Pre14A-072607
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed
by the Registrant [X]
Filed
by
a Party other than the Registrant [ ]
Check
the
appropriate box:
[X]
Preliminary Proxy Statement
[
]
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[
]
Definitive Proxy Statement
[
]
Definitive Additional Materials
[
]
Soliciting Material Pursuant to Section 240.14a-12
CONSTELLATION
BRANDS, INC.
(Name
of
Registrant as Specified in its Charter)
__________________________________________________
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[X]
No fee required.
[
] Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
(1)
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Title of each class of securities to which
transaction applies: |
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_______________________________________________
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(2)
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Aggregate number of securities to which transaction
applies: |
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_______________________________________________
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(3)
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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_______________________________________________
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|
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(4)
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Proposed
maximum aggregate value of transaction:
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_______________________________________________
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| (5) |
Total fee paid: |
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_______________________________________________
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| [ ] |
Fee paid previously with preliminary
materials. |
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| [ ] |
Check box if any part of the fee is offset as provided
by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the
date of its filing. |
| (1) |
Amount Previously Paid: |
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____________________________________
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| (2) |
Form, Schedule or Registration Statement No.: |
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____________________________________
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| (3) |
Filing Party: |
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____________________________________
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(4)
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Date Filed: |
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____________________________________
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Preliminary
Proxy Material
LOGO
Constellation
|
ANNUAL
MEETING OF
STOCKHOLDERS
|
June
__,
2007
To
Our Stockholders:
You
are
cordially invited to attend the Annual Meeting of Stockholders of Constellation
Brands, Inc. at the Rochester
Riverside Convention Center,
123
East Main Street, Rochester, New York, on Thursday, July 26, 2007 at 11:00
a.m. (local time).
The
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement
describe in detail the matters expected to be acted upon at the meeting.
Also
contained in this package is the Company’s 2007 Annual Report to Stockholders
that contains important business and financial information concerning the
Company.
We
hope
you are able to attend this year’s Annual Meeting.
| Very
truly yours, |
|
|
|
RICHARD
SANDS
Chairman
of the Board
and
Chief Executive Officer
|
Please
note that the Rochester Riverside Convention Center is located at the corner
of
East Main Street and South Avenue in downtown Rochester, New York. Parking
is
available at the South Avenue Garage, the entrance to which is located
on Broad
Street. Additional parking is also available at other public garages in
the
area.
Preliminary
Proxy Material
CONSTELLATION
BRANDS, INC.
|
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD JULY 26,
2007
|
NOTICE
IS
HEREBY GIVEN that the Annual Meeting of Stockholders of CONSTELLATION BRANDS,
INC. (the “Company”) will be held at the Rochester Riverside Convention Center,
123 East Main Street, Rochester, New York, on Thursday, July 26, 2007 at 11:00
a.m. (local time) for the following purposes more fully described in the
accompanying Proxy Statement:
| |
1.
|
To
elect directors of the Company (Proposal No. 1).
|
| |
2.
|
To
ratify the selection of KPMG LLP, Certified Public Accountants, as
the
Company’s independent public accountants for the fiscal year ending
February 29, 2008 (Proposal No. 2).
|
| |
3.
|
To
amend the Company’s certificate of incorporation to increase the number of
authorized shares of the Company’s Class A Common Stock from 300,000,000
shares to 315,000,000 shares (Proposal No. 3).
|
| |
4.
|
To
approve the amendment and restatement of the Company’s Long-Term Stock
Incentive Plan (Proposal No. 4).
|
| |
5.
|
To
approve the amendment and restatement of the Company’s Annual Management
Incentive Plan (Proposal No. 5).
|
| |
6.
|
To
transact such other business as may properly come before the Meeting
or
any adjournment thereof.
|
The
Board
of Directors has fixed the close of business on May 31, 2007 as the record
date
for the determination of stockholders entitled to notice of and to vote at
the
Meeting or any adjournment thereof.
A
Proxy
Statement and proxy card or proxy cards are enclosed.
WE
HOPE
YOU WILL ATTEND THIS MEETING IN PERSON, BUT, IF YOU CANNOT, PLEASE SIGN AND
DATE
THE ENCLOSED PROXY CARD(S). RETURN THE PROXY CARD(S) IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
| BY ORDER OF THE BOARD OF DIRECTORS |
|
|
| DAVID
S. SORCE, Secretary |
Fairport,
New York
June
___,
2007
Preliminary
Proxy Material
CONSTELLATION
BRANDS, INC.
370
Woodcliff Drive, Suite 300
Fairport,
New York 14450
2007
ANNUAL MEETING OF STOCKHOLDERS
This
Proxy Statement is being furnished to the holders of the common stock of
CONSTELLATION BRANDS, INC. (the “Company,” “we” or “us”) in connection with the
solicitation of proxies by the Board of Directors of the Company. The proxies
are for use at the 2007 Annual Meeting of Stockholders of the Company and
at any
adjournment thereof (the “Meeting”). The Meeting will be held on Thursday, July
26, 2007 at 11:00 a.m. (local time) at the Rochester Riverside Convention
Center, 123 East Main Street, Rochester, New York.
The
shares represented by your proxy, if the proxy is properly executed and
returned, and not revoked, will be voted at the Meeting as therein specified.
You may revoke your proxy at any time before the proxy is exercised by
delivering to the Secretary of the Company a written revocation or a duly
executed proxy bearing a later date. You may also revoke your proxy by attending
the Meeting and voting in person.
The
shares represented by your proxy will be voted FOR
the
election of the director nominees named herein (Proposal No. 1), unless you
specifically withhold authority to vote for one or more of the director
nominees. Further, unless you indicate otherwise, the shares represented
by your
proxy will be voted FOR
the
ratification of the selection of KPMG LLP as the Company’s independent public
accountants for the fiscal year ending February 29, 2008 (Proposal No. 2),
FOR
the
approval to amend the Company’s certificate of incorporation to increase the
number of shares of the Company’s Class A Common Stock from 300,000,000 shares
to 315,000,000 shares (Proposal No. 3), FOR
the
proposal to approve the amendment and restatement of the Company’s Long-Term
Stock Incentive Plan (Proposal No. 4), and FOR
the
proposal to approve the amendment and restatement of the Company’s Annual
Management Incentive Plan (Proposal No. 5).
The
outstanding common stock of the Company consists of Class A Common Stock,
par
value $.01 per share (“Class A Stock”), and Class B Common Stock, par value $.01
per share (“Class B Stock”). Accordingly, the Company has enclosed with the
proxy materials a Class A Stock proxy card and/or a Class B Stock proxy card,
depending on the holdings of the stockholder to whom proxy materials are
mailed.
Stockholders who receive both a Class A Stock proxy card and a Class B Stock
proxy card must sign and return both
proxy
cards in accordance with their respective instructions to ensure the voting
of
the shares of each class owned.
This
Proxy Statement and the accompanying proxy cards are being first mailed to
stockholders on or about June ___, 2007.
The
cost
of soliciting proxies will be borne by the Company. In addition to solicitation
by use of the mail, directors, officers or regular employees of the Company,
without extra compensation, may solicit proxies in person or by telephone,
facsimile, internet or electronic mail. The Company has requested persons
holding stock for others in their names or in the names of nominees to forward
these materials to the beneficial owners of such shares. If requested, the
Company will reimburse such persons for their reasonable expenses in forwarding
these materials.
VOTING
SECURITIES
The
total
outstanding capital common stock of the Company, as of May 31, 2007 (the
“Record
Date”), consisted of ____________ shares of Class A Stock and _________________
shares of Class B Stock. Each share of Class B Stock is convertible into
one
share of Class A Stock at any time at the option of the holder.
Of
the
_____________ shares of Class A Stock outstanding on the Record Date,
____________ shares were held by CHESS
Depositary Nominees Pty Ltd. (ACN 071 346 506) (“CDN”), a wholly-owned
subsidiary of ASX
Limited (ACN 008 624 691), the Australian Stock Exchange (the “ASX”).
CDN has
issued Constellation CHESS Depositary Interests (“Constellation CDIs”) that
represent beneficial interests in the Class A Stock held by CDN. Constellation
CDIs are traded on the electronic transfer and settlement system operated
by the
ASX. As of the Record Date there were _____________ Constellation CDIs
outstanding that were held by _____ holders of record. All references in
this
Proxy Statement to outstanding shares of Class A Stock include the shares
of
Class A Stock held by CDN and all references to holders of Class A Stock
include
CDN.
Holders
of Constellation CDIs receive all the economic and other benefits of actual
ownership of Class A Stock at a ratio of ten (10) Constellation CDIs to each
share of Class A Stock. Constellation CDIs can be converted to Class A Stock
at
any time at the option of the holder of the Constellation CDI at a ratio
of one
(1) share of Class A Stock for each ten (10) Constellation CDIs. Holders of
Constellation CDIs have
the
right
to
attend stockholders’ meetings of the Company and to direct the vote of the
underlying shares of Class A Stock represented by their Constellation CDIs.
CDN,
as the holder of record of the underlying shares of Class A Stock represented
by
the Constellation CDIs, will vote such shares in accordance with the directions
of the holders of the Constellation CDIs. If CDN does not receive a direction
from a holder of Constellation CDIs as to how to vote the underlying shares
represented by those Constellation CDIs, those shares will not be voted and
will
not be considered present at the Meeting for quorum purposes. A holder of
Constellation CDIs will be entitled to vote at the Meeting only if such holder
directs CDN to designate such holder as proxy to vote the underlying shares
of
Class A Stock represented by the Constellation CDIs held by such holder.
A form
to be used to direct CDN how to vote underlying shares of Class A Stock
represented by Constellation CDIs is being delivered with this Proxy Statement
to each holder of Constellation CDIs.
Only
holders of record of Class A Stock and Class B Stock on the books of the
Company
at the close of business on May 31, 2007, the Record Date for eligibility
to
vote at the Meeting, are entitled to notice of and to vote at the Meeting
and at
any adjournment thereof. Under arrangements established between the Company
and
CDN in connection with the issuance of Constellation CDIs, the holders of
Constellation CDIs are entitled to notice of and to attend the Meeting but
may
only vote at the Meeting as proxy for CDN in the circumstances described
above.
Except as otherwise required by Delaware law, the holders of Class A Stock
and
the holders of Class B Stock vote together as a single class on all matters
other than the election of the group of directors who are elected solely
by the
holders of the Class A Stock. Each holder of Class A Stock is entitled to
one
(1) vote for each share of Class A Stock registered in such holder’s name, and
each holder of Class B Stock is entitled to ten (10) votes for each share
of
Class B Stock registered in such holder’s name. Therefore, holders of Class A
Stock are entitled to cast a total of __________ votes and holders of Class
B
Stock are entitled to cast a total of ____________ votes at the
Meeting.
The
holders of a majority of the outstanding aggregate voting power of Class
A Stock
(including the underlying shares represented by Constellation CDIs) and
Class B Stock present at the Meeting, in person or by proxy, will
constitute a quorum. Shares represented by proxies marked as abstentions
will be
counted toward determining the presence of a quorum. Proxies relating to
shares
held in “street name” by brokers or other nominees that may be voted with
respect to some, but not all, matters without instruction from the beneficial
owner (“broker non-votes”) are counted as shares present for determining a
quorum. Under the rules of the New York Stock Exchange, brokers and nominees
are
generally permitted to vote with respect to Proposal No. 1 and Proposal No.
2
without receiving direction from the beneficial owner of Class A Stock or
Class
B Stock but are not permitted to vote with respect to Proposal Nos. 3, 4
or 5
unless such direction is received. Accordingly, the Company expects to receive
broker non-votes with respect to Proposal Nos. 3, 4 and 5 but does not expect
to
receive broker non-votes with respect to Proposal No. 1 or Proposal No. 2
unless
one or more beneficial owners have withheld discretionary authority from
their
respective brokers or nominees.
Under
Delaware law and the Company’s certificate of incorporation and by-laws,
directors are elected by a plurality of the votes cast (the highest number
of
votes cast) by the holders of the shares entitled to vote, and actually voting,
in person or by proxy. Pursuant to the Company’s certificate of incorporation,
the holders of Class A Stock (including the underlying shares represented
by
Constellation CDIs), voting as a separate class, are entitled to elect
one-fourth of the number of directors to be elected at the Meeting (rounded
up
to the next number if the total number of directors to be elected is not
evenly
divisible by four). The holders of Class A Stock (including the underlying
shares represented by Constellation CDIs) and Class B Stock, voting as a
single
class, are entitled to elect the remaining number of directors to be elected
at
the Meeting, with holders of Class A Stock having one (1) vote per share
and
holders of Class B Stock having ten (10) votes per share. Since the Board
of
Directors nominated eight (8) directors, the holders of Class A Stock will
be
entitled to elect two (2) directors and the holders of Class A Stock and
Class B
Stock, voting as a single class, will be entitled to elect six (6) directors.
Because the directors are elected by a plurality of the votes cast in each
election, votes that are withheld (including broker non-votes, if any) will
not
be counted and, therefore, will not affect the outcome of the
elections.
The
ratification of the selection of KPMG LLP as the Company’s independent public
accountants for the fiscal year ending February 29, 2008 (Proposal No. 2)
requires the affirmative vote of a majority of the votes entitled to be cast
by
stockholders present in person or represented by proxy at the Meeting. With
respect to this proposal, holders of Class A Stock (including the underlying
shares represented by Constellation CDIs) and Class B Stock are entitled
to vote
as a single class at the Meeting, with holders of Class A Stock having one
(1)
vote per share and holders of Class B Stock having ten (10) votes per share.
Therefore, abstentions will have the effect of negative votes. However, because
broker non-votes, if any, are not considered entitled to vote, they will
not
affect the outcome of the vote.
The
adoption of the proposal to amend the Company’s certificate of incorporation
(Proposal No. 3) requires the affirmative vote of the holders of a majority
of
the votes entitled to be cast by the Class A Stock (including the underlying
shares represented by Constellation CDIs) and Class B Stock, voting together
as
a single class, with the holders of the Class A Stock having one (1) vote
per
share and the holders of the Class B Stock having ten (10) votes per share.
Abstentions and broker non-votes, if applicable, will therefore have the
effect
of negative votes.
The
adoption of the proposal to approve the amendment and restatement of the
Company’s Long-Term Stock Incentive Plan (Proposal No. 4) and the proposal to
approve the amendment and restatement of the Company’s Annual Management
Incentive Plan (Proposal No. 5) each requires the affirmative vote of the
holders of a majority of the votes entitled to be cast by stockholders present
in person or represented by proxy at the Meeting. With respect to each of
these
proposals, holders of Class A Stock (including the underlying shares represented
by Constellation CDIs) and Class B Stock are entitled to vote as a single
class
at the Meeting, with holders of Class A Stock having one (1) vote per share
and
holders of the Class B Stock having ten (10) votes per share. Therefore,
abstentions will have the effect of negative votes. However, because broker
non-votes are not considered entitled to vote, they will not affect the outcome
of the vote with respect to either of these proposals.
BENEFICIAL
OWNERSHIP
This
section presents information concerning the beneficial ownership of our common
stock by certain individuals, entities and groups. Determinations as to whether
a particular individual, entity or group is the beneficial owner of our common
stock have been made in accordance with Rule 13d-3 of the Securities Exchange
Act of 1934. Under Rule 13d-3, a person is deemed to be the beneficial owner
of
any shares as to which such person: (i) directly or indirectly has or shares
voting power or investment power, or (ii) has the right to acquire such voting
or investment power within 60 days through the exercise of any stock option
or
other right. The fact that a person is the beneficial owner of shares for
purposes of Rule 13d-3 does not necessarily mean that such person would be
the
beneficial owner of securities for other purposes. The percentages of beneficial
ownership reported in this section were calculated on the basis of 191,319,504
shares of Class A Stock and 23,823,338 shares of Class B Stock outstanding
as of
the close of business on May 16, 2007, subject to adjustment as appropriate
in
each particular case in accordance with Rule 13d-3 of the Securities Exchange
Act of 1934.
Beneficial
Security Ownership of More Than 5% of the Company’s Common
Stock
The
following tables present, as of May 16, 2007, information regarding the
beneficial ownership of Class A Stock or Class B Stock by each person who
is
known to be the beneficial owner of more than 5% of the Class A Stock or
Class B
Stock. Except as otherwise noted below, the address of each person or entity
listed in the tables is c/o Constellation Brands, Inc., 370 Woodcliff Drive,
Suite 300, Fairport, New York 14450.
Class
A Stock
|
Name
and Address of
Beneficial
Owner
|
Shares
with Power to
Vote
or Dispose
|
Total
Shares
|
Percent
of Class
|
|
|
Sole
|
Shared
|
Class
A
Only
|
If
Class B
Converted
|
Class
A
Only
|
If
Class B
Converted
|
|
Richard
Sands
|
2,213,456
(1)
|
609,233
(2)
|
2,822,689
|
18,241,065
|
1.5
%
|
8.8
%
|
|
Robert
Sands
|
2,129,803
(3)
|
609,233
(4)
|
2,739,036
|
18,151,772
|
1.4
%
|
8.3
%
|
|
Trust
for the benefit of Andrew Stern, M.D. under the will of Laurie
Sands
|
-
|
472,376
(5)
|
472,376
|
7,135,088
|
0.2
%
|
3.6
%
|
|
CWC
Partnership-I (6)
|
-
|
472,376
(6)
|
472,376
|
6,571,456
|
0.2
%
|
3.3
%
|
|
Stockholders
Group Pursuant to Section 13(d)(3) of the
Securities
Exchange Act of 1934 (7)
|
-
|
4,952,492
(7)
|
4,952,492
|
27,623,460
|
2.5
%
|
12.7
%
|
|
FMR
Corp.
82
Devonshire Street
Boston,
MA 02109 (8)
|
(8)
|
(8)
|
14,838,207
(8)
|
N/A
|
7.8
%
|
N/A
|
|
UBS
AG
Bahnhofstrasse
45
PO
Box CH-8021
Zurich,
Switzerland (9)
|
(9)
|
(9)
|
25,132,283
(9)
|
N/A
|
13.1
%
|
N/A
|
|
Name
and Address of
Beneficial
Owner
|
Shares
with Power to
Vote
or Dispose
|
Total
Shares
|
Percent
of
Class
B
|
| |
Sole
|
Shared
|
|
|
|
Richard
Sands
|
7,258,232 (1)
|
8,160,144
(2)
|
15,418,376
|
64.7
%
|
|
Robert
Sands
|
7,252,592
(3)
|
8,160,144
(4)
|
15,412,736
|
64.7
%
|
|
Trust
for the benefit of Andrew Stern,
M.D.
under the will of Laurie Sands
|
-
|
6,662,712
(5)
|
6,662,712
|
28.0
%
|
|
CWC
Partnership-I
|
-
|
6,099,080
(6)
|
6,099,080
|
25.6
%
|
|
Stockholders
Group Pursuant to
Section
13(d)(3) of the Securities
Exchange
Act of 1934 (7)
|
-
|
22,670,968
(7)
|
22,670,968
|
95.2
%
|
_________________________
|
(1)
|
The
reported shares of Class A Stock include 1,613,750 shares
that can be purchased by exercising stock options that are exercisable
on
or within sixty (60) days after May 16, 2007. The
reported shares of Class B Stock include 3,906,166 shares held
by family
trusts of which Richard Sands is the sole trustee. The reporting
of these
shares as beneficially owned by Mr. Sands shall not be construed
as an
admission that Mr. Sands is the beneficial owner of such shares
for
purposes of Sections 13(d) or 13(g) of the Securities Exchange
Act of 1934
or otherwise.
|
|
(2)
|
The
reported shares are held by various family partnerships, family
trusts and
a foundation where, in most cases, Richard.Sands serves as a
partner,
trustee, director or officer. The reporting of these shares as
beneficially owned by Mr. Sands shall not be construed as an
admission
that Mr. Sands is the beneficial owner of such shares for purposes
of
Sections 13(d) or 13(g) of the Securities Exchange Act of 1934
or
otherwise. The reported shares are also included in the shares
reported as
beneficially owned by Robert Sands and the stockholders group
described in
footnote (7), and the shares reported as beneficially owned by
CWC
Partnership-I and the trust described in footnote (5) are included
in the
reported shares. Amounts reflected in the tables above do not
include: (i)
29,120 shares
of
Class A Stock owned by Mr. Sands’ spouse, individually and as custodian
for their children, or (ii) any direct or indirect remainder
interest Mr.
Sands has in 2,881,148 shares of Class A Stock held by Marilyn
Sands under
a life estate. Mr. Sands disclaims beneficial ownership of such
shares.
|
|
(3)
|
The
reported shares of Class A Stock include 1,395,300 shares
that can be purchased by exercising stock options that are exercisable
on
or within sixty (60) days after May 16, 2007. The
reported shares of Class B Stock include 3,906,166 shares held
by family
trusts of which Robert Sands is the sole trustee. The reporting
of these
shares as beneficially owned by Mr. Sands shall not be construed
as an
admission that Mr. Sands is the beneficial owner of such shares
for
purposes of Sections 13(d) or 13(g) of the Securities Exchange
Act of 1934
or otherwise.
|
|
(4)
|
The
reported shares are held by various family partnerships, family
trusts and
a foundation where, in most cases, Robert Sands serves as a partner,
trustee, director or officer. The reporting of these shares as
beneficially owned by Mr. Sands shall not be construed as an
admission
that Mr. Sands is the beneficial owner of such shares for purposes
of
Sections 13(d) or 13(g) of the Securities Exchange Act of 1934
or
otherwise. The reported shares are also included in the shares
reported as
beneficially owned by Richard Sands and the stockholders group
described
in footnote (7), and the shares reported as beneficially owned
by CWC
Partnership-I and the trust described in footnote (5) are included
in the
reported shares. Amounts reflected in the tables above do not
include: (i)
183,520 shares of Class A Stock owned by Mr. Sands’ spouse, individually
and as custodian for their children, or (ii) any direct or indirect
remainder interest Mr. Sands has in 2,866,672 shares of Class
A Stock held
by Marilyn Sands under a life estate. Mr. Sands disclaims beneficial
ownership of such shares.
|
|
(5)
|
The
reported shares are directly or indirectly held by various family
partnerships in which the trust is a partner. The reporting of
these
shares as beneficially owned by the trust shall not be construed
as an
admission that the trust is the beneficial owner of such shares
for
purposes of Sections 13(d) or 13(g) of the Securities Exchange
Act of 1934
or otherwise. The reported shares are also included in the shares
reported
as beneficially owned by Richard Sands, Robert Sands and the
stockholders
group described in footnote (7), and the shares reported as beneficially
owned by CWC Partnership-I are included in the reported shares.
Amounts
reflected in the tables above do not include
the
indirect remainder interest the trust has in 1,447,812 shares
of Class A
Stock held
by Marilyn Sands under a life estate.
The trust disclaims beneficial ownership of such
shares.
|
|
(6)
|
CWC
Partnership-I is a New York general partnership of which Richard
Sands and
Robert Sands are managing partners. The reported shares include
768 shares
of Class A Stock and 667,368 shares of Class B Stock owned by
a
partnership in which CWC Partnership-I is a partner. The
reporting of such shares as beneficially owned by CWC Partnership-I
shall
not be construed as an admission that CWC Partnership-I is the
beneficial
owner of such shares for purposes of Sections 13(d) or 13(g)
of the
Securities Exchange Act of 1934 or otherwise.
The
reported shares are also included in the shares reported as beneficially
owned by Richard Sands, Robert Sands, the trust described in
footnote (5)
and the stockholders group described in footnote
(7).
|
|
(7)
|
The
stockholders group, as reported, consists of Richard Sands, Robert
Sands,
CWC Partnership-I and another family partnership. The
reporting of shares as beneficially owned by the stockholders
group shall
not be construed as an admission that an agreement to act in
concert
exists or that the stockholders group is the beneficial owner
of such
shares for purposes of Sections 13(d) or 13(g) of the Securities
Exchange
Act of 1934 or otherwise. The
shares reported as beneficially owned by Richard Sands, Robert
Sands, CWC
Partnership-I, and the trust described in footnote (5) are included
in the
shares reported as beneficially owned by the stockholders group.
Of
the shares reported as beneficially owned by the stockholders
group,
1,612,082 shares of Class A Stock and 8,347,385 shares of Class
B Stock
have been pledged under credit facilities with a financial institution
as
collateral for loans made to persons or entities included in
the
stockholders group and certain other entities related to the
Sands family.
In the event of noncompliance with certain covenants under the
credit
facilities, the financial institution has the right to sell the
pledged
shares subject to certain protections afforded to the pledgors.
The number
of shares described as being pledged in the preceding discussion
does not
include 4,300,008 shares of Class A Stock held by Marilyn Sands
under a
life estate that have been pledged to a different financial institution
as
collateral for loans to Richard
Sands.
|
|
(8)
|
Information
concerning FMR Corp. presented in the table is based solely on
the
information reported in Amendment No. 5 to the Schedule 13G of
FMR Corp.
dated February 14, 2007. The number of shares equals the number
of shares
of Class A Stock reported to be beneficially owned by FMR Corp.
and Edward
C. Johnson 3d. The Schedule 13G amendment indicates that each
of FMR Corp.
and Mr. Johnson, through control over various entities, has sole
dispositive power with respect to all 14,838,207 shares. The
Schedule 13G
amendment further indicates that FMR Corp. has sole voting power
with
respect to 171,817 of these shares; however, such amendment is
internally
inconsistent as to the number of shares with respect to which
Mr. Johnson
has sole voting power.
|
|
(9)
|
Information
concerning UBS AG presented in the table is based solely on the
information reported in an amendment to the Schedule 13G of UBS
AG dated
April 30, 2007. The number of shares equals the number of shares
of Class
A Stock reported to be beneficially owned by UBS AG for the benefit
and on
behalf of the UBS Global Asset Management business group of UBS
AG
(collectively, “UBS”). The Schedule 13G amendment indicates that of the
25,132,283 shares of Class A Stock beneficially owned by UBS,
UBS has sole
voting power with respect to 23,328,487 shares and shared dispositive
power with respect to 25,132,283
shares.
|
Beneficial
Security Ownership of Directors and Executive Officers
The
Board
has established targets for the minimum amounts of our common stock that
our
non-management directors and executive officers should beneficially own.
These
targets for stock ownership consider the length of a director’s tenure on the
Board or an executive officer’s tenure as an executive officer. Individuals have
five years in which to reach their targets. Ownership targets can be satisfied
through the beneficial ownership of Class A Stock or Class B Stock, vested
stock
options, and/or Class A Stock underlying Constellation CDIs.
The
target for non-management directors is the beneficial ownership of two
times the
annual retainer fee paid to them. The target for executive officers is
based on
each officer’s position in the organization and is a multiple of annual base
salary. The Chairman and Chief Executive Officer has a stock ownership
target of
four (4) times his annual base salary. The President and Chief Operating
Officer
has a stock ownership target of three (3) times his annual base salary.
Each of
the other executive officers has a stock ownership target of two (2) times
his
annual base salary. As of May 16, 2007, each of our non-management
directors and each of our executive officers had either met his or
her respective target or was within the five-year window for doing
so.
The
following table sets forth, as of May 16, 2007, the beneficial ownership
of
Class A Stock and Class B Stock by our directors and nominees, the named
executive officers, and all of our directors and executive officers as
a
group.
The
table does not include shares of Class A Stock that are issuable upon the
conversion of Class B Stock, although such information is provided in footnotes
where applicable. Unless
otherwise noted, the individuals listed in the table have sole voting and
dispositive power with respect to the shares attributed to
them.
|
Name
of
Beneficial
Owner
|
Class
A Stock
|
Class
B Stock
|
|
Shares
Beneficially Owned
|
Percent
of Class Beneficially Owned
|
|
Outstanding
Shares
|
Shares
Acquirable
within
60
days
(1)
|
Total
Shares
|
Shares
Beneficially
Owned
|
Percent
of Class Beneficially Owned
|
|
Richard
Sands
|
1,208,939
(2)
|
1,613,750
|
2,822,689
|
1.5
% (2)
|
15,418,376
(2)
|
64.7
%
|
|
Robert
Sands
|
1,343,736
(2)
|
1,395,300
|
2,739,036
|
1.4
% (2)
|
15,412,736
(2)
|
64.7
%
|
|
Alexander
L. Berk
|
56,594
|
407,975
|
464,569
|
*
|
-
|
*
|
|
Thomas
S. Summer
|
23,663
(3)
|
291,400
|
315,063
|
*
|
-
|
*
|
|
Thomas
J. Mullin
|
13,681
|
486,750
|
500,431
|
*
|
-
|
*
|
|
Barry
A. Fromberg
|
6,134
|
3,737
|
9,871
|
*
|
-
|
*
|
|
Jeananne
K. Hauswald
|
8,556
|
43,563
|
52,119
|
*
|
-
|
*
|
|
James
A. Locke III
|
21,380
|
61,563
|
82,943
|
* (4)
|
264
|
*
|
|
Thomas
C. McDermott
|
12,988
|
68,563
|
81,551
|
*
|
-
|
*
|
|
Paul
L. Smith
|
7,564
|
9,049
|
16,613
|
*
|
-
|
*
|
|
Peter
H. Soderberg
|
640
|
-
|
640
|
*
|
-
|
*
|
|
All
Executive Officers and Directors as a Group
(13
persons) (5)
|
2,088,262
|
4,763,050
|
6,851,312
|
3.5
% (5)
|
22,671,232
|
95.2
%
|
______________________________________
*
Percentage does not exceed one percent (1%) of the outstanding shares
of such
class.
|
(1)
|
Reflects
the number of shares of Class A Stock that can be purchased
by exercising
stock options that are exercisable on or within sixty (60)
days after May
16, 2007.
|
|
(2)
|
Includes
shares in which the named individual shares voting or dispositive
power.
See tables and footnotes under the caption “Beneficial Security Ownership
of More Than 5% of the Company’s Common Stock” for information with
respect to such matters and for the number and percentage of
shares of
Class A Stock that would be beneficially owned assuming the
conversion of
Class B Stock into Class A Stock. Of the number of shares reported,
609,233 shares of Class A Stock and 8,160,144
shares of Class B Stock are included in the numbers reported
by both
Richard Sands and Robert Sands. Of the shares reported as beneficially
owned by Richard Sands, 952,842 shares of Class A Stock and
7,800,495
shares of Class B Stock have been pledged, and of the shares
reported as
being beneficially owned by Robert Sands, 1,012,376 shares
of Class A
Stock and 5,537,154 shares of Class B Stock have been pledged.
Of the
shares described as being pledged in the preceding sentence,
353,136
shares of Class A Stock and 4,990,264 shares of Class B Stock
are included
in the shares reported as beneficially owned by both Richard
Sands and
Robert Sands.
|
|
(3)
|
Mr.
Summer shares the power to vote and dispose of 19,842 shares
with his
spouse.
|
|
(4)
|
Assuming
the conversion of Mr. Locke’s 264 shares of Class B Stock into Class A
Stock, Mr. Locke would beneficially own 83,207 shares of Class
A Stock,
representing less than one percent (1%) of the outstanding
Class A Stock
after such conversion.
|
|
(5)
|
This
group consists of our current executive officers and directors.
Therefore,
Mr. Summer, a former executive officer, is not included in
this group.
Assuming the conversion into Class A Stock of a total of 22,671,232
shares
of Class B Stock beneficially owned by the current executive
officers and
directors as a group, this group would beneficially own 29,522,544
shares
of Class A Stock, representing 13.5% of the outstanding Class
A Stock
after such conversion.
|
EXECUTIVE
OFFICERS
Information
concerning the Company’s executive officers and the terms of office of executive
officers generally can be found in Part I to the Company’s Annual Report on Form
10-K for the year ended February 28, 2007.
Subsequent
to the filing of that report, the Board appointed Robert P. Ryder, age
47, to
the position of Executive Vice President and Chief Financial Officer of
the
Company effective as of May 15, 2007. Mr. Ryder previously served from
2005 to
2006 as Chief Administrative Officer of IMG, a sports marketing and media
company. From 2002 to 2005, he was Senior Vice President and Chief Financial
Officer of American Greetings Corporation, a publicly traded, multi-national
consumer products company. From 1989 to 2002, he held several management
positions of increasing responsibility with PepsiCo, Inc. These included
control, strategic planning, mergers and acquisitions and divisional chief
financial officer positions serving at PepsiCo’s corporate headquarters and at
its Frito-Lay International and Frito-Lay North America divisions. Mr.
Ryder is
a certified public accountant.
On
May
15, 2007, Thomas S. Summer retired from the position of Executive Vice
President
and Chief Financial Officer but will continue as an employee of the Company
until May 14, 2008 or an earlier date mutually agreed upon by the Company
and Mr. Summer.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
[TO
BE
INCLUDED IN DEFINITIVE PROXY STATEMENT]
Compensation
Committee Report
We,
the
Human
Resources Committee of the Board of Directors of the Company (which committee
functions as the compensation committee of the Board of Directors), have
reviewed and discussed the Compensation Discussion and Analysis set forth
above
with the management of the Company, and, based on such review and discussion,
have recommended to the Board of Directors the inclusion of the Compensation
Discussion and Analysis in this Proxy Statement and, through incorporation
by
reference to this Proxy Statement, the Company’s Annual Report on Form 10-K for
the year ended February 28, 2007.
Human
Resources
Committee:
Thomas
C. McDermott
(Chair)
Jeananne
K.
Hauswald
Paul
L.
Smith
Peter
H.
Soderberg
Summary
Compensation
[TO
BE
INCLUDED IN DEFINITIVE PROXY STATEMENT]
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Richard
Sands, Robert Sands and other members of the Sands family beneficially
own
various entities, through which, among other activities, they own and operate
the Inn on the Lake in Canandaigua, New York (the “Inn”). The Inn is frequently
used by the Company for Company functions and for its out-of-town employees
visiting the Company on business. The Company pays the Inn at not more
than its
standard rates for these services. During fiscal 2007, the Company paid
the
operator of the Inn approximately $48,390.67 (exclusive of employee reimbursed
expenses).
Richard
Sands is Chief Executive Officer and a director of Friends of The Constellation
Brands - Marvin Sands Performing Arts Center, Inc., a registered New York
charity located in Canandaigua, New York to which Constellation Brands,
Inc. has
pledged the amount of $1.5 million, payable over fifteen (15) years, in
exchange
for naming rights for
the
performing arts center. The Company has selected the name “The Constellation
Brands - Marvin Sands Performing Arts Center.” Robert Sands is also a director
of that entity. In fiscal 2007, the Company paid the entity $100,000 for
the
naming rights and $15,000 for box seats at the center.
By
an
Agreement dated December 20, 1990, the Company entered into a split-dollar
insurance agreement with a trust established by Marvin Sands of which Robert
Sands, is the trustee. Pursuant to the Agreement, in prior years the Company
paid the annual premium on an insurance policy (the “Policy”) held in the trust,
and the trust has reimbursed the Company for the portion of the premium
equal to
the “economic benefit” to Marvin and/or Marilyn Sands, calculated in accordance
with the United States Treasury Department rules then in effect. The Policy
is a
joint life policy payable upon the death of Marilyn Sands, as the survivor
of
the two insureds, with a face value of $5 million. Pursuant to the terms
of the
trust, Robert Sands (in his individual capacity), Richard Sands and the
children
of Laurie Sands (the deceased sister of Richard and Robert Sands) will
each
receive one-third of the proceeds of the Policy (after the repayment of
the
indebtedness to the Company out of such proceeds as described below), if
they
survive Marilyn Sands. While the Company has made no premium payment on
behalf
of the trust since fiscal 2002, from the inception of the agreement through
the
end of fiscal 2002 the Company paid aggregate premiums, net of reimbursements,
of $2,382,327. The aggregate amount of such unreimbursed premiums constitutes
indebtedness from the trust to the Company and is secured by a collateral
assignment of the Policy. Upon the termination of the Agreement, whether
by the
death of Marilyn Sands or earlier cancellation, the Company is entitled
to be
repaid by the trust the amount of such indebtedness.
James
A.
Locke III, a director of the Company, is a partner in the law firm of Nixon
Peabody LLP, the Company’s principal outside counsel.
Policy
Regarding Related Person Transactions
The
Board
adopted a written policy in April 2007 that all related person transactions
or
series of similar transactions required to be disclosed pursuant to Regulation
S-K Item 404(a) must be presented to the Corporate Governance Committee
for
pre-approval or ratification. The policy requires each of the Company’s
directors and executive officers to notify the General Counsel promptly
and,
wherever possible, in advance of the occurrence of any potential related
person
transaction in which such director or executive officer is directly or
indirectly involved.
The
General Counsel is responsible for reviewing all potential related person
transactions and taking all reasonable steps to ensure that all material
related
person transactions be presented to the Corporate Governance Committee
for
pre-approval or ratification by members of the Committee in their discretion
at the Committee's next regularly scheduled meeting or, if deemed
appropriate, by consent in lieu of a meeting. No director may engage in a
vote to pre-approve or ratify any related person transaction in which he
or she
or his or her immediate family member has a material interest; provided,
however, that such director shall provide any information concerning such
related person transaction that the Corporate Governance Committee may
reasonably request. If a potential related person transaction involves
the
General Counsel, the Chief Financial Officer assumes the responsibilities
of the
General Counsel under the policy.
The
Corporate Governance Committee may consider all factors it deems relevant
when
determining whether to approve or ratify a related person transaction.
The
Company is not aware of any related person transaction required to be reported
under to Regulation S-K Item 404(a) since the beginning of fiscal 2007
that has
not been pre-approved or ratified pursuant to this policy.
This
policy serves in addition to, and not in derogation of, the Company’s by-laws,
Code of Business Conduct and Ethics or any other Company policies, procedures,
and controls.
SECTION
16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
and executive officers, and persons who beneficially own more than 10%
of a
registered class of the Company’s equity securities, to file with the Securities
and Exchange Commission reports of ownership and changes in ownership of
the
Company’s Class A Stock and Class B Stock. Executive officers, directors and
greater than 10% stockholders are required to furnish the Company with
copies of
all such reports they file. Based solely upon review of copies of such
reports
furnished to the Company and related information, the Company believes
that all
such filing requirements for fiscal 2007 were complied with in a timely
fashion.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
Director
Nominees
The
Board
of Directors of the Company nominated eight (8) directors to be elected
by the
stockholders to hold office until the next Annual Meeting of Stockholders
and
until their successors are elected and qualified. The nominees for election
to
the Board of Directors are Richard Sands, Robert Sands, Barry A. Fromberg,
Jeananne K. Hauswald, James A. Locke III, Thomas C. McDermott, Paul L.
Smith and
Peter H. Soderberg, all of whom currently serve as directors of the Company.
Of
the eight (8) nominees, Messrs. McDermott and Smith have been designated
as the
nominees to be elected by the holders of the Class A Stock, voting as a
separate
class. The remaining six (6) nominees are to be elected by the holders
of the
Class A Stock and the Class B Stock, voting as a single class.
Management
does not anticipate that any of the nominees will become unavailable for
any
reason, but if that should occur before the Meeting, proxies will be voted
FOR
another nominee or nominees to be selected by the Board of Directors of
the
Company. The following paragraphs contain certain biographical information
about
the nominees. The reported age of each nominee is as of
June
1,
2007.
|
Barry
A. Fromberg
|
Director
since 2006
|
Mr.
Fromberg, age 52, who is currently retired, had been Executive Vice President
and Chief Financial Officer of Dean Foods Company, a food and beverage
company,
from 1998 until April 1, 2006. From 1995 to 1998, Mr. Fromberg served as
Chairman and Chief Executive Officer of a subsidiary of Paging Network,
Inc., a
provider of wireless communications services, and from 1993 to 1995 he
was
Senior Vice President and Chief Financial Officer of Paging Network, Inc.
He
served as Executive Vice President and Chief Financial Officer of Simmons
Communications, Inc., a cable television operator, from 1987 to 1993. He
is a
Certified Public Accountant.
|
Jeananne
K. Hauswald
|
Director
since 2000
|
Ms.
Hauswald, age 63, has been a managing partner of Solo Management Group,
LLC, a
corporate finance and investment management consulting company, since September
1998. From 1987 to her retirement in 1998, Ms. Hauswald was employed by
The
Seagram Company Ltd., a beverage and entertainment/communications company,
where
she served in various positions, including Vice President Human Resources
from
1990 to 1993 and Vice President and Treasurer from 1993 to 1998. Ms. Hauswald
currently serves on the Board of Directors of Thomas & Betts
Corporation.
|
James
A. Locke III
|
Director
since 1983
|
Mr.
Locke, age 65, has been engaged in the practice of business and corporate
law,
including primarily, mergers and acquisitions, since 1971. He is, and has
been
since 1996, a partner with the law firm of Nixon Peabody LLP. He is located
in
the Rochester, New York office of the firm. Nixon Peabody LLP is the Company’s
principal outside counsel. Prior to joining Nixon Peabody LLP, Mr. Locke
practiced law in Rochester as a partner with another law firm.
|
Thomas
C. McDermott
|
Director
since 1997
|
Mr.
McDermott, age 70, has been Chairman of GPM Associates, LLP (formerly,
Forbes
Products, LLC), a custom vinyl business products company, since January
1998.
From 1994 to 1997, Mr. McDermott was President and Chief Executive Officer
of
Goulds Pumps, Incorporated, a centrifugal pumps company for industrial,
domestic
and agricultural markets, where he also was Chairman from 1995 to 1997.
From
1986 to 1993, he was President and Chief Operating Officer of Bausch & Lomb
Incorporated, a contact lens, lens-care and eyewear products company.
|
Richard
Sands, Ph.D.
|
Director
since 1982
|
Mr.
Sands, age 56, is the Chairman of the Board and Chief Executive Officer
of the
Company. He has been employed by the Company in various capacities since
1979.
He was elected Chief Executive Officer in October 1993 and has served as
a
Director since 1982. In September 1999, Mr. Sands was elected Chairman
of the
Board. He served as Executive Vice President from 1982 to May 1986, as
President
from May 1986 to December 2002 and as Chief Operating Officer from May
1986 to
October 1993. He is the brother of Robert Sands.
|
Robert
Sands
|
Director
since 1990
|
Mr.
Sands, age 48, is President and Chief Operating Officer of the Company.
He was
appointed to these positions in December 2002 and has served as a director
since
January 1990. He also served as Group President from April 2000 to December
2002, as Chief Executive Officer, International from December 1998 through
April
2000, as Executive Vice President from October 1993 through April 2000,
as
General Counsel from June 1986 to May 2000, and as Vice President from
June 1990
through October 1993. He is the brother of Richard Sands.
|
Paul
L. Smith
|
Director
since 1997
|
Mr.
Smith, age 71, retired from Eastman Kodak Company in 1993 after working
there
for thirty-five years. Mr. Smith was employed in various positions at Eastman
Kodak Company, the last of which was from 1983 to 1993, when he served
as Senior
Vice President and Chief Financial Officer. Also from 1983 to 1993, he
served on
the Board of Directors of Eastman Kodak Company. Mr. Smith served a term
on the
Financial Accounting Standards Advisory Council and currently serves on
the
Board of Directors of Home Properties, Inc.
|
Peter
H. Soderberg
|
Director
since 2007
|
Mr.
Soderberg, age 61, has been President and Chief Executive Officer of Hillenbrand
Industries, Inc., a public holding company for two major operating businesses
serving the healthcare and funeral services industries, since March 2006.
From
January 2000 to March 2006, Mr. Soderberg was President and Chief Executive
Officer of Welch Allyn, Inc., a leading, privately-held medical device
manufacturer. Before that, he was Group Vice President and Chief Operating
Officer of Welch Allyn’s medical products business. Prior to joining Welch
Allyn, Mr. Soderberg served in a variety of operations, marketing and management
positions at Johnson & Johnson. Mr. Soderberg serves on the boards of
Hillenbrand Industries, Inc., Greatbatch, Inc., and AdvaMed, the Advanced
Medical Technology Association.
See
also
information regarding James A. Locke III, Richard Sands and Robert Sands
under
the caption “Certain Relationships and Related Transactions.” For information
with respect to the number of shares of the Company’s common stock beneficially
owned by each of the above named director nominees, see the tables and
the
footnotes thereto under “Beneficial Ownership.”
Director
Compensation
[TO
BE
INCLUDED IN DEFINITIVE PROXY STATEMENT]
Compensation
Committee Interlocks and Insider Participation
During
fiscal 2007, Jeananne K. Hauswald, Thomas C. McDermott and Paul L. Smith
served
as members of the Human Resources Committee of the Company’s Board of Directors.
None of these individuals are or have ever been officers or employees of
the
Company. Also during fiscal 2007, no executive officer of the Company served
on
the compensation committee or the board of directors of any company that
had one
or more of its executive officers serving as a member of the Company’s Human
Resources Committee or Board of Directors.
The
Board of Directors and Committees of the Board
On
December 19, 2003, the Board of Directors adopted revised Board of Directors’
Corporate Governance Guidelines containing categorical standards for determining
director independence. These standards, which were most recently revised
on
April 4, 2007, seek to satisfy the applicable requirements of the Securities
and
Exchange Commission and the New York Stock Exchange. The Board of Directors’
Corporate Governance Guidelines are available on the Company’s website at
www.cbrands.com
under
Investors/Corporate Governance and an excerpt containing the categorical
standards is appended to this Proxy Statement. (The information contained
on the
Company’s website, however, is not a part of this Proxy Statement.) The Board of
Directors has affirmatively determined that each current member of the
Board,
other than Richard Sands and Robert Sands, meets the categorical standards
set
by the Board to qualify as an independent director, and each such director
is
independent. Therefore, a majority of the members of the current Board
of
Directors are independent. In reaching its determination regarding James
A.
Locke III, the Board considered the services provided to the Company by
the law
firm in which Mr. Locke serves as a partner, Nixon Peabody LLP, and the
fact
that, for each of the last three fiscal years, the Company paid to Nixon
Peabody
for its services less than the greater of $1,000,000 or two percent of
Nixon
Peabody’s consolidated gross revenues. The Board of Directors of the Company
held nine (9) meetings during fiscal 2007. In addition, the non-management
members of the Board of Directors, all of whom are independent, meet
periodically in regularly scheduled sessions without management. The
non-management directors select a Lead Director. In accordance with the
Board of
Directors’ Corporate Governance Guidelines, Jeananne K. Hauswald presides at
these meetings in her capacity as Lead Director. Stockholders or other
interested parties may arrange to communicate directly with the directors,
the
Lead Director or the non-management directors as a group by writing to
them in
the care of the Company at 370 Woodcliff Drive, Suite 300, Fairport, New
York
14450. The Company will forward all such communications (other than unsolicited
advertising materials).
Committees
of the Board include a standing Audit Committee, Corporate Governance Committee
and Human Resources Committee. Each member of these committees is independent
in
accordance with the applicable requirements of the New York Stock Exchange’s
listing standards, the Securities and Exchange Commission and the Categorical
Standards of Independence contained within the Company’s Board of Directors’
Corporate Governance Guidelines. In addition, each committee operates under
a
written charter that was approved by the Company’s Board of Directors and is
available on the Company’s website at www.cbrands.com
under
Investors/Corporate Governance.
During
fiscal 2007, each of the incumbent directors who were directors during
that
period attended at least 75% of the total number of meetings held by the
Board
and each committee of the Board on which he or she served during his or
her
period of service. The Company’s directors are encouraged to
attend each Annual Meeting of Stockholders, and all directors attended
the Company’s 2006 Annual Meeting of Stockholders, except Mr. Soderberg who was
not a member of the Board at that time.
Audit
Committee. The
Audit
Committee is a standing committee currently composed of Paul L. Smith (Chair),
Barry A. Fromberg, Jeananne K. Hauswald and Thomas C. McDermott, each of
whom
the Board of Directors has determined is an audit committee financial expert.
No
committee member simultaneously serves on the audit committees of more
than two
other publicly registered companies. This Committee performs the Board
of
Directors’ oversight responsibilities as they relate to the Company’s accounting
policies, internal controls and financial reporting practices. In addition,
this
Committee maintains a line of communication between the Board of Directors
and
the Company’s financial management, internal auditors and independent public
accountants. The Audit Committee held nine (9) meetings during fiscal 2007.
Corporate
Governance Committee. The
Corporate Governance Committee is a standing committee currently composed
of
James A. Locke III (Chair), Jeananne K. Hauswald, Thomas C. McDermott and
Paul
L. Smith. This committee functions as the nominating committee of the Board
of
Directors. The Corporate Governance Committee identifies individuals qualified
to become Board members consistent with criteria and qualifications for
membership approved by the Board and selects, or recommends that the Board
select, director nominees for the annual meetings of stockholders. The
Corporate
Governance Committee advises the Board concerning the appropriate composition
of
the Board and its committees, develops and recommends to the Board the
corporate
governance guidelines applicable to the Company, and advises the Board
regarding
appropriate corporate governance practices and assists the Board in achieving
them. Among other matters, this Committee also makes recommendations to
the
Board with respect to an officer to be designated as Chief Executive Officer
and
a director to serve as Chairman of the Board. In addition, this Committee
recommends to the Board compensation for directors who are neither present
nor
former full-time officers of the Company. This Committee held three (3)
meetings
during fiscal 2007.
The
Corporate Governance Committee identifies potential director candidates
from any
outside advisors it may retain, as well as from other members of the Board,
executive officers and other contacts. The Corporate Governance Committee
engaged the services of an independent third-party search firm in order
to
assist the Corporate Governance Committee in identifying and evaluating
potential director candidates who will bring to the Board specific skill
sets as
established by the Corporate Governance Committee. As a result of this
process,
Peter H. Soderberg was identified as a potential candidate for nomination
to the
Board and was subsequently appointed.
The
Corporate Governance Committee will consider nominations by stockholders
of the
Company. Those nominations must include sufficient biographical information
so
that the Committee can appropriately assess the proposed nominee’s background
and qualifications. In its assessment of potential candidates, the Corporate
Governance Committee will review the candidate’s character, wisdom, acumen,
business experiences and understanding of the Company’s business environment,
and ability to devote the time and effort necessary to fulfill his or her
responsibilities, all in the context of the perceived needs of the Board
at that
time.
To
be
considered for nomination at the 2008 Annual Meeting of Stockholders,
stockholder submissions for nomination should be received in writing at
the
Company’s offices, to the attention of the Company's Secretary, Constellation
Brands, Inc., 370 Woodcliff Drive, Suite 300, Fairport, New York 14450,
no later
than February __, 2008. Stockholder recommendations made in accordance
with
these procedures will receive the same consideration and be evaluated in
the
same manner as other potential nominees.
Human
Resources Committee.
The
Human Resources Committee is a standing committee currently composed of
Thomas
C. McDermott (Chair), Jeananne K. Hauswald, Paul L. Smith and Peter H.
Soderberg. This committee functions as the compensation committee of the
Board
of Directors. The Human Resources Committee fulfills the Board of Directors’
responsibilities relating to the compensation of the Company’s executives,
including the Chief Executive Officer, and has engaged a third-party consultant
to assist the Committee in its review and analysis of executive compensation.
Additionally, the Human Resources Committee monitors, among other matters:
human
resources policies and procedures as they relate to the goals and objectives
of
the Company and good management practices; the Company’s material policies and
procedures which relate to compliance with pertinent human resources laws
and
regulations, the human resources aspects of the ethical conduct of the
business
and the management of human resources capital; and procedures and internal
controls that relate to personnel administration, pay practices and benefits
administration. The Human Resources Committee is responsible for reviewing
total
executive compensation in relation to individual executive performance,
Company
performance, salary information and other parameters deemed reasonable
in the
assignment of executive compensation levels. This Committee also reviews
and
approves executive benefits and perquisites and reviews performance systems,
including reward programs. The Human Resources Committee is responsible
for
evaluating the performance of the Chief Executive Officer and approves
his
compensation, as well as the compensation of other executives. This Committee
presently administers the Company’s Long-Term Stock Incentive Plan, Incentive
Stock Option Plan, Annual Management Incentive Plan, 1989 Employee Stock
Purchase Plan and U.K. Sharesave Scheme, and reviews succession planning
for the
Company and other important human resources issues. This Committee also
reviews
with management each required Compensation Discussion and Analysis and
recommends to the Board that it be included in the Company’s applicable filings.
The Human Resources Committee held four (4) meetings during fiscal 2007.
Audit
Committee Report
The
following
report
shall not be deemed incorporated by reference in any filing under the federal
securities laws by virtue of any general incorporation of this Proxy Statement
by reference and shall not otherwise be treated as filed under the securities
laws.
The
Audit
Committee of the Board of Directors provides oversight to the Company’s
financial reporting process through periodic meetings with the Company’s
independent public accountants, internal auditors and management. The management
of the Company is responsible for the preparation and integrity of the
financial
reporting information and related systems of internal controls. The independent
public accountants are responsible for performing an independent audit
of the
Company’s consolidated financial statements in accordance with generally
accepted auditing standards and for issuing a report thereon. They are
also
responsible for issuing a report on the effectiveness of the Company’s internal
control over financial reporting and management’s assessment of the internal
control over financial reporting. The Committee, in carrying out its role,
relies on the Company’s senior management and its independent public
accountants.
In
connection with the preparation and filing of the Company’s Annual Report on
Form 10-K for the fiscal year ended February 28, 2007, the Audit Committee
met,
reviewed and discussed with the Company’s management and with KPMG LLP, the
Company’s independent public accountants, the audited financial statements of
the Company and related disclosures, and the assessment of the adequacy
and
effectiveness of the Company’s internal control over financial reporting. Also,
the Committee discussed with KPMG LLP, with respect to the fiscal year
ended
February 28, 2007, the matters required to be discussed by Statement on
Auditing
Standards (“SAS”) No. 61, as amended by SAS 89 and SAS 90 (Codification of
Statements on Auditing Standards, AU § 380).
In
addition, the Committee received the written disclosures and the letter
from
KPMG LLP required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and discussed with KPMG LLP the independence
of that firm as the Company’s independent public accountants.
Based
on
the review and discussions described above, the Audit Committee recommended
to
the Board of Directors that the Company’s audited financial statements be
included in the Company’s Annual Report on Form 10-K for the fiscal year ended
February 28, 2007 for filing with the Securities and Exchange Commission.
Audit
Committee
Paul
L.
Smith (Chair)
Barry
A.
Fromberg
Jeananne
K. Hauswald
Thomas
C.
McDermott
Vote
Required
A
plurality of the votes cast at the Meeting by the holders of Class A Stock
is
required for the election of the two (2) directors to be elected by the
holders
of Class A Stock. A plurality of the votes cast at the Meeting by the holders
of
Class A Stock and Class B Stock voting together as a single class is required
for the election of the six (6) directors to be elected by the holders
of Class
A Stock and Class B Stock voting as a single class, with holders of Class
A
Stock having one (1) vote per share and holders of Class B Stock having
ten (10)
votes per share.
The
Board of Directors recommends a vote FOR the nominees. Unless authority
to vote
for one or more of the nominees is specifically withheld, the shares represented
by your proxy, if properly executed and returned, and not revoked, will
be voted
FOR the election of all the nominees for whom you are entitled to
vote.
PROPOSAL
NO. 2
SELECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
On
April
4, 2007, the Audit Committee determined to engage KPMG LLP to serve as
the
Company’s independent
public
accountants for the fiscal year ending February 29, 2008. Although ratification
by stockholders of this selection is not required, the
selection of KPMG LLP as the Company’s independent public accountants will be
presented to the stockholders for their ratification at the Meeting. If
the
stockholders do not ratify the selection of KPMG LLP, the Audit Committee
will
reconsider its choice. The firm of KPMG LLP, Certified Public Accountants,
served as the independent public accountants of the Company for the fiscal
years
ended February 28, 2007 and February 28, 2006. A representative of KPMG
LLP is
expected to be present at the Meeting and will be given an opportunity
to make a
statement if he or she so desires and will be available to respond to any
appropriate questions.
Fees
Paid to KPMG LLP
The
following fees were billed to the Company by KPMG LLP for services rendered
during the fiscal years ended February 28, 2007 and February 28,
2006:
Audit
Fees:
These
amounts relate to the annual audit of the Company’s consolidated financial
statements
included
in the Company’s Annual Report on Form 10-K, quarterly reviews of interim
financial statements included in the Company’s Form 10-Q reports and audit of
internal control, services normally provided by the independent public
accountants in connection with statutory or regulatory filings or its
engagement for the indicated fiscal year, statutory audits of certain of
the
Company’s subsidiaries, and services relating to filings under the Securities
Act of 1933 and the Securities Exchange Act of 1934, including fees associated
with Section 404 of the Sarbanes-Oxley Act of 2002. The aggregate audit fees
billed by KPMG LLP for the year ended February 28, 2007 were $4,489,876,
which
amount included out-of-pocket expenses. For the year ended February 28, 2006,
these audit fees were $3,451,888, which amount included out-of-pocket expenses.
Audit-Related
Fees:
These
amounts relate to benefit plan reviews, assistance on acquisitions/divestitures
and other audit-related projects, and the services comprising these fees
were in
the nature of various employee benefit plan audits and reviews. The aggregate
audit-related fees billed by KPMG LLP for the year ended February 28, 2007
were
$27,339 and for the year ended February 28, 2006 were $28,640.
Tax
Fees:
These
amounts relate to professional services for tax compliance, tax advice and
tax
planning. The aggregate tax fees billed by KPMG LLP for the year ended February
28, 2007 were $251,192 and for the year ended February 28, 2006 were an
aggregate of $47,512. The services comprising these fees were tax compliance,
tax advice and tax planning.
All
Other Fees:
These
amounts relate to all products and services provided to the Company by KPMG
LLP,
other than services disclosed in the categories above. For the years ended
February 28, 2007 and February 28, 2006, KPMG LLP did not provide any products
or services other than as disclosed above and, consequently, did not bill
the
Company for any fees other than as disclosed above.
Pre-Approval
Policies and Procedures
The
Audit
Committee has adopted a policy for the pre-approval of audit and non-audit
services that may be provided by the Company’s independent public
accountants. The Committee’s policy is to pre-approve all audit and
permissible non-audit services provided by KPMG LLP prior to the engagement.
Any
pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget. The Audit Committee has delegated
to its Chairperson authority to pre-approve proposed audit and non-audit
services that arise between Audit Committee meetings, provided that the decision
to approve the service is presented at the next scheduled Audit Committee
meeting. All audit and non-audit services performed by KPMG LLP during the
fiscal year ended February 28, 2007 were pre-approved in accordance with
this
policy. These services have included audit services, audit-related services
and
tax services. The Committee did not pre-approve any other products or services
that did not fall into these categories and KPMG LLP provided no other products
or services during the past fiscal year.
Vote
Required
The
adoption of Proposal No. 2 to ratify the selection of KPMG LLP as the Company’s
independent public accountants requires the affirmative vote of a majority
of
the votes entitled to be cast by stockholders present in person or represented
by proxy at the Meeting. With respect to this proposal, holders of Class
A Stock
and Class B Stock will vote together as a single class at the Meeting, with
holders of Class A Stock having one (1) vote per share and holders of Class
B
Stock having ten (10) votes per share.
The
Board of Directors recommends that the stockholders ratify the selection
of KPMG
LLP as the independent public accountants of the Company for the fiscal year
ending February 29, 2008 and, accordingly, recommends that you vote FOR Proposal
No. 2. Unless
otherwise directed therein, the shares represented by your proxy, if properly
executed and returned, and not revoked, will be voted FOR such proposal.
PROPOSAL
NO. 3
PROPOSED
AMENDMENT TO THE
COMPANY’S CERTIFICATE
OF INCORPORATION
General
The
Board
of Directors has approved, subject to the approval of the stockholders of
the
Company, an amendment to the Company’s certificate of incorporation (the
“Proposed Amendment”). The Proposed Amendment would increase the number of
authorized shares of Class A Stock to 315,000,000 shares. As a result of
this
increase, the aggregate number of authorized shares of the Company would
be
increased to 346,000,000 shares. No other change to the Company’s certificate of
incorporation (the “Certificate”) would result from the Proposed
Amendment.
The
Certificate currently authorizes the Company to issue an aggregate of
331,000,000 shares, consisting of 300,000,000 shares of Class A Stock,
30,000,000 shares of Class B Stock and 1,000,000 shares of Preferred Stock
having a par value of $.01 per share. The Proposed Amendment will increase
the
number of authorized shares of Class A Stock by 15,000,000 shares. If approved
by the stockholders of the Company at the Meeting, the Proposed Amendment
will
become effective when it is filed with the Delaware Secretary of
State.
The
Board
of Directors has recommended that the stockholders of the Company approve
the
Proposed Amendment. A copy of the Certificate and of the Proposed Amendment
are
available from the Company’s Secretary at 370 Woodcliff Drive, Suite 300,
Fairport, New York 14450.
Reasons
for Increasing the Number of Shares
The
primary purpose of the Proposed Amendment is to provide sufficient authorized
shares of Class A Stock to accommodate the issuance of shares under the
Company’s stock-based plans. The shares authorized by the Proposed Amendment
would also be available for use from time to time for corporate purposes
that
the Board of Directors may consider desirable. The availability of an adequate
supply of authorized and unissued shares of Class A Stock, Class B Stock
and
Preferred Stock benefits the Company by providing it with flexibility in
utilizing the shares for future stock dividends and other proper corporate
purposes, including acquisitions, equity financings, other stock distributions,
and grants of options and other stock rights, all as deemed necessary or
advisable by the Board of Directors. If the stockholders approve the Proposed
Amendment, the Company will have additional authorized but unissued shares
of
Class A Stock that may be issued by the Board of Directors of the Company,
without the necessity of any further stockholder action, except to the extent
otherwise required by applicable law, regulations or the rules of any stock
exchange or other market system on which the Company’s securities may then be
listed.
The
Company has no present plans, understandings, agreements or arrangements
for the
issuance of any shares of Class A Stock except for the issuance of Class
A Stock
(i) pursuant to the Company’s stock-based plans and outstanding options/rights
under those plans (including compensation arrangements of directors, if and
as
approved by the Board of Directors), (ii) upon the conversion of shares of
Class
B Stock (shares of Class B Stock are convertible into shares of Class A Stock
on
a one-to-one basis at any time at the option of the holder), and (iii) upon
the
conversion of Constellation CDIs (Constellation CDIs are convertible into
shares
of Class A Stock on a ten-to-one basis at any time at the option of the
holder).
Vote
Required
The
adoption of Proposal No. 3 to approve the Proposed Amendment requires the
affirmative vote of the holders of a majority of the votes entitled to be
cast
by the Class A Stock and Class B Stock. With respect to this proposal, holders
of Class A Stock and Class B Stock will vote together as a single class at
the
Meeting, with holders of Class A Stock having one (1) vote per share and
holders
of Class B Stock having ten (10) votes per share.
The
Board of Directors recommends that the stockholders approve the Proposed
Amendment to increase the number of authorized shares of the Company’s Class A
Stock from 300,000,000 to 315,000,000 shares. Accordingly, the Board of
Directors recommends that you vote FOR Proposal No. 3. Unless
otherwise directed therein, the shares represented by your proxy, if properly
executed and returned, and not revoked, will be voted FOR such
proposal.
PROPOSAL
NO. 4
PROPOSED
AMENDMENT AND RESTATEMENT OF THE
COMPANY’S
LONG-TERM STOCK INCENTIVE PLAN
The
Human
Resources Committee of the Company’s Board of Directors has approved, subject to
stockholder approval, an amendment and restatement of the Company's Long-Term
Stock Incentive Plan (“Long-Term Stock Plan”). The amendment and restatement
will (i) increase the number of shares of Class A Stock available for awards
under the Long-Term Stock Plan from 80,000,000 shares (after adjustment for
previous stock splits) to 94,000,000 shares, (ii) revise the maximum number
of
shares which may be subject to awards under the Long-Term Stock Plan granted
in
any fiscal year from two and one-half percent of the outstanding Class A
Stock
as of June 27, 1997, the date the plan was approved by the Board of Directors,
(380,343 shares) to any “Covered Employee” to one percent of the diluted shares
of Class A Stock outstanding on February 28, 2007 (2,582,378 shares), subject
to
adjustment in the future to prevent dilution or enlargement in the event
of any
stock dividend, stock split, reorganization or other event affecting the
Class A
Stock, to any “Participant”, (iii) increase the maximum aggregate fair market
value of any restricted stock award and the maximum aggregate fair market
value
of any “Other Stock-Based” award that may be granted to any Covered Employee in
any fiscal year from $2,500,000 each to $5,000,000 each, (iv) expand the
list of
permissible “Performance Criteria” under the Long-Term Stock Plan to also
include the following: earnings before interest and taxes, units of specified
products sold or depleted, free cash flow, sales growth, capital expenditures,
working capital, inventory, cash flow from operations, and gross margin,
and (v)
make certain other technical amendments to the provisions of, and definitions
used in, the Long-Term Stock Plan.
In
addition, Section 162(m) of the Internal Revenue Code and its related
regulations require that stockholders approve the material terms of incentive
compensation plans every five years if the Company has the ability to change
performance targets from year to year. The Long-Term Stock Plan was last
re-approved by the Company’s stockholders on July 23, 2002. Accordingly, under
this proposal, by being asked to approve the amendment and restatement of
the
Long-Term Stock Plan the Company’s stockholders are being asked again to approve
the Long-Term Stock Plan.
The
amendment and restatement of the Long-Term Stock Plan will become effective
upon
the approval of the stockholders of the Company. The following discussion
summarizes certain provisions of the Long-Term Stock Plan. This summary does
not
purport to be complete and is subject to and qualified in its entirety by
reference to the full text of the Long-Term Stock Plan, which was filed
electronically with the Securities and Exchange Commission as an attachment
to
this Proxy Statement but is not included in the printed version of this Proxy
Statement. A copy of the Long-Term Stock Plan is available from the Company’s
Secretary at 370 Woodcliff Drive, Suite 300, Fairport, New York 14450.
Summary
of Terms
Awards
under the Long-Term Stock Plan may consist of any combination of non-qualified
stock options, stock appreciation rights, restricted stock or other stock-based
awards (collectively, “Awards”). As used in this Proxy Statement, the phrase
“Other Stock-Based Awards” means all Awards other than stock options, stock
appreciation rights and restricted stock. The aggregate number of shares
of the
Company’s Class A Stock available for Awards under the Long-Term Stock Plan is
increased by the amendment and restatement from 80,000,000 shares (after
adjustment for previous stock splits) to 94,000,000 shares. Non-qualified
options to purchase 31,323,158 shares of Class A Stock were outstanding under
the Long-Term Stock Plan on May 1, 2007. No stock appreciation rights were
then
outstanding. Additionally, a total of 386,094 shares of restricted stock,
whether vested or unvested, had previously been awarded under the Long-Term
Stock Plan. Based on these figures plus the number of previously exercised
options and stock appreciation rights, an aggregate of 6,990,438 shares were
available for Awards under the Long-Term Stock Plan. If the proposed amendment
and restatement of the Long-Term Stock Plan is approved, and based upon these
figures, the aggregate shares available for awards would increase
to 20,990,438 shares. Any Awards granted pursuant to the Long-Term Stock
Plan are automatically adjusted to prevent dilution or enlargement in the
event
of any stock dividend, stock split, reorganization or other event affecting
the
Class A Stock. The market value of the Class A Stock as of May 1, 2007 was
$22.70 per share.
The
Long-Term Stock Plan is administered by the Human Resources Committee of
the
Company's Board of Directors. The Human Resources Committee may delegate
its
authority to others as provided in the Long-Term Stock Plan, and the entire
Board of Directors may act as the Committee. As used in this section, the
term
“Committee” means (i) the Human Resources Committee, (ii) a delegate acting
under the authority of the Human Resources Committee or (iii) the entire
Board
of Directors acting as the Committee, as defined in the Long-Term Stock Plan,
as
applicable. Under the Long-Term Stock Plan, the Committee is charged with
responsibility for selecting the participants and for determining the number
and
type of Awards to be granted to each participant, the timing of the Awards,
and
any other terms and conditions applicable to the Awards.
The
persons who are eligible to participate in the Long-Term Stock Plan include
directors and employees (including officers) of the Company and its
subsidiaries. Currently, six non-employee directors and approximately 9,200
employees are eligible to participate in the Long-Term Stock Plan; however,
only
directors and employees selected by the Committee will be granted Awards
under
the Long-Term Stock Plan. Outstanding non-qualified options granted under
the
Long-Term Stock Plan are, as of May 1, 2007, held by approximately 1,940
employees and each of the Company’s six non-employee directors.
The
Long-Term Stock Plan may be amended, modified or terminated by the Committee
from time to time. No amendment, modification or termination of the Long-Term
Stock Plan will be effective without stockholder approval if such approval
is
required under any applicable law, rule or regulation. The exercisability
of any
Award will terminate if the Committee determines that the participant is
engaged
in competition with the Company or has been terminated for “cause” as defined in
the Long-Term Stock Plan.
Stock
options and other Awards previously granted pursuant to the Long-Term Stock
Plan
will not be affected by the amendment and restatement of the Long-Term Stock
Plan and will remain outstanding until they are exercised, expire or otherwise
terminate. The following table sets forth the aggregate number of options
granted under the Long-Term Stock Plan to certain individuals and groups
of
individuals at any time:
|
Individual
or Group of Individuals
|
Aggregate
Number
of
Options
Granted
|
|
Richard
Sands,
Chairman
of the Board and Chief Executive Officer
|
2,887,343
|
|
Robert
Sands,
President
and Chief Operating Officer
|
2,641,743
|
|
Alexander
L. Berk,
Chief
Executive Officer, Constellation Beers and Spirits
|
1,631,850
|
|
Thomas
S. Summer,
Executive
Vice President and Chief Financial Officer
|
1,282,100
|
|
Thomas
J. Mullin,
Executive
Vice President and General Counsel
|
1,091,500
|
|
All
Executive Officers as a Group
(7
persons)(1)
|
9,618,636
|
|
All
Directors who are not Executive
Officers
as a Group (6 persons)
|
491,109
|
|
All
employees other than Executive Officers as a Group
(2)
|
76,957,267
|
___________________________
(1)
This
group consists of the Company’s current executive officers; therefore, Mr.
Summer is not included in this group.
(2) This
group consists of the Company’s current and former employees and includes Mr.
Summer.
Covered
Employee Restrictions.
There
are special rules under the Long-Term Stock Plan relating to the Chief Executive
Officer of the Company, the four other most highly compensated executive
officers of the Company and such other officers of the Company as the Committee
may designate (the "Covered Employees"). These provisions are necessary for
the
Long-Term Stock Plan to comply with Section 162(m) of the Internal Revenue
Code.
Prior to the amendment and restatement, the aggregate fair market value of
any
restricted stock granted to any individual Covered Employee in any fiscal
year
could not exceed $2,500,000, and the aggregate fair market value of any Other
Stock-Based Awards granted to any individual Covered Employee in any fiscal
year
could not exceed $2,500,000. If the amendment and restatement of the Long-Term
Stock Plan is approved by stockholders, these amounts will be increased to
$5,000,000. Also, prior to the amendment and restatement, no individual Covered
Employee could receive Awards in any fiscal year relating to a number of
shares
of Class A Stock in excess of two and one-half percent of the number of shares
of Class A Stock outstanding on June 27, 1997 (380,343 shares). If the amendment
and restatement of the Long-Term Stock Plan is approved by stockholders,
this
limit will be revised so that no participant in the Long-Term Stock Plan
can
receive Awards in any fiscal year relating to a number of Class A shares
in
excess of one percent of the diluted shares of Class A Stock outstanding
on
February 28, 2007 (2,582,378 shares), subject to adjustment in the future
to
prevent dilution or enlargement in the event of any stock dividend, stock
split,
reorganization or other event affecting the Class A Stock.
Stock
Options.
Under
the Long-Term Stock Plan, the Committee may grant Awards in the form of
non-qualified options to purchase shares of Class A Stock. The Committee
will,
with regard to each stock option, determine the number of shares subject
to the
option, the manner and period during which the option may be exercised and
the
exercise price per share of stock subject to the option. The exercise price
of
stock options granted to participants must be equal to or greater than the
fair
market value of a share of Class A Stock on the date the stock option is
granted. Unless otherwise determined by the Committee, stock options will
become
exercisable 20% per year on each of the first five anniversaries of the grant;
however, they become immediately exercisable upon a change of control. The
Committee has fixed the terms of recently granted options to employees so
that
the options vest 25% per year on each of the first four anniversaries of
the
grant and to non-employee directors so that the options fully vest six months
after the grant. Upon exercise, the option price may be paid in cash, shares
of
Class A Stock, a combination thereof, or such other consideration as the
Committee may deem appropriate.
Stock
Appreciation Rights.
The
Long-Term Stock Plan authorizes the Committee to grant stock appreciation
rights
(“SARs”) either in tandem with a stock option or independent of a stock option.
An SAR is a right to receive a payment equal to the difference between the
fair
market value of a share of Class A Stock on the date the SAR is exercised
and
the SAR’s reference price. A tandem SAR may be granted either at the time of the
grant of the related stock option or at any time thereafter during the term
of
the stock option. Unless otherwise determined by the Committee, an SAR will
become exercisable 20% per year on each of the first five anniversaries of
the
grant; however, they become immediately exercisable upon a change of control.
The reference price of an SAR will be fixed by the Committee, but the reference
price of a tandem SAR must be no less than the exercise price of its related
stock option and the reference price of an SAR granted to a Covered Employee
must equal or exceed the fair market value of a share of Class A Stock on
the
date of the grant. Upon the exercise of a stock option as to some or all
of the
shares covered by a tandem SAR, the related tandem SAR will automatically
expire
in accordance with the terms and conditions specified in the grant, and vice
versa.
Restricted
Stock Awards.
The
Long-Term Stock Plan authorizes the Committee to grant Awards in the form
of
restricted shares of Class A Stock. Such Awards will be subject to such terms,
conditions, restrictions, and/or limitations, if any, as the Committee deems
appropriate, including restrictions on transferability and continued employment.
The terms and conditions will include one or more performance criteria and
performance targets for Covered Employees if the grant is intended to comply
with Section 162(m) of the Internal Revenue Code and may contain such criteria
and targets under other circumstances and for other participants.
Other
Stock-Based Awards.
The
Committee may make Other Stock-Based Awards under the Long-Term Stock Plan.
The
Other Stock-Based Awards will be subject to such terms, conditions and
limitations as the Committee deems appropriate, which will include one or
more
performance criteria and performance targets for Covered Employees if the
grant
is intended to comply with Section 162(m) of the Internal Revenue Code and
may
contain such criteria and targets under other circumstances and for other
participants.
Performance
Criteria and Targets.
For
each restricted stock award and Other Stock-Based Award to Covered Employees
under the Long-Term Stock Plan intended to comply with Section 162(m) of
the
Internal Revenue Code, the Committee will establish specific annual performance
targets for performance periods of one or more years (or partial years).
The
performance targets will be based on one or more business criteria. Prior
to the
amendment and restatement, the permissible business criteria consisted of
the
following: increases in the fair market value of the Class A Stock, shareholder
value added, cash flow, earnings per share, EBITDA (earnings before interest,
taxes, depreciation and amortization), return on equity, return on capital,
return on assets or net assets, cost reduction or control, operating income
or
net operating income, operating margins/sales in one or more business segments
or product lines, return on operating revenue, market share in one or more
business segments or product lines, or on any combination thereof. If the
amendment and restatement of the Long-Term Stock Plan is approved by
stockholders, the permissible criteria will also include: earnings before
interest and taxes, units of specified products sold or depleted, free cash
flow, sales growth, capital expenditures, working capital, inventory, cash
flow
from operations, and gross margin. Business criteria may be established on
a
corporate, divisional, business unit or consolidated basis and measured
absolutely or relative to the Company’s peers. Performance targets must be
established while the performance relative to the target remains substantially
uncertain within the meaning of Section 162(m) of the Internal Revenue Code.
Concurrently with the selection of the performance targets, the Committee
must
establish an objective formula or standard for calculating the maximum Award
granted to each Covered Employee. The Committee may adjust performance targets
to take into account extraordinary items affecting the Company, as defined
in
the Long-Term Stock Plan (for example, an extraordinary gain or loss; a change
in accounting rules; and the effects of mergers, acquisitions, divestitures
or
significant transactions). While the Committee has no authority to make upward
adjustments to Awards to Covered Employees, it may in its discretion make
such
adjustments with respect to Awards to other employees.
Covered
Employees who are designated by the Committee as participants for a given
performance period shall only be entitled to receive payments of Awards for
such
period to the extent that the pre-established objective performance targets
set
by the Committee for such period are attained. With regard to a particular
performance period, the Committee will have the discretion, subject to the
Long-Term Stock Plan’s terms, to select the length of the performance period,
the type(s) of performance criteria to be used, the performance targets that
will be used to measure performance for the period and the performance formula
that will be used to determine what portion, if any, of the Award has been
earned for the period. Such discretion shall be exercised by the Committee
in
writing within the time prescribed by Section 162(m) of the Internal Revenue
Code (generally, the first 90 days of the performance period) and performance
for the period will be measured by the Committee following the end of the
performance period.
Certain
U.S. Federal Income Tax Consequences
A
participant who receives a non-qualified stock option will not realize income
upon the grant of the option. The participant will realize ordinary income
at
the time of exercise of non-qualified stock options in the amount of the
difference between the exercise price and the fair market value of the Class
A
Stock on the date of exercise multiplied by the number of shares with respect
to
which the option is exercised. The Company is entitled to a deduction equal
to
the amount of such income at the time such income is realized by the
participant.
With
respect to stock appreciation rights, participants will not realize any income
at the time of grant. Upon exercise, any cash received and the fair market
value
on the exercise date of any shares received will constitute ordinary income
to
the participant. The Company will be entitled to a deduction in the amount
of
such income at the time such income is realized by the participant.
Participants
who receive grants of restricted stock should not realize income at the time
of
grant, assuming the restrictions constitute a substantial risk of forfeiture
for
federal income tax purposes. When such restrictions lapse, the participants
will
receive taxable income in an amount equal to the then fair market value of
the
Class A Stock. The federal income tax consequences of Other Stock-Based Awards
will depend on the type of Award. Generally, a participant who receives a
stock-based award in the form of a right to receive Company stock will recognize
ordinary income equal to the fair market value of the stock when the stock
is
received by the participant and is no longer subject to a substantial risk
of
forfeiture. In either case, the Company will be entitled to a deduction of
such
amounts at the time the income is realized.
Individual
income tax consequences may differ with respect to participants who are resident
in jurisdictions outside the United States.
Securities
Authorized for Issuance under Equity Compensation
Plans
The
following table sets forth information with respect to the Company’s
compensation plans under which its equity securities may be issued, as of
February 28, 2007. The equity compensation plans approved by security holders
include the Company’s Long-Term Stock Incentive Plan, Incentive Stock Option
Plan, 1989 Employee Stock Purchase Plan and UK Sharesave Scheme.
Equity
Compensation Plan Information
| |
(a)
|
(b)
|
(c)
|
|
Plan
Category
|
Number
of securities
to
be issued upon
exercise
of
outstanding
options,
warrants
and rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation plans
(excluding
securities
reflected
in column (a))
|
|
Equity
compensation plans approved by
security
holders
|
23,368,526
|
$17.61
|
26,739,631
|
|
Equity
compensation plans not approved by security holders
|
-
|
-
|
-
|
|
Total
|
23,368,526
|
$17.61
|
26,739,631
|
Reasons
for Approval
The
Board
of Directors believes that it is desirable and in the best interests of the
Company and its stockholders to provide employees and directors with incentives
to maintain and enhance the Company's long-term performance. The amendments
effected by the amended and restated Long-Term Stock Plan will enable the
Company to continue to provide such incentives. The approval of the amendment
and restatement will also benefit the Company by satisfying the requirements
of
Section 162(m) of the Internal Revenue Code and thereby preserving the Company's
ability to deduct compensation paid to executives in excess of one million
dollars annually.
Vote
Required
The
adoption of Proposal No. 4 to approve the amendment and restatement of the
Long-Term Stock Plan requires the affirmative vote of a majority of the votes
entitled to be cast by stockholders present in person or represented by proxy
at
the Meeting. With respect to this proposal, holders of Class A Stock and Class
B
Stock will vote together as a single class at the Meeting, with holders of
Class
A Stock having one (1) vote per share and holders of Class B Stock having ten
(10) votes per share.
The
Board of Directors recommends that the stockholders approve the amendment and
restatement of the Company’s Long-Term Stock Incentive Plan and, accordingly,
recommends that you vote FOR Proposal No. 4. Unless
otherwise directed therein, the shares represented by your proxy, if properly
executed and returned, and not revoked, will be voted FOR such
proposal.
PROPOSAL
NO. 5
PROPOSED
AMENDMENT AND RESTATEMENT OF THE COMPANY’S
ANNUAL
MANAGEMENT INCENTIVE PLAN
On
April
27, 2007, the Human Resources Committee of the Board of Directors of the Company
approved, subject to stockholder approval, Amendment Number Three (“Amendment
Number Three”) to the Company’s Annual Management Incentive
Plan
(the “Incentive Plan”), to be effective April 27, 2007, and an amendment and
restatement of the Incentive Plan (incorporating all prior amendments to the
plan including those contained in Amendment Number Three). Amendment Number
Three (i) increased the maximum bonus that any participating employee could
receive in any one fiscal year under the Incentive Plan from $2,000,000 to
$5,000,000; (ii) expanded the list of permissible “Performance Criteria” under
the Incentive Plan to also include the following: earnings before interest
and
taxes, units of specified products sold or depleted, free cash flow, sales
growth, capital expenditures, working capital, inventory, cash flow from
operations, and gross margin, and (iii) made certain other technical amendments
to the provisions of, and definitions used in, the Incentive Plan. No additional
substantive amendments to the Incentive Plan were effected by the amendment
and
restatement.
The
amendments effected by Amendment Number Three require the approval of the
Company’s stockholders for the Incentive Plan to continue to satisfy Section
162(m) of the Internal Revenue Code and its related regulations. Section 162(m)
and its related regulations also require that stockholders approve the material
terms of incentive compensation plans every five years if the Company has the
ability to change performance targets from year to year. The Incentive Plan
was
last re-approved by the Company’s stockholders on July 23, 2002. Accordingly,
under this proposal, by being asked to approve the amendment and restatement
of
the Incentive Plan the Company's stockholders are being asked (i) to approve
the
amendments effected by Amendment Number Three that are incorporated into the
amendment and restatement and (ii) to again approve the Incentive
Plan.
The
purpose of the Incentive Plan is to enable the Company to attract and retain
valued Company employees and to provide them with incentives to attain certain
annual financial and performance goals. The Incentive Plan is intended to
satisfy the requirements for performance-based compensation within the meaning
of Section 162(m) of the Internal Revenue Code.
The
following discussion summarizes certain provisions of the Incentive Plan. This
summary does not purport to be complete and is subject to and qualified in
its
entirety by reference to the full text of the Incentive Plan, which was filed
electronically with the Securities and Exchange Commission as an attachment
to
this Proxy Statement, but is not included in the printed version of this Proxy
Statement. A copy of the Incentive Plan is available from the Company’s
Secretary at 370 Woodcliff Drive, Suite 300, Fairport, New York
14450.
Summary
of Terms
The
Incentive Plan establishes a vehicle for the payment of cash bonuses to
participating employees and for
tying
such bonuses to the performance of the Company with respect to certain business
criteria. The Incentive Plan is administered by the Human Resources Committee
of
the Company’s Board of Directors, all of whom are “outside directors” within the
meaning of Section 162(m) of the Internal Revenue Code and not eligible to
participate in the Incentive Plan.
The
Committee establishes specific annual performance targets corresponding to
annual performance periods for each key employee who participates in the
Incentive Plan. The performance targets are based on one or more business
criteria. Prior to Amendment Number Three, the permissible business criteria
included the following: increases in the fair market value of the Class A
Stock, shareholder value added, cash flow, earnings per share, EBITDA (earnings
before interest, taxes, depreciation and amortization), return on equity, return
on capital, return on assets or net assets, cost reduction or control, operating
income or net operating income, operating margins/sales in one or more business
segments or product lines, return on operating revenue, market share in one
or
more business segments or product lines, or on any combination thereof.
Amendment Number Three added to this list of permissible business criteria:
earnings before interest and taxes, units of specified products sold or
depleted, free cash flow, sales growth, capital expenditures, working capital,
inventory, cash flow from operations, and gross margin. Business
criteria may be established on a corporate, divisional, business unit or
consolidated basis and measured absolutely or relative to the Company’s peers.
Performance targets for participants who are subject to Section 162(m) of the
Internal Revenue Code must be established while the performance relative to
the
target remains substantially uncertain within the meaning of
Section 162(m). Concurrently with the selection of the performance targets,
the Committee must establish an objective formula or standard for calculating
the maximum bonus payable to each participating employee.
The
eligible persons under the Incentive Plan are certain key employees of
the
Company and its subsidiaries who are selected by the Committee. There are
approximately 173 key employees currently participating in the Incentive
Plan.
Under
the
Incentive Plan prior to Amendment Number Three, the maximum bonus any
participating employee could receive in any one fiscal year is $2,000,000.
Amendment Number Three increased this amount to $5,000,000. In addition to
this
overall maximum, the Committee has sole discretion to determine whether payment
of any bonus will be deferred, subject in each case to the Incentive Plan’s
terms and any other written commitment authorized by the Committee. The
Committee may also take into account the effects
of any
extraordinary items (for example, an extraordinary gain or loss; a change in
accounting rules; and the effects of mergers, acquisitions, divestitures or
significant transactions) in determining whether a performance target has been
satisfied. All bonuses are to be paid in cash or cash equivalents.
The
Incentive Plan may be amended, modified or terminated, in whole or in part,
by
the Committee from time to time, but no amendment, modification or termination
will be effective without Board and/or stockholder approval if such approval
is
required to comply with the applicable rules under Section 162(m) of the
Internal Revenue Code.
Reasons
for Approval
The
Board
of Directors believes that it is desirable and in the best interests of the
Company and its stockholders to insure that the Company’s compensation plans
comply with the requirements of Section 162(m). Approval of the amendment
and restatement of the Incentive Plan is being sought to preserve the Company’s
ability to deduct annual compensation in excess of one million dollars paid
to
participants subject to Section 162(m). The Board further believes that the
Incentive Plan is consistent with the Company’s existing policies that establish
a relationship between employee compensation and the Company’s
performance. The Incentive Plan also serves the Company’s interests by granting
the Committee discretion both in selecting the criteria by which performance
is
to be measured and in determining the actual amount of each participating
employee’s bonus within the maximum limits imposed pursuant to the Incentive
Plan.
Vote
Required
The
adoption of Proposal No. 5 to approve the amendment and restatement of the
Incentive Plan requires the affirmative vote of a majority of the votes entitled
to be cast by stockholders present in person or represented by proxy at the
Meeting. With respect to this proposal, holders of Class A Stock and Class
B
Stock will vote together as a single class at the Meeting, with holders of
Class A Stock having one (1) vote per share and holders of Class B
Stock having ten (10) votes per share.
The
Board of Directors recommends that the stockholders approve the amendment and
restatement of the Company’s Annual Management Incentive Plan and, accordingly,
recommends that you vote FOR Proposal No. 5. Unless otherwise directed
therein, the shares represented by your proxy, if properly executed and
returned, and not revoked, will be voted FOR such
proposal.
STOCKHOLDER
PROPOSALS FOR THE 2008 ANNUAL MEETING
In
order
for any stockholder proposal submitted pursuant to Rule 14a-8 promulgated under
the Securities Exchange Act of 1934 to be included in the Company’s Proxy
Statement to be issued in connection with the 2008 Annual Meeting of
Stockholders, such proposal must be received by the Company no later than
February __, 2008. Nominations for directors submitted by stockholders must
also
be received no later than February __, 2008.
Any
notice of a proposal submitted outside the processes of Rule 14a-8 promulgated
under the Act, which a stockholder intends to bring forth at the Company’s 2008
Annual Meeting of Stockholders, will be untimely for purposes of Rule 14a-4
of
the Securities Exchange Act of 1934 and the By-laws of the Company, if received
by the Company after February __, 2008.
AVAILABLE
INFORMATION
The
Company has furnished its financial statements to stockholders by including
in
this mailing the Company’s 2007 Annual Report to Stockholders. In addition, upon
the request of any stockholder, the Company will provide, without charge, a
copy
of its Annual Report on Form 10-K for the fiscal year ended February 28, 2007,
as filed with the Securities and Exchange Commission (excluding the exhibits
thereto). Written requests for such copies should be directed to Investor
Relations Department, Constellation Brands, Inc., 370 Woodcliff Drive, Suite
300, Fairport, New York 14450; telephone number: (888) 922-2150.
The
Company’s Code of Business Conduct and Ethics, Global Code of Responsible
Practices for Beverage Alcohol Advertising and Marketing, Chief Executive
Officer and Senior Financial Executive Code of Ethics, Board of Directors’
Corporate Governance Guidelines and the charters of the Audit Committee, the
Corporate Governance Committee and the Human Resources Committee are available
on the Company’s website at www.cbrands.com
under
“Investors/Corporate Governance” and are also available in print to any
stockholder who requests them. Such requests should be directed to Investor
Relations Department, Constellation Brands, Inc., 370 Woodcliff Drive, Suite
300, Fairport, New York 14450. Additionally, any amendments to, and waivers
granted to the Company’s directors and executive officers under the Company’s
codes of ethics will be posted in this area of the Company’s website. (The
information contained on the Company’s website, however, is not a part of this
Proxy Statement.)
OTHER
As
of the
date of this Proxy Statement, the Board of Directors does not intend to present,
and has not been informed that any other person intends to present, any matter
at the Meeting other than those specifically referred to in this Proxy
Statement. If any other matters properly come before the Meeting, it is intended
that the holders of the proxies will act in respect thereto in accordance with
their best judgment.
BY
ORDER OF THE BOARD
OF DIRECTORS
DAVID
S. SORCE,
Secretary
Fairport,
New York
June
___,
2007
Appendix
A
Excerpt
from the Company’s Corporate Governance Guidelines
| 1. |
Classification
and Definition of
Directors.
|
The
principal classifications of directors are “Independent,”
“Management”
and
“Non-Management.”
An
“Independent
Director”
of the
Company shall be one who meets the qualification requirements for being an
independent director under the corporate governance listing standards of the
New
York Stock Exchange (“NYSE”),
including the requirement that the Board must have affirmatively determined
that
the director has no material relationships with the Company (either directly
or
as a partner, stockholder or officer of an organization that has a relationship
with the Company). References to “Company”
include
any parent or subsidiary in a consolidated group with Constellation Brands,
Inc.
References to “immediate
family member”
includes
a person’s child, stepchild, parent, stepparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
and any person (other than a tenant or employee) sharing a person’s household.
To guide its determination whether or not a business or charitable relationship
between the Company and an organization with which a director is so affiliated
is material, the Board has adopted the following categorical
standards:
| A. |
A
director will not be Independent if, (i) currently or within the
last
three years the director was employed by the Company; (ii) an immediate
family member of the director is or has been within the last three
years
an executive officer of the Company; (iii) the director or an immediate
family member of the director received, during any twelve-month period
within the last three years, more than $100,000 in direct compensation
from the Company (other than director and committee fees and pension
or
other forms of deferred compensation for prior service, and also
provided
such deferred compensation is not contingent in any way on continued
service); (iv) the director or an immediate family member of the
director
is a current partner of a firm that is the Company's internal or
external
auditor; (v) the director is a current employee of a firm that is
the
Company’s internal or external auditor; (vi) the director has an immediate
family member who is a current employee of a firm that is the Company’s
internal or external auditor and such immediate family member participates
in that firm’s audit, assurance or tax compliance (but not tax planning)
practice; (vii) the director or an immediate family member of the
director
was within the last three years (but is no longer) a partner or employee
of a firm that is the Company’s internal or external auditor and such
director or immediate family member personally worked on the Company’s
audit within that time; (viii) the director or an immediate family
member
of the director is, or has been within the last three years, employed
as
an executive officer of another company in which any of the Company’s
present executive officers at the same time serve or served on that
other
company’s compensation committee; or (ix) the director is a current
employee, or an immediate family member of the director is a current
executive officer, of a company that has made payments to, or received
payments from, the Company for property or services in an amount
which, in
any of the last three fiscal years, exceeded the greater of $1,000,000
or
two percent (2%) of such other company’s consolidated gross
revenues.
|
| B. |
The
following commercial or charitable relationships will not be considered
to
be material relationships that would impair a director’s independence: (i)
an immediate family member of the director is or was employed by
the
Company other than as an executive officer; (ii) if the director
or an
immediate family member of the director received $100,000 or less
in
direct compensation from the Company during any twelve-month period
(other
than director and committee fees and pension or other forms of deferred
compensation for prior service, and also provided such deferred
compensation is not contingent in any way on continued service);
(iii) if
an immediate family member of the director is employed by a present
or
former internal or external auditor of the Company and such family
member
does not participate in the firm’s audit, assurance or tax compliance (as
distinguished from tax planning) practice and did not personally
work on
the Company’s audit within the last three years; (iv) if an immediate
family member of the director was (but is no longer) a partner or
employee
of a present or former internal or external auditor of the Company
and did
not personally work on the Company’s audit within the last three years;
(v) if a Company director is or was an executive officer or employee,
partner or shareholder, or an immediate family member of the director
is
or was an executive officer, partner or shareholder of another company
that does business with the Company and the annual sales to, or purchases
from, the Company for property and/or services are less than or equal
to
the greater of $1,000,000 or two percent (2%) of the annual revenues
of
such other company; (vi) if a Company director is or was an executive
officer,
employee,
partner or shareholder of another company which is indebted to the
Company, or to which the Company is indebted, and the total amount
of
either company’s indebtedness to the other is less than or equal to two
percent (2%) of the total consolidated assets of the company for
which he
or she serves as an executive officer, employee, partner or shareholder;
and (vii) if a Company director serves or served as an officer, director
or trustee of a tax exempt organization, and the Company’s discretionary
contributions to the tax exempt organization are less than or equal
to the
greater of $1,000,000 or two percent (2%) of that organization’s total
annual consolidated gross revenues. The Board will annually review
all
commercial and charitable relationships of directors.
|
| C. |
In
assessing the materiality of a director’s relationship not covered by
paragraph B set forth above, the directors at the time sitting on
the
Board who are independent under the standards set forth in paragraphs
A
and B above shall determine whether the relationship is material
and,
therefore, whether the director would be independent. In such instance,
the Company will explain in the next proxy statement the basis for
any
Board determination that a relationship was immaterial despite the
fact it
did not meet the categorical standards of immateriality in paragraph
B
above.
|
| D. |
In
accordance with the NYSE’s Transition Rules, the three (3) year look back
period referenced in paragraph A above shall be a one (1) year look
back
period until November 4, 2004.
|
A
“Non-Management
Director” is
a
director who is not a Company officer (as that term is defined in Rule 16a-1(f)
under the Securities Act of 1933), and includes such directors who are not
independent by virtue of a material relationship, former status or family
membership, or for any other reason. The group of Non-Management Directors
includes both Independent Directors and those Non-Management Directors who
do
not qualify as Independent Directors.
A
“Management
Director”
is
an
officer (as that term is defined in Rule 16a-1(f) under the Securities Act
of
1933) of the Company who serves on the Board.
|
CONSTELLATION
BRANDS, INC.
PROXY
FOR CLASS A COMMON STOCK
|
|
P
R
O
X
Y
|
The
undersigned hereby appoints David S. Sorce and Thomas J. Mullin,
or any
one of them, proxies for the undersigned with full power of substitution
to vote all shares of CONSTELLATION BRANDS, INC. (the "Company")
that the
undersigned would be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the Rochester Riverside
Convention Center, 123 East Main Street, Rochester, New York, on
Thursday,
July 26, 2007, at 11:00 a.m. (local time), and any adjournment
thereof
(the "Meeting").
Class
A Stockholders, voting as a separate class, are entitled to elect
two
directors at the Meeting. Class A Stockholders and Class B Stockholders,
voting as a single class, are entitled to elect six directors at
the
Meeting. Please refer to the Proxy Statement for details. Your
shares of
Class A Common appear on the back of this card. PLEASE SIGN ON
THE
BACK.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED BY
THE
UNDERSIGNED. THIS PROXY REVOKES ANY PRIOR PROXY GIVEN BY THE UNDERSIGNED.
UNLESS AUTHORITY TO VOTE FOR ONE OR MORE OF THE NOMINEES IS SPECIFICALLY
WITHHELD, THE SHARES REPRESENTED BY A SIGNED PROXY WILL BE VOTED
FOR
THE ELECTION OF ALL NOMINEES AS DIRECTORS AND, UNLESS OTHERWISE
SPECIFIED,
THE SHARES REPRESENTED BY A SIGNED PROXY WILL BE VOTED
FOR
PROPOSALS 2, 3, 4 AND 5.
TO
APPROVE THE BOARD OF DIRECTORS' RECOMMENDATIONS, SIMPLY SIGN ON
THE BACK.
YOU NEED NOT MARK ANY BOXES.
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
Address
Change/Comments (Mark the corresponding box on the reverse
side)
|
---------------------------------------------------------------------------------------------------------------------------------------------------
*
FOLD AND DETACH HERE *
BALLOT
|
Please
Mark
Here
for
Address
Change
SEE
REVERSE SIDE
|
[
]
|
|
Please
mark
your
votes as
indicated
in
this
example
|
[X]
|
|
1. Election
of Directors: To elect Directors as set forth in the Proxy
Statement.
|
FOR
ALL
NOMINEES
(except
as
noted
below)
|
[
]
|
|
WITHHELD
FROM
ALL
NOMINEES
|
[
]
|
|
Class
A Stockholders
are entitled to vote for the following:
01
Barry A. Fromberg,
02
Jeananne K. Hauswald,
03
James A. Locke III,
04
Richard Sands,
05
Robert Sands,
06
Thomas C. McDermott,
07
Paul L. Smith,
08
Peter H. Soderberg
|
_____________________________________________
Vote
withheld from nominee(s) identified on above line.
|
2.
|
Proposal to ratify the selection of KPMG LLP, Certified Public
Accountants, as the Company's independent public accountants for
the
fiscal year ending February 29,
2008.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[
]
|
[
]
|
[
]
|
|
3.
|
Proposal to amend the Company’s certificate of incorporation to increase
the number of authorized shares of the Company’s Class A Common Stock from
300,000,000 shares to 315,000,000
shares.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[
]
|
[
]
|
[
]
|
|
4.
|
Proposal to approve the amendment and restatement of the Company’s
Long-Term Stock Incentive Plan.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[
]
|
[
]
|
[
]
|
|
5.
|
Proposal to approve the amendment and restatement of the Company’s Annual
Management Incentive Plan.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[
]
|
[
]
|
[
]
|
|
6.
|
In
their discretion, the proxies are authorized to vote upon such
other
business not known at the time of the solicitation of this Proxy
as may
properly come before the Meeting or any adjournment
thereof.
|
| The
undersigned acknowledges receipt with this Proxy of a copy of the
Notice
of Annual Meeting and Proxy Statement for the Company’s 2007 Annual
Meeting that describe more fully the proposals set forth
herein. |
|
Signature
_________________
|
Date
________
|
Signature
_________________
|
Date
________
|
NOTE:
Please date this Proxy and sign your name above exactly as it appears hereon.
Executors, administrators, trustees, etc. should so indicate when signing.
If
the stockholder is a corporation or other entity, the full entity name should
be
inserted and the Proxy signed by a duly authorized representative of the
entity,
indicating his or her title or capacity.
---------------------------------------------------------------------------------------------------------------------------------------------------
*
FOLD AND DETACH HERE *
|
Please
note that, this year, there are two
(2) proxy cards,
one for Class A Stockholders and one for Class B Stockholders.
Stockholders who receive a Class A Common Stock proxy card and
a Class B
Common Stock proxy card must sign and return BOTH
proxy cards in accordance with their respective instructions to
ensure the
voting of shares of each class
owned.
|
|
CONSTELLATION
BRANDS, INC.
PROXY
FOR CLASS B COMMON STOCK
|
|
P
R
O
X
Y
|
The
undersigned hereby appoints David S. Sorce and Thomas J. Mullin,
or any
one of them, proxies for the undersigned with full power of substitution
to vote all shares of CONSTELLATION BRANDS, INC. (the "Company")
that the
undersigned would be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the Rochester Riverside
Convention Center, 123 East Main Street, Rochester, New York,
on Thursday,
July 26, 2007, at 11:00 a.m. (local time), and any adjournment
thereof
(the "Meeting").
Class
A Stockholders, voting as a separate class, are entitled to elect
two
directors at the Meeting. Class A Stockholders and Class B Stockholders,
voting as a single class, are entitled to elect six directors
at the
Meeting. Please refer to the Proxy Statement for details. Your
shares of
Class A Common appear on the back of this card. PLEASE SIGN ON
THE
BACK.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY. THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED BY
THE
UNDERSIGNED. THIS PROXY REVOKES ANY PRIOR PROXY GIVEN BY THE
UNDERSIGNED.
UNLESS AUTHORITY TO VOTE FOR ONE OR MORE OF THE NOMINEES IS SPECIFICALLY
WITHHELD, THE SHARES REPRESENTED BY A SIGNED PROXY WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS AND, UNLESS
OTHERWISE
SPECIFIED, THE SHARES REPRESENTED BY A SIGNED PROXY WILL BE VOTED
FOR PROPOSALS 2, 3, 4 AND 5.
TO
APPROVE THE BOARD OF DIRECTORS' RECOMMENDATIONS, SIMPLY SIGN
ON THE BACK.
YOU NEED NOT MARK ANY BOXES.
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
Address
Change/Comments (Mark the corresponding box on the reverse
side)
|
-----------------------------------------------------------------------------------------------------------------------------------------------
*
FOLD AND DETACH HERE *
BALLOT
|
Please
Mark
Here
for
Address
Change
SEE
REVERSE SIDE
|
[
]
|
|
Please
mark
your
votes as
indicated
in
this
example
|
[X]
|
|
1. Election
of Directors: To elect Directors as set forth in the Proxy
Statement.
|
FOR
ALL
NOMINEES
(except
as
noted
below)
|
[
]
|
|
WITHHELD
FROM
ALL
NOMINEES
|
[
]
|
|
Class
B Stockholders
are entitled to vote for the following:
01
Barry A. Fromberg,
02
Jeananne K. Hauswald,
03
James A. Locke III,
04
Richard Sands,
05
Robert Sands,
06
Peter H. Soderberg
|
_____________________________________________
Vote
withheld from nominee(s) identified on above line.
|
2.
|
Proposal to ratify the selection of KPMG LLP, Certified Public
Accountants, as the Company's independent public accountants
for the
fiscal year ending February 29,
2008.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[
]
|
[
]
|
[
]
|
|
3.
|
Proposal to amend the Company’s certificate of incorporation to increase
the number of authorized shares of the Company’s Class A Common Stock from
300,000,000 shares to 315,000,000
shares.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[
]
|
[
]
|
[
]
|
|
4.
|
Proposal to approve the amendment and restatement of the Company’s
Long-Term Stock Incentive Plan.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[
]
|
[
]
|
[
]
|
|
5.
|
Proposal to approve the amendment and restatement of the Company’s Annual
Management Incentive Plan.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
[
]
|
[
]
|
[
]
|
|
6.
|
In their discretion, the proxies are authorized to vote upon
such other
business not known at the time of the solicitation of this Proxy
as may
properly come before the Meeting or any adjournment
thereof.
|
| The
undersigned acknowledges receipt with this Proxy of a copy
of the Notice
of Annual Meeting and Proxy Statement for the Company’s 2007 Annual
Meeting that describe more fully the proposals set forth
herein. |
|
Signature
_________________
|
Date
________
|
Signature
_________________
|
Date
________
|
NOTE:
Please date this Proxy and sign your name above exactly as it appears hereon.
Executors, administrators, trustees, etc. should so indicate when signing.
If
the stockholder is a corporation or other entity, the full entity name
should be
inserted and the Proxy signed by a duly authorized representative of the
entity,
indicating his or her title or capacity.
-----------------------------------------------------------------------------------------------------------------------------------------------
*
FOLD AND DETACH HERE *
|
Please
note that, this year, there are two
(2) proxy cards,
one for Class A Stockholders and one for Class B Stockholders.
Stockholders who receive a Class A Common Stock proxy card
and a Class B
Common Stock proxy card must sign and return BOTH
proxy cards in accordance with their respective instructions
to ensure the
voting of shares of each class
owned.
|
CDI
Voting Instruction Form
[LOGO]
CONSTELLATION
|
CONSTELLATION
BRANDS, INC.
ARBN
103 442 646
Mark
this box with an 'X' if you have made any changes to your
address details
[ ]
|
All
correspondence to:
Computershare
Investor Services Pty Limited
GPO
Box 1903 Adelaide
South
Australia 5001
Australia
Enquiries
(within Australia) 1800 030 606
(outside
Australia) 61 3 9415 4046
Facsimile
61 8 8236 2305
www.computershare.com
|
Annual
General Meeting - 26 July 2007
Your
Voting Instructions are being sought so that CHESS Depositary Nominees
Pty Ltd
may respond to a proxy solicitation on behalf of the Board of Directors
of
Constellation Brands, Inc.
Voting
Instructions to CHESS Depository Nominees Pty Ltd
I/We
being a holder of CHESS Depositary Interests of the above Company hereby
direct,
|
[
]
|
CHESS
Depositary
Nominees
Pty Ltd (CDN)
(mark
with an “X”)
|
OR
|
|
Write
here the name of the person you are appointing if this person
is
someone other than CDN
|
to
vote
the shares underlying my/our holding at the Annual General Meeting in respect
of
the resolutions outlined below. If you do not complete one of the above
boxes,
CDN will vote the shares represented by those CDI's as directed
below.
CHESS
Depositary Nominees Pty Ltd will vote as directed. Please mark with an
[X] to
indicate your directions.
1.
Election
of Directors as set forth in the Proxy Statement.
| |
For
|
Withheld
|
|
1.1
|
Election
of Barry A. Fromberg
|
[
]
|
[
]
|
| |
|
|
|
|
1.2
|
Election
of Jeananne K. Hauswald
|
[
]
|
[
]
|
| |
|
|
|
|
1.3
|
Election
of James A. Locke III
|
[
]
|
[
]
|
| |
|
|
|
|
1.4
|
Election
of Richard Sands
|
[
]
|
[
]
|
| |
|
|
|
|
1.5
|
Election
of Robert Sands
|
[
]
|
[
]
|
| |
|
|
|
|
1.6
|
Election
of Thomas C. McDermott
|
[
]
|
[
]
|
| |
|
|
|
|
1.7
|
Election
of Paul L. Smith
|
[
]
|
[
]
|
| |
|
|
|
|
1.8
|
Election
of Peter H. Soderberg
|
[
]
|
[
]
|
| 2. |
Proposal
to ratify the selection of KPMG LLP, Certified Public Accountants,
as the
Company's independent public accountants for the fiscal year
ending
February 29, 2008.
|
[
]
|
[
]
|
[
]
|
| |
|
|
|
|
| 3. |
To
amend the Company's certificate of incorporation to increase the
number of
authorized shares of the Company's Class A Common Stock from 300,000,000
shares to 315,000,000 shares. |
[
]
|
[
]
|
[
]
|
| |
|
|
|
|
| 4. |
To
approve the amendment and restatement of the Company's Long-Term
Stock
Incentive Plan. |
[
]
|
[
]
|
[
]
|
| |
|
|
|
|
| 5. |
To
approve the amendment and restatement of the Company's Annual Management
Incentive Plan. |
[
]
|
[
]
|
[
]
|
*
If you
mark the Abstain box for this item, you are directing your proxy to abstain
from
voting on your behalf, therefore your votes will not be counted in computing
the
required majority.
By
execution of this CDI Voting Instruction Form the undersigned hereby authorises
CHESS Depositary Nominees Pty Ltd to appoint such proxies or their substitutes
to vote as directed above and in their discretion on such other business
as may
properly come before the meeting.
If
you do not mark either the ‘FOR’ or ‘AGAINST’ box your vote will not be counted.
PLEASE
SIGN HERE This section must
be
signed in accordance with the instructions overleaf to enable your directions
to
be implemented.
|
Individual
or Securityholder 1
|
|
____________________________________
|
|
Sole
Director and Sole Company
Secretary
|
|
Securityholder
2
|
|
____________________________________
|
|
Director
|
|
Securityholder
3
|
|
____________________________________
|
|
Director/Company
Secretary
|
/ /
--------------------------------------------------
-------------------------------------
-------------------
Contact
Name Contact
Daytime
Telephone
Date
Instruction
for Completion of CDI Voting Instruction Form
Your
vote is important
Each
Constellation Brands, Inc. CHESS Depositary Interest (CDI) is equivalent
to one
tenth of one share of Class A Common Stock of Constellation Brands, Inc.,
so
that every 10 CDIs that you own at 31 May 2007 (record date) entitles you
to
direct one vote. Class A Stockholders, voting as a separate class, are
entitled
to elect two directors at the annual general meeting of Constellation Brands,
Inc. Class A Stockholders and Class B Stockholders, voting as a single
class,
are entitled to elect five directors at that meeting. Please refer to the
Proxy
Statement for details.
You
can vote by completing, signing and returning your CDI Voting Instruction
Form.
The
CDI
Voting Instruction Form gives you two options:
|
(a)
|
You
can give your voting instructions to CHESS Depositary Nominees
Pty Ltd
(CDN), which will vote the underlying shares on your behalf;
or
|
|
(b)
|
You
can instruct CDN to appoint you or your nominee as proxy to vote
the
shares underlying your CDIs in person at the annual general meeting
of
Constellation Brands, Inc.
|
In
either
case, you need to return your completed CDI Voting Instruction Form so
that it
is received at the address shown on the Form by not later than 5pm Australian
time on 23 July 2007. That will give CHESS Depositary Nominees Pty Ltd
enough
time to tabulate all CHESS Depositary Interest votes, to vote the underlying
shares and to appoint the proxies.
Directing
CDN to Vote
If
you
wish to direct CDN to vote the shares underlying your CDIs, you may do
so by
placing a cross in the box next to CDN's name at the top of the form and
then
placing a mark in one of the boxes opposite each item of business. All
your CDIs
will be voted in accordance with such a direction. If you mark more than
one box
on an item your vote on that item will be invalid.
If
you
sign and return the CDI Voting Instruction Form and cross the box to direct
CDN
how to vote but do not indicate next to the items of business on the form
how
your votes are to be directed, the shares represented by those CDIs will
not be
voted by CDN.
If
you
sign and return the CDI Voting Instruction Form but you do not cross the
box to
direct CDN how to vote and you do not nominate a proxy but you do indicate
next
to the items of business on the form how your votes are to be directed,
the
shares represented by those CDIs will be voted by CDN.
Directing
CDN to Appoint a Proxy
If
you
wish to direct CDN to appoint a proxy to vote the shares underlying your
CDIs in
person at the annual general meeting of Constellation Brands, Inc., you
need to
fill in the name of the person who is to be appointed as proxy in the box
at the
top of the form. You may direct CDN to appoint you as the proxy or your
nominee.
If
you
direct CDN to appoint a proxy to vote the shares underlying your CDIs in
person
at the annual general meeting of Constellation Brands, Inc., the proxy
appointed
may vote as the proxy wishes.
If
CDN
does not receive a CDI Voting Instruction Form from a holder of Constellation
CDIs the shares represented by those Constellation CDIs will not be
voted.
If
you
have completed and returned your CDI Voting Instruction Form, you may revoke
the
directions contained therein by a written notice of revocation to Computershare
Investor Services Pty Limited no later than 5:00pm Australian time on 23
July
2007 bearing a later date than the CDI Voting Instruction Form.
Signature(s)
of CHESS Depositary Interest Holders
Each
holder must sign this form. If your CDIs are held in joint names, all holders
must sign in the boxes. If you are signing as an Attorney, then the Power
of
Attorney must have been noted by the Company's Australian Registry or a
certified copy of it must accompany this form.
Only
duly
authorised officer/s can sign on behalf of a company. Please sign in the
boxes
provided, which state the office held by the signatory, ie. Sole Director
and
Sole Company Secretary, or Director, or Director and Company
Secretary.
If
you
require further information on how to complete the CDI Voting Instruction
Form,
telephone the Registry on 1800 030 606.
Lodgement
of Notice
CDI
Voting Instruction Forms must be returned to Computershare Investor Services
Pty
Limited, Level 5, 115 Grenfell Street, Adelaide, SA 5000 Australia or GPO
Box
1326 Adelaide SA 5001 Australia.
For
assistance please contact Computershare Investor Services Pty
Limited
on
1800 030 606
Attachment
1
EXPLANATORY
NOTE: The Constellation Brands, Inc. Long-Term Stock Incentive Plan is
filed
herewith pursuant to Instruction 3 to Item 10 of Schedule 14A and is not
part of
the Proxy Statement.
CONSTELLATION
BRANDS, INC.
LONG-TERM
STOCK INCENTIVE PLAN
Amended
and Restated as of July __, 2007
This
Long-Term Stock Incentive Plan (amended and restated as of July __, 2007)
is
adopted pursuant to Section 19 of the Plan by the Human Resources Committee
of
the Board of Directors of Constellation Brands, Inc., acting in its capacity
as
the Committee under the Plan, and by the stockholders of the Company. The
Plan
amends and restates in its entirety the Constellation Brands, Inc. Long-Term
Stock Incentive Plan that was approved by the Board of Directors of the
Company
by unanimous written consent as of June 23, 1997, and applies to Awards
made on or after July __, 2007. Grants of Awards made under this Plan prior
to
July __, 2007 shall be governed by the terms of the Plan as of the date
of the
Award. Certain capitalized terms used in the Plan are defined in Annex
A.
1. PURPOSE
The
Plan
is designed to provide the Company with increased flexibility to attract
and
retain valued employees and directors and to provide them with incentives
to
maintain and enhance the Company’s long-term performance record by aligning the
interests of the Participants and the stockholders of the Company.
2. ADMINISTRATION
The
Plan
shall be administered by the Committee. The Committee shall possess the
authority, in its discretion, (a) to determine the employees and directors
of the Company to whom Awards shall be granted and the time or times at
which
Awards shall be granted; (b) to determine at the time of grant the number
of shares to be subject to each Award; (c) to prescribe the form of the
instrument representing such Award; (d) to establish any appropriate terms
and
conditions applicable to the Awards including any limitations on grants,
vesting
or exercisability, and to make any amendments to such instruments or the
Awards
which may, without limitation, include any acceleration of vesting or
exercisability, waiver of any condition or requirement or taking of other
action
consistent with the purposes of the Plan; (e) to interpret and construe the
Plan; (f) to make and amend rules and regulations relating to the Plan; and
(g) to make all other determinations necessary or advisable for the
administration of the Plan. The Committee’s determinations shall be conclusive
and binding on all Participants and all persons claiming under or through
any
Participant. No member of the Committee shall be liable for any action
taken or
decision made in good faith relating to the Plan or any Award granted under
the
Plan.
No
outstanding Award may be exercised by any person if the Participant to
whom the
Award is granted (x) is, or at any time after the date of grant has been,
in
competition with the Company or its affiliates or (y) has been terminated
by the
Company for Cause. The Committee shall determine, in its discretion, whether
a
Participant’s actions constitute competition with the Company or its
affiliates.
3. ELIGIBLE
EMPLOYEES AND NON-EMPLOYEE DIRECTORS
All
employees of the Company are eligible to receive Awards under the Plan.
Awards
may be made to non-employee directors of the Company. No Awards under the
Plan
shall be made to Covered Employees which are intended to qualify under
Section
162(m) of the Code until the Plan is approved by stockholders of the
Company.
4. SHARES
AVAILABLE; TYPES OF AWARDS
The
total
number of shares of the Company’s Common Stock available for Awards under the
Plan in the aggregate shall not exceed ninety-four million shares. The
maximum
number of Shares which may be subject to Awards granted to any Participant
in
any fiscal year shall not exceed 1% of the diluted shares of Common Stock
outstanding on February 28, 2007. Shares subject to Awards may be authorized
and
unissued shares or may be treasury shares.
If
an
Award expires, terminates or is cancelled without being exercised or becoming
vested, new Awards may thereafter be granted under the Plan covering such
shares
unless the applicable Rules under Section 16(b) of the Exchange Act or
Section
162(m) of the Code require otherwise.
The
Committee may make Awards from time to time in any one or more of the following
types singly or in tandem: Nonqualified Stock Options, Stock Appreciation
Rights, Restricted Stock or Other Stock-Based Awards.
5. STOCK
OPTIONS
Stock
Option Awards under the Constellation Brands, Inc. Stock Option and Stock
Appreciation Right Plan made prior to the date this Long-Term Stock Incentive
Plan was adopted by the Board of Directors shall remain outstanding and
in full
force in accordance with their terms. Each Stock Option Award shall specify
the
following terms and conditions, as well as any other terms, conditions,
limitations and restrictions specified by the Committee:
(a) Exercise
Price.
The
exercise price per Share under each Stock Option shall be specified by
the
Committee, provided that the exercise price per Share under each Stock
Option
granted to a Participant shall not be less than the Fair Market Value of
the
Common Stock on the date the Award is granted.
(b) Duration
of Option.
The
duration of each Stock Option shall be specified. Stock Options must be
exercised on or before 5:00 p.m. Eastern Time on their expiration
date.
(c) Exercise
Terms.
Each
Stock Option granted under the Plan shall become exercisable in five equal
annual installments commencing on the first anniversary of the date of
grant
except as otherwise provided by the Committee. Stock Options may be partially
exercised from time to time during the period extending from the time they
first
become exercisable in accordance with the terms of the Award until the
expiration of the exercise period specified in the Award. Exercise of related
Stock Appreciation Rights will cause the immediate automatic expiration
of
related Stock Options on the terms and conditions specified by the Committee.
The Committee may impose such additional limitations or conditions on the
vesting or exercise of any Stock Option as it deems appropriate.
(d) Payment
of Exercise Price.
A Stock
Option shall be exercised upon such notice as is required by the Committee
accompanied by payment in full of the exercise price for the Shares being
acquired in such form as the Committee may provide in accordance with Section
9
of the Plan, together with all applicable withholding taxes as provided
in
Section 10 of the Plan.
6. STOCK
APPRECIATION RIGHTS
Stock
Appreciation Rights may be granted by the Committee in Awards which are
in
tandem with Stock Options or freestanding. Tandem Awards may be granted
at the
same time as the grant of the related Stock Option or at any time thereafter
prior to the end of the exercise period for the related Stock
Option.
(a) Value.
The
value of each Stock Appreciation Right shall be the difference between
the Fair
Market Value of a Share on the date of exercise of the Stock Appreciation
Right
and the reference amount specified in the Award, which for each Stock
Appreciation Right granted in tandem with a Stock Option shall be not less
than
the exercise price of the related Stock Option. The reference amount for
each
Stock Appreciation Right granted to a Covered Employee shall not be less
than
the Fair Market Value of a Share on the date of grant of the Stock Appreciation
Right.
(b) Duration
of Stock Appreciation Right.
The
duration of each Stock Appreciation Right shall be specified. Each tandem
Stock
Appreciation Right shall specify the Stock Option to which it is related
and the
terms and conditions under which exercise or expiration of the related
Stock
Option will result in automatic expiration of the related Stock Appreciation
Right and the terms and conditions on which exercise or expiration of the
Stock
Appreciation Right will result in automatic expiration of the related Stock
Option.
(c) Exercise
Terms.
Each
Stock Appreciation Right granted under the Plan shall become exercisable
in five
equal annual installments commencing on the first anniversary of the date
of
grant except as otherwise provided by the Committee. Stock Appreciation
Rights
may be partially exercised from time to time during the period extending
from
the time they first become exercisable in accordance with the terms of
the Award
until the expiration of the exercise period specified in the Award. Exercise
of
related Stock Options will cause the immediate automatic expiration of
related
Stock Appreciation Rights on the terms and conditions specified by the
Committee. The Committee may impose such additional limitations or conditions
on
the exercise of any Stock Appreciation Right as specified in the Award
as it
deems appropriate, including such additional limitations or conditions
on the
vesting or exercise of any Stock Appreciation Right as it deems appropriate.
A
Stock Appreciation Right shall be exercised upon such notice as is required
by
the Committee.
7. RESTRICTED
STOCK
Shares
of
Restricted Stock may be granted by the Committee from time to time in its
discretion to Participants subject to such terms and conditions as may
be
required by law or are specified in the Award, including any payment required
for the Shares. The Award will also specify the availability of dividends
and
other distributions with respect to which Shares of Restricted Stock are
entitled and the voting rights, if any, associated with such Shares of
Restricted Stock. Restricted Stock Awards to Participants who may be Covered
Employees which are intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code shall only be made if payout is
contingent upon achievement of Performance Targets within or at the end
of the
Performance Period with respect to one or more Performance Criteria as
specified
by the Committee and the Committee certifies the extent to which any Performance
Target has been satisfied and the number of Shares of Restricted Stock
deliverable as a result thereof, prior to the delivery of any such Shares
to
Covered Employees. In any fiscal year, the value of Restricted Stock Awards
to
any individual Covered Employee shall not exceed $5 million (measured by
the
difference between the amount of any payment for the Shares by the Participant
and the Fair Market Value of the Shares on the date of the Award).
8. OTHER
STOCK-BASED AWARDS
From
time
to time in its discretion, the Committee may grant Other Stock-Based Awards
to
any Participant on such terms and conditions as may be determined by the
Committee and specified in the Award. Grants of Other Stock-Based Awards
to
Participants who may be Covered Employees which are intended to satisfy
the
requirements for “performance-based compensation” under Section 162(m) of the
Code shall only be made if payout or exercise is contingent upon achievement
of
Performance Targets within or at the end of the Performance Period with
respect
to one or more Performance Criteria as specified by the Committee and the
Committee certifies the extent to which any Performance Target has been
satisfied, and the number of Shares or other compensation deliverable as
a
result thereof, prior to the delivery of any such Shares or compensation
to
Covered Employees. Any exercise of Other Stock-Based Awards shall be made
upon
such notice as is required by the Committee to the Company accompanied
by
payment in full of any exercise price for the Shares or other compensation
being
acquired in such form as the Committee may provide in accordance with Section
9
of the Plan, together with all applicable withholding taxes as provided
in
Section 10 of the Plan. In any fiscal year, the value of Other Stock-Based
Awards to any individual Covered Employee shall not exceed $5 million (measured
by the difference between the amount of any payment or exercise price for
the
Award by the Participant and the Fair Market Value of the Shares or the
Award on
the date of the Award).
9. PAYMENT
FOR PURCHASE OR EXERCISE OF AWARDS
The
exercise price of Stock Options and any Other Stock-Based Awards providing
for
exercise prices and the purchase price for any Restricted Stock or Other
Stock-Based Awards for purchase prices shall be paid to the Company upon
exercise or acquisition of such Award in the manner which the Committee
may
determine which may include by (a) delivery of cash or a check in the amount
of
the price of the Award, (b) tendering previously acquired Shares having
a Fair
Market Value at the time of delivery equal to the price of the Award,
(c) delivery of irrevocable instructions to a broker or other agent
acceptable to the Company to promptly sell Shares received under the Award
and
to deliver to the Company the amount of proceeds to pay the price related
to
such Award, or (d) such other method of payment as the Committee in its
discretion deems appropriate, in each case together with all applicable
withholding taxes as provided in Section 10. Previously acquired Shares
tendered
in payment must have been owned by Participant for at least six months
prior to
the tender in payment of an Award.
10. WITHHOLDING
TAXES
Whenever
required by law in connection with an Award, the Company shall (and whenever
permitted by law in connection with an Award the Company may but is not
obligated to) require the Participant to remit to the Company an amount
sufficient to satisfy any federal, state and/or local income tax, foreign
tax,
social charge and employment withholding tax requirements prior to the
delivery
of any certificate or certificates for Shares or to take any other appropriate
action to satisfy such withholding requirements, including any method permitted
for payment under Section 9 as determined by the Committee. To the extent
permitted under such rules as the Committee may promulgate and in compliance
with any requirements to avoid violations under Section 16(b) of the Exchange
Act and related Rules, the Participant may satisfy such obligation in whole
or
in part by electing to have the Company withhold Shares from the Shares
to which
the Participant is otherwise entitled under the Award.
11. PERFORMANCE
CRITERIA
For
each
Award of Restricted Stock or Other Stock-Based Award intended to qualify
as
“performance based compensation” under Section 162(m) of the Code and related
Rules, the Committee shall select the applicable Performance Criteria,
Performance Period and Performance Target for the Award consistent with
the
terms of the Plan and Section 162(m). The Committee may select Performance
Criteria, Performance Periods and Performance Targets for Restricted Stock
and
Other Stock-Based Awards for Participants other than Covered Employees
in its
discretion. The Committee shall have no discretion to increase the amount
of
compensation payable to Covered Employees if a Performance Target has been
attained, but the Committee may adjust compensation to increase the amount,
in
its discretion, to any other Participant. The Committee may adjust Performance
Targets to take into account the effects of any Extraordinary Items equitably
in
a manner consistent with the determination of the original Award, provided,
however, no such adjustment may be made with respect to any Award to a
Covered
Employee which is intended to qualify as “performance based compensation” unless
such adjustment satisfies the requirements of Code Section 162(m) and the
related Rules.
For
Awards to Covered Employees which are intended to qualify as “performance based
compensation” under Code Section 162(m), the Performance Target with respect to
the selected Performance Criteria must be established by the Committee
in
advance of the deadlines applicable under Code Section 162(m) and the Rules
thereunder and while the performance relating to the Performance Target
remains
substantially uncertain within the meaning of such Section 162(m) and Rules.
At
the time the Performance Targets are established, the Committee shall provide,
in terms of an objective formula or standard for each Covered Employee,
the
method of computing the specific amount that will represent the maximum
number
of Shares or amount of other compensation payable to the Participant if
the
Performance Target is attained.
12. AWARDS
NOT TRANSFERABLE
Unless
transferability is permitted under certain conditions as determined by
the
Committee, no Award is transferable by the Participant other than (i) by
will or
the laws of descent and distribution, (ii) pursuant to a domestic relations
order, or (iii) to the extent permitted under the Plan, the Award or
interpretation of the Committee, by gift to family members or by gift or
permitted non-cash exchange to entities beneficially owned by family members
or
other permitted transferees, and shall be exercisable only by the Participant,
the Participant’s legal representative, or the Participant’s permitted
transferees. Shares of Restricted Stock may not be sold or otherwise transferred
until ownership vests in the Participant.
13. GENERAL
RESTRICTION ON ISSUANCE OF STOCK CERTIFICATES
The
Company shall not be required to deliver any certificate upon the grant,
vesting
or exercise of any Award until it has been furnished with such documents
as it
may deem necessary to insure compliance with any law or Rules of the SEC
or any
other governmental authority having jurisdiction under the Plan. Certificates
for Shares delivered upon such grant or exercise shall bear legends restricting
transfer or other restrictions or conditions to the extent required by
law or
determined by the Committee. Each Award under the Plan is subject to the
condition that, if at any time the Committee shall determine that the listing,
registration or qualification of the Shares subject to such Award under
any
state or federal law or other applicable Rule, or the consent or approval
of any
governmental regulatory body, is necessary or desirable as a condition
of the
granting of such Awards or the issue or purchase of Shares thereunder,
such
Awards may not vest or be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected
or
obtained free of any conditions not acceptable to the Committee.
14. TERMINATION
OF EMPLOYMENT
If
the
employment of a Participant terminates by reason of the Participant’s
Retirement, Disability or death, any Award may be exercised or received
by the
Participant, the Participant’s designated beneficiary or legal representative or
permitted transferee at any time on or prior to the earlier of the expiration
date of the Award or the expiration of one year after the date of Retirement,
Disability or death but only if, and to the extent that the Participant
was
entitled to exercise or receive the Award at the date of Retirement, Disability
or death and subject to such other terms and conditions as may be specified
in
the Award and the Plan. All Awards or any portion thereof not yet vested
or
exercisable on the date of Retirement, Disability or death shall become
immediately vested and exercisable on the date of termination due to Retirement,
Disability or death (except as otherwise provided by the Committee or an
employment agreement between the Company and the Participant). Upon termination
of the Participant’s employment for any reason other than Retirement, Disability
or death, any Award may be exercised or received by the Participant, the
Participant’s designated beneficiary or legal representative or permitted
transferee at any time on or prior to the earlier of the expiration date
of the
Award or the expiration of ninety days after the date of termination but
only
if, and to the extent that the Participant was entitled to exercise or
receive
the Award at the date of termination and subject to such other terms and
conditions as may be specified in the Award and the Plan. All Awards or
any
portion thereof not yet vested or exercisable on the date of termination
other
than by reason of Retirement, Disability or death shall terminate immediately
on
the date of termination (except as otherwise provided by the Committee
or an
employment agreement between the Company and the Participant).
Unless
otherwise determined by the Committee, an authorized leave of absence pursuant
to a written agreement or other leave entitling the Participant to reemployment
in a comparable position by law or Rule shall not constitute a termination
of
employment for purposes of the Plan unless the Participant does not return
at or
before the end of the authorized leave or within the period for which
re-employment is guaranteed by law or Rule.
Notwithstanding
the foregoing, the Committee has the authority to prescribe different rules
that
apply upon the termination of employment of a particular Participant, which
shall be memorialized in the Participant’s original or amended Award or similar
document.
15. ADJUSTMENT
OF AWARDS
In
the
event of any change in the Common Stock of the Company by reason of any
stock
dividend, stock split, recapitalization, reorganization, merger, consolidation,
split-up, combination, or exchange of shares, or rights offering to purchase
Common Stock at a price substantially below fair market value, or of any
similar
change affecting the Common Stock, the number and kind of shares authorized
under Section 4 for the Plan (including, to the extent permitted by Code
Section
162(m), the limit in Section 4 on Awards to any Participant in any fiscal
year),
the number and kind of shares which thereafter are subject to an Award
under the
Plan and the number and kind of unexercised Stock Options or Other Stock-Based
Awards and the number of Shares of Restricted Stock and the price per share
shall be adjusted automatically consistent with such change to prevent
substantial dilution or enlargement of the rights granted to, or available
for,
Participants in the Plan.
16. NO
EMPLOYMENT RIGHTS
The
Plan
and any Awards granted under the Plan shall not confer upon any Participant
any
right with respect to continuance as an employee of the Company, nor shall
the
Plan or such Awards interfere in any way with the right of the Company
to
terminate the Participant’s position as an employee or director at any
time.
17. RIGHTS
AS
A SHAREHOLDER
The
recipient of any Award under the Plan shall have no rights as a shareholder
with
respect thereto unless and until certificates for the underlying Shares
are
issued to the recipient, except as otherwise specifically provided by the
Committee.
18. SECTION
162(m) CONDITIONS
It
is the
intent of the Company that all Awards that are intended to qualify as
performance-based compensation under Code Section 162(m) be granted and
interpreted in a manner to satisfy all applicable requirements of Code
Section
162(m). Any provision, application or interpretation of the Plan inconsistent
with this intent to satisfy the standards in Code Section 162(m) shall
be
disregarded. Notwithstanding anything to the contrary in the Plan, the
provisions of the Plan may at any time be bifurcated by the Committee in
any
manner so that certain provisions of the Plan or any Award intended (or
required
in order) to satisfy the applicable requirements of Code Section 162(m) may
be applicable only to Covered Employees.
19. AMENDMENT
AND DISCONTINUANCE
The
Plan
and any Award outstanding under the Plan may be amended, modified or terminated
by the Committee at any time and all Awards shall be subject to the Plan,
as
amended from time to time, except that the Committee may not, without approval
of the Participant to whom the Award was granted or his legal representative
or
permitted transferee adversely affect the rights of such person under such
Award. No amendment, modification, or termination of the Plan shall be
effective
without stockholder approval if such approval is required under applicable
law
or Rule or any regulation of the stock market on which the Common Stock
is
traded.
20. CHANGE
IN
CONTROL
(a)
Notwithstanding other provisions of the Plan, in the event of a Change
in
Control of the Company, all of a Participant’s Awards shall become immediately
vested and exercisable or fully earned at the maximum amount, except with
respect to Covered Employees for “performance based compensation” as otherwise
determined by the Committee.
(b)
In the
event of a Change in Control, in the discretion of the Committee, each
Participant who is a Section 16 insider with respect to whom the Change
in
Control might result in a violation under Section 16(b) of the Exchange
Act, may
receive, in exchange for the surrender of the Stock Option, an amount of cash
equal to the difference between the fair market value (based on the kind
and
amount of any securities, cash, other property or other consideration to
be
received with respect to each Share in the Change in Control transaction
as
determined by the Committee) of the Common Stock covered by the Award and
the
option price of such Common Stock under the Stock Option or to receive,
in
exchange for any other Award, an amount of cash equivalent to such fair
market
value had the Participant received the Shares or other compensation as
intended
under the Award prior to the Change in Control.
(c)
Notwithstanding the foregoing, the Plan and any Awards outstanding under
the
Plan shall be binding upon any successor to the Company, whether such successor
is the result of a direct or indirect purchase, merger, consolidation or
other
acquisition of all or substantially all of the business and/or assets of
the
Company.
21. PARTICIPANTS
IN FOREIGN COUNTRIES.
The
Committee shall have the authority to adopt such modifications, procedures,
and
subplans, in each case which may differ from the terms specified in this
Plan,
as may be necessary or desirable to comply with provisions of the laws
of
foreign countries in which the Company or its Subsidiaries may operate
to assure
the viability of the benefits from Awards granted to Participants performing
services in such countries and to meet the objectives of the Plan.
22. GOVERNING
LAW
The
Plan
and any Award made pursuant to it shall be construed under the laws of
the State
of Delaware.
Dated:
July ___, 2007
| CONSTELLATION BRANDS, INC. |
| |
|
|
By:
|
|
|
Title:
|
|
Date
of
Stockholder Approval ________________
ANNEX
A
TO
LONG-TERM
STOCK INCENTIVE PLAN
CERTAIN
DEFINITIONS
Capitalized
terms used in the Plan shall have the meanings set forth below:
“Award”
means
any grant of Stock Options, Restricted Stock, Stock Appreciation Rights
or Other
Stock-Based Award under the Plan.
“Cause”
means,
solely for the purposes of the Plan, gross negligence or willful misconduct
or
commission of a felony or an act of moral turpitude determined by the Committee
to be detrimental to the best interests of the Company or, if the Participant
is
subject to a written agreement with the Company “cause” shall have the meaning
set forth in that agreement.
“Change
in Control”
means:
(a) there
shall be consummated
(i)
any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which any Shares are
to be
converted into cash, securities or other property, provided that the
consolidation or merger is not with a corporation which was a direct or
indirect
wholly-owned subsidiary of the Company or a parent of the Company immediately
before the consolidation or merger; or
(ii)
any
sale, lease, exchange or other transfer (in one transaction or a series
of
related transactions) of all, or substantially all, of the assets of the
Company; or
(b) the
stockholders of the Company approve any plan or proposal for the liquidation
or
dissolution of the Company; or
(c) any
person (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act)
shall become the beneficial owner (within the meaning of Rule 13d-3 under
the
Exchange Act), directly or indirectly, of 30% or more of the voting control
of
the Company’s then outstanding common stock, provided that such person shall not
be a wholly-owned subsidiary of the Company immediately before it becomes
such
30% beneficial owner of voting control; or
(d) individuals
who constitute the Company’s Board of Directors on the date hereof (the
“Incumbent Board”) cease for any reason to constitute at least a majority
thereof, provided, however, that any person becoming a director subsequent
to
the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least three quarters of the
directors
comprising the Incumbent Board (either by a specific vote or by approval
of the
proxy statement of the Company in which such person is named as a nominee
for
director without objection to such nomination) shall be, for purposes of
this
clause (d), considered as though such person were a member of the Incumbent
Board.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Company”
means
Constellation Brands, Inc. and its Subsidiaries, except where the context
indicates that only the parent company is intended.
“Committee”
means
the committee appointed from time to time by the Company’s Board of Directors to
administer the Plan (the “Committee”). The full Board of Directors, in its
discretion, may act as the Committee under the Plan, whether or not a Committee
has been appointed, and shall do so with respect to grants of Awards to
non-employee directors. The Committee may delegate to one or more members
of the
Committee or officers of the Company, individually or acting as a committee,
any
portion of its authority, except as otherwise expressly provided in the
Plan. In
the event of a delegation to a member of the Committee, officer or a committee
thereof, the term “Committee” as used herein shall include the member of the
Committee, officer or committee with respect to the delegated authority.
Notwithstanding any such delegation of authority, the Committee comprised
of
members of the Board of Directors and appointed by the Board of Directors
shall
retain overall responsibility for the operation of the Plan.
“Common
Stock”
means
the Class A Common Stock of the Company, par value $.01 per Share.
“Covered
Employee”
means
the Chief Executive Officer of the Company and the four other most highly
compensated officers of the Company as such term is defined under the Rules
promulgated under Section 162(m) of the Code and such other officers as
may be
designated by the Committee.
“Disability”
means,
unless the Committee specifies otherwise in a Participant’s Award document, a
termination of employment due to the inability of a Participant to engage
in any
substantial gainful activity by reason of any medically determinable physical
or
mental impairment which can be expected to result in death or which has
lasted
or can be expected to last for a continuous period of not less than six
months,
all as verified by a physician acceptable to, or selected by, the
Committee.
“Extraordinary
Items”
means
(a) items presented as such (or other comparable terms) on the Company’s audited
financial statements, (b) extraordinary, unusual or nonrecurring items
of gain
or loss, (c) changes in tax or accounting laws or Rules, and (d) the effects
of
mergers, acquisitions, divestitures, spin offs or significant transactions,
each
of which are identified in the audited financial statements and notes thereto
or
in the “management’s discussion and analysis” of the financial statements in a
period report filed with the SEC under the Exchange Act.
“Fair
Market Value”
of a
Share means the closing price of the Common Stock on the NASDAQ Stock Market
or
other national stock exchange on which the Common Stock is actively traded
for
the date as reported in the Wall Street Journal, Eastern Edition or such
other
standard reference service as the Committee may select.
“IRS”
means
the Internal Revenue Service and, if the context permits, the courts
interpreting the Code.
“Other
Stock-Based Award”
means an
Award granted pursuant to Section 8 of the Plan which is subject to the
terms,
conditions and restrictions set forth in the instrument evidencing the
Award.
“Participant”
means
any employee of the Company or non-employee director of the Company who
has
received an Award under the Plan.
“Performance
Criteria”
means
one or more of the following performance criteria selected by the Committee
with
respect to any performance-based Award: (a) increases in the Fair Market
Value
of a Share, (b) shareholder value added, (c) cash flow, (d) earnings per
share,
(e) earnings of the Company before deducting interest, taxes, depreciation
and
amortization, (f) return on equity, (g) return on capital, (h) return on
assets
or net assets, (i) cost reduction or control, (j) operating income or net
operating income, (k) operating margins/sales in one or more business segments
or product lines, (l) return on operating revenue, (m) market share in
one or
more business segments or product lines, (n) earnings before interest and
taxes,
(o) units of specified products sold or depleted, (p) free cash flow, (q)
sales
growth, (r) capital expenditures, (s) working capital, (t) inventory, (u)
cash
flow from operations or (v) gross margin. Performance criteria may be
established on a corporate, divisional, business unit or consolidated basis
and
measured absolutely or relative to the Company’s peers.
“Performance
Period”
means
the fiscal year or years or other period established by the Committee with
respect to which the Performance Targets are set by the Committee.
“Performance
Target”
means
one or more specific objective goal or goals (which may be cumulative or
alternative) that are timely set in writing by the Committee for each
Participant for the applicable Performance Period with respect to any one
or
more of the Performance Criteria.
“Plan”
means
the Long-Term Stock Incentive Plan of the Company (amended and restated
as of
July __, 2007), as amended from time to time.
“Restricted
Stock”
means
Shares granted pursuant to Section 7 of the Plan which are subject to the
terms,
conditions and restrictions set forth in the instrument evidencing the
Award.
“Retirement”
means a
termination of employment by an employee who is at least 60 years of age
and
after at least 10 years of service with the Company. For an individual
who
becomes employed by the Company in connection with a business acquisition
(regardless of the form of the transaction), service shall include the
individual’s service with the acquired business, unless the Committee determines
otherwise.
“Rules”
means
rules, regulations and interpretations issued by the governmental authority
charged with administering any law and any judicial interpretations applicable
thereto.
“SEC”
means
the Securities and Exchange Commission.
“Shares”
means
shares of the Company’s Class A Common Stock, par value $.01 per
share.
“Stock
Option”
means
any nonqualified Stock Option granted pursuant to Section 5 of the Plan
which is
subject to the terms, conditions and restrictions set forth in the instrument
evidencing the Award and the Plan.
“Subsidiaries”
means
(a) all corporations of which at least fifty percent of the voting stock
is
owned by the Company directly or through one or more corporations at least
fifty
percent of whose voting stock is so owned, and (b) partnerships or other
entities in which the Company has, either directly or indirectly, at least
a
fifty percent interest in the capital or profits.
Other
terms: Any other terms used in the Plan which are defined in Sections 83,
162(m)
or 421 of the Internal Revenue Code as amended, or the Rules thereunder
or
corresponding provisions of subsequent laws and Rules in effect at the
time
Awards are made under the Plan, shall have the meanings set forth in such
laws
or Rules.
Attachment
2
EXPLANATORY
NOTE: The Constellation Brands, Inc. Annual Management Incentive Plan is
filed
herewith pursuant to Instruction 3 to Item 10 of Schedule 14A and is not
part of
the Proxy Statement.
CONSTELLATION
BRANDS, INC.
ANNUAL
MANAGEMENT INCENTIVE PLAN
Amended
and Restated as of July __, 2007
This
Annual Management Incentive Plan (amended and restated as of July __, 2007)
is
adopted pursuant to Section 8 of the Plan by the Committee, and by the
stockholders of the Company. The Plan amends and restates in its entirety
the
Constellation Brands, Inc. Annual Management Incentive Plan that was approved
by
the Board of Directors on June 23, 1997. Certain capitalized terms used in
the Plan are defined in Annex A.
1. PURPOSE
The
Plan
is designed to enable the Company to attract and retain valued employees
and to
provide them with incentives to attain certain annual performance
goals.
2. ADMINISTRATION
The
Plan
shall be administered by a Committee of the Company’s Board of Directors. This
Committee shall consist of at least two members of the Company’s Board of
Directors, all of whom are (a) “outside directors” within the meaning of Section
162(m) and (b) not eligible to participate in the P1an. Subject to the
Plan, the
Committee shall possess the sole authority, in its discretion, to (i) establish
and administer the Performance Criteria and Performance Target, (ii) select
the
Participating Executives who will receive Bonuses under the Plan, (iii)
determine the amount of such Bonuses and any terms, conditions or limitations
on
the payment of any Bonuses, (iv) interpret the Plan, (v) make and amend
rules
and regulations relating to the Plan, and (vi) make all other determinations
necessary or advisable for the administration of the Plan.
3. TERMS
AND
CONDITIONS OF BONUSES
For
each
Performance Period, the Committee shall select, at the time the Performance
Criteria and Performance Targets are determined, the Participating Executives.
Each Participating Executive may receive a Bonus if and only if the Performance
Targets established by the Committee, relative to the applicable Performance
Criteria, are attained. The applicable Performance Period and Performance
Targets shall be determined by the Committee consistent with the terms
of the
Plan and Section 162(m). The Committee may adjust Performance Targets to
take
into account the effects of any Extraordinary Items equitably in a manner
consistent with the determination of the original Bonus, provided, however,
no
such adjustment may be made with respect to any Bonus to a Participating
Executive which is intended to qualify as “performance based compensation”
unless such adjustment satisfies the requirements of Section 162(m) and
the
related Rules.
The
Performance Target with respect to the Performance Criteria must be established
by the Committee in advance of the deadlines applicable under Section 162(m)
and
while the performance relating to the Performance Target remains substantially
uncertain within the meaning of Section 162(m). At the time the Performance
Target is established, the Committee shall provide, in terms of an objective
formula or standard for each Participating Executive, the method of computing
the specific amount that will represent the maximum amount of Bonus payable
to
the Participant if the Performance Target is attained.
Notwithstanding
any other provision hereof, no Participating Executive shall receive a
Bonus
under the Plan for any fiscal year or other Performance Period in excess
of $5
million. Any Bonuses awarded by the Committee under the Plan shall be paid
within 30 days after year-end financial results are reported or, if later,
as
soon as practicable following the Committee’s determinations and certification
under this Section. Any such payment shall be in cash or cash equivalent,
subject to applicable withholding requirements. Notwithstanding the foregoing,
the Committee may, in its sole discretion, defer the payout of any Bonus.
In the
case of the delay of a Bonus otherwise payable at or after the attainment
and
certification of the applicable Performance Target, any additional amount
payable as a result of the delay shall be limited to the Moody’s Average
Corporate Bond Yield during the deferral period.
No
Participating Executive shall receive any payment under the Plan unless
the
Committee has certified, by resolution or other appropriate action in writing,
that the amount thereof has been accurately determined in accordance with
the
terms, conditions and limits of the Plan and that the Performance Target
and any
other material terms previously established by the Committee or set forth
in the
Plan were in fact satisfied.
4. TERMINATION
OF EMPLOYMENT
If
the
employment of a Participating Executive terminates by reason of such
Participating Executive’s Retirement, Disability, death or involuntary
termination without Cause, a ratable portion of any applicable Bonus shall
be
paid, subject to the attainment of the applicable Performance Target, at
or
after the attainment and certification of the applicable Performance Target
at
the end of the fiscal year or other Performance Period. The ratable portion
of
the Bonus shall be determined by multiplying the bonus by a fraction, the
numerator of which is the number of lull or partial months during the
Performance Period during which the Participating Executive was employed,
and
the denominator of which is the number of calendar months in the Performance
Period. Upon termination of the Participating Executive’s employment by
voluntary resignation or for Cause, all Bonuses for which the Participating
Executive may be eligible shall be forfeited unless the Committee otherwise
expressly so provides in a written contract or other written
instrument.
5. ADJUSTMENTS
In
the
event of any change in the Company’s applicable accounting principles or
practices or by reason of any stock dividend, stock split, recapitalization,
reorganization, merger, consolidation, split-up, combination, exchange
of
shares, rights offering or other similar change which occurs after the
Performance Targets are established for a given Performance Period, the
amount
of the Bonuses paid under the Plan for such Performance Period shall be
automatically adjusted consistent with such change to prevent dilution
or
enlargement of the Bonuses under the Plan.
6. NO
EMPLOYMENT RIGHTS
The
Plan
shall not confer upon any Participating Executive any right with respect
to
continuance as an employee of the Company, nor shall it interfere in any
way
with the right of the Company to terminate the Participating Executive’s
position as an employee.
7. DISCRETION
OF COMPANY
Any
decision made or action taken by the Company, the Committee or the Board
of
Directors in connection with the creation, amendment, construction,
administration, interpretation or effect of the Plan shall be within the
absolute discretion of such entity and shall be conclusive and binding
upon all
persons. No officer, director or member of the Committee shall have any
liability for actions taken or omitted under the Plan by the member or
by any
other person.
8. AMENDMENT
AND DISCONTINUANCE
The
Plan
may be amended, modified or terminated by the Committee at any time, and
all
Bonuses shall be subject to the Plan as amended from time to time, except
that
the Committee may not, without the approval of a Participating Executive
adversely affect any rights under the Plan. No amendment, modification
or
termination shall be effective without the approval of the Board of Directors
and/or the stockholders if such approval is necessary to comply with the
applicable provisions of Section l62(m).
9. CHANGE
OF
CONTROL
Notwithstanding
other provisions of the Plan, in the event of a Change of Control of the
Company, the Performance Period for a Participating Executive shall end
on the
date of the Change of Control and the Performance Target shall be adjusted
to
reflect the early termination of the Performance Period. If the Performance
Target, as adjusted, is deemed satisfied by the Committee, the Participating
Executive may receive a ratable portion of the Bonus that would have been
paid
if the Performance Period had not been terminated early and the Performance
Target had been satisfied. The ratable portion of the Bonus shall be determined
by multiplying the original Bonus by a fraction, the numerator of which
is the
number of months from the first day of the Performance Period to the date
of the
Change of Control (including any fractional month) and the denominator
of which
is the total number of months in the original Performance Period.
The
Plan
shall be binding upon any successor to the Company, whether such successor
is
the result of a direct or indirect purchase, merger, consolidation or other
acquisition of all or substantially all of the business and/or assets of
the
Company.
10. SECTION
162(m) CONDITIONS
It
is the
intent of the Company that the Plan and Bonuses paid under the Plan satisfy
and
be interpreted in a manner that satisfies any applicable requirements of
Section
162(m) as performance-based compensation. Any provision, application or
interpretation of the Plan inconsistent with this intent to satisfy the
standards in Section 162(m) shall be disregarded. Notwithstanding anything
to
the contrary in the Plan, the provisions of the Plan may at any time be
bifurcated by the Committee in any manner so that certain provisions of
the Plan
or any Bonus intended (or required in order) to satisfy the applicable
requirements of Section 162(m) are applicable only to persons whose compensation
is subject to Section 162(m).
11. NO
FUNDING OF THE PLAN
The
Company shall not be required to fund or otherwise segregate any cash or
any
other assets which may at any time be paid to any Participating Executive
under
the Plan. The Plan shall constitute an “unfunded” plan of the Company. The
Company shall not, by any provisions of the Plan, be deemed to be a trustee
of
any property, and any rights of any Participating Executive shall be limited
to
those of a general unsecured creditor.
12. NON-TRANSFERABILITY
Except
as
expressly provided by the Committee, no benefit payable under the Plan
shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any such attempted action shall be void.
This
Section shall not apply to an assignment of a contingency or payment due
after
the death of a Participating Executive to such Participating Executive’s legal
representative or beneficiary.
13. EFFECTIVE
DATE
The
effective date of the Plan shall be the date the Plan was initially approved
by
the Company’s stockholders.
l4. DEFINITIONS
Any
terms
or provisions used herein which are defined in Section 162(m) shall have
the
meanings as therein defined.
15. GOVERNING
LAW
To
the
extent not inconsistent with the provisions of Section l62(m), the Plan
shall be
construed under the laws of the State of New York.
| Dated: |
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CONSTELLATION
BRANDS, INC. |
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By: |
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Title:
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Date
of
Stockholder Approval: _________________
ANNEX
A
TO
ANNUAL
MANAGEMENT INCENTIVE PLAN
CERTAIN
DEFINITIONS
Capitalized
terms used in the Plan shall have the meanings set forth below:
“Bonus”
means a cash payment or payment opportunity, as the context
requires.
“Cause”
means, solely for the purposes of the Plan, gross negligence or willful
misconduct or commission of a felony or an act of moral turpitude determined
by
the Committee to be detrimental to the best interests of the Company or,
if the
Participating Executive is subject to a written agreement with the Company,
“cause” shall have the meaning set forth in that agreement.
“Change
of Control” means:
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(a)
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there
shall be consummated
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(i) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which any Shares are
to be
converted into cash, securities or other property, provided that the
consolidation or merger is not with a corporation which was a direct or
indirect
wholly-owned subsidiary of the Company or a parent of the Company immediately
before the consolidation or merger; or
(ii) any
sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company;
or
(b) the
stockholders of the Company approve any plan or proposal for the liquidation
or
dissolution of the Company; or
(c) any
person (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act)
shall become the beneficial owner (within the meaning of Rule 13d-3 under
the
Exchange Act), directly or indirectly, of 30% or more voting control of
the
Company’s then outstanding common stock, provided that such person shall not be
a wholly-owned subsidiary of the Company immediately before it becomes
such 30%
beneficial owner of voting control; or
(d) individuals
who constitute the Company’s Board of Directors on the date hereof (the
“Incumbent Board’) cease for any reason to constitute at least a majority
thereof, provided, however, that any person becoming a director subsequent
to
the date hereof whose election, or nomination for election, by the Company’s
shareholders, was approved by a vote of at least three quarters of the
directors
comprising the Incumbent Board (either by a specific vote or by approval
of the
proxy statement of the Company in which such person is named as a nominee
for
director without objection to such nomination) shall be, for purposes of
this
clause (d), considered as though such person were a member of the Incumbent
Board.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Company”
means Constellation Brands, Inc. and its Subsidiaries, except when the
context
indicates that only the parent company is intended.
“Committee”
means the committee appointed by the Board of Directors of the Company
to
administer the Plan as provided in Section 2.
“Disability”
means, unless the Committee specifies otherwise in a Participant’s Award
document, a termination of employment due to the inability of a Participant
to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result
in
death or which has lasted or can be expected to last for a continuous period
of
not less than six months, all as verified by a physician acceptable to,
or
selected by, the Committee.
“Extraordinary
Items” means (a) items presented as such (or other comparable terms) on the
Company’s audited financial statements, (b) extraordinary, unusual or
nonrecurring items of gain or loss, (c) changes in tax or accounting laws
or
Rules, and (d) the effects of mergers, acquisitions, divestitures, spin-offs
or
significant transactions, each of which are identified in the audited financial
statements and notes thereto or in the “management’s discussion and analysis” of
the financial statements in a period report filed with the SEC under the
Exchange Act.
“Participating
Executive” means a key employee (including any officer) of the Company or one of
its Subsidiaries selected by the Committee to participate in the
Plan.
“Performance
Criteria” means one or more of the following performance criteria selected by
the Committee with respect to any performance-based Award: (a) increases
in the
Fair Market Value of a Share, (b) shareholder value added, (c) cash flow,
(d)
earnings per share, (e) earnings of the Company before deducting interest,
taxes, depreciation and amortization, (f) return on equity, (g) return
on
capital, (h) return on assets or net assets, (i) cost reduction or control,
(j)
operating income or net operating income, (k) operating margins/sales in
one or
more business segments or product lines, (l) return on operating revenue,
(m)
market share in one or more business segments or product lines, (n) earnings
before interest and taxes, (o) units of specified products sold or depleted,
(p)
free cash flow, (q) sales growth, (r) capital expenditures, (s) working
capital,
(t) inventory, (u) cash flow from operations or (v) gross margin. Performance
criteria may be established on a corporate, divisional, business unit or
consolidated basis and measured absolutely or relative to the Company’s
peers.
“Performance
Period” means the fiscal year or years or other period established by the
Committee with respect to which the Performance Targets are set by the
Committee.
“Performance
Target” means one or more specific objective goal or goals (which may be
cumulative or alternative) that are timely set in writing by the Committee
for
each Participant for the applicable Performance Period with respect to
any one
or more of the Performance Criteria.
“Plan”
means the Annual Management Incentive Plan of the Company (amended and
restated
as of July __, 2007), as amended from time to time.
“Retirement”
means a termination of employment by an employee who is at least 60 years
of age
and after at least 10 years of service with the Company. For an individual
who
becomes employed by the Company in connection with a business acquisition
(regardless of the form of the transaction), service shall include the
individual’s service with the acquired business, unless the Committee determines
otherwise.
“Rules”
means rules, regulations and interpretations issued by the governmental
authority charged with administering any law and any judicial interpretations
applicable thereto.
“Section
162(m)” means Section 162(m) of the Code, together with the regulations
promulgated thereunder, all as amended from time to time.
“Shares”
means shares of the Company’s Class A Common Stock, par value $.01 per
share.
“Subsidiaries”
means (a) all corporations of which at least fifty percent of the voting
stock
is owned by the Company directly or through one or more corporations at
least
fifty percent of whose voting stock is so owned, and (b) partnerships or
other
entities in which the Company has, either directly or indirectly, at least
a
fifty percent interest in the capital or profits.
AMENDMENT
NUMBER 3
TO
THE
CONSTELLATION
BRANDS, INC.
ANNUAL
MANAGEMENT INCENTIVE PLAN
This
Amendment Number 3 to the Constellation Brands, Inc. Annual Management
Incentive
Plan (the “Plan”)
is
adopted pursuant to Section 8 of the Plan by the Human Resources Committee
of
the Board of Directors of Constellation Brands, Inc. (the “Company”).
Capitalized terms used herein which are not otherwise defined shall have
the
meanings ascribed to them in the Plan and Annex A thereto. This amendment
shall
become effective as of the date set forth below and is subject to shareholder
approval.
1. The
first
sentence of the third paragraph of Section 3 is amended to replace the
reference
to “$2 million” with “$5 million”.
2. The
definition of “Disability”
in
Annex A to the Plan is replaced with the following:
“Disability”
means,
unless the Committee specifies otherwise in a Participant’s Award document, a
termination of employment due to the inability of a Participant to engage
in any
substantial gainful activity by reason of any medically determinable physical
or
mental impairment which can be expected to result in death or which has
lasted
or can be expected to last for a continuous period of not less than six
months,
all as verified by a physician acceptable to, or selected by, the
Committee.
3. The
definition of “Performance
Criteria”
in
Annex A to the Plan is amended by replacing the reference to “and (m) market
share in one or more business segments or product lines” with “(m) market share
in one or more business segments or product lines, (n) earnings before
interest
and taxes, (o) units of specified products sold or depleted, (p) free cash
flow,
(q) sales growth, (r) capital expenditures, (s) working capital, (t) inventory,
(u) cash flow from operations or (v) gross margin”.
4. The
definition of “Retirement”
in
Annex A to the Plan is replaced with the following:
“Retirement”
means
a
termination of employment by an employee who is at least 60 years of age
and
after at least 10 years of service with the Company. For an individual
who
becomes employed by the Company in connection with a business acquisition
(regardless of the form of the transaction), service shall include the
individual’s service with the acquired business, unless the Committee determines
otherwise.
In
witness whereof, Constellation Brands, Inc. has caused this instrument
to be
executed as of April 27, 2007.
| CONSTELLATION
BRANDS, INC. |
| |
| By: |
/s/ L. Denise Watson |
| Name: |
L. Denise Watson |
| Title: |
SVP, Global Compensation &
Benefits |