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In addition, the Committee approved a further 2012 bonus opportunity for Mr. Roper equal to 80% of his primary 2012 bonus potential (which would equal an incremental 64% of his base salary) tied to achieving certain goals that would require substantial out-performance by the Company against its 2012 financial plan, as set forth below:
TABLE 2 – CEO “STRETCH” BONUS OPPORTUNITY = 64% OF BASE SALARY
| |
Objectives to be Achieved by the Company by FY2012 Year-End
| Weight (against base bonus opportunity)
|
Depletions growth at least 2% greater than that of craft and
domestic specialty beer growth | 20% |
Depletions growth at least 4% greater than that of craft and
domestic specialty beer growth | 30% |
Achieve processing costs of under $2.00 per case equivalent at
breweries owned by the Company | 30% |
TOTAL | 80% |
Chairman
The Committee approved 2012 bonus opportunities for C. James Koch, the Company’s Chairman, equal to 100% of salary. Mr. Koch’s objectives for 2012 as a percentage of his bonus opportunities are set forth below.
TABLE 3 – CHAIRMAN BONUS OPPORTUNITY = 100% OF BASE SALARY
| |
Objectives to be Achieved by the Company or the Chairman by FY2011 Year-End
| Weight
|
Depletions growth of at least 8%, excluding new brand introductions not
currently in the 2012 Financial Plan
Depletions growth of at least 10%, excluding new brand introductions not
currently in the 2012 Financial Plan | 10%
5% |
Depletions growth greater than the growth rate of the Craft Beer category | 20% |
Delivered gross profit of $268 million and delivered gross profit margin of not
less than 48%, after adjusting for commodity impact from plan levels | 20% |
Freshest Beer Program successfully implemented for wholesalers covering at
least 75% of the Company’s volume by year end | 20% |
Investment of time and resources in craft industry initiatives which support
the category and the Company | 20% |
TOTAL | 100% |
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Chief Financial Officer
The Committee approved 2012 bonus opportunities for William F. Urich, the Company’s Treasurer and Chief Financial Officer, equal to 50% of his base salary, based on achieving objectives as follows:
TABLE 4 – CFO BONUS OPPORTUNITY = 50% OF BASE SALARY
| | | |
Objectives to be Achieved by the Company or the CFO by FY2012 Year-End
| Weight
|
Company 2012
Goals | The Company meets its Company 2012 Goals | 30%* |
Resource
Efficiency | Deliver $2.5 million of resource efficiency improvements outside
of Delivered Gross Margin | 15% |
Support the Operations group in indentifying and executing against
a 2012 Delivered Gross Margin goal to achieve $5 million of
savings/efficiencies by year-end 2013 | 10% |
Lead Operations/Brewing performance improvement
measurements, KPI's and financial reporting to drive focus on key
measurable and continuous financial improvement, to improve SAP
tracking of materials, yields and cost reporting, and the like | 5% |
Procurement | Identify and execute approximately 2% savings for non-contracted
procurement spend and deliver $1.0 million savings. Identify and execute $1.5 million of Delivered Gross Margin savings for full year 2013 | 15% |
Sales Force
Effectiveness | Identify unplanned pricing opportunities (not including
opportunities created by competitive moves) of at least $250,000.
Improve data and analysis delivery to Sales | 5% |
Support New
Business
Development | Develop required back office support system to support A&S
Brewing Collaborative LLC and provide financial performance
reporting on its projects. Support due diligence on new business
development or potential acquisitions | 10% |
IT | Improve effectiveness, productivity, business impact and efficiency
of IT department. Support the Freshest Beer Program and develop
strategy for sales mobile devices for 2013 | 10% |
| TOTAL | 100% |
*
50% payout if depletions grow by at least 5% but less than 7.8%, provided that the Samuel
Adams® brand grows at least 3%
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Vice President of Operations
The Committee approved 2012 bonus opportunities for Thomas W. Lance, the Company’s Vice President of Operations, equal to 50% of his 2012 base salary, based on achieving objectives set forth below. The bonus opportunity is subject to reduction if any product that does not meet quality standards is shipped from a brewery.
TABLE 5 – VICE PRESIDENT OF OPERATIONS
BONUS OPPORTUNITY = 50% OF BASE SALARY
| | |
Objectives to be Achieved by the Company or Mr. Lance by FY2012 Year-End
| Weight |
Company
2012 Goals | The Company meets its Company 2012 Goals | 20%* |
Safety &
Quality | Reduce average Total Incident Rate at the breweries to 4.3% | 10% |
Improve Total Quality Aggregate Score (combined brewing and
packaging) by 2% from 2011 year-end | 10% |
Resource
Efficiency | Identify and implement $5 million in Delivered Gross Margin
improvements | 10% |
Brewery
Performance | Develop leadership capabilities, enhance the continuous
improvement process, and install high performance brewery
environments to maximize capacities and significantly improve
KPI’s, while: Maintaining adjusted conversion cost/case without depreciation
flat relative to 2011 fourth quarter Reducing adjusted conversion cost/case without depreciation by
2.5% relative to 2011 fourth quarter |
5%
5% |
Freshest Beer
Program | Fully develop and expand to 75% of the Company’s volume.
Improve out-of-stock tracking and service levels | 10% |
Brewery
Culture | Implement employee relations strategy that supports a “progressive
work environment” at the Pennsylvania brewery and creates
healthy employee-manager-company relations. Launch and support
at least 25 “continuous improvement teams” that deliver
measurable improvement. Secure labor contract extensions | 10% |
Capacity | Successfully execute capacity/capability projects approved by
senior management on time and on budget with intended benefit
delivered in 2013 | 20% |
| TOTAL | 100% |
*
50% payout if depletions grow by at least 5% but less than 7.8%, provided that the Samuel
Adams® brand grows at least 3%
Vice President of Sales
The Committee approved 2012 bonus opportunities for John C. Geist, the Company’s Vice President of Sales, equal to 50% of his 2012 base salary, based on achieving objectives as follows:
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TABLE 6 – VICE PRESIDENT OF SALES
BONUS OPPORTUNITY = 50% OF BASE SALARY
| | |
Objectives to be Achieved by the Company or Mr. Geist by FY2012 Year-End
| Weight
|
Company
2012 Goals | The Company meets its Company 2012 Goals | 30%* |
Depletions | Meet Company depletions goals for each brand family. (Weighting
of performance: Samuel Adams brand, 60%; Twisted Tea brand,
15%; Samuel Adams relative to Craft beer category growth, 15%;
and Angry Orchard brand, 10%) | 20% |
Class of Trade
Initiatives | Grow certain key classes of trade to 2012 plan | 20% |
Wholesaler
Initiatives | Improve wholesaler and Company sales force execution of
distribution and visibility, seasonal transitions and high-end beer
releases | 15% |
Financial | Price adjustments to exceed 2012 Financial Plan | 7.5% |
Manage expenses of sales force to budget | 7.5% |
| TOTAL | 100% |
*
50% payout if depletions grow by at least 5% but less than 7.8%, provided that the Samuel
Adams® brand grows at least 3%
Other Executive Officers
The Committee also approved the 2012 bonus opportunity for twoother executive officers, which opportunity consists of a combination of the Company achieving its Company 2012 goals and the officers achieving their individual goals. The bonus opportunity for both officers equals 50% of their 2012 base salary. One officer has 20% of the bonus opportunity being the achievement by the Company of the Company’s 2012 goals and the other officer has 15% of the bonus opportunity being the achievement by the Company of the Company’s 2012 goals.
Equity Compensation
Based on the recommendation of the Compensation Committee, the Board of Directors of the Company, at its meeting on December 13, 2011, approved the following option and restricted stock grants of the Company’s Class A Common Stock pursuant to the Company’s Employee Equity Incentive Plan.
Contingent Vesting Options
The Board of Directors approved the grant of contingent vesting options for shares of the Company’s Class A Common Stock in the aggregate amount of 11,100 shares to two executive officers and one senior manager, effective January 1, 2012, with an exercise price at the fair market value of such Common Stock on the effective date of the grant.
C. James Koch, the Company’s founder and Chairman, and Thomas W. Lance, Vice President of Brewing, will each be granted an option for 4,800 shares and the senior manager will be granted an option for 1,500 shares. The number of shares as to which these options may become exercisable in any year is dependent upon the Company’s meeting certain 2012 depletions targets, as follows: 50% will be eligible to vest if 2012 depletions excluding new brand introductions are at least 4% over 2011 depletions, and 100% will be eligible to vest if 2012 depletions excluding new brand introductions are 7.8% or more over 2011 depletions. The determination will be made regarding the eligibility for vesting of these options by the Compensation Committee by mid-March 2013. Eligible shares will then vest at the rate of 20% per year over the five-year period commencing January 1, 2012, subject to accelerated vesting in certain specified circumstances. The options will lapse to the extent that the above depletions targets are not met.
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Special Long-Term Retention Option
The Board of Directors also approved the grant of an option to a senior manager for 7,500 shares of the Company’s Class A Common Stock, effective January 1, 2012 with an exercise price at the fair market value of such Common Stock on the effective date of the grant. Sixty percent (60%) of the shares will vest five years from the effective date of grant, with the remaining shares vesting at the rate of 10% each year thereafter. The optionee must be an employee of the Company on the applicable vesting date or the option will lapse as to the non-vested shares.
Restricted Stock Awards
In addition, the Board of Directors approved an aggregate of $1,672,000 in restricted stock grants to be awarded to senior managers and certain key employees of the Company as of January 1, 2012. The restricted stock will vest over the five-year period commencing January 1, 2012, contingent only on continued employment, such that 20% of the shares will vest on January 1 in each of the years 2013 through 2017, subject to accelerated vesting in certain specified circumstances. No executive officers of the Company were awarded restricted stock grants.
Approval of Class B Stockholder
All of the bonus opportunities and equity compensation grants to executive officers described above were approved by the sole holder of the Company’s Class B Common Stock.
Item 7.01.
Regulation FD Disclosure.
Increase in Capital Investments in 2012
At its December 13, 2011 meeting, the Company’s Board of Directors approved a capital plan for 2012 of approximately $50 million, relating primarily to continued investments in the Company’s breweries to support the Freshest Beer Program and the projected growth of the existing brands. This is an increase of more than $15 million over the 2012 capital expenditures that were projected by the Company in its earnings release for the third quarter issued on November 1, 2011. Actual capital investment in 2012 could differ materially from this plan.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
