ability to achieve these priorities in a manner that is aligned with our vision, mission, and values.

THE ROLE OF OUR COMPENSATION COMMITTEE

The Compensation Committee of our Board serves a critical role in our compensation governance process by providing independent oversight and thought leadership on executive compensation and its relationship to company performance. The Committee focuses on the establishment of performance objectives and the correlation between pay and performance when viewed against industry competitors. With the assistance of its independent compensation consultant, FWC, the Committee establishes compensation for our NEOs and certain other executive officers and helps the Board to fulfill its duties relating to the compensation of our directors, officers, and employees. The Committee also has the sole authority, on behalf of the Board, to determine the compensation of our CEO.

The Committee is composed of three independent directors, Messrs. Bousquet-Chavanne (Chair), Cook, and Roney. Each member of the Committee qualifies as an independent director under NYSE listing standards (including the NYSE’s heightened independence standards for Compensation Committee members of non-controlled companies), a non-

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		COMPENSATION DISCUSSION AND ANALYSIS—TARGET COMPENSATION

employee director under SEC rules, and an outside director under regulations adopted pursuant to Section 162 of the Internal Revenue Code.

The Committee’s deliberations and decisions are informed by the diverse experiences of its members, input from certain members of our management team, advice from FWC, and access to functional experts in our human resources department.

As the Committee’s independent compensation advisor, FWC reports directly to the Committee and attends Committee meetings as requested. FWC provides the Committee with information on external compensation trends and advises it regarding the compensation of the CEO and other NEOs, and reviews this Compensation Discussion and Analysis. In addition, FWC provides independent advice to the Board on director remuneration, confidentially compiles responses from directors to annual questionnaires on Board and committee effectiveness, and acts as the Committee’s agent in working with Company management on matters that fall within the Committee’s purview. FWC provides no other services to the Company or its management.

In accordance with SEC and NYSE requirements, the Committee has reviewed the independence of FWC and determined that no conflict exists that would compromise the independence of the advice provided by FWC.

TARGET COMPENSATION

How We Set Target Compensation for Our NEOs

We apply a customized approach to determine the target compensation of each NEO. We take into accountconsider each NEO’s role, the value of the role in the labor market, and factors specific to eachthe NEO as an individual. These individualIndividual factors include tenure with the Company,Brown-Forman, mastery of current role, potential to move into expanded roles, current performance, scarcity of skill sets,skill-sets, retention risk, fit withwithin our culture, career experience, and internal pay equity. We find that this customized approach leads to a more effective pay program than an approach that considers onlyone solely based on external labor market data.

To ensure that our pay is competitive, we compare NEO compensation with the compensation for executives in similar positions within a comparator group of high-performing, brand-building consumer products companies with financial characteristics similar to Brown-Forman’s.those of Brown-Forman. FWC prepares thea market analysis comparing the target value of each element of compensation for Brown-Forman’s NEOs to those ofthe compensation paid by the comparator group. This analysis produces a range of market-competitive levels of target compensation as one factor for consideration in determining base salaries and target incentive compensationpay for our NEOs.

In setting and evaluating target compensation, we use “total direct compensation,” which consists of salary, holiday bonus, short-term incentives, and long-term incentives.

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COMPENSATION DISCUSSION AND ANALYSIS  •  TARGET COMPENSATION

NEOs. While we do not set target compensation to meet specific benchmarks—such as salaries “above the median” or equity compensation “at the 75th percentile”—benchmarks, we do focus onconsider the median of the comparator group as a guide to appropriate target pay ranges for our NEOs.

With respect to determining

To determine the pay elements that make up each NEO’s target compensation, we begin by reviewing a preferred “pro forma”“pro-forma” mix of pay developed and recommended by FWC. Our goal, independentThe objective of prevalent marketthis practice is to have a pay mix that makes sensealigns from an internal perspective and supports our goal of promoting shareholder value creation.value. FWC and the Committee periodically review the “pro-forma” mix to ensure this continued alignment.

BROWN-FORMAN NEO PAY MIX VS. COMPENSATION COMPARATOR GROUP

 

 

(1)
		Brown-Forman NEO Pay Mix vs. Compensation Comparator Group This represents a recommended target pay mix by FWC.

 

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		COMPENSATION DISCUSSION AND ANALYSIS—AWARDS AND PAYOUTS IN FISCAL 2015: FIXED AND SHORT-TERM COMPENSATION

Compensation Comparator Group

During fiscal 2015,2017, the Committee reviewed and revised ourthe compensation comparator group of companies to ensure continued alignment with the characteristics of Brown-Forman. The 2015 compensation comparator group was updated from fiscal 2014 as follows: (1) the removalAs a result of Campbell Soup Co., Clorox Co., and Coach Inc.; and (2) the addition of Campari S.p.A., Pernod Ricard SA, Remy Cointreau SA, The Hain Celestial Group, Inc., and The WhiteWave Foods Company. In addition, Beamthis review, Keurig Green Mountain Inc. was later removed due to being acquired in 2015.as they were recently acquired.

 

Campari S.p.A.		Energizer HoldingsHarley Davidson Inc.		Mead Johnson Nutrition Co.		The Hain Celestial Group, Inc.
Church & Dwight Co., Inc.		Hershey Co.		Molson Coors Brewing Co.		The WhiteWave Foods Company
Constellation Brands, Inc.		J.M. Smucker Co.		Monster Beverage Corp.
Diageo Plc.		lululemon athletica inc.		Remy CointreauPernod Ricard SA
Church & Dwight Co., Inc.		Harley Davidson
Dr. Pepper Snapple Group, Inc.		McCormick & Co., Inc.		The Hain Celestial Group, Inc.
Constellation Brands, Inc.		Hershey Co.		Mead Johnson Nutrition Co.		The WhiteWave Foods Company
Diageo Plc.		J.M. Smucker Co.		Molson Coors Brewing Co.
Dr. Pepper Snapple Group, Inc.		Keurig Green Mountain Inc.		Monster Beverage Corp.
		Lorillard, Inc.		Pernod RicardRemy Cointreau SA

28

BROWN-FORMAN2017 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

COMPENSATION DISCUSSION AND ANALYSIS  •

AWARDS AND PAYOUTS IN FISCAL 2017: FIXED AND SHORT-TERM COMPENSATION

Target Total Direct Compensation for Fiscal 20152017

The chart below shows the annualized target total direct compensation (TTDC) for each of our NEOs in fiscal 20152017 versus fiscal 20142016, and the percentage increase.increase of each component.

 

		Fiscal 2015 versus Fiscal 2014 NEO Target Total Direct Compensation FISCAL 2017 VERSUS FISCAL 2016 NEO TARGET TOTAL DIRECT COMPENSATION

 

				■ Salary and		■ Short-Term		■ Long-Term		Target Total		Percent
Name		Year		Holiday Bonus(1)		Incentive Target		Incentive Target		Direct Comp		Increase		Pay Mix at Target
Paul C. Varga		2017		1,145,870		1,455,000		4,400,000		7,000,870		4%
		2016		1,133,370		1,400,000		4,200,000		6,733,370
Jane C. Morreau		2017		598,978		420,000		900,000		1,918,978		5%
		2016		572,935		400,000		850,000		1,822,935
Mark I. McCallum		2017		661,480		450,000		860,000		1,971,480		2%
		2016		645,854		440,000		850,000		1,935,854
Jill A. Jones		2017		614,603		440,000		840,000		1,894,603		4%
		2016		598,978		430,000		800,000		1,828,978
Lawson E. Whiting		2017		494,808		300,000		650,000		1,444,808		9%
		2016		447,931		275,000		600,000		1,322,931

(1)	Salary and holiday bonus are based on the one-year period beginning on August 1 (generally the effective date of base salary increases).July 1. Other compensation elements are based on our fiscal year beginning May 1. Any change to compensation during the year is prorated.

(2)	In fiscal 2014, Mr. Varga was awarded a special restricted stock grant of 67,513 shares at a grant date fair value of $5,000,013. The grant is not part of TTDC for fiscal 2014 and is therefore excluded from the above table.

AWARDS AND PAYOUTS IN FISCAL 2015: