EXECUTIVE COMPENSATION
LONG-TERM INCENTIVE PLAN
1994-1996 Plan Cycle
PARTICIPANTS:
The CEO, COO, all officers of Coors Brewing company and other key personnel
selected by the CEO or COO.
Participants who are newly hired, promoted into an eligible position, or
selected for participation during the Plan
cycle will receive a pro-rata share of the current Plan based on the number of
calendar days spent in the eligible
position divided by the actual number of days during the performance cycle of
the Plan.
FINANCIAL TARGETS:
Long-term Company goals will be measured on cumulative Return on Invested
Capital (ROIC). ROIC is defined
as the earnings before interest, after tax, divided by debt plus equity. The
cumulative ROIC target for plan years
1994, 1995, and 1996 is 22.6. Minimum payout level is set at 90% of target
(20.3). Maximum payout level
is set at 150% of target (33.9). The Plan cycle will be for three years, with
payout in the beginning of the
fourth year. A new plan will begin every other year for another three year
cycle. (Bi-annual payout).
94 95 96 *
96 97 98 *
98 99 00 *
* = Payout
LONG-TERM INCENTIVE PROGRAM AWARD LEVELS AS A PERCENT OF BASE SALARY AS OF THE
BEGINNING OF THE PLAN CYCLE (1/1/94) OR THE PLAN ENTRY DATE IF LATER (BI-ANNUAL
AND ANNUAL PERCENTAGES):
Position Minimum Target Maximum
* * *
CEO 10% (5%) 150% (75%) 300% (150%)
COO 10% (5%) 140% (70%) 280% (140%)
Exec. Staff 10% (5%) 100% (50%) 200% (100%)
VP 10% (5%) 60% (30%) 120% (60%)
Other 10% (5%) 40% (20%) 80% (40%)
* Bi-annual payouts yield annual equivalent at the 90th percentile of market.
VEHICLE TO PAY INCENTIVE:
One-half of all award payments will be paid in restricted shares of Coors Class
B Common non-voting stock, based on the Fair Market Value (FMV) at the time of
payout. The FMV is the average of the highest and the lowest prices of the
stock as reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"). The shares will be granted under the Adolph Coors
Company Equity Incentive Plan. Restricted shares will be fully vested but will
be restricted from sale for a holding period of five years, commencing at the
time of payout (1997). The five-year transfer restriction will survive
termination of employment for any reason. The remaining one-half of any award
payment will be paid in cash. Upon entering the Plan, the Participant will have
the opportunity to elect one of two other alternatives: a) to use the cash
portion to purchase discounted Coors Class B non-voting stock (based on 75% of
the FMV at the time of Payout) or b) to have the entire award paid in the form
of stock options, the number of options to be 3 times the total award amount
divided by the FMV at the time the Participant entered the Plan. The
Participant will elect a percentage (a multiple of 10, but not more than 100)
of the total award amount, if any, be made in the form of stock options. All
shares will receive dividend during the restriction period.
DISCOUNTED STOCK PRICE AND TERM:
The price for discounted stock purchased at payout under alternative (a) will
be 75% of the FMV at the time of payout from the Plan. Restricted shares will
be fully vested but will be restricted from sale for a holding period of three
years from date of payout. The three-year transfer restriction will survive
termination of employment for any reason. Restricted shares will receive
dividends during the three year restriction period.
STOCK OPTION PRICE TERM:
The price for stock options under alternative (b) will be the new FMV at the
beginning of the Plan cycle,. New hires and individuals promoted who are
eligible to participate in the Plan and elect to receive stock options will
be issued stock options with a FMV on the date they entered the Plan. The stock
options will expire ten years following the end of the Plan cycle in which the
stock options were issues. The options will be subject to all other terms and
conditions of the Adolph Coors Company Equity Incentive Plan applicable to
options.
FEDERAL, STATE AND FICA TAX WITHHOLDING:
The Company will be required to withhold all applicable federal, state and FICA
income taxes on the awards.
TAX TREATMENT:
Normal Form of Payment. As stated above, in the absence of an election of
another alternative, any award payments will be paid one-half in cash and
one-half in Restricted Stock. The cash will be treated as compensation, subject
to withholding, in the year it is received.
The Participant will be taxed on the Restricted Stock when the restrictions
lapse. At the time the Participant will recognize compensation, subject to
withholding, equal to the FMV for the Restricted Stock on the date the
restrictions lapse. In the alternative, the Participant may make an election
under Code section 83 (b) to recognize compensation equal to the FMV of the
Restricted Stock on the date it is granted. The election must be filed with the
Internal Revenue Service within 30 days after the date the Restricted Stock is
granted. The Participant's basis for the stock will be equal to the compensation
recognized. The Participant's holding period, for determining whether gain or
loss on a disposition is long- or short-term, will begin just after the
restrictions lapse, or, in the case of an election under Code section 83 (b),
just after the Restricted Stock is granted.
Election to Use Cash Portion to Purchase Stock. A participant who makes this
election will be taxed on the portion of the award paid in Restricted Stock as
described above under "Normal Form of Payment".
The cash will be treated as compensation , subject to withholding, in the year
paid. Upon the purchase of the discounted stock, the Participant will recognize
compensation, subject to withholding, equal to the excess of the FMV of the
discounted stock on the date the restrictions lapse over the amount paid. In
the alternative, the Participant may make and election under Code section 83 (b)
to recognize compensation at the time the discounted stock is purchased. The
election must be filed with the Internal Revenue Service within 30 days
after the date the discounted stock is purchased. If the participant makes the
election, the Participant will recognize compensation, subject to withholding,
equal to the excess of the fair market value of the stock on the date the
discounted stock is purchased over the amount paid. The Participant's basis for
the discounted stock will be equal to the amount paid for the discounted stock
plus the compensation recognized. The Participant's holding period, for
determining whether gain or loss on a disposition is long-or short-term, will
begin just after the restrictions lapse, or, in the case of an election under
Code Section 83 (b), just after the discounted stock is purchased.
Election to Receive an Option Grant. In general, the Participant will not
recognize income upon the grant of the options. Upon exercise of the options,
the Participant will recognize compensation equal to the excess of the FMV of
the stock on the date the option is exercised over the amount paid. For more
information concerning the ta treatment of exercise of options, consult "ERISA
and Federal Income Tax Consequences" in the Prospectus for the Equity Incentive
Plan. Participants should be aware, however, that although options are
generally not taxed upon grant, if the exercise price for the option is
substantially less than the FMV of the shares a the time the option is granted,
there is a risk that the Internal Revenue Service may assert that the
Participant must recognize compensation a the time the option is granted equal
to the excess of the FMV of the stock over the exercise price.
The portion of the award, if any, that is received in cash will be treated as
compensation, subject to withholding, in the year it is received.
TERMINATION PROVISION:
Payments to retired or terminated employees will be a the discretion of the CEO
and COO.
NOT EMPLOYMENT CONTRACT:
At no time is this Plan to be considered an employment contract between the
participants and the Company. It does not guarantee participants the right to
be continued as an employee of the Company. It does not effect
a participants right to leave the Company or the Company's right to discharge
a participant.
DISCLAIMER:
Coors Brewing Company reserves the right to change, amend or terminate this Plan
at any time, for any reason by resolution of its Board of Directors.