| (e) | Compensatory Arrangements of Certain Officers. |
At a meeting held on April 27, 2007, the Human Resources Committee (the “Committee”) of the Board of Directors (the “Board”) of Constellation Brands, Inc. (the “Company”) took the following actions with regard to certain compensatory arrangements for certain of the Company’s senior management personnel, including its executive officers.
Adoption of Amendment Number 3 to the Company’s Annual Management Incentive Plan
On April 27, 2007, the Human Resources Committee of the Board of Directors approved Amendment Number 3 to the Company’s Annual Management Incentive Plan (the “Amendment”). The Amendment is effective as of April 27, 2007, and is subject to shareholder approval. The Amendment modifies the Annual Management Incentive Plan (the “Plan”) as follows:
| (1) | increases to $5 million the maximum bonus that any Participating Executive (as that term is defined in the Plan) may receive in any fiscal year; |
| (2) | amends the definitions of “Disability” and “Retirement” as those terms are defined in Annex A of the Plan; and |
| (3) | amends the definition of “Performance Criteria” as that term is defined in Annex A of the Plan by expanding the list of potential performance measures from which the Committee can select when making awards under the Plan. |
A copy of the Amendment as approved by the Committee is filed as Exhibit 99.1 hereto and incorporated herein by reference.
Criteria for 2008 Fiscal Year Incentive Awards
Following approval of Amendment Number 3 to the Company’s Annual Management Incentive Plan (as more fully described above), the Committee adopted the 2008 Fiscal Year Award Program for Executive Officers (the “2008 Program for Executive Officers”), thereby establishing the performance criteria and the targets under the Annual Management Incentive Plan for the Company’s fiscal year ending February 29, 2008. Pursuant to the 2008 Program for Executive Officers, incentive awards for the Company’s 2008 fiscal year will be based on a percentage of base salary, depending upon the participant’s management position, and achieved performance during the plan year.
As only executive officers of the Company participate in the 2008 Program for Executive Officers, performance will be based solely upon achieved Company performance or a combination of achieved Company and division performance for the plan year, with potential
awards ranging from a minimum of 17.5% to a maximum of 240% of base salaries for executive officers. Performance targets are based upon:
| (1) | “EBIT” (Earnings Before Interest and Taxes), which is equal to the sum of Operating Income plus Equity in Earnings of Equity Method Investees. “EBIT” is measured based on the Company’s performance for the period from March 1, 2007 through February 29, 2008. |
| (2) | “Free Cash Flow”, which is equal to Net Cash Provided by (Used in) Operating Activities minus Purchases of Property, Plant and Equipment. ���Free Cash Flow” is measured based on the Company’s performance for the period from March 1, 2007 through February 29, 2008. |
ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. |
| (a) | Financial statements of businesses acquired. |
| | |
| | Not applicable. |
| | |
| (b) | Pro forma financial information. |
| | |
| | Not applicable. |
| | |
| (c) | Shell company transactions. |
| | |
| | Not applicable. |
| | |
| (d) | Exhibits. |
| | |
| | The following exhibit is furnished as part of this Current Report on Form 8-K: |
| | Exhibit No. | Description |
| | 99.1 | Amendment Number 3 to the Company’s Annual Management Incentive Plan. |
