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SAM > SEC Filings for SAM > Form 8-K on 17-Dec-2013All Recent SEC Filings

Show all filings for BOSTON BEER CO INC

Form 8-K for BOSTON BEER CO INC


17-Dec-2013

Change in Directors or Principal Officers


Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

2014 Bonus Opportunities

At its meeting on December 11, 2013, the Board of Directors of the Company formally ratified the decisions of the Compensation Committee of the Board in setting bonus objectives for the Company's named executive officers for 2014 and shared Company-wide goals (the "Shared Company-Wide Goals") that apply to certain officers and other employees. The Shared Company-Wide Goals consist of achieving: (i) depletions growth of at least 18% over 2013 and (ii) the generation of at least $7.5 million in resource efficiencies and cost savings, while maintaining brand health. The Shared Company-Wide Goals will be deemed partially achieved, and the respective officers and employees will receive 50% of their respective weighted Shared Company-Wide Goal payments, if: (i) the Company achieves depletions growth of at least 14% over 2013; and (ii) the Samuel Adams brand grows at least 3% over 2013. Assessment of performance against the Shared Company-Wide Goals and the various objectives listed below is within the purview of the Committee.

Chief Executive Officer

The Committee approved primary 2014 bonus opportunities for Martin F. Roper, the Company's President and CEO, equal to 80% of salary, based on achieving objectives as set forth below. The Delivered Gross Profit and Margin goals are based on the Company's current 2014 financial plan.

              TABLE 1 - CEO BONUS OPPORTUNITY = 80% OF BASE SALARY


  Performance Measure    Bonus Goal                                    Weight
  2014 depletions        Total depletions growth of at least 16%.       15.0%
  growth over 2013
                         Total depletions growth of at least 18%.       20.0%
  Delivered gross profit Delivered gross profit of at least $400        25.0%
                         million and delivered gross profit margin of
                         at least 45.4%, after adjusting for
                         commodity and mix impact from plan levels.
  Capacity and service   Significant reduction in "out of stock" and    25.0%
                         improvement in service. Addition of capacity
                         and capability to support projected growth
                         in 2014 and anticipated 2015 growth.
                         Implementation of optimized changeover
                         capabilities, minimize brewery inventory,
                         and maximize live loading.
  Resource savings       Combined savings of $7.5 million from          10.0%
                         delivered gross margin and SG&A efficiency
                         initiatives by the end of 2014. Improve
                         operational and freight costs.
  Freshness              Freshest Beer Program successfully              5.0%
                         implemented for wholesalers covering at
                         least 75% of the Company's volume by the end
                         of 2014.
                                            TOTAL                      100.0%

In addition, the Committee approved a further 2014 bonus opportunity for Mr. Roper equal to 80% of his primary 2014 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 2014 financial plan, as set forth below:

         TABLE 2 - CEO "STRETCH" BONUS OPPORTUNITY = 64% OF BASE SALARY


   Performance Measure   Bonus Goal                                    Weight
   2014 Depletions       Total depletions growth of 20%.                20.0%
   Growth over 2013
                         Total depletions growth of 22%.                30.0%
   Capacity and service  Improvements in service levels, finished       30.0%
                         goods inventory reduction, tank utilization,
                         and planning.
                                            TOTAL                       80.0%

Chairman

The Committee approved 2014 bonus opportunities for C. James Koch, the Company's Chairman, equal to 100% of salary. Mr. Koch's objectives for 2014 as a percentage of his bonus opportunities are set forth below.

           TABLE 3 - CHAIRMAN BONUS OPPORTUNITY = 100% OF BASE SALARY


  Performance Measure    Bonus Goal                                    Weight
  2014 depletions        Total depletions growth of at least 16%.       15.0%
  growth over 2013
                         Total depletions growth of at least 18%.       20.0%

                         Total depletions growth of at least 20%.       15.0%

                         Depletions growth greater than that of total   10.0%
                         craft beer category (benchmark to be based
                         on best available syndicated data and
                         approved by Compensation Committee).
  Delivered gross profit Delivered gross profit of at least $400        20.0%
                         million and delivered gross profit margin of
                         at least 45.4%, after adjusting for
                         commodity and mix impact from plan levels.
  Freshness              Freshest Beer Program successfully             10.0%
                         implemented for wholesalers covering at
                         least 75% of the Company's volume by the end
                         of 2014. Reduction of finished inventory at
                         breweries, warehouses, and U.S. wholesalers.
  Industry initiatives   Investment of time and resources in craft      10.0%
                         industry initiatives which support the
                         category and the Company.
                                            TOTAL                      100.0%

Chief Financial Officer

The Committee approved 2014 bonus opportunities for William F. Urich, the Company's Treasurer and Chief Financial Officer, equal to 50% of his 2014 base salary, based on achieving objectives as follows:

              TABLE 4 - CFO BONUS OPPORTUNITY = 50% OF BASE SALARY


Performance Measure   Bonus Goal                                     Weight
Shared Company-Wide   The Company achieves its Shared Company-Wide    30.0%
Goals                 Goals.
Individual Goals
Resource efficiency   Deliver $2.5 million of resource efficiency     10.0%
                      improvements outside of Delivered Gross
                      Margin.
                                                                       7.5%
                      Support the Operations group in identifying
                      and executing against a 2014 Delivered Gross
                      Margin goal to achieve $5 million of
                      savings/efficiencies by year-end 2014            7.5%

                      Lead the Operations/Brewing performance
                      improvement measurements, KPI's and financial
                      reporting. Drive focus on key measurable and
                      continuous financial improvement. Support the
                      analysis of capacity constraints and develop
                      with operations team a path forward for
                      future capacity requirements and
                      alternatives.
Procurement           Through effective use of procurement             5.0%
                      department, identify and execute 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 2014.               5.0%

                      Develop meaningful cider product extensions
                      and source concentrate to support future
                      volume projections.
Support of A&S        Develop required back office support system     10.0%
Brewing Collaborative to support projects of A&S, including
LLC ("A&S")           start-up of regional breweries and
initiatives           tracking/support for new brands. Support due
                      diligence on new business development or
                      potential acquisitions.
Organizational        Improve departmental or functional talent       10.0%
development           bench strength and depths, especially in key
                      positions, and drive culture of high
                      performance. Support projects to improve
                      project management capabilities of the
                      organization.
IT                    Improve effectiveness, productivity, business   15.0%
                      impact and efficiency of IT department. Lead
                      IT efforts for the breweries and Boston
                      Operations to support growth and increase
                      service levels over 2013. Work with Boston
                      operations to identify IT requirements and
                      change process to become a more effective
                      service group to our customers through
                      enhancements in the planning and execution
                      systems.
                                          TOTAL                      100.0%

Vice President of Sales

The Committee approved 2014 bonus opportunities for John C. Geist, the Company's Vice President of Sales, equal to 50% of his 2014 base salary, based on achieving objectives as follows:

                       TABLE 5 - VICE PRESIDENT OF SALES

                     BONUS OPPORTUNITY = 50% OF BASE SALARY


Performance Measure        Bonus Goal                                   Weight
Shared Company-Wide Goals  The Company achieves its Shared               30.0%
                           Company-Wide Goals.
Individual Goals
2014 depletions            Samuel Adams depletions growth of at least    10.0%
growth over 2013           9%.
                                                                          5.0%
                           Twisted Tea depletions growth of at least
                           17%.                                           5.0%

                           Angry Orchard depletions growth of at         10.0%
                           least 50%.

                           Total depletions growth including A&S of
                           at least 18%.
Pricing                    Price adjustments of greater than 2%.         10.0%
Sales execution            Achieve draft-handle distribution             10.0%
                           year-high goals for Boston Lager,
                           Seasonals, Rebel, Angry Orchard, and A&S.
                                                                          6.0%
                           Achieve at least 70% of 2013 Samuel Adams
                           Seasonal distribution within designated
                           time period within each season.
Wholesaler initiatives     Surpass 2013 performance on display            2.0%
                           execution during key holiday periods
                           (measured by percentage of stores with
                           displays and cases per store on display in
                           surveyed stores).                              2.0%

                           500,000 drinkers sampled.
Organizational development Improve departmental or functional talent     10.0%
                           bench strength and depths, especially in
                           key positions, and drive culture of high
                           performance.
                                             TOTAL                      100.0%

Vice President of Operations

The Committee approved 2014 bonus opportunities for Thomas W. Lance, the Company's Vice President of Operations, equal to 50% of his 2014 base salary, based on achieving objectives set forth below. The bonus opportunity is subject to a reduction determined by the Compensation Committee if any product that does not meet the Company's quality standards is shipped from a brewery.

                     TABLE 6 - VICE PRESIDENT OF OPERATIONS

                     BONUS OPPORTUNITY = 50% OF BASE SALARY


Performance Measure        Bonus Goal                                     Weight
Shared Company-Wide Goals  The Company achieves its Shared Company-Wide    20.0%
                           Goals.
Individual Goals
Safety                     Assure safe work environments and effective     10.0%
                           safety training/program that results in
                           better than industry average incident rates.
Quality                    Continuously improve aggregate quality scores   10.0%
                           while assuring that no bad beer leaves the
                           brewery.
Supply chain               Significantly improve manufacturing and         20.0%
                           supply chain capabilities and service levels
                           and reduce "out of stocks" at wholesaler
                           level.
Capacity                   Install and activate required capacity to       20.0%
                           support high-side projected volumes and mix
                           for 2014-2015, while supplementing peak loads
                           with contract manufacturing support. Update
                           mid and long range capacity planning to
                           assure cost effective product supply over 3-5
                           year horizon.
Cost savings               Decrease brewery, freight and warehouse costs   15.0%
                           by $10 million over 2013 levels and plan for
                           2015 savings.
Organizational development Continue to build high performance               5.0%
                           organization culture that results in
                           continuous improvement throughout the supply
                           chain and delivers $5m in Delivered Gross
                           Margin improvement.
                                               TOTAL                      100.0%

Other Executive Officers

The Committee also approved the 2014 bonus opportunities for four other executive officers, which opportunities consist of a combination of the Company achieving its Shared Company-Wide Goals and the officers achieving their individual goals. The overall bonus opportunities for these officers range from 20% to 50% of their 2014 base salary. The proportion of the overall bonus opportunity that is based on the achievement of the Shared Company-Wide Goals for each of these officers is a maximum of 20%.

Equity Compensation

Based on the recommendation of the Compensation Committee, the Board of Directors of the Company, at its meeting held on December 11, 2013, 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 7,090 shares to four executive officers, effective January 1, 2014, 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, Thomas W. Lance, Vice President of Brewing, and Robert Pagano, Vice President of Brand Development, will each be granted an option for 2,140 shares and Kathleen H. Wade, Vice President-Legal and Corporate Secretary, will be granted an option for 670 shares. The number of shares as to which these options may become exercisable in any year is dependent upon the Company's meeting certain 2014 depletions targets, as follows: (a) 50% will be eligible to vest if 2014 depletions increase at least 13% over 2013 depletions; and (b) 100% will be eligible to vest if 2014 depletions increase at least 18% over 2013 depletions. The determination regarding the eligibility for vesting of these options will be made by the Compensation Committee by mid-March 2015. Eligible shares will then vest over the five-year period commencing January 1, 2014, such that 20% of the shares will vest in each of the years 2015 through 2019, subject to accelerated vesting in certain specified circumstances. The options will lapse to the extent that the above depletions targets are not met.

Restricted Stock Awards

In addition, the Board of Directors approved an aggregate of $2,875,000 in restricted stock grants to be awarded to one executive officer and to senior managers and key employees of the Company as of January 1, 2014. Of these awards, $1,625,000 will vest over the five-year period commencing January 1, 2014, contingent only on continued employment, such that 20% of the shares will vest on January 1 in each of the years 2015 through 2019, subject to accelerated or extended vesting in certain specified circumstances, and $500,000 will vest 33% on each of January 1, 2017 and January 1, 2018, and 34% on January 1, 2019, also contingent only on continued employment. Vesting of the remaining $750,000 in approved grants is tied to achievement of certain 3, 5 and 8 year volume goals.

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.

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