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 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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Brown-Forman Corporation
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
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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.
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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June 26,
2009
Dear Brown-Forman Stockholder:
It is our pleasure to invite you to attend Brown-Forman
Corporations 2009 Annual Meeting of Stockholders, which
will be held:
Thursday, July 23, 2009
9:30 A.M. (Eastern Daylight Time)
Brown-Forman Conference Center
850 Dixie Highway
Louisville, Kentucky
We hope to see you on July 23. All Class A
stockholders are urged to complete and return the enclosed proxy
card as soon as possible, whether or not you plan to attend the
Annual Meeting. Your vote is important to us.
Very truly yours,
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Paul C. Varga,
Chairman and
Chief Executive Officer
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Geo. Garvin Brown IV,
Presiding Chairman of the
Board of Directors
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NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
Brown-Forman Corporation will hold its Annual Meeting for
holders of our Class A common stock
in the Conference
Center at our corporate offices, 850 Dixie Highway, Louisville,
Kentucky 40210, at 9:30 A.M. (Eastern Daylight Time), on
Thursday, July 23, 2009.
We are holding this meeting for the following purposes, which
are more fully described in the accompanying Proxy Statement:
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To elect a board of eleven directors;
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To vote on the re-approval of performance measures under the
Brown-Forman 2004 Omnibus Compensation Plan; and
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To transact such other corporate business as may properly come
before the meeting.
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Only Class A stockholders of record at the close of
business on June 15, 2009, are entitled to vote at the
meeting. Holders of Class B common stock are welcome to
attend the meeting but may not vote. We will not close the stock
transfer books in advance of the meeting. Class A
stockholders may vote either in person or by proxy.
If you are a Class A stockholder, whether or not you
plan to attend the meeting, PLEASE complete, sign, and date the
enclosed proxy card and return it promptly in the enclosed
envelope. Submitting a proxy will not affect your right to vote
your shares differently if you attend the meeting in person. We
are not asking for proxy cards from Class B
stockholders.
We enclose separately for your review a copy of our Annual
Report for the fiscal year ended April 30, 2009.
Louisville, Kentucky
June 26, 2009
By Order of the Board of Directors
Matthew E. Hamel, Secretary
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 23,
2009:
The Notice of Annual Meeting, Proxy Statement, and 2009
Annual Report to Stockholders
are available at
www.brown-forman.com/proxy
PROXY
STATEMENT
TABLE OF
CONTENTS
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1
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4
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11
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12
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12
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QUESTIONS
AND ANSWERS
This section sets forth certain
frequently asked questions and answers about the Proxy Statement
and the Annual Meeting.
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Q:
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Why did I receive these proxy materials?
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A:
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The Board of Directors of Brown-Forman Corporation provides you
with these proxy materials so that you may cast your vote
knowledgeably on the matters to be considered at the 2009 Annual
Meeting of Stockholders. The meeting will take place on
Thursday, July 23, 2009, at 9:30 A.M. (Eastern
Daylight Time), in the Conference Center at our corporate
offices, 850 Dixie Highway, Louisville, Kentucky. We will begin
mailing this Proxy Statement and accompanying materials on or
about June 26, 2009, to holders of record of our
Class A common stock at the close of business on
June 15, 2009, the record date for the 2009 Annual Meeting.
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Q:
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What is the record date and what does it mean?
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A:
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The Board has set June 15, 2009, as the record date for the
2009 Annual Meeting. Holders of our Class A common stock at
the close of business on the record date are entitled to receive
notice of the meeting and to vote at the meeting. If you
purchase Class A common stock after the record date, you
may vote those shares only if you receive a proxy to do so from
the person who held the shares on the record date.
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Q:
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What information is contained in these proxy materials?
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A:
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The information contained in these proxy materials relates to
the matters to be voted upon at the Annual Meeting, the voting
process, our corporate governance, the compensation of our
directors and most highly paid executive officers, and other
matters.
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May holders of Class B common stock vote at the
meeting?
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Holders of shares of Class B common stock are not entitled
to vote on any of the matters to be considered at the 2009
Annual Meeting of Stockholders but are welcome to attend.
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Q:
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How will my dividend reinvestment and employee stock purchase
plan shares be voted?
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A.
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Shares of Class A common stock held by participants in
Brown-Formans dividend reinvestment and employee stock
purchase plans are included in your holdings and reflected on
your proxy card. The shares will be voted as you direct.
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What am I voting on?
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A:
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The matters to be voted upon this year are the election of our
Board of Directors and the re-approval of performance measures
under our 2004 Omnibus Compensation Plan. Class A
stockholders may also vote on any other matter that is properly
brought before the meeting.
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Who are the nominees for directors?
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A:
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We have eleven director nominees who are standing for election.
We describe each nominee briefly in this Proxy Statement,
starting on page 12.
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How does the Board recommend I vote?
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A:
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Our Board unanimously recommends that you vote your shares
FOR
the election of each of the nominees to
the Board and
FOR
the re-approval of
performance measures under our 2004 Omnibus Compensation Plan.
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Q:
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What is the proxy card for?
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A:
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By completing and signing the proxy card, you authorize the
individuals named on the card to vote your shares for you, in
accordance with your instructions. If you grant a proxy, the
persons named as proxy holders will also have the obligation and
authority to vote your shares as they see fit on any other
matter properly presented for a vote at the meeting. If for any
unforeseen reason a director nominee is not available to serve,
the persons named as proxy holders may vote your shares at the
meeting for another nominee. The proxy holders for this
years Annual Meeting are Geo. Garvin Brown IV, Paul C.
Varga, and Matthew E. Hamel.
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Q:
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How many shares must be present or represented to conduct
business at the Annual Meeting?
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A:
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A majority of the outstanding shares of our Class A common
stock must be present in person or represented by proxy to
constitute a quorum to conduct business at the Annual Meeting.
Abstentions and broker non-votes are counted as present for
establishing a quorum. A broker non-vote occurs when a broker
does not vote on a matter on the proxy card because the broker
does not have discretionary voting power for the particular item
and has not received instructions from the beneficial owner.
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What votes are necessary for action to be taken?
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A:
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In the election of directors, a nominee is elected if he or she
receives a majority of the votes cast. This means that the
number of shares voted for a director nominee must
exceed the number of shares voted against that
nominee in order for that nominee to be elected. Only votes
for or against are counted as votes cast
in the election of directors abstentions and broker
non-votes are not counted as votes cast. For each other
proposal, the affirmative vote of the majority of the shares
present in person or represented by proxy and entitled to vote
on the matter is required for the action to be taken.
Abstentions and broker non-votes will have the same effect as
votes against the proposal.
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What happens if additional matters are presented at the
Annual Meeting?
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We are not aware of any business to be acted upon at the Annual
Meeting other than the election of directors and the re-approval
of performance measures under our 2004 Omnibus Compensation
Plan. If you grant a proxy, the persons named as proxy holders
will have the obligation and authority to vote your shares as
they see fit on any additional matters properly presented and
brought to a vote at the meeting.
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Q:
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What is the difference between a stockholder of
record and a street name holder?
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A:
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If your shares are registered in your name with our stock
transfer agent, National City Bank, you are considered to be the
stockholder of record of those shares. The proxy
materials have been sent to stockholders of record directly by
Brown-Forman Corporation. As a stockholder of record, you have
the right to grant your voting proxy to the proxy holders named
above, or to vote in person at the meeting. Only stockholders of
record may vote in person at the Annual Meeting. If your shares
are held in a stock brokerage account or by a bank, your shares
are said to be held in street name. The proxy
materials have been forwarded to you in a mailing from your
broker or bank, which is, for those shares, the
stockholder of record. You have the right to direct
your broker or bank how to vote your street name shares by using
the voting instruction card included in the mailing.
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What is householding and how does it affect
me?
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A:
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Householding is a procedure approved by the
Securities and Exchange Commission (SEC) that
permits the delivery of a single Proxy Statement and annual
report to multiple stockholders who share the same address and
last name. Each stockholder in that household receives his or
her
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own proxy card. We participate in householding to reduce our
printing costs and postage fees, and to facilitate voting in
households where shares may be held in multiple names and
accounts. If you share an address with another stockholder and
receive multiple copies of the proxy materials, you may request
householding by writing or
e-mailing
our Secretary, Matthew E. Hamel, 850 Dixie Highway, Louisville,
Kentucky 40210, or
e-mailing
him at Secretary@b-f.com. The proxy materials are available at
www.brown-forman.com/proxy.
You also may request
additional copies at any time by writing or
e-mailing
our Secretary. If you wish to opt out of householding and
receive multiple copies of the proxy materials at the same
address next year, you may do so at any time prior to thirty
days before the mailing of proxy materials (proxy materials are
typically mailed in late June), by writing to our Secretary at
the above address.
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What should I do if I receive more than one proxy card?
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It is important that you complete, sign, and date each proxy
card and each voting instruction card that you receive, because
they represent different shares.
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What if I submit a proxy card and then change my mind as to
how I want to vote?
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A:
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If you are a stockholder of record, you may change your vote by
granting a new proxy bearing a later date, by providing our
Secretary with written notice of revocation of your proxy, or by
attending the meeting and casting your vote in person. To change
your vote for shares you hold in street name, you will need to
follow the instructions in the materials your broker or bank
provides you.
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Where can I find the voting results of the Annual Meeting?
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We intend to announce the results at the Annual Meeting and to
issue a press release on the day of the Annual Meeting.
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Whom may I call with questions about the Annual Meeting?
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A:
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For information about your stock ownership, or for other
stockholder services, please contact Linda Gering, our
Stockholder Services Manager, at
(502) 774-7690,
or Linda_Gering@b-f.com. For information about the meeting
itself, please contact Matthew E. Hamel, our Secretary, at
(502) 774-7631,
or Secretary@b-f.com.
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3
This section describes the
purpose of this Proxy Statement, who may vote, and how to
vote.
Purpose.
The
Board of Directors of Brown-Forman Corporation is sending you
this Proxy Statement to solicit proxies for use at the 2009
Annual Meeting of Stockholders, which will be held Thursday,
July 23, 2009, at 9:30 A.M. (Eastern Daylight Time) at
Brown-Forman Corporation, 850 Dixie Highway, Louisville,
Kentucky. We will begin mailing this Proxy Statement and
accompanying materials on or about June 26, 2009, to
holders of record of our Class A common stock at the close
of business on June 15, 2009, the record date for the 2009
Annual Meeting. Also beginning on June 26, 2009, our
directors, officers, and other employees may solicit proxies by
mail, phone, fax, the Internet or in person. We will pay all
solicitation costs. We will reimburse banks, brokers, nominees,
and other fiduciaries for their reasonable charges and expenses
incurred in forwarding our proxy materials to the beneficial
owners of our stock held in street name. In addition, we have
retained Proxy Express, Inc., to assist with the distribution of
proxy materials for a fee of approximately $15,000, plus
associated expenses.
We are providing access to our proxy materials both by sending
you this full set of proxy materials and by notifying you of the
availability of our proxy materials on the Internet. This Proxy
Statement and our 2009 Annual Report to Stockholders are
available at
www.brown-forman.com/proxy.
Please
complete, sign, date, and return the enclosed proxy card at your
earliest convenience.
Voting
Stock.
We have two classes of common stock,
Class A and Class B. Only holders of Class A
common stock may vote at the 2009 Annual Meeting. As of the
close of business on the record date, June 15, 2009, we had
outstanding 56,613,071 shares of Class A common stock.
Voting
Rights.
If you were a Class A stockholder
on June 15, 2009, you may cast one vote for each share
registered in your name. You may vote your shares either in
person or by proxy. To vote by proxy, please complete, sign,
date, and return the enclosed proxy card. Granting a proxy will
not affect your right to vote shares registered in your name if
you attend the meeting and want to vote in person. You may
revoke a proxy at any time before it is voted by sending our
Secretary written notice of your revocation at the following
address: Matthew E. Hamel, 850 Dixie Highway, Louisville,
Kentucky 40210, by issuing a new proxy, or by attending the
meeting in person and casting your vote there. For any shares
you hold in street name, you must submit voting instructions to
the stockholder of record in accordance with the instructions
they provide. To revoke your proxy, you must comply with the
directions they provide. The proxy holders will vote all shares
represented by effective proxies in accordance with the terms
stated in the proxy. The proxy holders for this years
Annual Meeting are Geo. Garvin Brown IV, Paul C. Varga, and
Matthew E. Hamel.
A majority of the outstanding shares of our Class A common
stock must be present in person or represented by proxy to
constitute a quorum to conduct business at the Annual Meeting.
In the election of directors, a nominee will be elected if he or
she receives a majority of the votes cast. A majority of the
votes cast means that the number of shares voted for a director
must exceed the number of shares voted against that director
(with abstentions and broker non-votes not counted as votes
cast.) The affirmative vote of the majority of the shares
present in person or represented by proxy and entitled to vote
on the matter is required to re-approve the performance measures
under the Brown-Forman 2004 Omnibus Compensation Plan.
Abstentions and broker non-votes will have the same effect as a
vote against the proposal. An affirmative vote of the majority
of the shares represented at the meeting must approve any other
matter properly presented and brought to a vote at the meeting.
4
CORPORATE
GOVERNANCE
This section describes our
corporate governance practices in light of the corporate
governance rules and regulations of the Securities and Exchange
Commission and the New York Stock Exchange.
As a publicly traded, family-controlled company, Brown-Forman
enjoys a rare governance opportunity, whereby members of our
controlling stockholder group participate directly on our Board
of Directors. We believe this governance structure confers a
distinct competitive advantage upon the Company, due largely to
the long-term ownership perspective of the Brown family. This
advantage is sustained by a careful balancing of the roles of
our three primary stakeholders: our Board of Directors, Company
management, and our stockholders including in
particular, the Brown family.
Brown-Forman
is a Controlled Company.
Our Board has determined that Brown-Forman is a controlled
company within the meaning of the New York Stock Exchange
(NYSE) rules. A controlled company is one in which
more than 50% of the voting power is held by an individual, a
group or another company. The Brown family control group owns
substantially more than 50% of our Class A voting stock,
the overwhelming majority of which has historically voted in
favor of the directors proposed by the Board.
Controlled companies are exempt from NYSE listing standards that
require a board composed of a majority of independent directors,
a fully independent nominating/corporate governance committee,
and a fully independent compensation committee. We avail
ourselves of the exemptions from having a board composed of a
majority of independent directors and a fully independent
nominating/corporate governance committee. Notwithstanding the
available exemption, our Board Compensation Committee is
composed exclusively of independent directors.
The Board believes that transparency is a hallmark of good
corporate governance. All directors are invited to attend as
guests meetings of committees on which they do not sit. This
ensures the transparency of committee decision-making and the
effective representation of all stockholder interests.
Our
Board of Directors.
To Brown-Forman, one of the primary benefits of being a
controlled company under the NYSE Rules is that members of our
controlling stockholder group are able to participate more fully
on our Board of Directors than they would otherwise.
Our Board of Directors is the policy-making body that is
ultimately responsible for the business success and ethical
climate of the Company. The Board oversees the performance of
our senior management team, which is responsible for leading and
operating the Companys business. The Boards primary
responsibilities include retention and evaluation of the
Companys Chief Executive Officer (CEO),
oversight of the Companys corporate strategy and financial
condition, oversight of our executive compensation policies and
practices, and succession planning for the CEO and the Presiding
Chairman of the Board. The Board of Directors may retain such
independent advisors as it deems necessary or appropriate to the
performance of its duties. The Board conducts an annual
self-assessment to determine whether it and its committees are
functioning effectively.
Presiding Chairman of the Board.
Our Board is
chaired by Geo. Garvin Brown IV. In his role as Presiding
Chairman of the Board, Mr. Brown is responsible for
chairing Board meetings a task that involves agenda
planning, fostering Board engagement, and driving discussion
toward timely consensus. Mr. Brown is also responsible for
leading the Board in the fulfillment of its corporate
5
governance-related obligations. Our Presiding Chairman chairs
our Annual Meeting of Stockholders and serves as a key liaison
between the Board and our controlling family stockholders.
Director Service.
Directors are elected by majority
vote of our Class A stockholders each year at the Annual
Meeting. Once elected, a director holds office until the next
Annual Meeting of Stockholders or until his or her successor is
elected and qualified, unless he or she first resigns, retires,
or is removed. A director may not stand for re-election to the
Board after he or she has reached the age of 71. In exceptional
circumstances, and upon recommendation of the Corporate
Governance and Nominating Committee, the Board may request a
director to remain on the Board until a given date, if it finds
that such service would be of significant benefit to the
Company. Board member service beyond the age of 71 must be
approved by the affirmative vote of two-thirds of the directors,
excluding the participation and vote of the director concerned.
Directors are not subject to term limits.
Changes
to our Board of
Directors
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Owsley Brown II
retired from the Board effective
July 24, 2008. Mr. Brown served a remarkable
37 years on the Companys Board, including twelve
years as the Boards Chairman.
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John D. Cook
was appointed to the Board effective
September 25, 2008. Mr. Cook is a candidate for
election at the 2009 Annual Meeting of Stockholders.
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Barry D. Bramley
retired from the Board, effective
September 28, 2008, upon reaching the customary retirement
age of 71. Mr. Bramley served on the Companys Board
for twelve years.
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Matthew R. Simmons
retired from the Board effective
January 22, 2009. Mr. Simmons served on the
Companys Board for seven years.
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Donald G. Calder
is scheduled to retire from the Board of
Directors at the upcoming Annual Meeting, July 23, 2009,
following a one-year extension of his term past the customary
retirement age. Mr. Calder will have served on our Board
for fourteen years.
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Independent Directors.
Under NYSE rules, a director
qualifies as independent if the board of directors
affirmatively determines that the director has no material
relationship with the listed company. While the focus of the
inquiry is
independence from management
, the board is
required to consider broadly all relevant facts and
circumstances in making an independence determination. Material
relationships can include commercial, industrial, banking,
consulting, legal, accounting, charitable and familial
relationships. Our Board recognizes the value of having
independent directors on the Board and has determined that five
of our eleven director nominees have no material relationship
with the Company and are therefore independent under NYSE
standards. These are Directors Patrick Bousquet-Chavanne, John
D. Cook, Richard P. Mayer, William E. Mitchell and William M.
Street.
In making its determination of independence with regard to
Mr. Street, the Board considered Mr. Streets
prior employment with the Company and his substantial
Class A stock holdings. The Board believes that these
relationships do not interfere with Mr. Streets
ability to exercise independent judgment in the performance of
his duties as director. The Board determined that Donald G.
Calder, who currently serves as a director but is retiring at
the expiration of his term at the upcoming Annual Meeting, is
independent under NYSE standards. With respect to our three
former Board members who served during fiscal 2009
Owsley Brown II, Barry D. Bramley, and Matthew R.
Simmons Mr. Bramley and Mr. Simmons were
independent under NYSE standards.
The Board determined that Geo. Garvin Brown IV, Paul C. Varga,
and James S. Welch, Jr. are not independent because they
are members of Company management. The Board determined that
Dace Brown Stubbs is not independent because she has an
immediate family member who is employed by
6
the Company. The Board elected not to make a determination with
respect to the independence of Martin S. Brown, Jr., and
Sandra A. Frazier.
Brown Family Directors.
The Company believes that it
is beneficial for Brown family members to be actively engaged in
the oversight of the Company, including by serving on the Board
of Directors. Through participation on the Board, the Brown
familys long-term perspective is brought to bear, in some
measure, upon each and every Board consideration. Brown family
directors serve as an effective intermediary between the Board
and the controlling family stockholder group. Board service also
provides the family with an active means by which to watch over
their collective investment. Current Brown family member
directors are: Geo. Garvin Brown IV, Martin S. Brown, Jr.,
Sandra A. Frazier, and Dace Brown Stubbs.
Management Directors.
The Company also believes that
it is essential, from a corporate governance standpoint, that
Company management be represented on the Board of Directors.
Current Board members who are also members of Company management
are: Geo. Garvin Brown IV, Paul C. Varga, and James S.
Welch, Jr.
Board Meetings.
The Board held six meetings during
fiscal 2009, all of which were regular meetings. Absent an
appropriate reason, attendance is expected for the full meeting
by all directors at the Companys Annual Meeting of
Stockholders, at all Board meetings, and at all meetings of each
committee of which a director is a member. Each of our director
nominees attended at least 83% of the meetings of the Board and
Board committees on which they served during fiscal 2009. Twelve
of the thirteen directors then serving were present at the 2008
Annual Meeting of Stockholders.
Executive Sessions.
NYSE rules require
non-management directors to meet at regularly scheduled
executive sessions without management present. Our
non-management directors held two such meetings in fiscal 2009.
Richard P. Mayer, Chair of the Corporate Governance and
Nominating Committee, served as the presiding director for these
meetings. NYSE rules also require companies whose group of
non-management directors includes directors who are not
independent under NYSE listing standards to hold an
executive session of just the independent directors at least
once per year. Our independent directors held two such meetings
in fiscal 2009. Mr. Mayer was the presiding director for
those meetings as well.
Board Committees.
Our Board has the following four
standing committees: Audit Committee, Compensation Committee,
Corporate Governance and Nominating Committee, and Executive
Committee. Each Board committee operates pursuant to a written
charter. Copies of the charters are posted on our website in the
Corporate Governance area of the Investor
Relations section
(
www.brown-forman.com/company/governance
), and are
available in print at no charge by writing to our Secretary,
Matthew E. Hamel, 850 Dixie Highway, Louisville, Kentucky 40210,
or
e-mailing
him at Secretary@b-f.com. Each Board committee conducts an
annual self-evaluation (except the Executive Committee, which is
evaluated by the full Board periodically) and has the power to
hire independent advisors, as it deems necessary or appropriate.
The following chart sets forth our current Board committee
membership.
7
Board
Committee Membership
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Corporate
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Governance &
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Name of Director
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Audit
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Compensation
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Nominating
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Executive
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Patrick Bousquet-Chavanne
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X
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X
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Geo. Garvin Brown IV
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X
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X
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Donald G. Calder
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Chair
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X
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John D. Cook
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X
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X
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Richard P. Mayer
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Chair
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Chair
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William E. Mitchell
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X
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William M. Street
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Vice Chair *
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Paul C. Varga
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X
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James S. Welch, Jr.
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X
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*
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Audit Committee Financial Expert
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Audit Committee.
The Audit Committee assists the
Board in fulfilling its oversight responsibilities with respect
to the integrity of the Companys financial statements, the
Companys compliance with legal and regulatory
requirements, the independent auditors qualifications,
independence, and performance, and the performance of the
Companys internal audit function. The committees
responsibilities include, among other things, the preparation of
the Audit Committee Report that appears in this Proxy Statement
on page 20.
Donald G. Calder, John D. Cook, William E. Mitchell and William
M. Street serve on the Audit Committee of our Board of
Directors. Mr. Calder serves as Chair, and Mr. Street
serves as Vice Chair. The Board has appointed Mr. Street to
serve as Chair of the Audit Committee, effective upon
Mr. Calders retirement on July 23, 2009. Barry
D. Bramley served on the committee during fiscal 2009 until his
retirement on September 28, 2008. Mr. Cook joined the
committee effective September 25, 2008. The Audit Committee
held three regular meetings and six telephonic
certification-related meetings during fiscal 2009.
In addition to the NYSE requirement that each audit committee
member satisfy the NYSE director independence standards, audit
committee members must comply with the independence standards
mandated by Section 301 of the Sarbanes-Oxley Act and set
forth in
Rule 10A-3
of the Securities Exchange Act of 1934, as amended. Each member
of our Audit Committee satisfies these standards. The Board has
determined that each member of our Audit Committee is
financially literate within the meaning of the NYSE
rules. Mr. Bramley served as the designated audit
committee financial expert during fiscal 2009, until his
retirement on September 28, 2008. Mr. Street has
served as the audit committee financial expert since
Mr. Bramleys retirement.
Compensation Committee.
The Compensation Committee
assists the Board in fulfilling the Boards duties relating
to the compensation of our directors, officers and employees.
The committees responsibilities include, among other
things, determining the compensation of the CEO; reviewing and
approving the compensation of the Presiding Chairman of the
Board; approving incentive compensation plan design and changes
thereto for the CEO and other senior executive officers;
participating in the preparation of the Compensation Discussion
and Analysis that appears in this Proxy Statement on
page 24; preparing the Compensation Committee Report that
appears in this Proxy Statement on page 34; and leading the
evaluation of the performance of the CEO and Presiding Chairman
of the Board. The committee has engaged Frederic W.
Cook & Co. as its independent compensation consultant
for assistance with these responsibilities. The committee is
composed of three directors, each of whom qualifies as an
independent director under NYSE listing standards, a
non-employee director under SEC rules, and an
outside director under regulations adopted pursuant
to Section 162 of the Internal Revenue Code.
8
Richard P. Mayer (Chair), Patrick Bousquet-Chavanne and John D.
Cook serve on the Compensation Committee. Matthew R. Simmons
served on the committee during fiscal 2009 until his retirement
on January 22, 2009. John D. Cook joined the committee
effective January 22, 2009. The committee held four regular
meetings and three special meetings during fiscal 2009.
Corporate Governance and Nominating Committee.
The
Corporate Governance and Nominating Committees primary
responsibilities are: to assist the Board in identifying,
recruiting and recommending to stockholders appropriate
candidates to serve as directors; to review periodically the
Companys corporate governance principles in light of new
developments in corporate governance law and best practices,
taking into account the Companys controlled-company status
under the NYSE rules; to coordinate and oversee CEO succession
planning on behalf of the Board; and to assist the Board with
its annual self-evaluation. The Corporate Governance and
Nominating Committee held six regular meetings during fiscal
2009.
Richard P. Mayer (Chair), Patrick Bousquet-Chavanne, Geo. Garvin
Brown IV, and Donald G. Calder serve on the Corporate Governance
and Nominating Committee. Barry D. Bramley served on the
committee during fiscal 2009 until his retirement on
September 28, 2008. Mr. Bousquet-Chavanne joined the
committee effective September 25, 2008. All of the
Corporate Governance and Nominating Committee members are
independent under NYSE listing standards, except Geo. Garvin
Brown IV. To exclude Brown family members from participation on
this committee would lead to the incongruous result of a
controlling family being precluded from participating in the
forum that identifies directors, independent and otherwise, who
oversee the management of the Company.
The Corporate Governance and Nominating Committee may from time
to time engage independent search firms to assist in identifying
potential Board candidates. In evaluating candidates for Board
membership, the Corporate Governance and Nominating Committee
seeks directors who will represent the best long-term interests
of all stockholders. As articulated in our Corporate Governance
Guidelines, the Boards view is that all Brown-Forman
directors should possess the highest personal and professional
ethics, integrity, and values. The Board also believes that it
is highly desirable for the directors to possess the following
qualities: good judgment, candor, independence, civility,
business courage, experience with businesses and other
organizations of comparable character and of comparable or
larger size, and a lack of possible conflicts of interest.
The Board realizes the critical and unique contribution made by
each group of directors the independent directors,
the Brown family members, and the management
representatives and strives to find the ideal
balance among them so that the Board can function in the most
efficient and effective manner on behalf of all stockholders.
The Board has not adopted a formal policy regarding
stockholder-nominated director candidates because the committee
believes that the processes used to date have been appropriate
and effective for identifying and selecting Board members.
Executive Committee.
The Executive Committee may
exercise all of the powers of the Board of Directors on such
matters as are delegated to it by the Board, as well as during
intervals between meetings of the Board of Directors. Geo.
Garvin Brown IV, Paul C. Varga and James S. Welch, Jr.,
serve as members of the Executive Committee. The Executive
Committee met twice during fiscal 2009.
Corporate Governance Guidelines.
The Board has
adopted Corporate Governance Guidelines that provide a framework
for the conduct of the Boards business and guide the Board
in the exercise of its duties. These guidelines set forth Board
responsibilities, director qualification standards, Board
meeting and attendance requirements, committee composition
requirements, primary committee responsibilities, policies
related to director compensation, management succession,
director access to management and independent advisors, and an
annual self-evaluation requirement for the Board, among other
things. The Board amended the Corporate Governance Guidelines in
May 2009 to include or update policies addressing stock
ownership requirements for directors, change in a
directors principal occupation, and director service on
other public boards, among others. In
9
addition, the amendment modified slightly the Companys
mandatory retirement policy for directors. A brief description
of these provisions is set forth below:
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Stock Ownership.
In order to better align the
economic interests of our directors and stockholders, each
director is expected to own an amount of Brown-Forman stock to
be determined periodically by the Corporate Governance and
Nominating Committee.
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Director Tenure.
No director may stand for
re-election to the Board after he or she has reached the age of
71, unless requested to do so by special vote of the Board. This
change enables an orderly transition of directors at the Annual
Meeting, rather than at various times throughout the year.
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Change in Director Occupation.
If a directors
principal occupation or business association changes
substantially during his or her tenure as a director, that
director must tender his or her resignation for consideration by
the Corporate Governance and Nominating Committee. The Corporate
Governance and Nominating Committee will recommend for Board
approval what action, if any, should be taken with respect to
the resignation.
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Director Service on Other Public Boards.
To ensure
that a director has sufficient time to devote to his or her
service on the Companys Board, it is expected that any
director who serves full-time as an officer or employee of the
Company or any other business entity should not serve on more
than two boards of public companies in addition to the
Companys Board (this includes the board of any public
company at which the director may be employed), and other
directors should not serve on more than three boards of public
companies in addition to the Companys Board.
|
The Corporate Governance Guidelines are published on our website
in the Corporate Governance area of the
Investor Relations section
(
www.brown-forman.com/company/governance
). You may
request a print copy at no charge by writing to our Secretary,
Matthew E. Hamel, 850 Dixie Highway, Louisville, Kentucky 40210,
or
e-mailing
him at Secretary@b-f.com.
Communication with our Board.
Brown-Forman
stockholders and other interested parties may communicate with
Brown-Formans directors, including the non-management
directors or the independent directors as a group, by sending
written communications to our Secretary, Matthew E. Hamel, at
850 Dixie Highway, Louisville, Kentucky 40210, or by
e-mail
at
Secretary@b-f.com. Written communications received at that
address will be provided to the individual director or group of
directors to whom they are addressed, and copies of such
communications will be provided to all other directors.
Company
Management.
Brown-Forman has long believed that good corporate governance
is essential to maintaining our integrity in the marketplace. We
continually evaluate our corporate governance practices in the
context of our controlled company status to address the changing
regulatory environment and adopt what we believe are best
practices for Brown-Forman.
Code of Conduct and Compliance Guidelines.
The
Company has adopted the Brown-Forman Code of Conduct and
Compliance Guidelines (the Code of Conduct), which
set forth standards of ethical behavior applicable to all
Company employees and directors. The Code of Conduct contains a
Code of Ethics for Senior Financial Officers, which details the
Companys expectation that all financial, accounting,
reporting, and auditing activities of the Company be conducted
in strict compliance with all applicable rules and regulations,
and in accordance with the highest ethical standards. The Code
of Conduct, including the Code of Ethics for Senior Financial
Officers, can be found on our website in the Corporate
Governance area of the Investor Relations
section (
www.brown-forman.com/company/governance
). You
may request a print copy at no charge by
10
writing to our Secretary, Matthew E. Hamel, 850 Dixie Highway,
Louisville, Kentucky 40210, or
e-mailing
him at Secretary@b-f.com.
Disclosure Controls Committee.
The Company has a
Disclosure Controls Committee composed of members of senior
management. The committee has established controls and
procedures designed to ensure that information that may be
required to be disclosed publicly is gathered and communicated
to management and, if required, reported in a timely and
accurate manner. The committee is also responsible for
developing and implementing procedures to assist the Company in
complying with Regulation FD (Fair Disclosure). The
committee has implemented a financial review process that
enables our CEO and Chief Financial Officer (CFO) to
certify our quarterly and annual financial reports with
confidence.
Separate Chairman of the Board and Chief Executive Officer
Roles.
There are two separate and distinct management
positions at Brown-Forman with the word Chairman in
the title. Geo. Garvin Brown IV serves as our Presiding
Chairman of the Board; and Paul C. Varga serves as Chief
Executive Officer and Chairman of the Company. As Presiding
Chairman of the Board, Mr. Browns responsibilities
include chairing meetings of the Board, encouraging the
Boards role in strategic planning, leading the
Boards operations and administration, and planning Board
meeting agendas. As Chief Executive Officer and Chairman of the
Company, Mr. Varga is the Companys highest ranking
executive, and has ultimate responsibility for the
Companys performance, leadership of senior management, and
all aspects of Company operations.
Our
Controlling Family Stockholders.
Unlike most public companies, Brown-Forman has an engaged
family stockholder base with a long-term ownership perspective.
We view our status as a publicly traded, family-controlled
company as a distinct source of competitive advantage, and we
believe that a strong relationship with the Brown family is
essential to our growth, independence, and long-term value
creation for all stockholders. We therefore actively cultivate
our relationship with the Brown family.
Brown-Forman/ Brown Family Shareholders
Committee.
The Brown-Forman/ Brown Family Shareholders
Committee encourages and provides a forum for open, constructive
and frequent dialogue between the Company and its controlling
family stockholders. Designed for broad family participation,
and including several non-family Company executives, the
committee has proposed policies and formed working groups to
study areas of particular interest to the Brown family, such as
family governance, philanthropy, and family members
education and employment at the Company. The committee conducts
its interactions with the Company in a manner consistent with
all applicable securities and disclosure rules and regulations.
Director of Family Shareholder Relations.
In 2009,
the Company created the position of Director of Family
Shareholder Relations. The Director of Family Shareholder
Relations will work with Company employees and Brown family
members to develop and implement policies and practices designed
to further strengthen the relationship between the Company and
the Brown family.
Family Members Appointed to Key Management
Committees.
Brown family employees participate on key
Company management committees that oversee and advise on
internal and external operational matters. Participation on
these committees enables our Brown family employees to
contribute their long-term shareholder perspective on key
matters and provides a valuable developmental opportunity.
11
ELECTION
OF DIRECTORS
This section provides
biographical information about our Director nominees.
Proposal 1:
Election of Directors
Election of Directors at the Annual Meeting.
Members
of Brown-Formans Board of Directors are elected each year
at the Annual Meeting of Stockholders. Once elected, a director
holds office until the next Annual Meeting, or until his or her
successor is elected and qualified, unless he or she first
resigns, retires, or is removed. No director may stand for
re-election to the Board after he or she has reached the age of
71, except upon special vote by the Board. The Board of
Directors is authorized to fix the number of directors to serve
on the Board from time to time, within a range of three to
seventeen members. There are eleven nominees on this years
slate of directors.
The proxy holders will vote all shares for which they receive a
proxy
FOR
the election of all director
nominees below, unless you direct them on the proxy card to vote
against, or abstain from voting for, certain or all of the
nominees. If any nominee becomes unable to serve before the
meeting, the persons named as proxy holders may vote your shares
for a substitute nominee. As of the date of this Proxy
Statement, the Board is not aware of any nominee who is
unwilling or unable to serve as director.
Nominees.
Each of our director nominees currently
serves as a director of Brown-Forman and is standing for
re-election. Set forth below is certain information about our
director nominees.
The Board of Directors unanimously recommends a vote
FOR
the election of each of the director
nominees.
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Name, Age as of the July 23, 2009 Annual Meeting, Term
as Director,
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Current Position, Business
Experience, Other Directorships
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Patrick Bousquet-Chavanne,
51, director since 2005. President and Chief Executive Officer of T-Ink Technologies, Inc., a company specializing in advanced conductive technology; President and Chief Executive Officer of Yoostar Entertainment Group, a developer of interactive and immersive entertainment systems; Group President of The Estée Lauder Companies Inc. from 2001 through June 2008; President of Estée Lauder International, Inc., from 1998 to 2001. Other directorships: HSN, Inc.
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Geo. Garvin Brown IV,
40, director since 2006, a thirteen-year employee of Brown-Forman. Our Presiding Chairman of the Board since 2007; Senior Vice President and Managing Director of Western Europe and Africa since 2009; Vice President and Jack Daniels Brand Director in Europe and Africa from 2004 to 2008; Vice President of Brown-Forman Beverages, Europe, Ltd., from 2004 to 2007; Director of the Office of the Chairman and Chief Executive Officer from 2002 to 2004.
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12
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Name, Age as of the July 23, 2009 Annual Meeting, Term
as Director,
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Current Position, Business
Experience, Other Directorships
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Martin S. Brown, Jr.,
45, director since 2006. Partner, Adams and Reese LLP, a law firm, since 2005; Partner, Stokes & Bartholomew, P.A. (a predecessor firm to Adams and Reese LLP) since 1999.
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John D. Cook,
56, director since 2008. Director Emeritus of McKinsey & Company; Director, McKinsey & Company from 2003 to 2008.
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Sandra A. Frazier,
37, director since 2006. Founder and Member, Tandem Public Relations, LLC, since 2005; Public Relations Account Manager at Doe Anderson, Inc., from 2002 to 2005; Project Assistant at Schneider and Associates Public Relations from 2000 to 2001. Other directorships: Commonwealth Bank and Trust Company.
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Richard P. Mayer,
69, director since 1994. Chairman and Chief Executive Officer of Kraft General Foods North America (now Kraft Foods Inc.) from 1989 to 1996.
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William E. Mitchell,
65, director since 2007. Chairman of the Board of Arrow Electronics, Inc., since 2006, and President and Chief Executive Officer of Arrow Electronics, Inc. from 2003 to May 2009. Executive Vice President of Solectron Corporation and President of Solectron Global Services, Inc., from 1999 to 2003. Other directorships: Arrow Electronics, Inc., Rogers Corporation, Humana Inc.
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William M. Street,
70, director since 1971. Our President from 2000 to 2003; our Vice Chairman from 1987 to 2000; President and Chief Executive Officer of Brown-Forman Beverages Worldwide (a division of Brown-Forman) from 1994 to 2003. Other directorships: Papa Johns International, Inc.
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13
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Name, Age as of the July 23, 2009 Annual Meeting, Term
as Director,
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Current Position, Business
Experience, Other Directorships
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Dace Brown
Stubbs,
62, director since 1999. Private investor.
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Paul C. Varga,
45, director since 2003, a twenty-two-year employee of Brown-Forman. Our Company Chairman since August 2007; our Chief Executive Officer since 2005; President and Chief Executive Officer of Brown-Forman Beverages (a division of Brown-Forman) from 2003 to 2005; Global Chief Marketing Officer for Brown-Forman Spirits from 2000 to 2003.
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James S. Welch, Jr.,
50, director since 2007, a twenty-year employee of Brown-Forman. Vice Chairman, Executive Director of Corporate Affairs, Strategy, Diversity, and Human Resources since 2007; Vice Chairman, Executive Director of Corporate Strategy and Human Resources from 2003 to 2007; Senior Vice President and Executive Director of Human Resources from 1999 to 2003.
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Family Relationships.
No family relationship - first
cousin or closer - exists between any two directors, executive
officers, or persons nominated or chosen by the Company to
become a director or executive officer, except Director Geo.
Garvin Brown IV is the nephew of Director Dace Brown Stubbs.
14
STOCK
OWNERSHIP
This
section identifies the beneficial owners of 5% or more of our
voting stock and the ownership amounts of our directors and
executive officers.
Voting
Stock Owned by 5% Beneficial Owners.
The table below identifies each beneficial owner of 5% or more
of our Class A common stock, our only class of voting
stock, as of April 30, 2009. The SEC defines
beneficial ownership to include shares over which a
person has sole or shared voting or investment power. Each of
the beneficial owners listed in the table below is either a
Brown family member, an entity or trust controlled by Brown
family members, or an individual serving as an advisor to a
Brown family trust at the request of a Brown family member.
The Brown family holds Class A shares in a variety of
family trusts and entities, with multiple family members often
sharing voting control and investment power as members of
advisory committees to the trusts or as owners or officers of
the entities. As a result, many of the shares shown in the table
below are counted more than once, as they are deemed to be
beneficially owned by more than one of the persons identified in
the table. Counting each share only once, the aggregate number
of shares of Class A common stock beneficially owned by the
persons in this table is 38,066,401 shares, or 67.3% of the
56,596,065 Class A shares outstanding as of the close of
business on April 30, 2009.
The table confirms that the Brown family continues its
longstanding voting control of Brown-Forman Corporation.
Beneficial
Ownership of Class A Common Stock as of April 30,
2009
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Amount and Nature of Beneficial
Ownership
(1)
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Voting and Investment Power
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Percent of
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Name and Address
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Sole
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Shared
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Total
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Class
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Owsley Brown II
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817,434
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8,882,811
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9,700,245
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17.1
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%
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Preston Pointe Building
333 East Main Street, Suite 400
Louisville, Kentucky 40210
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J. McCauley Brown
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2,058,968
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(2)
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5,553,921
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(2)
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7,612,889
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(2)
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13.5
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%
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850 Dixie Highway
Louisville, Kentucky 40210
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Ina Brown Bond
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1,866,749
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5,299,537
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7,166,286
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12.7
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%
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River Bend Farm
PO Box 284
Goshen, Kentucky 40026
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Owsley Brown
Frazier
(3)
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515,514
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5,553,921
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6,069,435
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10.7
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%
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829 West Main Street
Louisville, Kentucky 40202
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Catherine Frazier
Joy
(3)
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164,440
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5,605,995
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5,770,435
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10.2
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%
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PO Box 640
Goshen, Kentucky 40026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laura
Frazier
(3)
|
|
|
147,049
|
|
|
|
5,553,921
|
|
|
|
5,700,970
|
|
|
|
10.1
|
%
|
829 West Main Street
Louisville, Kentucky 40202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of Beneficial
Ownership
(1)
|
|
|
|
|
|
|
Voting and Investment Power
|
|
|
Percent of
|
|
Name and Address
|
|
Sole
|
|
|
Shared
|
|
|
Total
|
|
|
Class
|
|
OB Tr U/W fbo OB
Frazier
(3)
|
|
|
0
|
|
|
|
5,553,921
|
|
|
|
5,553,921
|
|
|
|
9.8
|
%
|
829 West Main Street
Louisville, Kentucky 40202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABF Tr U/A fbo OB
Frazier
(3)
|
|
|
0
|
|
|
|
5,553,921
|
|
|
|
5,553,921
|
|
|
|
9.8
|
%
|
829 West Main Street
Louisville, Kentucky 40202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avish Agincourt, LLC
|
|
|
0
|
|
|
|
5,553,921
|
|
|
|
5,553,921
|
|
|
|
9.8
|
%
|
829 West Main Street
Louisville, Kentucky 40202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geo. Garvin Brown
III
(4)
|
|
|
95,014
|
|
|
|
5,448,290
|
(5)
|
|
|
5,543,304
|
|
|
|
9.8
|
%
|
6009 Brownsboro Park Blvd., Suite B
Louisville, Kentucky 40207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laura Lee Brown
|
|
|
32,427
|
|
|
|
5,163,486
|
|
|
|
5,195,913
|
|
|
|
9.2
|
%
|
710 West Main Street, Suite 201
Louisville, Kentucky 40202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jean W. Frazier
|
|
|
276,110
|
|
|
|
4,888,985
|
|
|
|
5,165,095
|
|
|
|
9.1
|
%
|
4810 Cherry Valley Road
Prospect, Kentucky 40059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sandra A. Frazier
|
|
|
13,456
|
|
|
|
4,888,985
|
|
|
|
4,902,441
|
|
|
|
8.7
|
%
|
304 West Liberty Street, Suite 200
Louisville, Kentucky 40202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brooke A. Morrow
|
|
|
0
|
|
|
|
4,888,985
|
|
|
|
4,888,985
|
|
|
|
8.6
|
%
|
1100 Ridgeway Loop Road, Suite 444
Memphis, Tennessee 38120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W. L. Lyons Brown, Jr.
|
|
|
611,755
|
|
|
|
4,275,027
|
|
|
|
4,886,782
|
|
|
|
8.6
|
%
|
320 Whittington Parkway, Suite 206
Louisville, Kentucky 40222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin S. Brown, Sr.
|
|
|
0
|
|
|
|
4,256,776
|
|
|
|
4,256,776
|
|
|
|
7.5
|
%
|
5214 Maryland Way, Suite 405
Brentwood, Tennessee 37027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Campbell P.
Brown
(4)
|
|
|
0
|
|
|
|
3,083,686
|
|
|
|
3,083,686
|
|
|
|
5.5
|
%
|
850 Dixie Highway
Louisville, Kentucky 40210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geo. Garvin Brown
IV
(4)
|
|
|
0
|
|
|
|
3,024,168
|
|
|
|
3,024,168
|
|
|
|
5.3
|
%
|
850 Dixie Highway
Louisville, Kentucky 40210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dace Brown Stubbs
|
|
|
2,000
|
|
|
|
2,885,323
|
|
|
|
2,887,323
|
|
|
|
5.1
|
%
|
135 Sago Palm Road
Vero Beach, Florida 32963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marshall B. Farrer
|
|
|
210
|
|
|
|
2,885,323
|
|
|
|
2,885,533
|
|
|
|
5.1
|
%
|
850 Dixie Highway
Louisville, Kentucky 40210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of Beneficial
Ownership
(1)
|
|
|
|
|
|
|
Voting and Investment Power
|
|
|
Percent of
|
|
Name and Address
|
|
Sole
|
|
|
Shared
|
|
|
Total
|
|
|
Class
|
|
Dace Polk Maki
|
|
|
0
|
|
|
|
2,885,323
|
|
|
|
2,885,323
|
|
|
|
5.1
|
%
|
PO Box 91206
Louisville, Kentucky 40291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Log House Partners Ltd.
|
|
|
0
|
|
|
|
2,885,323
|
|
|
|
2,885,323
|
|
|
|
5.1
|
%
|
4708 Old Brownsboro Court
Louisville, Kentucky 40207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garvin Brown Deters
|
|
|
101,459
|
|
|
|
2,737,401
|
|
|
|
2,838,860
|
|
|
|
5.0
|
%
|
710 West Main Street, Suite 201
Louisville, Kentucky 40202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Based upon information furnished to
the Company by the named persons and information contained in
filings with the SEC.
|
|
(2)
|
|
Amounts listed reflect voting
power. J. McCauley Brown holds sole investment power over
283,618 shares of Class A common stock and shared
investment power over 6,163,098 shares of Class A
common stock.
|
|
(3)
|
|
Owsley Brown Frazier, Catherine
Frazier Joy, Laura Frazier, the OB Tr U/W fbo OB Frazier, and
the
ABF Tr U/A fbo
OB Frazier have agreed in principle to act together for the
purpose of holding and voting certain shares of Class A
common stock, and beneficially own an aggregate of
6,432,998 shares, or 11.4%, of the outstanding shares of
Class A common stock.
|
|
(4)
|
|
Geo. Garvin Brown III, Campbell P.
Brown and Geo. Garvin Brown IV have agreed in principle to
act together for the purpose of holding and voting certain
shares of Class A common stock, and beneficially own an
aggregate of 4,547,272 shares of Class A common stock,
representing 8.0% of the outstanding shares of Class A
common stock.
|
|
(5)
|
|
Includes shares over which Geo.
Garvin Brown III shares voting and dispositional control
but in which he has no pecuniary interest, which shares have not
been attributed to the holdings of the other persons referenced
in footnote 4.
|
17
Stock
Owned by Directors and Executive Officers.
The following table sets forth as of April 30, 2009, the
beneficial ownership of our Class A and Class B common
stock of each current director, each director nominee, each
executive officer named in the Summary Compensation Table for
Fiscal 2009 found on page 35, and of all directors and
executive officers as a group.
Some shares shown below are
beneficially owned by more than one person.
As of the close
of business on April 30, 2009, there were
56,596,065 shares of Class A common stock and
93,545,762 shares of Class B common stock outstanding.
In calculating the aggregate number of shares and percentages
owned by all directors and executive officers as a group, which
includes shares owned by persons not named in this table, we
counted each share only once.
Stock
Beneficially Owned by Directors and Executive Officers as of
April 30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common
Stock
(2)
|
|
|
|
|
|
Class B Common
Stock
(2)
|
|
|
|
|
|
|
Voting or Investment Power
|
|
|
|
|
|
Investment Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
|
|
|
|
|
% of
|
|
Name
(1)
|
|
Sole
|
|
|
Shared
|
|
|
Total
|
|
|
Class
|
|
|
Sole
|
|
|
Shared
|
|
|
Total
|
|
|
Class
|
|
James L. Bareuther
|
|
|
20,217
|
(3
|
)
|
|
|
0
|
|
|
|
20,217
|
|
|
|
*
|
|
|
|
141,768
|
(3
|
)
|
|
|
0
|
|
|
|
141,768
|
|
|
|
*
|
|
Donald C. Berg
|
|
|
11,518
|
(3
|
)
|
|
|
0
|
|
|
|
11,518
|
|
|
|
*
|
|
|
|
108,495
|
(3
|
),(5)
|
|
|
0
|
|
|
|
108,495
|
|
|
|
*
|
|
Patrick Bousquet-Chavanne
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
*
|
|
|
|
25,497
|
(3
|
)
|
|
|
0
|
|
|
|
25,497
|
|
|
|
*
|
|
Geo. Garvin Brown IV
|
|
|
0
|
|
|
|
|
3,024,168
|
|
|
|
3,024,168
|
|
|
|
5.3%
|
|
|
|
11,540
|
(3
|
),(5)
|
|
|
756,041
|
|
|
|
767,581
|
|
|
|
*
|
|
Martin S. Brown, Jr.
|
|
|
75,618
|
|
|
|
|
105,434
|
|
|
|
181,052
|
|
|
|
*
|
|
|
|
31,346
|
(3
|
)
|
|
|
27,857
|
|
|
|
59,203
|
|
|
|
*
|
|
Donald G. Calder
|
|
|
12,000
|
|
|
|
|
12,000
|
|
|
|
24,000
|
|
|
|
*
|
|
|
|
35,304
|
(3
|
)
|
|
|
3,000
|
|
|
|
38,304
|
|
|
|
*
|
|
John D. Cook
|
|
|
0
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
*
|
|
|
|
2,793
|
(3
|
)
|
|
|
0
|
|
|
|
2,793
|
|
|
|
*
|
|
Sandra A. Frazier
|
|
|
13,456
|
|
|
|
|
4,888,985
|
|
|
|
4,902,441
|
|
|
|
8.7%
|
|
|
|
15,961
|
(3
|
)
|
|
|
1,222,245
|
|
|
|
1,238,206
|
|
|
|
1.3%
|
|
Richard P. Mayer
|
|
|
6,000
|
|
|
|
|
0
|
|
|
|
6,000
|
|
|
|
*
|
|
|
|
36,794
|
(3
|
)
|
|
|
0
|
|
|
|
36,794
|
|
|
|
*
|
|
Mark I. McCallum
|
|
|
6,475
|
(3
|
)
|
|
|
0
|
|
|
|
6,475
|
|
|
|
*
|
|
|
|
31,581
|
(3
|
)
|
|
|
18
|
|
|
|
31,599
|
|
|
|
*
|
|
William E. Mitchell
|
|
|
1,000
|
|
|
|
|
0
|
|
|
|
1,000
|
|
|
|
*
|
|
|
|
13,235
|
(3
|
)
|
|
|
0
|
|
|
|
13,235
|
|
|
|
*
|
|
William M. Street
|
|
|
1,121,098
|
(4
|
)
|
|
|
552,276
|
|
|
|
1,673,374
|
|
|
|
3.0%
|
|
|
|
392,368
|
(3
|
)
|
|
|
138,069
|
|
|
|
530,437
|
|
|
|
*
|
|
Dace Brown Stubbs
|
|
|
2,000
|
|
|
|
|
2,885,323
|
|
|
|
2,887,323
|
|
|
|
5.1%
|
|
|
|
44,340
|
(3
|
)
|
|
|
721,330
|
|
|
|
765,670
|
|
|
|
*
|
|
Paul C. Varga
|
|
|
78,288
|
(3
|
)
|
|
|
0
|
|
|
|
78,288
|
|
|
|
*
|
|
|
|
50,530
|
(3
|
)
|
|
|
0
|
|
|
|
50,530
|
|
|
|
*
|
|
James S. Welch, Jr.
|
|
|
12,050
|
(3
|
)
|
|
|
0
|
|
|
|
12,050
|
|
|
|
*
|
|
|
|
68,680
|
(3
|
)
|
|
|
0
|
|
|
|
68,680
|
|
|
|
*
|
|
All Directors and Executive Officers as a Group
(17 persons, including those named
above)
(6)
|
|
|
1,359,862
|
(7
|
)
|
|
|
11,468,186
|
|
|
|
12,828,048
|
|
|
|
22.7%
|
|
|
|
1,034,557
|
(7
|
),(8)
|
|
|
2,868,560
|
|
|
|
3,903,117
|
|
|
|
4.2%
|
|
|
|
|
*
|
|
Represents less than 1% of the
class.
|
|
(1)
|
|
The address for each of the persons
named in the table is 850 Dixie Highway, Louisville, Kentucky
40210.
|
|
(2)
|
|
Based upon Company information,
information furnished to the Company by the named persons, and
information contained in filings with the SEC. Under SEC rules,
a person is deemed to beneficially own shares over which the
person has or shares voting or investment power or of which the
person has the right to acquire beneficial ownership within
60 days (including shares underlying options or stock
appreciation rights that are exercisable within 60 days).
|
|
(3)
|
|
Includes the following shares
subject to Class B common stock options or stock-settled
stock appreciation rights (SSARs) exercisable on or before
June 29, 2009 (60 days after April 30, 2009), and
performance-based Class A Common and Class B Common
restricted stock over which the named persons have sole voting
power:
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
Class B
|
|
|
|
Restricted
|
|
|
Stock
|
|
|
|
|
|
Restricted
|
|
Name
|
|
Stock
|
|
|
Options
|
|
|
SSARs
|
|
|
Stock
|
|
James L. Bareuther
|
|
|
20,217
|
|
|
|
79,116
|
|
|
|
25,893
|
|
|
|
11,573
|
|
Donald C. Berg
|
|
|
10,489
|
|
|
|
76,485
|
|
|
|
23,166
|
|
|
|
5,861
|
|
Patrick Bousquet-Chavanne
|
|
|
0
|
|
|
|
564
|
|
|
|
24,933
|
|
|
|
0
|
|
Geo. Garvin Brown IV
|
|
|
0
|
|
|
|
3,880
|
|
|
|
1,567
|
|
|
|
0
|
|
Martin S. Brown, Jr.
|
|
|
0
|
|
|
|
0
|
|
|
|
10,550
|
|
|
|
0
|
|
Donald G. Calder
|
|
|
0
|
|
|
|
18,725
|
|
|
|
13,579
|
|
|
|
0
|
|
John D. Cook
|
|
|
0
|
|
|
|
0
|
|
|
|
2,793
|
|
|
|
0
|
|
Sandra A. Frazier
|
|
|
0
|
|
|
|
0
|
|
|
|
10,550
|
|
|
|
0
|
|
Richard P. Mayer
|
|
|
0
|
|
|
|
14,215
|
|
|
|
13,579
|
|
|
|
0
|
|
Mark I. McCallum
|
|
|
6,475
|
|
|
|
16,691
|
|
|
|
13,272
|
|
|
|
1,618
|
|
William E. Mitchell
|
|
|
0
|
|
|
|
0
|
|
|
|
12,985
|
|
|
|
0
|
|
William M. Street
|
|
|
0
|
|
|
|
88,873
|
|
|
|
13,579
|
|
|
|
0
|
|
Dace Brown Stubbs
|
|
|
0
|
|
|
|
26,540
|
|
|
|
13,579
|
|
|
|
0
|
|
Paul C. Varga
|
|
|
78,140
|
|
|
|
0
|
|
|
|
0
|
|
|
|
29,017
|
|
James S. Welch, Jr.
|
|
|
12,050
|
|
|
|
34,880
|
|
|
|
22,887
|
|
|
|
10,913
|
|
|
|
|
(4)
|
|
Includes 29,000 shares of
Class A common stock pledged as security.
|
|
(5)
|
|
Includes Class B common stock
held in the Companys 401(k) plan as of the close of
business April 30, 2009, as follows: for Donald C. Berg,
2,453 shares; for Geo. Garvin Brown IV, 5,040 shares.
|
|
(6)
|
|
All directors and executive
officers as a group includes 17 persons, including
those directors and officers named in the table. In calculating
the aggregate number of shares and percentages owned by all
directors and executive officers as a group, each share is
counted only once.
|
|
(7)
|
|
Includes 127,371 shares of
Class A and 58,982 shares of Class B restricted
stock held by all directors and executive officers as a group.
|
|
(8)
|
|
Includes 375,200 Class B
common stock options and 210,925 Class B common stock SSARs
held by all directors and executive officers as a group that are
exercisable on or before June 29, 2009 (60 days after
April 30, 2009).
|
Section 16(a)
Beneficial Ownership
Reporting Compliance.
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers, directors, and
beneficial owners of 10% or more of our Class A
common stock to file stock ownership reports and reports of
changes in ownership with the SEC. Based on a review of those
reports and written representations from the reporting persons,
we believe that during fiscal 2009, these persons reported all
transactions on a timely basis, except that J. McCauley Brown
filed one late Form 4 to report the purchase of 4,000
Class A shares. In addition, during fiscal 2009, Catherine
Frazier Joy corrected an omission from her Form 3 filed
June 11, 2007, of four trust accounts that each held 150
Class B shares.
19
AUDIT
COMMITTEE
This
section is a report of the Audit Committee of the Board of
Directors. It explains the role of the Audit Committee and sets
forth the fees paid to our independent registered public
accounting firm.
Audit
Committee Report.
The Audit Committees primary responsibility is the
oversight of the Companys financial reporting process on
behalf of the Board. Management is responsible for establishing
and maintaining the Companys internal controls, for
preparing the financial statements, and for the public reporting
process. The independent registered public accounting firm is
responsible for performing an audit of the Companys
financial statements in accordance with generally accepted
auditing standards and for issuing a report on its audit. The
independent registered public accounting firm also issues a
report on the effectiveness of the Companys internal
control over financial reporting. The Audit Committee reviews
the work of management and has direct responsibility for
retention of the independent registered public accounting firm
on behalf of the Board of Directors.
On behalf of the Board, the Audit Committee retained
PricewaterhouseCoopers LLP (PwC) as the independent
registered public accounting firm to audit the Companys
consolidated financial statements and the Companys
internal control over financial reporting for fiscal 2009. The
Audit Committee reviewed and discussed with management and the
independent registered public accounting firm the audited
financial statements as of and for the fiscal year ended
April 30, 2009. In addition, the Audit Committee reviewed
and discussed with management their assessment of the
effectiveness of the Companys internal control over
financial reporting and PwCs evaluation of the
Companys system of internal controls. These discussions
included meetings with the independent registered public
accounting firm without representatives of management present.
The Audit Committee discussed with the independent registered
public accounting firm matters required to be discussed by
Statement on Auditing Standards No. 61, as amended (AICPA,
Professional Standards, Vol. 1, AU section 380), as adopted
by the Public Company Accounting Oversight Board in
Rule 3200T. The independent registered public accounting
firm provided the Audit Committee with the written disclosures
and the letter required by applicable requirements of the Public
Company Accounting Oversight Board for independent auditor
communications with audit committees concerning independence,
and the committee discussed with the independent registered
public accounting firm the firms independence and ability
to conduct the audit. The Audit Committee has determined that
PwCs provision of audit and non-audit services to the
Company is compatible with maintaining auditor independence.
Based on the foregoing, the Audit Committee recommended to the
Board of Directors that the Companys audited financial
statements be included in the Companys Annual Report on
Form 10-K
for the fiscal year ending April 30, 2009.
Audit
Committee
Donald G. Calder, Chair
William M. Street, Vice Chair
John D. Cook
William E. Mitchell
20
Fees
Paid to Independent Registered Public Accounting Firm.
The following table shows the fees that the Company paid or
accrued for the audit and non-audit services provided by
PricewaterhouseCoopers LLP during fiscal years 2008 and 2009.
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Years
|
|
|
|
2008
|
|
|
2009
|
|
|
Audit Fees
|
|
$
|
1,733,516
|
(1
|
)
|
|
$
|
1,720,711
|
|
Audit-Related Fees
|
|
|
202,361
|
|
|
|
|
187,963
|
|
Tax Fees
|
|
|
0
|
|
|
|
|
0
|
|
All Other Fees
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,935,877
|
|
|
|
$
|
1,908,674
|
|
|
|
|
(1)
|
|
Includes approximately $60,000 in
Audit Fees not reflected in the 2008 Proxy Statement.
|
Audit Fees.
This category includes the audit of the
Companys annual financial statements included in the
Companys Annual Report on
Form 10-K,
attestation services relating to the report on internal controls
in accordance with Section 404 of the Sarbanes-Oxley Act of
2002, review of financial statements included in the
Companys
Form 10-Q
quarterly reports, services normally provided in connection with
statutory and regulatory filings or engagements, and statutory
audits required by foreign jurisdictions.
Audit-Related
Fees
.
This
category consists principally of assurance and other services
related to the Companys acquisition and divestiture
activities, and audits of employee benefit plans. All of such
fees were pre-approved by the Audit Committee in accordance with
the policy described below.
Policy
on Audit Committee Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Registered Public Accounting
Firm.
The Audit Committee approved the fiscal 2009 audit and non-audit
services provided by PricewaterhouseCoopers LLP
(PwC). The non-audit services approved by the Audit
Committee were also reviewed to ensure compatibility with
maintaining the registered public accounting firms
independence. The Audit Committee pre-approves both the type of
service to be provided by PwC and the estimated fee for the
service. The Audit Committee has delegated to its Chair
authority to pre-approve proposed audit and non-audit services
that arise between meetings, with the understanding that the
decision to approve the service will be reviewed at the next
scheduled Audit Committee meeting. During the approval process,
the Audit Committee considers the impact of the type of service
on the independence of the registered public accounting firm.
Services and fees must be deemed compatible with the maintenance
of the registered public accounting firms independence,
including compliance with SEC rules and regulations. The policy
prohibits the Audit Committee from delegating to management the
Audit Committees responsibility to pre-approve permitted
services of our independent registered public accounting firm.
Throughout the year, the Audit Committee reviews any revisions
to the estimates of audit and non-audit fees initially approved.
The Audit Committee has adopted other policies in an effort to
protect further the independence of our independent registered
public accounting firm. The Audit Committee must pre-approve
PwCs rendering of personal financial and tax advice to any
of the Companys designated executive officers. In
addition, the Audit Committee has adopted a policy that limits
the Companys ability to hire certain current and former
employees of our independent registered public accounting firm.
21
Appointment
of Independent Registered Public Accounting Firm.
The Audit Committee has appointed PricewaterhouseCoopers LLP
(PwC) to serve as the Companys independent
registered public accounting firm for the fiscal year ending
April 30, 2010. Through its predecessor Coopers &
Lybrand L.L.P., PwC has served as the Companys auditor
continuously since 1933. A PwC representative will attend the
Annual Meeting, will be given the opportunity to make a
statement should he or she so desire, and will be available to
respond to appropriate questions. We know of no direct or
material indirect financial interest that PwC has in us or any
of our subsidiaries, or of any connection with us or any of our
subsidiaries by PwC in the capacity of promoter, underwriter,
voting trustee, director, officer or employee.
22
EXECUTIVE
COMPENSATION
This
section explains our compensation philosophy and all elements of
the compensation we provide to our Named Executive
Officers.
Overview.
The following bullet points provide a brief overview of the more
detailed disclosure set forth in the Compensation
Discussion & Analysis section that begins on
page 24.
|
|
|
|
|
The objective of our executive compensation program is to
recruit, retain, and motivate a diverse team of talented
executives to produce sustainable, superior growth for our
shareholders.
|
|
|
|
We provide those executive officers whose names appear in the
Summary Compensation Table on page 35 (our Named
Executive Officers, or NEOs) with the
following types of direct compensation: salary, cash-based
short-term incentives, cash-based long-term incentives, and
equity-based long-term incentives.
|
|
|
|
For fiscal 2009, we targeted total cash compensation at the
55
th
to
65
th
percentile
of a group of diverse consumer products and manufacturing
companies.
|
|
|
|
We believe in pay for performance and link
short-term and long-term incentive compensation to the
achievement of measurable performance goals.
|
|
|
|
We use equity-based compensation as a means of aligning the
interests of our executives with those of our stockholders.
|
|
|
|
Short-term incentives support our pay-for-performance
compensation philosophy and reward annual results; long-term
incentives serve both as a retention mechanism and as a means to
focus our executives on long-range strategic goals and on
sustainable growth and performance.
|
|
|
|
We have never backdated or re-priced equity awards. We do not
time our equity award grants relative to the release of material
non-public information (or vice-versa).
|
|
|
|
We endeavor to limit the source of shares for awards made
pursuant to our incentive compensation plan to those purchased
by the Company in either open market or private transactions in
order to minimize dilution to our stockholders.
|
|
|
|
We offer our NEOs limited perquisites an annual car
allowance and reimbursement for certain financial
planning-related expenses.
|
|
|
|
Our NEOs do not have employment, severance, or
change-in-control
agreements.
|
|
|
|
Our executives participate in the same group benefit programs
available to nearly all of our salaried employees in the United
States.
|
|
|
|
We maintain both tax-qualified retirement plans and
non-qualified supplemental excess retirement plans.
|
|
|
|
Solid underlying growth and strong performance relative to our
industry competitors in fiscal 2009 resulted in short-term
compensation payouts to our NEOs at 75% of target.
|
|
|
|
Excellent performance for fiscal 2008 and fiscal 2007, together
with solid performance for fiscal 2009, resulted in long-term
incentive compensation payouts to our NEOs at 138% of target.
|
23
|
|
|
|
|
The market prices of our Class A and Class B common
stock decreased during fiscal 2009. This decrease negatively
affected the value of our executives accumulated
equity-based incentives during fiscal 2009.
|
|
|
|
We believe our executive compensation program achieves the
programs objectives in a reasonable and efficient manner.
|
|
|
|
During fiscal 2009, the Committee reviewed the Companys
short- and long-term incentive compensation program design and
approved changes to the program that will be applicable to
compensation awarded to the NEOs beginning in fiscal 2010.
|
Compensation
Discussion and Analysis.
Compensation Committee.
The Compensation Committee
(the Committee) of our Board of Directors assists
the Board in fulfilling the Boards duties relating to the
compensation of our directors, officers, and employees. The
Committee is composed of three directors, each of whom qualifies
as an independent director under NYSE listing standards, a
non-employee director under SEC rules, and an
outside director under regulations adopted pursuant
to Section 162 of the Internal Revenue Code. The Committee
has the sole authority, on behalf of the Board of Directors, to
determine the compensation of our CEO. The Committee, with input
from the Management Compensation and Benefits Committee (of
which our CEO is a member), determines the compensation of our
other NEOs. The Management Compensation and Benefits Committee
and our Human Resources Department support the Committee in the
performance of its responsibilities.
Independent Compensation Consultant.
The
Compensation Committee has engaged Frederic W. Cook &
Co. as its independent compensation consultant. The Cook firm is
responsible to the Committee and its Chair for reviewing and
recommending the compensation of the CEO and other NEOs. The
Cook firm also provides independent advice to the Board on
director remuneration and is responsible for compiling, on a
confidential basis, the responses from directors to its annual
questionnaire on Board effectiveness. The Cook firm works with
Company management as the Compensation Committees agent on
all matters that fall within the Compensation Committees
purview. The Cook firm provides no other service to the Company
or its management. The Company paid the Cook firm $127,129 for
its services during fiscal 2009.
Compensation Philosophy.
The overarching objective
of our compensation program is to enable Brown-Forman to
recruit, retain, and motivate a diverse team of talented
executives who will lead the Company to fulfill our goal of
being the best brand builder in the wine and spirits industry.
In support of this objective, our compensation program has the
following primary goals:
|
|
|
|
|
To reward employees for their efforts in support of the
Companys business by offering competitive salaries;
|
|
|
|
To foster a pay-for-performance culture by offering short-term
and long-term incentive-based compensation that is earned upon
the achievement of measurable performance goals; and
|
|
|
|
To align the interests of our executives with those of our
stockholders through the use of equity-based compensation.
|
Compensation Offered.
We offer the following
compensation and benefits to our NEOs:
|
|
|
|
|
Salary (including a holiday bonus, which we consider part of
salary)
|
|
|
|
Short-term cash incentive compensation
|
|
|
|
Long-term cash incentive compensation
|
|
|
|
Long-term equity incentive compensation
|
|
|
|
Other benefits that are available to nearly all salaried
employees
|
24
|
|
|
|
|
Limited additional benefits and perquisites
|
|
|
|
Limited post-employment compensation and benefits
|
Use of Market Data in Making Compensation
Decisions.
We believe that to recruit, retain, and
motivate high-caliber executives, our executive compensation
must be competitive with the compensation opportunities provided
by companies with which we compete for executive talent.
Therefore, it is the Committees practice to target total
cash compensation at the
55
th
to
65
th
percentile
of the relevant market, with the possibility of delivering top
quartile total compensation if business performance exceeds
targeted goals, and the flexibility to pay at lower levels for
periods of underperformance.
In making compensation decisions for fiscal 2009, the Committee
used customized compensation survey data provided by Towers
Perrin. Specifically, the Committee reviewed information from
two subsets of Towers Perrin survey data one of
manufacturing companies and one of consumer products companies.
Seven companies appeared in both survey groups. The survey data
included salary, incentive compensation, and internal pay equity
information from the comparator companies. The companies in each
of the survey subsets were:
|
|
|
|
|
|
|
Consumer Products
Companies
|
|
|
|
|
The A.T. Cross Company
Altria Group, Inc.
Avon Products, Inc.
Bob Evans Farms, Inc.
Chiquita Brands International, Inc.
The
Coca-Cola
Company
Columbia Sportswear Company
ConAgra Foods, Inc.
Diageo North America, Inc.
Fortune Brands, Inc.
General Mills, Inc.
Heinz Foodservice
|
|
The Hershey Company
The J.M. Smucker Company
J.R. Simplot Company
Kellogg Company
Kraft Foods, Inc.
Land OLakes, Inc.
Lorillard Tobacco Company
Mary Kay, Inc.
McDonalds Corporation
Mission Foods (Gruma Corp.)
Molson Coors Brewing Company
Nestle USA, Inc.
|
|
PepsiAmericas, Inc.
PepsiCo, Inc.
Reynolds American, Inc.
Rich Products, Corporation
S.C. Johnson & Son, Inc.
Sara Lee Corporation
The Schwan Food Company
Tupperware Brands Corporation
Unilever United States, Inc.
Wm. Wrigley Jr. Company
|
|
|
|
|
|
Manufacturing
Companies
|
3M Company
A.T. Cross Company
Abbott Laboratories
Advanced Micro Devices, Inc.
Air Products and Chemicals, Inc.
Alcon Laboratories, Inc.
Allergan, Inc.
Alliant Techsystems, Inc.
Altria Group, Inc.
Ameren Corporation
Astra Zeneca Pharmaceuticals LP
Ball Corporation
BIC Corporation
The Boeing Company
Bristol-Myers Squibb Company
The
Coca-Cola
Company
Cytec Industries Inc.
DENTSPLY International Inc.
Donaldson Company, Inc.
|
|
E. I. du Pont de Nemours and Co.
Eastman Chemical Company
Eastman Kodak Company
Ecolab, Inc.
Federal-Mogul Corporation
Flowserve Corporation
Ford Motor Company
Fortune Brands, Inc.
Gates Corporation
General Mills, Inc.
General Motors Corporation
Intel Corporation
ITT Corporation
Johnson & Johnson
Johnson Controls, Inc.
Kennametal Inc.
Kohler Co.
Mary Kay, Inc.
Masco Corporation
|
|
McDermott International, Inc.
Merck & Co., Inc.
Molson Coors Brewing Company
NIKE, Inc.
Noranda Aluminum, Inc.
Northup Grumman Newport News
Panasonic Corp. of North America
Parker Hannifin Corporation
Pfizer Inc.
Pitney Bowes Inc.
PPG Industries, Inc.
Praxair, Inc.
Robert Bosch LLC
Schneider Electric (K-Tech Corp.)
Siemens Corporation
Steelcase Inc.
The Timken Company
The Toro Company
|
Towers Perrin provided the survey data as an interactive
tool that created predictive market values for each
executive position based on company sales and the pay percentile
desired within the specified peer group. Comparative data from
each of the two survey groups for each executive position for
which data was available was used to calculate an average of the
data for all pay elements surveyed to arrive at what the
Committee considered to be the most useful market
25
information for each pay element and for each position. The
Committee used this information primarily to understand
prevailing market pay rates and practices in support of our goal
of offering competitive compensation to our executive officers.
The Committee also used this information as a reference point
when apportioning pay across the various elements of
compensation.
When setting our NEOs compensation for fiscal 2009, the
Committee reviewed market data for annual cash compensation
(base salary plus the value of short-term cash incentives)
representing both the 55th percentile and the
65th percentile within the comparator groups to establish a
range for total cash compensation. With respect to long-term
incentive compensation, including long-term cash and equity
compensation, the Committee referred to the 50th percentile
of market data. The Committee also considered job scope,
contribution, and long-term value to Brown-Forman.
Principal
Elements of Compensation.
Base Salary.
Each year the Committee determines the
salary for the CEO, and reviews and approves the salaries of the
other NEOs and executive officers. We pay our NEOs a salary as a
means of recognizing their significant responsibilities and
rewarding them for their daily efforts. It has been our practice
to offer our NEOs a salary within the
55
th
to
65
th
percentile
of our comparator group, using the methodology described above.
We believe that this compensation practice has furthered our
objective of attracting, retaining, and motivating a diverse
team of talented executives.
At each annual review, the Committee typically determines any
increase or decrease to the NEOs salaries based on
established merit budget guidelines applicable to all salaried
employees and the results of individual performance assessments.
However, in fiscal 2009, merit increase guidelines for NEOs and
other executives were reduced to approximately half of the
amount provided to other salaried employees. This reduction in
merit increase guidelines was intended to moderate, due to
difficult macro-economic circumstances, the increase in
employment cost associated with merit increases, and is not
reflective of lower levels of performance by the affected
executives.
The holiday bonus, which we consider part of salary, is paid in
cash near calendar year end and is calculated as follows:
|
|
|
Length of Continuous
Service
|
|
Amount of Holiday
Bonus
|
|
3 months but less than 6 months
|
|
1/8 of monthly salary
|
6 months but less than 5 years
|
|
1/4 of monthly salary
|
5 years but less than 10 years
|
|
3/8 of monthly salary
|
10 years or more
|
|
1/2 of monthly salary
|
The salaries, including holiday bonus, earned by our NEOs during
fiscal 2009 are reflected in the column under the heading
Salary in the Summary Compensation Table found on
page 35.
Incentive Compensation.
We provide our executives
with both short-term and long-term performance-based incentive
compensation opportunities.
2004 Omnibus Compensation Plan.
On July 22,
2004, our stockholders approved the Brown-Forman 2004 Omnibus
Compensation Plan (the Plan), an incentive
compensation plan designed to reward participants for individual
and Company performance. Officers, employees, and non-employee
directors of the Company, its subsidiaries and affiliates are
eligible to receive awards under the Plan. The Plan permits the
following types of awards: cash, stock options, stock
appreciation rights, stock, restricted stock, market value
units, and performance units. All short-term and long-term
incentive compensation paid by the Company is administered
pursuant to the terms and conditions of the Plan. Under the
terms of the Plan, performance goals are limited to certain
Company, affiliate, operating unit or division financial
performance measures. Performance goals may be expressed on an
absolute or relative basis, and may exclude certain items as the
Committee may determine.
26
Alignment with Corporate Vision.
Our corporate
vision is to be the best brand builder in the wine and spirits
industry. We measure our success on this front, relative to our
industry peers, by evaluating depletion-based operating
income. This is the amount of operating profit earned by
the Company on the number of nine-liter cases depleted during a
fiscal year. Depletions are shipments from the
Company direct to retail, or shipments from distributors to
wholesale or retail customers, and are commonly regarded in the
industry as an approximate measure of consumer demand. The
payouts under our incentive compensation plan are tied to
Company performance against depletion-based operating income.
Thus, our executive compensation plans are aligned with our
corporate vision and the key performance metric that is
indicative of our success.
Short-Term Incentive Compensation.
We provide our
NEOs with an annual short-term incentive compensation
opportunity, which is payable in cash and based upon a
pre-determined percentage of each executives base salary.
Short-term incentive compensation is performance-based, and
payout is dependent upon the achievement during the fiscal year
of certain goals related to Company performance.
Within 90 days following the start of each fiscal year, the
Committee determines the annual performance goals and cash
opportunity for each NEO. The Committee also establishes a
threshold performance level, which must be achieved before any
short-term incentive compensation is paid. Performance at target
yields a payout of 100%. If the threshold performance level is
satisfied, the short-term incentive compensation paid out is
based upon how much Company performance exceeds or falls short
of the performance target, and is capped at 200% of target. The
Committee reserves the right to adjust downward (but not upward)
any award produced by this formula. Short-term incentive
compensation is typically paid out on June 15 following the end
of the fiscal year.
For fiscal 2009, the short-term performance goals for the NEOs
were based on the Companys depletion-based operating
income. The Committee believes that depletion-based operating
income is the most relevant measure by which to assess the
Companys short-term business performance. Factors
considered in setting the performance goals at the start of the
year were performance expectations on this metric among industry
competitors, Company historical depletion-based operating income
trends, and the Companys outlook for fiscal 2009
depletion-based operating income. The fiscal 2009 short-term
performance goals were determined by the Committee, with input
from the Management Compensation and Benefits Committee, and
were as follows:
Fiscal
2009 Short-Term Incentive Compensation Performance
Goals
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Depletion-Based
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Attainment Point
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Operating
Income
(1)
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Payout
(2)
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Threshold
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$674.6
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0%
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Target
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$715.1
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100%
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Maximum
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$755.6
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200%
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(1)
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Dollars in millions. Operating
income between two points is interpolated using a straight line
method.
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(2)
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Payout between two points is
interpolated using a straight line method.
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After adjusting for certain items, including a portion of the
gain on the divestiture of the Companys Italian wine
brands, the negative impact of discontinued brands, agave
write-offs in excess of normal losses, expenses associated with
the Companys reduction in force and early retirement
programs, and the impact of an increase in excise taxes on
ready-to-drink products in Australia, the Committee determined
that for purposes of the Plan, the Company achieved
depletion-based operating income of $705.0 million for
fiscal 2009. This resulted in a short-term incentive
compensation payout to our
27
NEOs of 75% of target. The Committee did not exercise downward
discretion with regard to the short-term incentive compensation
payout in respect of any NEO.
A NEO forfeits his or her short-term incentive compensation if
he or she voluntarily terminates employment or is discharged for
cause during the fiscal year. For executives who leave the
Company voluntarily at or after age 55 with at least five
years of service (considered to be retirees), the short-term
incentive compensation is pro-rated based on length of service
during the performance period, and is paid at the same time and
in the same manner as to active employee participants.
Please see the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table for
Fiscal 2009 found on page 35 and the Grants of Plan Based
Awards for Fiscal 2009 table found on page 37 for more
information on the short-term incentive compensation we paid to
our NEOs.
Long-Term Incentive Compensation.
We provide our
NEOs and other key employees with a long-term incentive
compensation opportunity as part of their total compensation
package. Long-term incentives are intended to focus our
executives on our long-range strategic goals and on the
sustainable growth and performance of our brands. Long-term
incentives also serve as a retention mechanism and
equity-building opportunity for our executives.
The long-term incentive compensation opportunity contains both
cash-based and equity-based awards, and is generally established
in accordance with the following process: The total long-term
incentive compensation opportunity for each NEO is initially
determined as a cash value. At least 50% of that value is
delivered in the form of performance-based cash. The remaining
portion is delivered through a combination of restricted stock,
stock appreciation rights, and additional performance-based
cash. The Committee, with input from the CEO with respect to the
other NEOs, and taking into account the personal circumstances
of the NEOs (such as time until retirement and current equity
holdings) decides for each NEO what portion of the total
long-term incentive compensation opportunity should be delivered
via each of the long-term incentive vehicles. In making its
decision regarding the portion of a long-term award to be
delivered via restricted stock, the Committee examines the
equity holdings in the Company of each NEO from all sources,
including personal holdings, holdings from past incentive-based
awards, and holdings within the executives 401(k) plan
account. As a result, the equity awards to NEOs may include only
restricted stock, only stock appreciation rights, or a
combination of the two. To provide flexibility in retirement
planning, executives who are older than 62 or who will attain
age 62 during the fiscal year, are not required to have an
equity component to their long-term incentive compensation award
and instead may receive 100% of their award in the form of
performance-based cash. James L. Bareuther did not have an
equity component to his fiscal 2009 long-term incentive
compensation for these reasons. The Committee believes that the
use of equity-based compensation furthers the goal of aligning
executives interests with those of Company stockholders.
For fiscal 2009, the long-term incentive compensation awarded to
the NEOs contained three components: performance-based cash,
performance-based restricted stock, and stock-settled stock
appreciation rights.
Performance-Based Cash Opportunity.
Long-term
cash awards are granted during the first 90 days of each
fiscal year. Long-term cash awards granted in early fiscal 2009
will be paid out shortly following the completion of fiscal 2011
(likely on June 15, 2011). The target amount of the
long-term performance-based cash award is adjusted up or down by
the average of the Companys short-term incentive
performance scores over the applicable three-year period.
For the long-term incentive compensation performance period that
ended in fiscal 2009 (i.e., for the three-year performance
period of fiscal 2007 through fiscal 2009), the payout was based
upon the average of the fiscal 2007, fiscal 2008 and fiscal 2009
payout percentages for the Companys short-
28
term incentive compensation program (170%, 169% and 75%,
respectively). The Companys performance during this
three-year performance cycle resulted in a long-term incentive
compensation payout at 138% of target.
An executive typically forfeits all long-term cash incentives if
he or she voluntarily terminates employment (prior to retirement
eligibility) or is discharged for cause during any three-year
performance period. Subject to the Plan Administrators
discretion, for those NEOs who voluntarily leave the Company at
or after age 55 with at least five years of service
(considered to be retirees), the long-term cash incentive
compensation may be pro-rated and paid at the same time and in
the same manner as to active employee participants.
Please see the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table for
Fiscal 2009 found on page 35 and the Grants of Plan Based
Awards for Fiscal 2009 table found on page 37 for more
information on the cash portion of the long-term incentive
compensation we pay to our NEOs.
Performance-Based
Equity Opportunity.
Restricted Stock.
Our performance-based restricted
stock has a one-year performance measure followed by a
three-year vesting period. The restricted stock award is
initially determined by the Committee as a cash value, and is
awarded to our NEOs on the date of the Companys Annual
Meeting of Stockholders, which is typically held in late July.
This initial cash value is adjusted up or down after the
completion of the fiscal year by the Companys short-term
incentive compensation performance score. The number of
restricted shares issuable in respect of the award is determined
by dividing the adjusted cash value by the closing price of the
relevant class of our common stock on the date the award was
originally made (the Annual Meeting date). The restricted shares
are subject to certain employment-related restrictions for the
ensuing three fiscal years, vesting on the first day of the
fourth fiscal year following the date of grant.
For fiscal 2009, Class A common restricted stock awards
were granted on July 24, 2008. The number of shares issued
in respect of the awards was determined by multiplying the cash
value of each NEOs restricted stock opportunity at target
by the short-term incentive compensation performance score for
fiscal 2009 (75%), and dividing that product by the value of our
Class A common stock as of the close of trading on the date
of the award, July 24, 2008 ($57.35). The restricted shares
were issued June 1, 2009. Restricted shares awarded for
fiscal 2009 will vest on April 30, 2012. NEOs receive cash
dividend payments on the restricted shares during the vesting
period to reinforce the ownership value of the shares.
Restricted stock is forfeited should a NEO voluntarily terminate
his or her employment (prior to retirement eligibility) during
the restriction period, or be terminated for cause. Restricted
stock vests on a pro-rata basis upon an involuntary termination
for reasons other than for cause. Subject to the Plan
Administrators discretion, restricted stock may vest on a
pro-rata basis upon retirement or death. For more information on
the restricted stock awarded for fiscal 2009, please see the
Grants of Plan Based Awards for Fiscal 2009 and Outstanding
Equity Awards as of April 30, 2009, tables set forth on
pages 37 and 39, respectively.
Stock-Settled Stock Appreciation
Rights.
Stock-settled stock appreciation rights
(SSARs) are granted annually on the date of the
Companys Annual Meeting of Stockholders, which is
typically held in late July. The number of Class B Common
SSARs awarded to our NEOs for fiscal 2009 was determined by
dividing the cash value of the long-term incentive compensation
opportunity designated for SSARs by the Black-Scholes value of a
SSAR as of the close of trading on the date of grant,
July 24, 2008. SSARs are not exercisable until the first
day of the third fiscal year following the grant date, and are
exercisable for seven fiscal years thereafter (i.e., SSARs
granted July 24, 2008, are exercisable May 1, 2011,
and expire on April 30, 2018). For more information on
29
the SSARs awarded for fiscal 2009, please see the Grants of Plan
Based Awards for Fiscal 2009 and Outstanding Equity Awards as of
April 30, 2009 tables set forth on pages 37 and 39,
respectively.
Class B Common Stock Distribution.
On
October 27, 2008, we completed a special distribution of
shares of our Class B common stock. For every four shares
of Class A or Class B common stock held as of the
record date, stockholders received one share of Class B
common stock, with fractional shares payable in cash
(outstanding option and SSAR awards were rounded up to the next
whole share). Outstanding equity award amounts and exercise
prices were adjusted as of October 27, 2008, to account for
this distribution, and are presented in this Proxy Statement on
an adjusted basis.
Executive
Officer Changes.
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Donald C. Berg
was appointed Executive Vice President and
Chief Financial Officer, effective May 1, 2008.
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Mark I. McCallum
was appointed Executive Vice President
and Chief Operating Officer, effective May 1, 2009.
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James L. Bareuther
, in connection with a long-term
succession plan, was appointed Executive Vice President for
Global Business Development, effective May 1, 2009.
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Fiscal 2009 Company Performance and its Effect on Executive
Compensation.
The Companys underlying performance
for fiscal 2009 was solid, especially relative to our direct
industry competitors, but represented a decline in growth
compared to fiscal 2008 and fiscal 2007. Company performance
fell short of target for the fiscal 2009 performance period, but
substantially exceeded target performance levels for the fiscal
2008 and fiscal 2007 performance periods. Therefore, the
short-term incentive payout for the NEOs for fiscal 2009 was
lower than target (75%), while the long-term incentive payout
for the NEOs for the three-year performance period ending in
fiscal 2009 was higher than target (138%). (The payout for
performance at target is 100%.)
The market prices of our Class A and Class B common
stock decreased during fiscal 2009. Our Class A common
stock closing price decreased from $56.20 on April 30,
2008, to $48.70 on April 30, 2009. Our Class B common
stock closing price decreased from $54.42 on April 30,
2008, to $46.50 on April 30, 2009. These price decreases
resulted in a decrease in the value of our executives
accumulated equity-based incentives during fiscal 2009.
Impact of Fiscal 2009 Performance on CEO Total Direct
Compensation.
The Fiscal 2009 Summary Compensation
Table appearing on page 35 presents compensation
information for our CEO as required by SEC regulations. The
table below reflects our CEOs total direct compensation as
viewed by the Compensation Committee when making compensation
decisions. The table below is not designed to replace the
Summary Compensation Table, but rather to reflect the
Committees perspective related to the CEOs total
direct compensation. It differs from the 2009 Summary
Compensation Table, which is required by the SEC to follow the
Statement of Financial Accounting Standards 123R, Share-Based
Payment (FAS 123R) methodology for expensing
equity awards over the vesting period.
The Compensation Committee considers total direct compensation
for a fiscal year to be: base salary, short-term cash paid as a
result of that years performance, long-term cash paid for
the three-year performance period ending at the conclusion of
the fiscal year, the grant date fair value of SSAR awards made
during the fiscal year (of which there were none for the CEO in
fiscal 2008 or fiscal 2009), and the performance-adjusted value
of restricted stock awards made during the fiscal year.
Mr. Vargas total direct compensation for fiscal 2008
and fiscal 2009, presented in this manner, is set forth in the
following table. Short- and long-term incentive compensation for
both years was based on the Companys performance against
pre-established financial targets (depletion-based operating
income). The effect of fiscal 2009 Company performance on our
CEOs fiscal 2009 total direct compensation, as the
Committee views it, resulted in a decrease of 34% from fiscal
2008 total direct compensation.
30
Fiscal
2009 versus Fiscal 2008 Total Direct Compensation
for our Chief Executive Officer
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Short-Term
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Long-Term
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Restricted
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Total Direct
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Fiscal Year
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Salary
(1)
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Cash
(2)
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Cash
(3)
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Stock
(4)
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Compensation
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2009
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$950,000
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$937,500
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$1,112,128
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$813,750
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$3,813,378
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2008
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$936,000
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$2,048,778
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$1,047,834
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$1,733,820
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$5,766,432
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(1)
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Amounts included in this column
represent base salary at the beginning of the fiscal year, and
exclude holiday bonus. Salary adjustments for salaried employees
are typically made as of August 1 each year.
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(2)
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Amounts included in this column
represent the short-term cash incentive compensation paid on or
about June 15 for the one-year performance period ended
April 30.
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(3)
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Amounts included in this column
represent the long-term cash incentive compensation paid on or
about June 15 for the three-year performance period ended
April 30.
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(4)
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Amounts included in this column
represent the performance-adjusted value of the restricted stock
award granted for the fiscal year. Restricted stock awards are
initially determined by the Compensation Committee as a cash
value, which is adjusted after the completion of the fiscal year
by the short-term incentive compensation performance multiplier.
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Perquisites and Employee Benefits.
We provide our
NEOs with certain employee benefits that are available to nearly
all salaried employees, including Company-paid group term life
insurance equal to two times target cash compensation, travel
accident insurance, Company matching contributions (up to 5%) to
a 401(k) savings plan, medical and dental plans, and a pension
that grows with each added years service and pay. In
addition, we provide our NEOs and certain other executives with
additional benefits, including a leased automobile, automobile
insurance, and reimbursement of financial planning expenses. We
purchase tickets to sporting and entertainment events for
business outings with customers and suppliers. If the tickets
are not used for business purposes, employees (including the
NEOs) may have the opportunity to use the tickets at no
incremental cost to the Company. We believe these benefits
further our goal of attracting and retaining a diverse team of
talented executives. We occasionally invite the NEOs and their
spouses to certain events, including retirement celebrations and
award dinners. We believe these events provide valuable
opportunities for our senior executives to establish and develop
relationships with our directors, long-term stockholders,
employees, and each other, furthering our objective of having a
strong and cohesive management team. For more detail on these
benefits, please see the All Other Compensation
column of the Summary Compensation Table for Fiscal 2009 found
on page 35.
Post-Termination Compensation and Benefits.
We
maintain both tax-qualified retirement plans and non-qualified
supplemental excess retirement plans. Most salaried employees,
including all of our NEOs, participate in the Salaried Employees
Retirement Plan. This plan provides monthly retirement benefits
based on age at retirement, years of service, and the average of
the five highest consecutive calendar years salary during
the final ten years of employment. These retirement benefits are
not offset by Social Security benefits and are normally payable
at age 65. A participants interest vests after five
years of service. Please see the Pension Benefits Table on
page 43 for additional information.
Federal tax law limits the benefits we might otherwise pay to
key employees under qualified plans such as the
Salaried Employees Retirement Plan. Therefore, for certain
employees, including our NEOs, we maintain a nonqualified
Supplemental Executive Retirement Plan (SERP). The
SERP provides retirement benefits to make up the difference
between a participants accrued benefit calculated under
the Salaried Employees Retirement Plan and the ceiling imposed
by federal tax law. The SERP also provides accelerated vesting
of a portion of retirement benefits for certain key employees
who join us mid-career.
31
We maintain a qualified 401(k) savings plan for most salaried
employees, including our NEOs. Subject to a maximum the IRS sets
annually, most participants in our 401(k) savings plan may
contribute between 1% and 50% of their compensation to their
savings plan accounts, although highly compensated employees
including our NEOs are limited to contributions of between 1%
and 16% of their compensation. Our match of participants
contributions is currently 100% of the first 5% of the
employees contribution, and vests fully after four years
of service. At termination, the departing participant may elect
to leave the vested balance in Companys 401(k) plan or to
roll it over to an IRA or (subject to applicable IRS rules)
withdraw it.
We believe these post-termination compensation and benefit
programs further our goal of attracting and retaining top
executive talent, and serve to encourage executives to make
long-term career commitments to us. For additional information
on potential payments upon termination, please see the Potential
Payments upon Termination or
Change-in-Control
section of this Proxy Statement found on page 44.
Fiscal 2010 Compensation.
During fiscal 2009, the
Committee reviewed the Companys short- and long-term
incentive compensation program design and approved changes to
the program that will be applicable to compensation awarded to
the NEOs beginning in fiscal 2010. In doing so, the Committee
sought to maintain the programs compatibility with varying
business and economic environments and to align the program more
fully with certain of the Companys performance measures,
while appropriately correlating the level of incentive
opportunity with the modest risk orientation that is considered
optimal for the Companys continued success.
Changes to Short-Term Incentive Compensation.
Our
annual short-term incentive compensation opportunity will
continue to be based, in large part, upon the achievement during
the fiscal year of certain goals related to the Companys
depletion-based operating income. However, the threshold level
of performance may be set below the level achieved during the
prior fiscal year. In addition, when reviewing depletion-based
operating income results at the conclusion of the fiscal year
for purposes of assessing performance under the short-term
incentive compensation plan, the impact of foreign exchange will
be excluded. Also, in fiscal 2010, a minority component of the
NEOs short-term incentive compensation opportunity will be
based upon the achievement of individual performance objectives.
This change will not affect the deductibility of the
performance-based compensation we pay under our incentive
compensation plans.
Changes to Long-Term Incentive
Compensation.
Beginning in fiscal 2010, the allocation
among our long-term incentive compensation vehicles will change
as follows: 25% of the total target long-term incentive value
will be allocated to each of: long-term cash, SSARs, and
performance-based restricted stock. The Committee will have
discretion with regard to the allocation of the remaining 25% of
the award. The Committee will exercise this discretion by
considering each NEOs preference, total equity holdings,
and career stage.
Beginning in fiscal 2010, long-term cash awards will be subject
to a new performance measure. The new measure will consist of a
comparison by the Committee of the three-year cumulative total
shareholder return of Brown-Formans Class B common stock
with that of the group of high-performing consumer products and
retail companies comprising the S&P Consumer Staples Index.
The Committee will establish a payout scale that correlates
Brown-Formans percentile rank against the peer group on
this measure to a specific payout level ranging from 0% to 200%
of the participants target cash award, with target
performance and payout set at the
55
th
percentile rank versus the group.
Performance-based restricted stock awards made in fiscal 2010
will be subject to new performance and restriction periods.
Currently, restricted stock awards are subject to a one-year
performance period and a three-year (approximately) restriction
period. Beginning in fiscal 2010, restricted stock awards will
be subject to a three-year performance period and a one-year
(approximately) restriction period. The performance measure for
restricted stock awards will also change in fiscal 2010. The new
measure will consist of a comparison of the compound annual
growth rate in the Companys
32
depletion-based operating income over a three-year period, with
that of the nominal gross domestic product reported by the
International Monetary Fund of a set of countries identified by
the Committee (which countries will be aligned with our current
and anticipated business operations). When calculating
depletion-based operating income results at the conclusion of
the three-year performance period, the impact of foreign
exchange will be included.
Beginning in fiscal 2010, the maximum payout level achievable
for restricted stock awards under the long-term incentive
compensation plan will be 150% of the target award, while the
minimum payout level will be 50% of the target award. This
payout schedule should provide less volatility than under the
previous design. The number of Class A common shares
awarded to each participant will continue to be determined by
dividing the performance-adjusted award value by the price of
our Class A common stock as of the date of the award. By
using this methodology to determine the number of shares
awarded, the plan will continue to expose participants to
changes in our stock price throughout the performance period. No
dividends will be paid on the restricted shares during the
three-year performance period. However, at the end of the
performance period, the performance adjusted value of the award
will be increased to account for the dividends paid during the
second and third years of the performance period.
Changes to the Comparator Companies and Methodology for
Market Comparison.
As part of the review of our
incentive compensation program design, the Committee also
undertook a review of the comparator group of companies used for
market compensation analysis. In developing a new comparator
group, the Committees goal was to identify superior
brand-building consumer products companies with financial
characteristics similar to Brown-Formans. The Committee
also considered the global nature of the potential comparator
companies, as well as the likely use of the companies as sources
for executive talent recruitment. The following companies will
be used for competitive compensation analysis beginning with the
2010 fiscal year, replacing the two groups of companies from the
Towers Perrin database previously used:
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Campbell Soup Co.
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Dr. Pepper Snapple Group, Inc.
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Hershey Co.
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Molson Coors Brewing Co.
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Clorox Co.
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Energizer Holdings Inc.
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Kraft Foods Inc.
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PepsiCo Inc.
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Coach Inc.
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Estee Lauder Companies, Inc.
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Levi Strauss & Co.
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Polo Ralph Lauren Corp.
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Constellation Brands, Inc.
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Fortune Brands, Inc.
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Lorillard, Inc.
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J.M. Smucker Co.
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Diageo Plc.
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Harley Davidson Inc.
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Miller Brewing Co.
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YUM! Brands Inc.
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The Committee has adjusted its philosophy regarding
market-competitive compensation for the NEOs. Beginning in
fiscal 2010, the Committee will review the median value of
market compensation data of the comparator group, rather than
the 55th to 65th percentile data that was considered previously.
The revised comparator group is considered to be a
high-performing group of consumer products companies, and
positioning the target compensation of our NEOs at the median of
the group should provide a level of compensation that is
sufficiently competitive to achieve our talent recruitment and
retention objectives. The Committee also made changes to the
methodology it will use in its market comparisons. When
reviewing market data for fiscal 2010 compensation decisions,
the Committee may consider data that has been weighted on the
basis of reported revenue.
Compensation
Policies and Practices.
Deductibility of Compensation.
Section 162(m)
of the Internal Revenue Code limits to $1 million the
amount of annual compensation expense we may deduct when paid to
a NEO unless the compensation is performance-based
and paid under a formal compensation plan that meets the
Internal Revenue Codes requirements. We took appropriate
steps in defining performance measures under our 2004 Omnibus
Compensation Plan to assure the deductibility of all
compensation paid to
33
NEOs under the Plan. To maintain flexibility, we have no policy
requiring that all NEO compensation be fully deductible.
However, the Committee expects the Company to be able to deduct
all fiscal 2009 compensation paid to our NEOs, with the
exception of $1,458 of salary paid to our CEO.
In order to preserve the deductibility of performance-based
awards granted under the Plan, the material terms of the
performance measures must be disclosed to and approved by our
stockholders at least every five years. Therefore these
measures, which have not changed since the Plan was approved by
our stockholders in 2004, must be re-approved at the upcoming
Annual Meeting. For additional information on the re-approval of
the performance measures under our 2004 Omnibus Compensation
Plan, please see Proposal 2: Re-approval of Performance
Measures under the Brown-Forman 2004 Omnibus Compensation Plan,
set forth on page 52.
Equity Award Grants.
We have an equity award grant
policy that requires the grant date of any award to be the date
of the applicable Committee or Board meeting at which such award
was approved, and the grant price to be the closing price of the
relevant class of our common stock on the grant date. We do not
have a program, plan or practice of timing equity award grants
in conjunction with the release of material non-public
information (or vice-versa). We have never re-priced or
back-dated options granted under any of our equity compensation
plans, and our 2004 Omnibus Compensation Plan specifically
prohibits these practices.
Source of Plan Shares.
Under the terms of the Plan,
we try to limit the source of shares delivered to participants
under the Plan to those purchased by the Company from time to
time on the open market, in private transactions, or otherwise.
If we determine that the timing of such purchases may unduly
affect the market price of the shares, the purchases may be
spread over a period of time sufficient to minimize such effect.
We may use newly-issued shares to cover exercises or redemptions
of awards under the Plan, and then purchase an equal number of
shares on the open market or otherwise as quickly as is
reasonably practicable thereafter. This practice minimizes
long-term dilution to our stockholders.
Conclusion.
We believe that our executive
compensation program has been successful in recruiting,
retaining, and motivating a team of talented and diverse
executives, both in the United States and around the world, who
will lead us to achieve our goal of being the best brand builder
in the wine and spirits industry and enable us to deliver
superior value to our stockholders.
Compensation
Committee Report.
We, the Compensation Committee of the Board of Directors of
Brown-Forman Corporation, have reviewed and discussed with
Company management the Compensation Discussion and Analysis set
forth above, and based upon such review and discussion, have
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.
Compensation
Committee
Richard P. Mayer, Chairman
Patrick Bousquet-Chavanne
John D. Cook
34
Summary
Compensation Table for Fiscal 2009.
The following table sets forth the compensation paid or accrued
by the Company for the fiscal year ended April 30, 2009, as
required to be calculated under SEC rules, for services rendered
in all capacities by our Chief Executive Officer, our Chief
Financial Officer, and our three other most highly compensated
executive officers as of the end of the fiscal year (the
Named Executive Officers or NEOs).
Fiscal
2009 Summary Compensation Table
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|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SSAR/
|
|
Incentive
|
|
Deferred
|
|
All
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Plan
|
|
Compensation
|
|
Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
(5)
|
|
($)
(6)
|
|
($)
(7)
|
|
($)
(7)
|
|
($)
(8)
|
|
($)
(9)
|
|
($)
(10)
|
|
($)
|
|
|
Paul C. Varga
|
|
|
2009
|
|
|
|
1,001,458
|
|
|
|
|
|
|
|
1,377,198
|
|
|
|
|
|
|
|
2,049,628
|
|
|
|
108,384
|
|
|
|
42,856
|
|
|
|
4,579,524
|
|
Chairman and Chief
|
|
|
2008
|
|
|
|
986,083
|
|
|
|
|
|
|
|
1,165,139
|
|
|
|
|
|
|
|
3,096,612
|
|
|
|
404,184
|
|
|
|
31,303
|
|
|
|
5,683,321
|
|
Executive Officer
|
|
|
2007
|
|
|
|
945,000
|
|
|
|
|
|
|
|
690,465
|
|
|
|
|
|
|
|
2,590,602
|
|
|
|
413,410
|
|
|
|
83,544
|
|
|
|
4,723,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald C.
Berg
(1)
|
|
|
2009
|
|
|
|
539,167
|
|
|
|
|
|
|
|
181,018
|
|
|
|
166,833
|
|
|
|
506,949
|
|
|
|
1,588
|
|
|
|
37,275
|
|
|
|
1,432,830
|
|
Executive Vice President
and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James L.
Bareuther
(2)
|
|
|
2009
|
|
|
|
565,208
|
|
|
|
|
|
|
|
301,736
|
|
|
|
215,273
|
|
|
|
616,948
|
|
|
|
192,930
|
|
|
|
38,456
|
|
|
|
1,930,551
|
|
Executive Vice President
|
|
|
2008
|
|
|
|
550,542
|
|
|
|
|
|
|
|
302,632
|
|
|
|
125,558
|
|
|
|
968,364
|
|
|
|
300,795
|
|
|
|
39,383
|
|
|
|
2,287,274
|
|
for Global Business
|
|
|
2007
|
|
|
|
526,167
|
|
|
|
|
|
|
|
204,127
|
|
|
|
218,514
|
|
|
|
1,080,620
|
|
|
|
309,183
|
|
|
|
49,123
|
|
|
|
2,387,734
|
|
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James S. Welch,
Jr.
(3)
|
|
|
2009
|
|
|
|
545,625
|
|
|
|
|
|
|
|
226,373
|
|
|
|
147,122
|
|
|
|
658,645
|
|
|
|
479
|
|
|
|
31,676
|
|
|
|
1,609,920
|
|
Vice Chairman
|
|
|
2008
|
|
|
|
524,166
|
|
|
|
|
|
|
|
202,936
|
|
|
|
140,777
|
|
|
|
858,925
|
|
|
|
123,846
|
|
|
|
32,165
|
|
|
|
1,882,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark I.
McCallum
(4)
|
|
|
2009
|
|
|
|
492,500
|
|
|
|
|
|
|
|
138,517
|
|
|
|
118,562
|
|
|
|
459,214
|
|
|
|
49,524
|
|
|
|
30,570
|
|
|
|
1,288,887
|
|
Executive Vice President
|
|
|
2008
|
|
|
|
462,292
|
|
|
|
|
|
|
|
103,079
|
|
|
|
88,474
|
|
|
|
774,276
|
|
|
|
57,233
|
|
|
|
30,384
|
|
|
|
1,515,738
|
|
and Chief Operating
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Mr. Berg was not a Named
Executive Officer for fiscal years 2007 and 2008. Therefore,
information for those years is not provided.
|
|
(2)
|
|
Mr. Bareuther served as
Executive Vice President and Chief Operating Officer until
April 30, 2009. He assumed the position of Executive Vice
President for Global Business Development effective May 1,
2009.
|
|
(3)
|
|
Mr. Welch was not a Named
Executive Officer for fiscal year 2007. Therefore, information
for fiscal 2007 is not provided. Mr. Welchs full
title is Vice Chairman, Executive Director of Corporate Affairs,
Strategy, Diversity, and Human Resources.
|
|
(4)
|
|
Mr. McCallum was not a Named
Executive Officer for fiscal year 2007. Therefore, information
for fiscal 2007 is not provided. Mr. McCallum served as
Executive Vice President and Chief Brands Officer until
April 30, 2009. He assumed the position of Executive Vice
President and Chief Operating Officer effective May 1, 2009.
|
|
(5)
|
|
Salary includes holiday bonus.
Please see page 26 for additional information.
|
|
(6)
|
|
NEOs do not receive non-performance
based compensation that would be considered a Bonus
under SEC regulations.
|
|
(7)
|
|
Amounts reflect the dollar amount
of compensation cost recognized for financial statement
reporting purposes, in accordance with SFAS 123(R).
Pursuant to SEC regulations, the amounts shown exclude the
impact of estimated forfeitures related to service-based vesting
conditions. Assumptions used in the calculation of these amounts
are included in footnote 16 to the Companys audited
financial statements for the fiscal year ended April 30,
2009, which are included in the Companys fiscal 2009
Annual Report on
Form 10-K
as filed with the SEC. These amounts reflect our accounting
expense for these awards and do not correspond to the actual
value that will be recognized by the NEOs.
|
35
|
|
|
(8)
|
|
Amounts listed for the year 2009
include short-term cash incentive compensation paid for the
one-year performance period ended April 30, 2009, and
long-term cash incentive compensation paid for the three-year
performance period ended April 30, 2009, as determined by
the Compensation Committee at its May 27, 2009, meeting and
paid to the NEOs on or about June 15, 2009. Specific
amounts are reflected below.
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term Cash
|
|
Long-Term Cash
|
Paul C. Varga
|
|
|
937,500
|
|
|
|
1,112,128
|
|
Donald C. Berg
|
|
|
195,000
|
|
|
|
311,949
|
|
James L. Bareuther
|
|
|
195,000
|
|
|
|
421,948
|
|
James S. Welch, Jr.
|
|
|
195,000
|
|
|
|
463,645
|
|
Mark I. McCallum
|
|
|
195,000
|
|
|
|
264,214
|
|
|
|
|
(9)
|
|
Amounts listed for the year 2009
reflect the change in pension value for each NEO during fiscal
year 2009. Change in pension value is based on an actuarial
present value calculation. Amounts attributable to each of our
retirement plans are reflected below. Please see the Pension
Benefits Table on page 43 for additional information,
including assumptions used in the present value calculations.
|
|
|
|
|
|
|
|
|
|
|
|
Qualified
|
|
Non-Qualified
|
Paul C. Varga
|
|
|
(22,126)
|
|
|
|
130,510
|
|
Donald C. Berg
|
|
|
(11,809)
|
|
|
|
13,397
|
|
James L. Bareuther
|
|
|
29,455
|
|
|
|
163,475
|
|
James S. Welch, Jr.
|
|
|
(16,958)
|
|
|
|
17,437
|
|
Mark I. McCallum
|
|
|
5,176
|
|
|
|
44,348
|
|
|
|
|
(10)
|
|
Please see the Fiscal 2009 All
Other Compensation Table below for additional information on the
amounts reflected in this column. For fiscal 2007 only, amounts
reflected in this column include dividends paid on restricted
stock.
|
The following table sets forth each component of the All
Other Compensation column of the Summary Compensation
Table.
Fiscal
2009 All Other Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-
|
|
|
Cost of
|
|
|
|
|
|
|
|
|
|
401(k)
|
|
|
Provided
|
|
|
Company-
|
|
|
|
|
|
|
|
|
|
Matching
|
|
|
Life
|
|
|
Leased
|
|
|
|
|
|
|
|
Name
|
|
Contribution
|
|
|
Insurance
|
|
|
Car
(1)
|
|
|
Other
(2)
|
|
|
Total
|
|
Paul C. Varga
|
|
|
12,063
|
|
|
|
3,600
|
|
|
|
20,845
|
|
|
|
6,348
|
|
|
|
42,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald C. Berg
|
|
|
12,268
|
|
|
|
2,638
|
|
|
|
18,369
|
|
|
|
4,000
|
|
|
|
37,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James L. Bareuther
|
|
|
11,600
|
|
|
|
2,956
|
|
|
|
19,741
|
|
|
|
4,159
|
|
|
|
38,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James S. Welch, Jr.
|
|
|
11,563
|
|
|
|
2,893
|
|
|
|
13,220
|
|
|
|
4,000
|
|
|
|
31,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark I. McCallum
|
|
|
11,625
|
|
|
|
2,694
|
|
|
|
16,251
|
|
|
|
|
|
|
|
30,570
|
|
|
|
|
(1)
|
|
Values based on incremental cost to
the Company during the fiscal year, including lease payments,
maintenance and registration, and annual insurance premiums.
|
|
(2)
|
|
Amounts include reimbursement of
financial planning expenses and, for Messrs. Bareuther
and Varga, travel-related expenses for their spouses to
attend certain business-related events.
|
36
Grants
of Plan-Based Awards for Fiscal 2009.
The following table sets forth information regarding the equity
and non-equity awards granted to our NEOs during fiscal 2009
under our 2004 Omnibus Compensation Plan. For additional
information on the Plan and the fiscal 2009 awards made
thereunder, please see the Incentive Compensation
section of our Compensation Discussion and Analysis, which
begins on page 26.
Fiscal
2009 Grants of Plan-Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
Estimated Possible Payouts
|
|
|
of
|
|
|
Exercise
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
Under Equity Incentive Plan
|
|
|
Securities
|
|
|
or Base
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
Plan
Awards
(2)
|
|
|
Awards
(3)
|
|
|
Underlying
|
|
|
Price of
|
|
|
of Stock
|
|
|
|
|
|
|
|
|
|
Thres
|
|
|
|
|
|
|
|
|
Thres
|
|
|
|
|
|
|
|
|
Options
|
|
|
Option
|
|
|
and Option
|
|
|
|
Grant
|
|
|
Descrip-
|
|
|
hold
|
|
|
Target
|
|
|
Maximum
|
|
|
hold
|
|
|
Target
|
|
|
Maximum
|
|
|
(4)(6)
|
|
|
Awards
|
|
|
Awards
(5)(6)
|
|
Name
|
|
Date
|
|
|
tion
(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
|
|
|
Paul C. Varga
|
|
|
|
|
|
|
STC
|
|
|
|
0
|
|
|
|
1,250,000
|
|
|
|
2,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTC
|
|
|
|
0
|
|
|
|
1,085,000
|
|
|
|
2,170,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
1,085,000
|
|
|
|
2,170,000
|
|
|
|
|
|
|
|
|
|
|
|
2,170,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald C. Berg
|
|
|
|
|
|
|
STC
|
|
|
|
0
|
|
|
|
260,000
|
|
|
|
520,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTC
|
|
|
|
0
|
|
|
|
300,000
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
120,000
|
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
240,000
|
|
|
|
|
7/24/2008
|
|
|
|
SSAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,588
|
|
|
$
|
57.40
|
|
|
|
154,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James L. Bareuther
|
|
|
|
|
|
|
STC
|
|
|
|
0
|
|
|
|
260,000
|
|
|
|
520,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTC
|
|
|
|
0
|
|
|
|
375,000
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
SSAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,872
|
|
|
$
|
57.40
|
|
|
|
215,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James S. Welch, Jr.
|
|
|
|
|
|
|
STC
|
|
|
|
0
|
|
|
|
260,000
|
|
|
|
520,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTC
|
|
|
|
0
|
|
|
|
300,000
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
120,000
|
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
240,000
|
|
|
|
|
7/24/2008
|
|
|
|
SSAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,588
|
|
|
$
|
57.40
|
|
|
|
154,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark I. McCallum
|
|
|
|
|
|
|
STC
|
|
|
|
0
|
|
|
|
260,000
|
|
|
|
520,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTC
|
|
|
|
0
|
|
|
|
300,000
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
RS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
180,000
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
7/24/2008
|
|
|
|
SSAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,059
|
|
|
$
|
57.40
|
|
|
|
103,336
|
|
|
|
|
(1)
|
|
STC is short-term incentive
compensation payable in cash; LTC is long-term incentive
compensation payable in cash; RS is performance-based restricted
stock; SSAR is stock-settled stock appreciation rights.
|
|
(2)
|
|
Amounts represent the potential
value of the payouts for short-term incentive compensation
opportunity for the fiscal 2009 performance period and the cash
component of long-term incentive compensation opportunity for
the three-year performance period fiscal 2009 through fiscal
2011, inclusive. Please see the Non-Equity Incentive Plan
Compensation column of the Fiscal 2009 Summary
Compensation Table on page 35 for amounts actually paid out
in respect of fiscal 2009 performance. No amounts are payable if
threshold performance levels are not achieved. STC is capped at
200% of target; long-term incentive compensation is uncapped,
but as a point of reference a Maximum number of 200% of target
is included.
|
37
|
|
|
(3)
|
|
Amounts represent the potential
value of a NEOs long-term incentive compensation
opportunity designated for RS for fiscal 2009. No RS is awarded
if threshold performance levels are not achieved. The long-term
incentive compensation opportunity designated for RS is capped
at 200% of target. The number of shares of RS awarded for fiscal
2009 is determined by multiplying the cash value at target of a
NEOs long-term incentive compensation opportunity
designated for RS by the short-term performance adjustment
factor for fiscal 2009 (75%), and dividing that product by
$57.35, which is the value of our Class A common stock as
of the close of trading on the date of grant, July 24,
2008. Restricted share awards granted in fiscal 2009 vest on the
first day of the fourth fiscal year following the date of grant.
The number of Class A common shares issued on June 1,
2009, in respect of the fiscal 2009 awards and the cash value of
the awards as of the date of grant are as follows
(Mr. Bareuther did not have a restricted stock component to
his fiscal 2009 long-term incentive compensation opportunity):
|
|
|
|
|
|
|
|
|
|
|
|
Cash Value
|
|
|
Class A Common
|
|
|
|
as of July 24,
2008
|
|
|
Restricted Shares
|
|
Paul C. Varga
|
|
|
813,750
|
|
|
|
14,190
|
|
Donald C. Berg
|
|
|
90,000
|
|
|
|
1,570
|
|
James S. Welch, Jr.
|
|
|
90,000
|
|
|
|
1,570
|
|
Mark I. McCallum
|
|
|
135,000
|
|
|
|
2,354
|
|
|
|
|
(4)
|
|
The number of SSARs awarded to our
NEOs for fiscal 2009 was determined by dividing the cash value
of the opportunity designated for SSARs by the Black-Scholes
value of our Class B common stock as of the close of
trading on the date of grant, July 24, 2008. SSARs are not
exercisable until the first day of the third fiscal year
following the fiscal year of grant, and are exercisable for
seven fiscal years thereafter. SSARs granted July 24, 2008,
are exercisable May 1, 2011, and expire April 30, 2018.
|
|
(5)
|
|
For RS, amounts represent the grant
date fair value of each award at the maximum payout level
(200%). Please see footnote 3 above for the grant date fair
value of the awards actually paid out. For SSARs, amounts
represent the grant date fair value as calculated in accordance
with SFAS 123(R).
|
|
(6)
|
|
On October 27, 2008, we
completed a special distribution of shares of our Class B
common stock. For every four shares of Class A or
Class B common stock held as of the record date,
stockholders received one share of Class B common stock,
with fractional shares payable in cash (outstanding option and
SSAR awards were rounded up to the next whole share).
Outstanding equity award amounts and exercise prices were
adjusted as of October 27, 2008, to account for this
distribution, and are presented herein on an adjusted basis.
|
38
Outstanding
Equity Awards as of April 30, 2009.
The following table sets forth the outstanding equity awards
held by our NEOs as of April 30, 2009. The year-end values
set forth in the table are based on the $48.70 closing price for
our Class A common stock and $46.50 closing price for our
Class B common stock, respectively, on April 30, 2009.
Outstanding
Equity Awards at 2009 Fiscal Year End Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option and SSAR Awards
(1)(2)
|
|
|
Stock Awards
(1)(3)
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
|
|
|
Class of
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
|
|
|
Common
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Grant Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Grant Date
|
|
|
Stock
|
|
|
(#)
|
|
|
($)
(4)
|
|
|
|
|
Paul C. Varga
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2003
|
|
|
|
B
|
|
|
|
7,587
|
|
|
|
352,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2003
|
|
|
|
B
|
|
|
|
1,896
|
|
|
|
88,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
A
|
|
|
|
17,769
|
|
|
|
865,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
B
|
|
|
|
4,442
|
|
|
|
206,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
A
|
|
|
|
19,208
|
|
|
|
935,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
B
|
|
|
|
4,802
|
|
|
|
223,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
A
|
|
|
|
24,138
|
|
|
|
1,175,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
B
|
|
|
|
6,034
|
|
|
|
280,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
A
|
|
|
|
14,190
|
|
|
|
691,053
|
|
Donald C. Berg
|
|
|
7/27/2000
|
|
|
|
6,437
|
|
|
|
|
|
|
|
19.68
|
|
|
|
4/30/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/31/2001
|
|
|
|
18,983
|
|
|
|
|
|
|
|
26.67
|
|
|
|
4/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/25/2002
|
|
|
|
16,903
|
|
|
|
|
|
|
|
25.06
|
|
|
|
4/30/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2003
|
|
|
|
19,024
|
|
|
|
|
|
|
|
30.62
|
|
|
|
4/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2004
|
|
|
|
15,138
|
|
|
|
|
|
|
|
36.35
|
|
|
|
4/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
13,062
|
|
|
|
|
|
|
|
46.19
|
|
|
|
4/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
|
|
|
|
10,104
|
|
|
|
56.50
|
|
|
|
4/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
|
|
|
|
11,567
|
|
|
|
54.58
|
|
|
|
4/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
|
|
|
|
13,588
|
|
|
|
57.40
|
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2003
|
|
|
|
B
|
|
|
|
2,592
|
|
|
|
120,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2003
|
|
|
|
B
|
|
|
|
648
|
|
|
|
30,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
A
|
|
|
|
2,556
|
|
|
|
124,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
B
|
|
|
|
639
|
|
|
|
29,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
A
|
|
|
|
2,156
|
|
|
|
104,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
B
|
|
|
|
539
|
|
|
|
25,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
A
|
|
|
|
2,206
|
|
|
|
107,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
B
|
|
|
|
551
|
|
|
|
25,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
A
|
|
|
|
1,570
|
|
|
|
76,459
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option and SSAR Awards
(1)(2)
|
|
|
Stock Awards
(1)(3)
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
|
|
|
Class of
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
|
|
|
Common
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Grant Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Grant Date
|
|
|
Stock
|
|
|
(#)
|
|
|
($)
(4)
|
|
|
|
|
James L. Bareuther
|
|
|
7/27/2000
|
|
|
|
22,245
|
|
|
|
|
|
|
|
19.68
|
|
|
|
4/30/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/31/2001
|
|
|
|
14,885
|
|
|
|
|
|
|
|
26.67
|
|
|
|
4/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/25/2002
|
|
|
|
10,824
|
|
|
|
|
|
|
|
25.06
|
|
|
|
4/30/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2003
|
|
|
|
17,013
|
|
|
|
|
|
|
|
30.62
|
|
|
|
4/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2004
|
|
|
|
14,149
|
|
|
|
|
|
|
|
36.35
|
|
|
|
4/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
12,225
|
|
|
|
|
|
|
|
46.19
|
|
|
|
4/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
|
|
|
|
13,668
|
|
|
|
56.50
|
|
|
|
4/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
|
|
|
|
10,280
|
|
|
|
54.58
|
|
|
|
4/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
|
|
|
|
18,872
|
|
|
|
57.40
|
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2003
|
|
|
|
B
|
|
|
|
5,216
|
|
|
|
242,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2003
|
|
|
|
B
|
|
|
|
1,304
|
|
|
|
60,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
A
|
|
|
|
5,382
|
|
|
|
262,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
B
|
|
|
|
1,345
|
|
|
|
62,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
A
|
|
|
|
2,915
|
|
|
|
141,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
B
|
|
|
|
728
|
|
|
|
33,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
A
|
|
|
|
4,412
|
|
|
|
214,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
B
|
|
|
|
1,103
|
|
|
|
51,290
|
|
James S. Welch, Jr.
|
|
|
7/31/2001
|
|
|
|
9,492
|
|
|
|
|
|
|
|
26.67
|
|
|
|
4/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/25/2002
|
|
|
|
9,658
|
|
|
|
|
|
|
|
25.06
|
|
|
|
4/30/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2004
|
|
|
|
15,730
|
|
|
|
|
|
|
|
36.35
|
|
|
|
4/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
14,543
|
|
|
|
|
|
|
|
46.19
|
|
|
|
4/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
|
|
|
|
8,344
|
|
|
|
56.50
|
|
|
|
4/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
|
|
|
|
14,804
|
|
|
|
54.58
|
|
|
|
4/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
|
|
|
|
13,588
|
|
|
|
57.40
|
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2003
|
|
|
|
B
|
|
|
|
6,322
|
|
|
|
293,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2003
|
|
|
|
B
|
|
|
|
1,580
|
|
|
|
73,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
A
|
|
|
|
2,846
|
|
|
|
138,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
B
|
|
|
|
711
|
|
|
|
33,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
A
|
|
|
|
2,670
|
|
|
|
130,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
B
|
|
|
|
667
|
|
|
|
31,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
A
|
|
|
|
2,824
|
|
|
|
137,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
B
|
|
|
|
706
|
|
|
|
32,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
A
|
|
|
|
1,570
|
|
|
|
76,459
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option and SSAR Awards
(1)(2)
|
|
|
Stock Awards
(1)(3)
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
|
|
|
Class of
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
|
|
|
Common
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Grant Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Grant Date
|
|
|
Stock
|
|
|
(#)
|
|
|
($)
(4)
|
|
|
|
|
Mark I. McCallum
|
|
|
7/24/2003
|
|
|
|
9,799
|
|
|
|
|
|
|
|
30.62
|
|
|
|
4/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/22/2004
|
|
|
|
6,892
|
|
|
|
|
|
|
|
36.35
|
|
|
|
4/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2005
|
|
|
|
10,418
|
|
|
|
|
|
|
|
46.19
|
|
|
|
4/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
|
|
|
|
2,854
|
|
|
|
56.50
|
|
|
|
4/30/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
|
|
|
|
9,869
|
|
|
|
54.58
|
|
|
|
4/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
|
|
|
|
9,059
|
|
|
|
57.40
|
|
|
|
4/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
A
|
|
|
|
3,651
|
|
|
|
177,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/27/2006
|
|
|
|
B
|
|
|
|
912
|
|
|
|
42,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
A
|
|
|
|
2,824
|
|
|
|
137,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/26/2007
|
|
|
|
B
|
|
|
|
706
|
|
|
|
32,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/24/2008
|
|
|
|
A
|
|
|
|
2,354
|
|
|
|
114,640
|
|
|
|
|
|
(1)
|
On October 27, 2008, we completed a special distribution of
shares of our Class B common stock. For every four shares
of Class A or Class B common stock held as of the
record date, stockholders received one share of Class B
common stock, with fractional shares payable in cash
(outstanding option and SSAR awards were rounded up to the next
whole share). Outstanding equity award amounts and exercise
prices were adjusted as of October 27, 2008, to account for
this distribution, and are presented herein on an adjusted basis.
|
|
|
(2)
|
All option and SSAR awards are Class B common stock. Awards
with grant dates prior to July 28, 2005 are stock options;
awards with grant dates of July 28, 2005 or later are
stock-settled stock appreciation rights (SSARs). All options and
SSARs vest and become fully exercisable on the first day of the
third fiscal year following the fiscal year of grant.
|
|
|
(3)
|
Restricted stock awards with a July 24, 2003 grant date
vest on the first day of the eighth fiscal year following the
date of grant; restricted stock awards granted July 22,
2004, July 28, 2005, and July 27, 2006, vest on the
first day of the fifth fiscal year following the date of grant;
restricted stock awards granted July 26, 2007, and
July 24, 2008, vest on the first day of the fourth fiscal
year following the date of grant.
|
|
|
(4)
|
Values based on the closing prices on April 30, 2009, of
our Class A common stock of $48.70 and Class B common
stock of $46.50.
|
41
Option
Exercises and Stock Vested for Fiscal 2009.
The following table shows all stock options exercised and the
value realized upon exercise, and all stock awards vested and
the value realized upon vesting, by the NEOs during fiscal 2009.
Fiscal
2009 Option Exercises and Stock Vested Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/SSAR
Awards
(1)(2)
|
|
|
Stock
Awards
(1)
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
|
Acquired
|
|
|
Value Realized
|
|
|
|
|
|
Acquired
|
|
|
Value Realized
|
|
|
|
on Exercise
|
|
|
on Exercise
(3)
|
|
|
Class of
|
|
|
on Vesting
(4)
|
|
|
on Vesting
(5)
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
Common Stock
|
|
|
(#)
|
|
|
($)
|
|
|
|
|
Paul C. Varga
(6)
|
|
|
29,277
|
|
|
|
705,837
|
|
|
|
A
|
|
|
|
17,025
|
|
|
|
829,118
|
|
|
|
|
|
|
|
|
|
|
|
|
B
|
|
|
|
4,256
|
|
|
|
197,904
|
|
Donald C. Berg
|
|
|
|
|
|
|
|
|
|
|
A
|
|
|
|
3,571
|
|
|
|
173,908
|
|
|
|
|
|
|
|
|
|
|
|
|
B
|
|
|
|
892
|
|
|
|
41,478
|
|
James L. Bareuther
(7)
|
|
|
14,980
|
|
|
|
190,246
|
|
|
|
A
|
|
|
|
7,508
|
|
|
|
365,640
|
|
|
|
|
|
|
|
|
|
|
|
|
B
|
|
|
|
1,877
|
|
|
|
87,281
|
|
James S. Welch, Jr.
(8)
|
|
|
15,014
|
|
|
|
551,785
|
|
|
|
A
|
|
|
|
3,710
|
|
|
|
180,677
|
|
|
|
|
|
|
|
|
|
|
|
|
B
|
|
|
|
927
|
|
|
|
43,106
|
|
|
|
|
|
(1)
|
On October 27, 2008, we completed a special distribution of
shares of our Class B common stock. For every four shares
of Class A or Class B common stock held as of the
record date, stockholders received one share of Class B common
stock, with fractional shares payable in cash (outstanding
option and SSAR awards were rounded up to the next whole share).
Outstanding equity award amounts and exercise prices were
adjusted as of October 27, 2008, to account for this
distribution, and are presented herein on an adjusted basis.
|
|
|
(2)
|
All option and SSAR awards are denominated in the form of
Class B common stock.
|
|
|
(3)
|
Value realized on exercise equals the difference between the
option/SSAR exercise price and the market price of the
underlying shares on the date of exercise, multiplied by the
number of shares for which the option/SSAR was exercised.
|
|
|
(4)
|
The awards of Class A common stock shown in this column
were granted on July 22, 2004. The awards of Class B
common stock shown in this column are also considered to have a
grant date of July 22, 2004, but were issued on
October 27, 2008, in connection with the Companys
special stock distribution. The vesting date for all stock
awards shown on this table was April 30, 2009.
|
|
|
(5)
|
Value realized on vesting equals the market price of the
underlying securities on the vesting date, multiplied by the
number of shares that vested. The closing prices of our
Class A common stock and Class B common stock on the
vesting date, April 30, 2009, were $48.70 and $46.50,
respectively.
|
|
|
(6)
|
Mr. Varga exercised 29,277 options for Class B common
stock on December 17, 2008. Of those options, 12,064 had an
exercise price of $30.62 and a market price of $51.46, and
17,213 had an exercise price of $25.06 and a market price of
$51.46.
|
|
|
(7)
|
Mr. Bareuther exercised 14,980 options for Class B
common stock on March 11, 2009, with an exercise price of
$24.30 and a market price of $37.00.
|
|
|
(8)
|
Mr. Welch exercised 15,014 options for Class B common
stock on June 12, 2008, with an exercise price of $24.30
and a market price of $61.05. These options were exercised
before the Companys special stock distribution in October
2008, however, the number of options, exercise price and market
price are presented herein on an adjusted basis.
|
42
Pension
Benefits.
We maintain both tax-qualified and non-qualified supplemental
excess retirement plans. The following table sets forth the
present value of accumulated pension benefits payable to each of
our NEOs under our tax-qualified base plan, the Salaried
Employees Retirement Plan, and under our non-qualified excess
plan, the Supplemental Executive Retirement Plan, based on the
pension earned as of our most recent SFAS 87 measurement
date, April 30, 2009.
Fiscal
2009 Pension Benefits Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present
|
|
|
|
|
|
|
|
Years
|
|
Value of
|
|
Payments
|
|
|
|
|
|
Credited
|
|
Accumulated
|
|
During Last
|
|
|
|
|
|
Service
|
|
Benefit
|
|
Fiscal Year
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
(1)
|
|
($)
|
|
|
|
|
Paul C. Varga
|
|
Qualified
|
|
22.00
|
|
156,031
|
|
|
0
|
|
|
|
Non-Qualified
|
|
22.00
|
|
1,456,213
|
|
|
0
|
|
Donald C. Berg
|
|
Qualified
|
|
19.83
|
|
273,628
|
|
|
0
|
|
|
|
Non-Qualified
|
|
19.83
|
|
819,086
|
|
|
0
|
|
James L. Bareuther
|
|
Qualified
|
|
14.50
|
|
428,992
|
|
|
0
|
|
|
|
Non-Qualified
|
|
14.50
|
|
1,459,040
|
|
|
0
|
|
James S. Welch, Jr.
|
|
Qualified
|
|
19.75
|
|
198,997
|
|
|
0
|
|
|
|
Non-Qualified
|
|
19.75
|
|
627,263
|
|
|
0
|
|
Mark I. McCallum
|
|
Qualified
|
|
5.75
|
|
81,765
|
|
|
0
|
|
|
|
Non-Qualified
|
|
5.75
|
|
179,214
|
|
|
0
|
|
|
|
|
(1)
|
|
The amount in this column
represents the actuarial present value of each NEOs
accumulated pension benefit as of our SFAS 87 measurement
date, April 30, 2009, using a 7.94% discount rate,
age 65 expected retirement age, 2008 Static Mortality Table
for Annuitants and Non-Annuitants, and life annuity form of
payment.
|
Brown-Forman Corporation Salaried Employees Retirement
Plan.
Most U.S. salaried employees participate in
the tax-qualified Salaried Employees Retirement Plan. This plan
is a funded, non-contributory, defined-benefit pension plan that
provides monthly retirement benefits based on age at retirement,
years of service, and the average of the five highest
consecutive calendar years compensation during the final
ten years of employment. Retirement benefits are not offset by
Social Security benefits and are normally payable at
age 65. A participants interest vests after five
years of service.
Brown-Forman Corporation Supplemental Executive Retirement
Plan.
U.S. Federal tax law limits the amount of
compensation that may be used annually to accrue benefits under
our tax-qualified Salaried Employees Retirement Plan. Therefore,
for employees whose compensation exceeds these limits, including
our NEOs, we maintain a non-qualified Supplemental Executive
Retirement Plan (SERP). The SERP provides retirement
benefits to make up the difference between a participants
accrued benefit calculated under the tax-qualified Salaried
Employees Retirement Plan and the ceiling imposed by federal tax
law. The SERP also provides faster vesting for certain key
employees who join us mid-career.
The formula to calculate the combined total pension benefit
under both plans includes the following factors:
|
|
|
|
|
Final Average Compensation (FAC) is the average of
the highest consecutive five calendar years in the last ten
calendar years employed. For this purpose, compensation is
considered to be salary and short-term incentive compensation
(not long-term cash or equity compensation).
|
43
|
|
|
|
|
Social Security Covered Compensation (CC) is the
average of the Social Security Taxable Wage Base in effect for
each calendar year during the 35 years ending with the
calendar year in which a participant attains his or her Social
Security Retirement age.
|
|
|
|
Credited Service (Service) is the number of years
and whole months of service the participant is employed by the
Company at a location or division that participates in the
pension plan, up to a maximum of 30 years.
|
The formula to determine monthly pension for a participant
retiring at the regular retirement age of 65 is:
|
|
|
|
|
1.3% multiplied by FAC up to CC;
|
|
|
|
1.75% multiplied by FAC above CC;
|
|
|
|
The sum of the above multiplied by Service; and
|
|
|
|
Divide by 12 to get the monthly pension (before reduction for
early retirement or optional forms of payment).
|
For example, for someone with FAC of $400,000, CC of $80,000,
and Service of 30 years:
|
|
|
|
|
.013 X $80,000 =
|
|
$
|
1,040
|
|
.0175 X $320,000 =
|
|
$
|
5,600
|
|
|
|
|
|
|
Sum
|
|
$
|
6,640
|
|
Times Service
|
|
|
30
|
|
|
|
|
|
|
Annual age 65 Pension
$199,200
|
|
|
|
|
Divide by
|
|
|
12
|
|
|
|
|
|
|
Monthly Pension
|
|
$
|
16,600
|
|
Early retirement is available at age 55 under both plans.
However, those who retire before age 65 have their pension
payments reduced by 3% for each year
(
1
/
4
of 1% for each month) that payments start prior to age 65.
James L. Bareuther is our only NEO who is currently eligible for
early retirement. Retirees can also reduce their pension payment
to purchase optional forms of payment that protect their spouse
or ensure a minimum payment period.
Once the final pension is determined, the federal rules that
govern the maximum pension that can be paid under the qualified
plan are applied to determine the portion to be paid under the
qualified plan, and the remainder becomes payable under the
non-qualified pension plan.
Potential
Payments Upon Termination or
Change-in-Control.
We do not provide our NEOs with any contract, agreement, plan,
or arrangement that allows for payments or benefits upon
termination or a
change-in-control,
and that discriminates in favor of any of the NEOs in scope or
terms of operation.
Retirement.
For those executives who leave the
Company at or after age 55 with at least 5 years of
service (considered to be retirees), the incomplete short-term
incentive compensation and long-term cash incentive compensation
cycles continue in effect, pro-rated, and are paid at the same
time and in the same manner as to active employee participants.
Stock options and SSARs continue to be exercisable for the
shorter of their original term, or seven years from the date of
retirement. Restricted stock awards have provisions that permit
the Plan Administrator to provide at least pro-rated vesting in
the event of retirement.
44
Death,
Involuntary Termination for Cause, Involuntary Termination Not
for Cause, Voluntary Termination.
Cash Incentive Compensation.
Executives who are
involuntarily terminated for cause, or who voluntarily terminate
employment prior to retirement age, forfeit awards under
incomplete short-term and long-term incentive compensation
cycles. In the event of death, any incomplete short-term
incentive compensation cycle continues in effect, pro-rated, and
is paid at the same time and in the same manner as to active
employee participants. In the event of death, incomplete
long-term incentive compensation cycles are pro-rated and paid
out as soon as practicable. (Pro-rated long-term cash incentive
compensation payable in the event of death is subject to certain
reductions under the administrative guidelines to the Plan.) If
employment is involuntarily terminated for reasons other than
for cause, and absent the exercise of Plan Administrator
discretion otherwise, awards payable under incomplete short-term
and long-term incentive compensation cycles are forfeited.
Options/SSARs.
Options and SSARs become immediately
exercisable upon death, and must be exercised by the earlier of
the original expiration date, or five years following the date
of death. Options and SSARs expire immediately upon termination
for cause, and upon the earlier of the expiration date or the
end of thirty days following the date of termination, in the
event of voluntary termination. If employment is involuntarily
terminated for reasons other than for cause, and absent the
exercise of Plan Administrator discretion to accelerate the
first exercise date or delay expiration, options and SSARs
expire immediately upon termination.
Restricted Stock.
Restricted stock awards permit the
Plan Administrator to provide at least pro-rated vesting in the
event of death or involuntary termination. Employees terminating
voluntarily and employees terminated for cause forfeit all
unvested restricted stock. Pro-rated vesting of restricted stock
awards is mandatory upon a participants involuntary
termination for reasons other than for cause.
Termination Upon
Change-in-Control.
In
the event of an executives termination upon a
change-in-control,
as defined in the Plan, target awards under incomplete
short-term and long-term incentive compensation cycles are
deemed to have been earned. Vesting is accelerated, and the
Company is required to pay out in cash within thirty days
following the termination, a pro-rated portion of all such
awards. Outstanding options and SSARs become immediately vested
and exercisable, and restrictions upon outstanding restricted
stock awards lapse.
45
The following table illustrates the value of compensation
available to our NEOs had they terminated on April 30,
2009, the final day of our 2009 fiscal year, under various
scenarios. The compensation included is only that which would
have been payable as a direct result of the specified triggering
event.
Fiscal
2009 Potential Payments upon Termination or
Change-in-Control
Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
Termination
|
|
|
Voluntary
|
|
Termination
|
|
|
|
|
|
Upon Change-
|
Name
|
|
Termination
|
|
Not for Cause
|
|
Retirement
|
|
Death
|
|
in-Control
|
|
|
Varga
|
|
|
|
|
|
|
|
|
|
|
Death Benefit
(1)
|
|
$0
|
|
$0
|
|
$0
|
|
$2,000,000
|
|
$0
|
Holiday Bonus
(2)
|
|
0
|
|
16,753
|
|
16,753
|
|
16,753
|
|
16,753
|
STC
(3)
|
|
0
|
|
0
|
|
1,250,000
|
|
1,250,000
|
|
1,250,000
|
LTC
(4)
|
|
0
|
|
0
|
|
3,523,494
|
|
3,062,960
|
|
3,523,494
|
SSARs
(5)
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
RS
(6)
|
|
0
|
|
2,784,290
|
|
0
|
|
0
|
|
4,818,741
|
Total
|
|
0
|
|
2,801,043
|
|
4,790,247
|
|
6,329,713
|
|
9,608,988
|
Berg
|
|
|
|
|
|
|
|
|
|
|
Death Benefit
(1)
|
|
0
|
|
0
|
|
0
|
|
2,604,000
|
|
0
|
Holiday Bonus
(2)
|
|
0
|
|
9,028
|
|
9,028
|
|
9,028
|
|
9,028
|
STC
(3)
|
|
0
|
|
0
|
|
260,000
|
|
260,000
|
|
260,000
|
LTC
(4)
|
|
0
|
|
0
|
|
918,345
|
|
800,098
|
|
918,345
|
SSARs
(5)
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
RS
(6)
|
|
0
|
|
400,026
|
|
0
|
|
0
|
|
644,425
|
Total
|
|
0
|
|
409,054
|
|
1,187,373
|
|
3,673,126
|
|
1,831,798
|
Bareuther
(7)
|
|
|
|
|
|
|
|
|
|
|
Death Benefit
(1)
|
|
0
|
|
0
|
|
0
|
|
1,656,000
|
|
0
|
Holiday Bonus
(2)
|
|
9,462
|
|
9,462
|
|
9,462
|
|
9,462
|
|
9,462
|
STC
(3)
|
|
260,000
|
|
0
|
|
260,000
|
|
260,000
|
|
260,000
|
LTC
(4)
|
|
1,205,785
|
|
0
|
|
1,205,785
|
|
1,054,378
|
|
1,205,785
|
SSARs
(5)
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
RS
(6)
|
|
0
|
|
725,666
|
|
0
|
|
0
|
|
1,069,793
|
Total
|
|
1,475,247
|
|
735,128
|
|
1,475,247
|
|
2,979,840
|
|
2,545,040
|
Welch
|
|
|
|
|
|
|
|
|
|
|
Death Benefit
(1)
|
|
0
|
|
0
|
|
0
|
|
2,614,000
|
|
0
|
Holiday Bonus
(2)
|
|
0
|
|
9,115
|
|
9,115
|
|
9,115
|
|
9,115
|
STC
(3)
|
|
0
|
|
0
|
|
260,000
|
|
260,000
|
|
260,000
|
LTC
(4)
|
|
0
|
|
0
|
|
1,159,524
|
|
1,029,174
|
|
1,159,524
|
SSARs
(5)
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
RS
(6)
|
|
0
|
|
613,832
|
|
0
|
|
0
|
|
946,967
|
Total
|
|
0
|
|
622,947
|
|
1,428,639
|
|
3,912,289
|
|
2,375,606
|
McCallum
|
|
|
|
|
|
|
|
|
|
|
Death Benefit
(1)
|
|
0
|
|
0
|
|
0
|
|
2,110,000
|
|
0
|
Holiday Bonus
(2)
|
|
0
|
|
6,250
|
|
6,250
|
|
6,250
|
|
6,250
|
STC
(3)
|
|
0
|
|
0
|
|
260,000
|
|
260,000
|
|
260,000
|
LTC
(4)
|
|
0
|
|
0
|
|
1,022,332
|
|
880,912
|
|
1,022,332
|
SSARs
(5)
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
RS
(6)
|
|
0
|
|
245,966
|
|
0
|
|
0
|
|
505,210
|
Total
|
|
0
|
|
252,216
|
|
1,288,582
|
|
3,257,162
|
|
1,793,792
|
46
|
|
|
|
(1)
|
Death benefit includes amounts provided by the Company as an
insurance benefit in the event of the employees death
(generally available to all salaried employees) and additional
amounts elected and paid for by each NEO as optional insurance
coverage.
|
|
|
(2)
|
Pro-rated holiday bonus is provided in the event of retirement,
death, involuntary termination other than for cause, and
change-in-control.
Holiday bonus is calculated based on a December 1
November 30 payment cycle.
|
|
|
(3)
|
Pro-rated short-term cash incentives are provided in the event
of retirement or death based on actual Company performance.
Pro-rated short-term cash incentives are provided in the event
of termination upon
change-in-control
based on target Company performance. Amounts shown reflect
payments based on target levels of performance for fiscal 2009.
|
|
|
(4)
|
Continued vesting of pro-rated long-term cash awards is provided
in the event of retirement or death, based on the number of days
worked during the performance period. Accelerated vesting of
pro-rated long-term cash awards is provided in the event of
termination upon a
change-in-control.
For retirement and termination upon
change-in-control
scenarios, amounts shown represent actual performance applied to
prior performance periods and target performance applied to the
current and future performance periods. For death scenarios,
amounts shown represent actual performance applied to prior
performance periods and target performance applied to the fiscal
2009 and future performance periods, with the award for the
performance period ending April 30, 2010, reduced by 15%
and the award for the performance period ending April 30,
2011, reduced by 25%, in accordance with the administrative
guidelines to the Plan.
|
|
|
(5)
|
SSARs become non-forfeitable upon retirement and vest
immediately in the event of death and
change-in-control.
Amounts shown in the SSARs line item represent the
value realized upon vesting of unvested SSARs, based upon the
difference between the exercise price and the closing price of
our Class B common stock on April 30, 2009. Amounts
shown are $0 because the exercise prices of all outstanding
unvested SSARs are lower than the closing price of our
Class B common stock on April 30, 2009.
|
|
|
(6)
|
Continued vesting of a pro-rated number of unvested restricted
shares is provided in the event of involuntary termination other
than for cause based on the number of whole or partial months
elapsed at the time of termination divided by the number of
months required for full vesting. Accelerated vesting of
unvested restricted shares is provided in the event of
termination upon a
change-in-control.
Amounts shown represent the number of restricted shares
provided, multiplied by the closing prices of our Class A
and Class B common stock on April 30, 2009, of $48.70
and $46.50, respectively.
|
|
|
(7)
|
As a retirement-eligible NEO, Mr. Bareuther would be
treated as a retiree in the event of voluntary termination.
|
47
This
section describes how we compensate our Directors.
Elements
of Compensation.
Our directors serve one-year terms that begin with their
election at the Annual Meeting of Stockholders held in late July
each year (the Board Year). We offer the following
types of compensation to our non-employee directors:
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|
|
Annual cash retainer
|
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|
|
Equity award for the Board Year
|
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|
|
Committee member retainer
|
|
|
|
Committee chairman retainer
|
|
|
|
Meeting fees for Board and committee meetings
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|
|
Limited personal benefits and perquisites
|
Our compensation philosophy for our non-employee directors is to
provide an annual retainer that is less than that provided by
comparable companies and meeting fees that exceed those provided
by comparable companies. The Compensation Committee believes
that this structure appropriately reflects the importance of
directors attendance and active participation at Board and
committee meetings and compensates for the dedication and time
commitment required for committee service.
Annual Retainer.
The Committee reviews, and if
appropriate, adjusts annually, effective August 1, the
compensation offered to our non-employee directors. Effective
August 1, 2008, our non-employee directors are paid an
annual retainer of $38,000 cash, payable in six installments
over the Board Year. In lieu of cash, each director may elect to
receive all or part of his or her annual retainer in the form of
Class B common stock-settled stock appreciation rights
(SSARs).
Annual Equity Award.
In addition to the annual
retainer, each non-employee director receives an annual grant of
$45,000 in SSARs. All SSARs are denominated in Class B
common stock, and are immediately exercisable. The number of
SSARs awarded to our non-employee directors for fiscal 2009 was
determined by dividing the cash value of the award by the
Black-Scholes value of our Class B common stock as of the
close of trading on the date of grant, July 24, 2008. We
have never backdated or re-priced equity awards to directors. We
do not time our equity award grants relative to the release of
material non-public information (or vice-versa).
Committee-Related Retainers.
We pay our non-employee
director committee chairs an annual retainer of $30,000 cash per
committee chaired, payable in six installments over the Board
Year. We pay our non-employee director committee members (other
than committee chairs) an annual retainer of $10,000 cash,
payable in six installments over the Board Year.
Meeting Fees.
Non-employee directors receive a
meeting fee of $5,000 per Board meeting attended in person (or
telephonically, if personal attendance is not possible for
medical reasons), or $2,500 if attended telephonically or for
partial in-person participation. Committee members and chairs
receive $2,500 per committee meeting attended in person or
telephonically.
Director Candidate Interview Fees.
Non-employee
director members of the Corporate Governance and Nominating
Committee receive the equivalent of a committee meeting fee when
they travel to conduct interviews of potential director
candidates.
Employee Directors.
In addition to, and separate
from, his regular compensation as a Brown-Forman employee, we
pay Geo. Garvin Brown IV $10,250 per month as compensation
for his service as Presiding Chairman of the Board. Otherwise,
we do not pay our employee directors (Geo. Garvin Brown IV, Paul
C. Varga and James S. Welch, Jr.) for serving on our Board,
any of its
48
committees, or on the boards or equivalent bodies of any of our
subsidiaries. For additional information on the compensation we
pay to Geo. Garvin Brown IV as a Brown-Forman employee,
please see the Certain Relationships and Related
Transactions section, which begins on page 51.
Expense Reimbursement.
We reimburse all directors
for reasonable and necessary expenses they incur in performing
their duties as directors, and provide an additional
international travel allowance of $3,000 per meeting to
directors who must travel to Board meetings from outside the
United States. All of our directors are covered under the
Companys travel accident insurance and D&O liability
insurance programs.
We occasionally invite our directors and their spouses to
certain events, including retirement celebrations and award
dinners. We believe these events provide valuable opportunities
for our directors to establish and develop relationships with
our senior executives, long-term stockholders, employees, and
each other, furthering our objective of having a strong and
cohesive Board of Directors.
The following table sets forth the compensation we paid to our
non-employee directors for their service in fiscal 2009.
Fiscal
2009 Director Compensation Table
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
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|
Value and
|
|
|
|
|
|
|
|
|
|
or
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
SSAR
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
(1)
|
|
|
($)
|
|
|
($)
(2)(3)(4)(5)
|
|
|
($)
|
|
|
Earnings
|
|
|
($)
(6)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick Bousquet-Chavanne
|
|
|
63,333
|
|
|
|
|
|
|
|
71,488
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
134,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry D. Bramley
(7)
|
|
|
50,000
|
|
|
|
|
|
|
|
71,488
|
|
|
|
|
|
|
|
|
|
|
|
10,874
|
|
|
|
132,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin S. Brown Jr.
|
|
|
61,167
|
|
|
|
|
|
|
|
38,761
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
99,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owsley Brown II
(8)
|
|
|
10,833
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
10,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald G. Calder
|
|
|
132,000
|
|
|
|
|
|
|
|
38,761
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
170,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John D. Cook
(9)
|
|
|
57,967
|
|
|
|
|
|
|
|
31,860
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
89,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sandra A. Frazier
|
|
|
61,167
|
|
|
|
|
|
|
|
38,761
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
99,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard P. Mayer
|
|
|
143,667
|
|
|
|
|
|
|
|
38,761
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
182,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William E. Mitchell
|
|
|
58,750
|
|
|
|
|
|
|
|
71,488
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
130,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthew R. Simmons
(10)
|
|
|
24,167
|
|
|
|
|
|
|
|
71,488
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
95,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William M. Street
|
|
|
92,000
|
|
|
|
|
|
|
|
38,761
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
130,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dace Brown Stubbs
|
|
|
56,167
|
|
|
|
|
|
|
|
38,761
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
94,928
|
|
|
|
|
(1)
|
|
Amounts in this column include:
annual Board retainer, if paid in cash; annual committee chair
and committee member retainers; and Board and committee meeting
fees. Fees vary based on the length of Board service during the
year, the Board members attendance at Board and committee
meetings, and whether such Board member is chair of a committee.
|
|
(2)
|
|
Amounts include: annual Board
retainer, if paid in equity; and annual equity awards for fiscal
2009. For fiscal 2009, Mr. Bousquet-Chavanne,
Mr. Bramley, Mr. Mitchell and Mr. Simmons elected
to receive their Board retainer in SSARs.
|
|
(3)
|
|
Amounts reflect the dollar amount
of compensation cost recognized for financial statement
reporting purposes for the fiscal year ended April 30,
2009, in accordance with SFAS 123(R). Assumptions used in
the calculation of
|
49
|
|
|
|
|
these amounts are included in
footnote 16 to the Companys audited financial statements
for the fiscal year ended April 30, 2009, which are
included in the Companys Annual Report on
Form 10-K
as filed with the SEC. The grant date fair value of each SSAR
granted to our non-employee directors as of July 24, 2008,
was $57.40. The grant date fair value of the SSARs granted to
John D. Cook on September 25, 2008, was $58.45. All SSARs
granted to non-employee directors are immediately vested and
fully exercisable.
|
|
(4)
|
|
The aggregate number of
Class B common stock options and SSARs outstanding for each
of our non-employee directors as of April 30, 2009, is set
forth below. All such options and SSARs are fully vested and
exercisable.
|
|
|
|
|
|
Name
|
|
|
|
|
|
|
Patrick Bousquet-Chavanne
|
|
|
25,497
|
|
Martin S. Brown Jr.
|
|
|
10,550
|
|
Donald G. Calder
|
|
|
32,304
|
|
John D. Cook
|
|
|
2,793
|
|
Sandra A. Frazier
|
|
|
10,550
|
|
Richard P. Mayer
|
|
|
27,794
|
|
William E. Mitchell
|
|
|
12,985
|
|
William M. Street
|
|
|
102,452
|
|
Dace Brown Stubbs
|
|
|
40,119
|
|
|
|
|
(5)
|
|
On October 27, 2008, we
completed a special distribution of shares of our Class B
common stock. For every four shares of Class A or
Class B common stock held as of the record date,
stockholders received one share of Class B common stock,
with fractional shares payable in cash (outstanding option and
SSAR awards were rounded up to the next whole share).
Outstanding equity award amounts and exercise prices were
adjusted as of October 27, 2008, to account for this
distribution, and are presented herein on an adjusted basis.
|
|
(6)
|
|
For Mr. Bramley, this amount
includes an international travel allowance of $9,000 ($3,000 per
meeting attended in fiscal 2009), product gift of $1,157, and
$717 in travel-related expenses for Mr. Bramleys
spouse to attend certain Board-related events.
|
|
(7)
|
|
Mr. Bramley retired from the
Board effective September 28, 2008.
|
|
(8)
|
|
Owsley Brown II retired from
the Board effective July 24, 2008.
|
|
(9)
|
|
Mr. Cook joined the Board
effective September 25, 2008.
|
|
(10)
|
|
Mr. Simmons retired from the
Board effective January 22, 2009.
|
50
OTHER
INFORMATION
This
section provides other information you should know before you
cast your vote.
Certain
Relationships and Related Transactions.
Related Person Transactions.
SEC regulations require
disclosure of certain transactions between the Company and
specified categories of related persons. A related
person generally includes any individual who served as a
director or executive officer at any time during the last fiscal
year, a director nominee, a person holding more than 5% of the
Companys voting securities, and any immediate family
member of any such person. In order to ascertain information
regarding related person transactions, the Company asks each
director, director nominee, executive officer, and 5% beneficial
owner to disclose any transaction in which the Company
participates and in which the respondent has a direct or
indirect material interest and the amount involved exceeds
$120,000. The Audit Committee reviewed and evaluated all such
transactions for fiscal 2009, each of which is described below.
Director Geo. Garvin Brown IV, a nephew of Director Dace Brown
Stubbs, is a Senior Vice President of Brown-Forman Corporation
and Managing Director of our Western Europe and Africa region.
For a portion of fiscal 2009, Mr. Brown served as Vice
President and Brand Director for Jack Daniels in Europe
and Africa. During fiscal 2009, Mr. Brown received a base
salary of $173,367 and short-term and long-term cash incentive
compensation of $141,561. The Company incurred costs at a net
amount of $358,437 during fiscal 2009 for certain expenses
associated with Mr. Browns living abroad, including
housing costs, benefits, and other assignment-related expenses.
The total cost to Brown-Forman during fiscal 2009, including
additional taxes resulting from his international assignment,
was $920,921. During fiscal 2009, Mr. Brown also received
as an employee of the Company long-term equity-based incentive
compensation of 953 Class B Common SSARs, with an exercise
price of $57.40. The SSARs are exercisable May 1, 2011, and
expire April 30, 2018. This equity award was approved by
the Companys Management Compensation and Benefits
Committee. Mr. Browns compensation is consistent with
that of other employees with similar tenures, responsibilities,
performance histories, and expatriate status. In addition,
Mr. Brown receives a $10,250 per month stipend for serving
as the Presiding Chairman of our Board of Directors. The stipend
was approved by the Compensation Committee of the Board.
As a family-controlled company, we employ individuals who are
immediate family members of our directors, executive officers,
and major stockholders. As of April 30, 2009, we employ
five individuals (Campbell P. Brown, Christopher L. Brown, J.
McCauley Brown, Marshall B. Farrer, and Andrew M. Varga) who are
immediate family members of executive officers, directors, or 5%
beneficial owners, or who are 5% beneficial owners in their own
right. Each of these employees is compensated in a manner
consistent with our employment and compensation policies
applicable to all employees. The aggregate annual compensation
paid by the Company to each of these employees exceeds $120,000.
Laura Lee Brown is a member of the Brown family, and the sister
of Director Dace Brown Stubbs. Ms. Brown owns a parking
garage in downtown Louisville, next to our offices at
626 West Main Street. We lease, at market rates, a number
of parking spaces in this garage, and pay additional amounts for
validations of parking for customers and visitors. For fiscal
2009, the Companys total expense under this arrangement
was $208,519. In addition, Ms. Brown is an investor in the
21c Museum Hotel. Brown-Forman rented hotel rooms and conference
rooms, and provided meals and entertainment at 21c, at market
rates, to various corporate guests. The amount paid to the 21c
Museum Hotel for these expenses in fiscal 2009 was $725,993.
Compensation Committee Interlocks and Insider
Participation.
None of the members of the Compensation
Committee during fiscal 2009, or as of the date of this Proxy
Statement, is or has
51
been an officer or employee of the Company, and no executive
officer of the Company has served on the compensation committee
or board of any company that employed any member of our
Compensation Committee or Board of Directors.
Proposal 2:
Re-approval of the Performance Measures Under the Brown-Forman
2004 Omnibus Compensation Plan
We are asking our stockholders to re-approve the performance
measures used for performance-based awards granted under the
Brown-Forman 2004 Omnibus Compensation Plan, as amended (the
Plan), to preserve our ability to take a federal tax
deduction for certain compensation awards made under the Plan.
Section 162(m) of the Internal Revenue Code of 1986, as
amended, limits to $1 million the amount of annual
compensation expense a public company may deduct when paid to
its chief executive officer and its other three most highly
compensated executive officers, other than the chief financial
officer, unless the compensation is
performance-based and paid under a formal
compensation plan that meets the Internal Revenue Codes
requirements. In order to preserve the deductibility of
performance-based awards granted under the Plan, the material
terms of the performance measures must be disclosed to and
approved by our stockholders at least every five years. These
measures, which have not changed since the Plan was approved by
our stockholders in 2004, must be re-approved at the upcoming
Annual Meeting. We are not amending the Plan, re-approving the
Plan itself, or increasing the number of shares authorized for
issuance under the Plan.
General Information about the Plan.
On July 22,
2004, our stockholders approved the 2004 Omnibus Compensation
Plan, as the successor to both the 1994 Omnibus Compensation
Plan, which provided equity awards to employees, and the
Non-Employee Directors Plan, which provided awards to
non-employee Directors. The 2004 Omnibus Compensation Plan is an
incentive compensation plan designed to reward participants for
individual and Company performance. All short- and long-term
incentive compensation paid by the Company is administered
pursuant to the terms and conditions of the Plan.
Purpose.
The purpose of the Plan is to promote the
interests of the Company and its stockholders by attracting and
retaining key executive officers, directors and employees;
motivating these individuals by means of performance-based
incentives to achieve long-range performance goals; and linking
their compensation to the long-term interests of the Company and
its stockholders.
Administration.
The Plan Administrator for all
participants other than our non-employee directors is the
Compensation Committee of the Board. For our non-employee
directors, the Plan Administrator is the entire Board. Under the
terms of the Plan, the Plan Administrator is authorized to
select participants, determine the type and number of awards to
be granted, and make all other determinations that may be
necessary or desirable for the administration of the Plan.
Eligibility and Award Estimates.
Officers,
employees, and non-employee directors of the Company, its
subsidiaries, and affiliates are eligible to receive awards
under the Plan. The granting of awards under the Plan is at the
discretion of the Plan Administrator; therefore, it is not
possible to determine the number of persons who may be granted
awards or the number of shares subject to awards that may be
granted. For information on the equity and non-equity awards
granted to our NEOs during fiscal 2009 under the Plan, please
see the Grants of Plan Based Awards for Fiscal 2009 Table set
forth on page 37.
Types of Awards.
The Plan permits the following
types of awards: cash, stock options, stock appreciation rights,
stock, restricted stock, market value units, performance units,
and any combination thereof.
Shares Available for Awards under the Plan.
The
maximum number of shares subject to awards that may be granted
under the Plan is 5,028,571. Under the terms of the Plan, we try
to limit the source of shares delivered to participants under
the Plan to those purchased by the Company from time to time on
the open market, in private transactions, or otherwise. If we
determine that the timing of
52
such purchases may unduly affect the market price of the shares,
the purchases may be spread over a period of time sufficient to
minimize such effect. We may use newly issued shares to cover
exercises or redemptions of awards under the Plan, and then
purchase an equal number of shares on the open market or
otherwise as quickly as is reasonably practicable thereafter.
This practice minimizes long-term dilution to our stockholders.
Performance Measures.
Under the terms of the Plan,
performance goals are limited to one or more of the following
Company, affiliate, operating unit or division financial
performance measures:
|
|
|
|
|
earnings before interest, taxes, depreciation
and/or
amortization;
|
|
|
|
operating income or profit;
|
|
|
|
operating efficiencies;
|
|
|
|
return on equity, assets, capital, capital employed or
investment;
|
|
|
|
after tax operating income;
|
|
|
|
net income;
|
|
|
|
earnings or book value per share;
|
|
|
|
cash flow(s);
|
|
|
|
total sales or revenues, or sales or revenues per employee;
|
|
|
|
production (separate work units or SWUs);
|
|
|
|
stock price or total shareholder return;
|
|
|
|
dividends; or
|
|
|
|
strategic business objectives, consisting of one or more
objectives based on meeting specified cost targets, business
expansion goals or goals relating to acquisitions or
divestitures;
|
|
|
|
or any combination thereof.
|
Each goal may be expressed on an absolute
and/or
relative basis, may take into account the exclusion of certain
items deemed appropriate by the Plan Administrator, may be based
on or otherwise employ comparisons based on internal targets,
the past performance of the Company or any affiliate, operating
unit, or division of the Company,
and/or
the
past or current performance of other companies, and in the case
of earnings-based measures, may use or employ comparisons
relating to capital, to shareholders equity
and/or
shares outstanding, or to assets or net assets.
The discussion above is a summary of the Plan and is qualified
in its entirety by the specific language of the Plan. The Plan,
together with the amendments thereto, has been filed with the
SEC as an exhibit to this Proxy Statement.
The Board of Directors unanimously recommends a vote
FOR
the re-approval of the performance
measures set forth in the Brown-Forman 2004 Omnibus Compensation
Plan.
53
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
Number of securities to be
|
|
|
Weighted-average
|
|
|
remaining available for
|
|
|
issued upon exercise of
|
|
|
exercise price of
|
|
|
future issuance under
|
|
|
outstanding options and
|
|
|
outstanding options and
|
|
|
equity compensation
|
Plan Category
|
|
SSARs
|
|
|
SSARs
|
|
|
plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
4,173,651
|
|
|
$
|
40.11
|
|
|
|
5,028,571
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders
(1)
|
|
|
141,036
|
|
|
$
|
26.09
|
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,314,687
|
|
|
$
|
39.65
|
|
|
|
5,028,571
|
|
|
|
(1)
|
|
Our Non-Employee Directors Plan,
which was discontinued in 2004 upon our stockholders
approval of the 2004 Omnibus Compensation Plan, was not
submitted to stockholders for approval.
|
|
(2)
|
|
No further awards may be made under
the Non-Employee Directors Plan.
|
Other
Proposed Action.
As of June 26, 2009, we know of no business to come before
the meeting other than the election of our Board of Directors
and the re-approval of performance measures under our 2004
Omnibus Compensation Plan. If any other corporate business
should be properly presented at the meeting, the proxies will be
voted in accordance with the judgment of the persons holding
them.
Stockholder
Proposals for the 2010 Annual Meeting.
To be considered for inclusion in next years Proxy
Statement and form of proxy relating to the 2010 Annual Meeting
of Stockholders, stockholder proposals must be received by us at
our principal executive offices at 850 Dixie Highway,
Louisville, Kentucky 40210, not later than February 26,
2010. Proposals should be sent to the attention of Matthew E.
Hamel, our Secretary, and must comply with SEC requirements
related to the inclusion of stockholder proposals in
Company-sponsored proxy materials. Proposals received between
February 27 and May 12, 2010, will not be included in
our proxy materials for the 2010 Annual Meeting. Proposals
received after May 12, 2010, will be considered untimely,
and the proxies solicited by us for next years Annual
Meeting will confer discretionary authority to vote on any such
matters without a description of them in the Proxy Statement for
that Annual Meeting.
By Order of the Board of Directors
Matthew E. Hamel
Secretary
Louisville, Kentucky
June 26, 2009
54
Exhibit A
BROWN-FORMAN 2004 OMNIBUS COMPENSATION PLAN
Unless the context clearly requires otherwise, references to Sections and
Articles are to
sections and articles of this plan, and capitalized terms have the meaning
assigned to them below.
All references to statutes or regulations mean those statutes or regulations as
amended from time
to time, and any successors to those statutes or regulations.
ARTICLE 1
ESTABLISHMENT, OBJECTIVES AND DURATION
1.1
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|
ESTABLISHMENT. Brown-Forman Corporation, a Delaware corporation (the
Company), hereby establishes an incentive compensation plan to be known
as the Brown-Forman 2004 Omnibus Compensation Plan (the Plan), as set out in
this document. The Plan permits the Plan Administrator to grant Awards (as
defined below).
|
1.2
|
|
OBJECTIVES. The Plans objectives are:
|
(a)
|
|
to optimize the Companys profitability and growth through
incentives which are
consistent with the Companys goals and which link the personal interests
of
Participants to those of the Companys stockholders;
|
|
(b)
|
|
to provide Participants with an incentive for excellence in
individual performance;
|
|
(c)
|
|
to promote teamwork among Participants;
|
|
(d)
|
|
to provide flexibility to the Company in its ability to motivate,
attract and retain
the services of Participants who make significant contributions to the
Companys
success; and
|
|
(e)
|
|
to allow Participants to share in the Companys success.
|
1.2
|
|
DURATION. Subject to (a) approval by the Companys stockholders, and
(b) the Boards right to amend or terminate the Plan at any time pursuant to
Article 12, the Plan shall take effect as of the Effective Date, and remain in effect until
Participants have bought or acquired all Shares subject to the Plan. The Plan Administrator
may not, however, grant any Awards under the Plan on or after July 22, 2014.
|
ARTICLE 2
DEFINITIONS
Whenever used in the Plan, the following terms shall have the following
meanings:
2.1
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|
ADJUSTED MARKET VALUE is defined in Section 11.2(b).
|
|
2.2
|
|
AFFILIATE shall mean (i) any entity that, directly or indirectly, is
controlled by the
Company, (ii) any entity in which the Company has a significant equity
interest, (iii) an
affiliate of the Company, as defined in Rule 12b-2 promulgated under
Section 12 of the
Exchange Act, and (iv) any entity in which the Company has an ownership
voting
interest, in each case as designated by the Plan Administrator (subject to
the Boards
approval) as being a participating employer in the Plan.
|
|
2.3
|
|
ANNUAL INCENTIVE AWARD means a short-term incentive Award granted
under
Article 6.
|
|
2.4
|
|
AWARD means, individually or collectively, a grant under this Plan
of Annual
Incentive Awards and/or Long Term Incentive Awards.
|
|
2.5
|
|
AWARD AGREEMENT shall mean any written agreement, contract or other
instrument or document evident in any Award, which may, but need not, be
executed or
acknowledged by a Participant.
|
|
2.6
|
|
AWARD OPPORTUNITY means the total Award that a Participant may earn
under the
Plan with respect to a Plan Year or other Performance Period, as
established by the Plan
Administrator.
|
|
2.7
|
|
BASE PERIOD means the three-month period ending three months prior
to the first
date on which a Potential Change in Control occurs.
|
|
2.8
|
|
BASE PERIOD FAIR MARKET VALUE means, with respect to an Option (or
SAR),
the average Fair Market Value per Share for each date on which Shares were
traded
during the Base Period, or portion of the Base Period, during which the
Option (or SAR)
was outstanding. If an Option (or SAR) is granted during the Restricted
Period prior to a
Change in Control, the Base Period Fair Market Value for the Option (or
SAR) shall be
its exercise price (or grant price).
|
|
2.9
|
|
BENEFICIAL OWNER or BENEFICIAL OWNERSHIP shall have the meaning
ascribed to such term in Rule 13d-3 under the Exchange Act.
|
|
2.10
|
|
BOARD means the Companys board of directors.
|
|
2.11
|
|
CAUSE shall mean, unless otherwise defined in the applicable Award
Agreement, with
respect to any Participant:
|
(a)
|
|
the willful and continued failure of the Participant to perform
substantially the
Participants duties with the Company (other than any such failure
resulting from
incapacity due to physical or mental illness), after a written demand for
substantial
|
E-2
|
|
performance is delivered to the Participant by the Board, the chief
executive
officer of the Company or the senior officer of the Company supervising
the
Participant, which demand identifies the manner in which the Board, the
chief
executive officer of the Company or the senior officer of the Company
supervising the Participant believes that the Participant has not
substantially
performed the Participants duties, or
|
|
(b)
|
|
the engaging by the Participant in illegal conduct or gross
misconduct that is
materially and demonstrably injurious to the Company.
|
|
|
For purposes of this definition, no act or failure to act on the part of
the Participant shall
be considered willful unless it is done, or omitted to be done, by the
Participant in bad
faith or without reasonable belief that the Participants action or
omission was in the best
interests of the Company. Any act or failure to act based upon authority
given pursuant to
a resolution duly adopted by the Board or upon the instructions of the
chief executive
officer or a senior officer of the Company or based upon the advice of
counsel for the
Company shall be conclusively presumed to be done, or omitted to be done,
by the
Participant in good faith and in the best interests of the Company. Any
determination of
Cause for purposes of the Plan or any Award shall be made by the Plan
Administrator in
its sole discretion.
|
2.12
|
|
CHANGE IN CONTROL of the Company means, and shall be deemed to have
occurred upon, any of the following events:
|
(a)
|
|
individuals who, as of the close of business on July 22, 2004,
constitute the Board
(the Incumbent Board) cease for any reason to constitute at least a
majority of
the Board; provided, however, that any individual becoming a director
after such
time on July 22, 2004 and whose election, or nomination for election by
the
Companys stockholders, was approved by a vote of at least a majority of
the
Directors then comprising the Incumbent Board shall be considered a member
of
the Incumbent Board, but excluding, for this purpose, any individual whose
initial
assumption of office occurs as a result of an actual or threatened
election contest
with respect to the election or removal of Directors or other actual or
threatened
solicitation of proxies or consents by or on behalf of a Person other than
the
Board;
|
|
(b)
|
|
consummation by the Company of a reorganization, merger or
consolidation or
sale or other disposition of all or substantially all of the assets of the
Company or
the acquisition of assets or stock of another entity (a Business
Combination), in
each case, unless, following the Business Combination,
|
(1)
|
|
all or substantially all of the Beneficial Owners of the combined
voting
power of the then Outstanding Voting Securities of the Company
immediately before the Business Combination beneficially own, directly
|
E-3
|
|
or indirectly, more than fifty percent (50%) of the combined voting power
of the Outstanding Voting Securities of the corporation resulting from the
Business Combination (including, without limitation, an entity that as a
result of such transaction owns the Company or all or substantially all of
the Companys assets either directly or through one or more affiliates) in
substantially the same proportions that they owned the Outstanding Voting
Securities of the Company immediately before the Business Combination,
and
|
|
(2)
|
|
no Person, excluding any employee benefit plan (or related trust)
of the
Company or such corporation resulting from the Business Combination,
beneficially owns, directly or indirectly, twenty percent (20%) or more of
the combined voting power of the Outstanding Voting Securities of the
corporation resulting from the Business Combination except to the extent
that such ownership existed before the Business Combination, and
|
|
(3)
|
|
at least a majority of the directors of the corporation resulting
from the
Business Combination were Directors on the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for the Business Combination; or
|
(c)
|
|
the approval by the Companys stockholders of a plan of
liquidation and
dissolution.
|
2.13
|
|
CHANGE IN CONTROL PRICE shall mean, unless otherwise defined in the
applicable Award Agreement, the closing sale price on the principal
securities exchange
on which the Shares are traded, or the highest price per share paid or
offered in any bona
fide transaction related to a Potential Change in Control or Change in
Control of the
Company at any time during the sixty (60) day period immediately preceding
the
occurrence of the Change in Control (or, where applicable, the occurrence
of the Potential
Change in Control event), in each case as determined by the Plan
Administrator except
that, in the case of Incentive Stock Options and Stock Appreciation Rights
relating to
Incentive Stock Options, such price shall be based only on transactions
reported for the
date on which the optionee exercises such Stock Appreciation Rights.
|
2.14
|
|
CODE means the Internal Revenue Code of 1986, as amended from time
to time.
|
2.15
|
|
COMPANY means Brown-Forman Corporation, a Delaware corporation, and
to the
extent it is appropriate in the context of the Plan provision, the
Companys Affiliates, as
well as any successor to any of such entities as provided in Section 15.4.
|
2.16
|
|
COMPENSATION COMMITTEE means the members of the Board who are
serving as
its Compensation Committee at the time of the action to be taken. Each
member of the
Compensation Committee shall be (a) an independent director within the
meaning of
|
E-4
|
|
the listing standards of the New York Stock Exchange; (b) a non-employee
director as
that term is defined by the rules and regulations of the Securities and
Exchange
Commission (including Rule 16b-3); and (c) an outside director as that
term is defined
by the regulations applicable to Internal Revenue Code Section 162(m), but
each such
qualification shall be applicable only so long as the respective
requirement is necessary
under applicable law or rule or any successor provision to such applicable
rule or law.
|
2.17
|
|
DESIGNATED EXECUTIVE OFFICER shall mean at any date (i) any
individual who,
with respect to the previous taxable year of the Company, was a covered
employee of
the Company within the meaning of Section 162(m) of the Code; provided,
however, that
the term Designated Executive Officer shall not include any such
individual who is
designated by the Plan Administrator, in its discretion, at the time of
any Award or at any
subsequent time, as reasonably expected not to be such a covered
employee with
respect to the current taxable year of the Company and (ii) any individual
who is
designated by the Plan Administrator, in its discretion, at the time of
any Award or at any
subsequent time, as reasonably expected to be such a covered employee
with respect to
the current taxable year of the Company or with respect to the taxable
year of the
Company in which any applicable Award will be paid.
|
2.18
|
|
DIRECTOR means any individual who is a Board member.
|
2.19
|
|
DISABILITY shall mean, unless otherwise defined in the applicable
Award
Agreement, a disability that would qualify as a total and permanent
disability under the
Companys (or an Affiliates, if applicable) then current long-term
disability plan.
|
2.20
|
|
EFFECTIVE DATE means July 22, 2004.
|
2.21
|
|
EMPLOYEE means any employee of the Company or an Affiliate.
|
2.22
|
|
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended
from time
to time.
|
2.23
|
|
EXECUTIVE OFFICER means an Employee whom the Board has determined is
an
officer as defined in Rule 16a-1(f) under the Exchange Act (or its
successor rule), as of
the date of vesting and/or payout of an Award, as applicable.
|
2.24
|
|
FAIR MARKET VALUE means (i) the closing sale price on the principal
securities
exchange on which the Shares are traded on the relevant date (or, if no
Shares are traded
on the relevant date, the last previous day on which a sale was reported),
or (ii) in the
event there is no public market for the Shares on such date, the fair
market value as
determined in good faith by the Plan Administrator in its sole discretion.
|
2.25
|
|
FREESTANDING SAR means a SAR granted independently of any Options,
as
described in Section 7.5.
|
E-5
2.26
|
|
IMMEDIATE FAMILY means, with respect to a Participant, such
Participants
children and grandchildren, including adopted children and grandchildren,
stepchildren,
parents, stepparents, grandparents, spouse, siblings (including half
brothers and sisters),
father-in-law, mother-in-law, daughters-in-law and sons-in-law.
|
2.27
|
|
INCENTIVE STOCK OPTION or ISO means an option to buy Shares
granted under
Section 7.4 that is designated an Incentive Stock Option and that is
intended to meet the
requirements of Code Section 422.
|
|
2.28
|
|
INDEXED OPTION means an Option with an exercise price that either
increases by a
fixed percentage over time or changes by reference to a published index.
|
|
2.29
|
|
LONG TERM INCENTIVE AWARD means a long-term incentive Award granted
under Article 7.
|
|
2.30
|
|
MARKET VALUE UNIT or MVU means an Award, designated as an MVU,
granted
pursuant to Section 7.3.
|
|
2.31
|
|
NON-EMPLOYEE DIRECTOR means a Director who is not an Employee.
|
|
2.32
|
|
NON-QUALIFIED STOCK OPTION or NQSO means an option to buy Shares
granted under Section 7.4 which is not intended to meet the requirements
of Code Section
422.
|
|
2.33
|
|
OPTION means an Incentive Stock Option, Indexed Option or a
Non-qualified Stock
Option, as described in Section 7.4.
|
|
2.34
|
|
OPTION PRICE means the price at which a Participant may buy a Share
under an
Option.
|
|
2.35
|
|
OUTSIDE DIRECTOR means, with respect to the grant of an Award, a
member of the
Board then serving on the Compensation Committee.
|
|
2.36
|
|
OUTSTANDING VOTING SECURITIES means, with respect to a corporation,
the
then outstanding voting securities entitled to vote generally in the
election of directors of
the corporation.
|
|
2.37
|
|
PARTICIPANT means any Employee or Director.
|
|
2.38
|
|
PERFORMANCE-BASED EXCEPTION means the performance-based exception
from the tax deductibility limitations of Code Section 162(m).
|
E-6
2.39
|
|
PERFORMANCE PERIOD means such period of time as determined by the
Plan
Administrator.
|
|
2.40
|
|
PERFORMANCE UNIT means an Award granted to a Participant as
described in
Section 7.6.
|
|
2.41
|
|
PERIOD OF RESTRICTION means the period during which the transfer of
Shares of
Restricted Stock is limited in some way (based on the passage of time, the
achievement of
performance goals, or upon the occurrence of other events as determined by
the Plan
Administrator), and during which the Shares are subject to a substantial
risk of forfeiture,
as provided in Section 7.2.
|
|
2.42
|
|
PERMITTED TRANSFEREE means a Participants Immediate Family, a
Permitted
Trust or a partnership of which the only partners are members of the
Participants
Immediate Family.
|
|
2.43
|
|
PERMITTED TRUST means a trust solely for the benefit of a
Participant or a
Participants Immediate Family.
|
|
2.44
|
|
PERSON shall have the meaning ascribed to such term in Section
3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
group as
defined in Section 13(d) thereof.
|
|
2.45
|
|
PLAN ADMINISTRATOR shall mean, for all Persons other than Outside
Directors,
the Compensation Committee, and shall include any person or committee to
whom
authority is delegated from time-to-time pursuant to Section 3.3 hereof.
With respect to
Outside Directors, the Plan Administrator shall mean the entire Board.
|
|
2.46
|
|
PLAN YEAR means the Companys Fiscal Year.
|
|
2.47
|
|
POTENTIAL CHANGE IN CONTROL of the Company means, and shall be
deemed
to have occurred upon, any of the following events:
|
(a)
|
|
the Company enters into an agreement, the consummation of which
would result
in the occurrence of a Change in Control of the Company;
|
|
(b)
|
|
any Person (including the Company) publicly announces an
intention to take or to
consider taking actions which if consummated would constitute a Change in
Control of the Company;
|
|
(c)
|
|
any Person (other than the Company, a Person who as of May 1,
2004 is reporting
its Outstanding Voting Securities on Schedule 13D or who subsequently
files a
Schedule 13D solely by virtue of acquiring Outstanding Voting Securities
from
such a Person under the laws of descent and distribution or upon
liquidation of a
|
E-7
|
|
trust, or a Person reporting its acquisition of Outstanding Voting
Securities on
Schedule 13G) becomes the Beneficial Owner, directly or indirectly, of
securities
of the Company representing five percent (5%) or more of the combined
voting
power of the Outstanding Voting Securities of the Company; or
|
|
(d)
|
|
the Board adopts a resolution to the effect that, for purposes of
this Plan, a
potential Change in Control of the Company has occurred.
|
2.48
|
|
RESTRICTED PERIOD shall mean the period beginning upon the
occurrence of a
Potential Change in Control and ending at the end of the twelfth month
following the
month in which the Potential Change in Control occurs, if a Change in
Control has not
occurred prior to the end of such month. Notwithstanding the foregoing,
in the event of a
Potential Change in Control described in Section 2.47(a), the Restricted
Period shall end
upon the first to occur of the end of the period described in the
immediately preceding
sentence or the sixtieth day following the termination of the agreement
described in
Section 2.47(a). If a Change in Control occurs before the end of the
twelfth month
following the Potential Change in Control, the Restricted Period shall
continue until all
Options (and SARs) granted hereunder have been exercised or canceled.
|
|
2.49
|
|
RESTRICTED STOCK means an Award granted to a Participant pursuant to
Section
7.2.
|
|
2.50
|
|
RETIREMENT shall mean, unless otherwise defined in the applicable
Award
Agreement, the voluntary, elective separation of a Participant from the
employ or service
of the Company or any of its Affiliates after the Participant has attained
(a) age 60, or (b)
both age 55 and at least fifteen (15) years of service with the Company or
any of its
Affiliates.
|
|
2.51
|
|
SHARES means the shares of the Companys Class A or Class B Common
Stock, or
any combination of Class A or Class B Common Stock, as the Plan
Administrator
determines.
|
|
2.52
|
|
STOCK APPRECIATION RIGHT or SAR means an Award, granted alone or
in
connection with a related Option, designated as an SAR, pursuant to
Section 7.5.
|
|
2.53
|
|
TANDEM SAR means a SAR granted in connection with a related Option
pursuant to
Section 7.5. A holder exercising a Tandem SAR must forfeit the right to
buy a Share
under the related Option; conversely, a holder of a Tandem SAR buying a
Share under the
Option will have the Tandem SAR canceled proportionately.
|
|
2.54
|
|
TARGET INCENTIVE AWARD is defined in Section 5.7(c).
|
E-8
ARTICLE 3
ADMINISTRATION
3.1
|
|
AUTHORITY OF PLAN ADMINISTRATOR. The Plan shall be administered by
the
Plan Administrator, provided however, with respect to Awards to Outside
Directors, all
references in the Plan to the Plan Administrator shall be deemed to be
references to the
Board.
|
(a)
|
|
Powers of Plan Administrator. Subject to the terms of the Plan
and applicable
law, and in addition to other express powers and authorizations conferred
on the
Plan Administrator by the Plan, the Plan Administrator shall have full
power and
authority in its discretion to:
|
(i)
|
|
designate Participants;
|
|
(ii)
|
|
determine the type or types of Awards to be granted to a
Participant;
|
|
(iii)
|
|
determine the number of Shares to be covered by, or with
respect to which
payments, rights or other matters are to be calculated in connection with
Awards;
|
|
(iv)
|
|
determine the timing, terms, and conditions of any Award;
|
|
(v)
|
|
accelerate the time at which all or any part of an Award may be
settled or
exercised;
|
|
(vi)
|
|
determine whether, to what extent, and under what circumstances
Awards
may be settled or exercised in cash, Shares, other securities, other
Awards
or other property, or canceled, forfeited or suspended and the method or
methods by which Awards may be settled, exercised, canceled, forfeited or
suspended;
|
|
(vii)
|
|
determine whether, to what extent, and under what
circumstances cash,
Shares, other securities, other Awards, other property and other amounts
payable with respect to an Award shall be deferred either automatically or
at the election of the holder thereof or of the Plan Administrator;
|
|
(viii)
|
|
interpret and administer the Plan and any instrument or
agreement relating
to, or Award made under, the Plan;
|
|
(ix)
|
|
except to the extent prohibited by the Plan, amend or modify the
terms of
any Award at or after grant with the consent of the holder of the Award;
|
E-9
(x)
|
|
establish, amend, suspend or waive such rules and regulations and
appoint
such agents as it shall deem appropriate for the proper administration of
the Plan; and
|
|
(xi)
|
|
make any other determination and take any other action that the
Plan
Administrator deems necessary or desirable for the administration of the
Plan, subject to the exclusive authority of the Board under Section 12.1
hereunder to amend or terminate the Plan.
|
(b)
|
|
Limitations on Authority. Notwithstanding the provisions of
Section 12.2 hereof
and except as permitted by the provisions of Section 4.4 hereof, the Plan
Administrator shall not have the power to:
|
(i)
|
|
amend the terms of previously granted Options to reduce the
Option Price
of such Options;
|
|
(ii)
|
|
cancel such Options and grant substitute Options with a lower
Option
Price than the canceled Options; or
|
|
(iii)
|
|
adjust upwards the amount payable with respect to any
Awards granted to
comply with the Performance-Based Exception or waive or alter the
performance goals associated therewith.
|
3.2
|
|
PLAN ADMINISTRATOR DISCRETION BINDING. Except as otherwise expressly
provided in the Plan, all designations, determinations, interpretations
and other decisions
under or with respect to the Plan or any Award shall be within the sole
discretion of the
Plan Administrator, may be made at any time by the then applicable Plan
Administrator
and shall be final, conclusive and binding upon all Persons, including the
Company, any
Affiliate, any Participant and any holder or beneficiary of any Award.
|
3.3
|
|
DELEGATION. Subject to the terms of the Plan and applicable law, the
Plan
Administrator may delegate to one or more officers, employees or Directors
of the
Company or of any Affiliate, or to a committee of such persons, the
authority, subject to
such terms and limitations as the Plan Administrator shall determine, to
grant Awards to,
or to cancel, modify or waive rights with respect to, or to alter,
interpret, discontinue,
suspend or terminate Awards held by Participants who are not Executive
Officers or
Directors of the Company, and such delegee, or delegees, shall have all of
the powers,
discretion and protections of the Compensation Committee regarding all
matters within
the scope of such delegation. The Compensation Committee may revoke any
such
delegation at any time. Notwithstanding anything in this Plan to the
contrary, (i) all
awards to Executive Officers must be administered by the Compensation
Committee or a
committee of the Board that is composed solely of two or more
Non-Employee
Directors as that term is used in Rule 16(b)-3 promulgated under the
Exchange Act, and
(ii) unless the Plan Administrator specifically determines that an Award
shall not qualify
|
E-10
|
|
for the Performance-Based Exception, Awards to Designated Executive
Officers must be
administered by the Compensation Committee or a committee that consists of
members
who are outside directors under Section 162(m) of the Code. Subject to
the foregoing
limitation with respect to Executive Officers and Designated Executive
Officers, unless
and until revoked or modified by the Compensation Committee by written
resolution, the
Brown-Forman Management Compensation Review Committee, or the committee
serving similar functions from time to time, shall be designated as the
Plan
Administrator.
|
|
3.4
|
|
NO LIABILITY. No member of the Board or Plan Administrator shall be
liable for any
action taken or determination made in good faith with respect to the Plan
or any Award
granted hereunder.
|
ARTICLE 4
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1
|
|
SHARES AVAILABLE FOR GRANTS. Subject to adjustment as provided in
Section
4.4, the number of Shares or share equivalents (Award units whose
underlying value is
based on Shares) reserved for issuance to Participants under the Plan
shall be 4,900,000
Shares, plus the Shares remaining from the Brown-Forman Omnibus
Compensation Plan,
as amended (the 1994 Plan), which were authorized but not granted
(1,046,051 Shares
as of April 30, 2004). Notwithstanding the foregoing and subject to
adjustment as
provided in Section 4.4, the maximum number of Shares with respect to
which Awards
may be granted under the Plan shall be increased by the number of Shares
with respect to
which Options or other Awards were granted under the 1994 Plan as of the
effective date
of this Plan, but which terminate, expire unexercised or are settled for
cash, forfeited or
cancelled without the delivery of Shares under the terms of the 1994 Plan,
as the case
may be, after the effective date of this Plan.
|
4.2
|
|
DESIGNATED EXECUTIVE OFFICER MAXIMUMS. Unless and until the Plan
Administrator determines that an Award to a Designated Executive Officer
shall not be
designed to comply with the Performance-Based Exception, the following
rules shall
apply to grants of such Awards:
|
(a)
|
|
Shares. For any Plan Year, no Designated Executive Officer may
receive,
pursuant to an Award, Shares, MVUs, Performance Units, stock Options
and/or
SARs for more than 250,000 Shares in the aggregate, which limit shall
include
any Shares represented by an Award that has been canceled.
|
|
(b)
|
|
Cash. The maximum aggregate amount of any Award or Awards
settled in cash
that may be granted to any Designated Executive Officer shall be as
follows:
|
E-11
|
|
|
|
|
Plan Years
|
|
Applicable Maximum
|
1-3
|
|
$
|
4,000,000
|
|
4-6
|
|
$
|
5,000,000
|
|
7-10
|
|
$
|
6,000,000
|
|
|
|
Plan Year 1 shall begin on the Effective Date and end on the first fiscal
year end
of the Company following the Effective Date.
|
4.3
|
|
LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates,
expires or lapses for any reason (except the termination of a Tandem SAR
upon exercise
of the related Option, or the termination of a related Option upon
exercise of the
corresponding Tandem SAR), any Shares subject to such Award shall be
available for the
grant of another Award under the Plan, except that this provision shall
not be executed to
increase the maximum number of authorized shares under Section 4.2.
|
|
4.4
|
|
ADJUSTMENTS. In the event the Plan Administrator determines that any
dividend or
other distribution (whether in the form of cash, Shares, other securities
or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of Shares or other
securities of
the Company, issuance of warrants or other rights to purchase Shares or
other securities
of the Company, or other similar corporate transaction or event affects
the Shares such
that an adjustment is determined by the Plan Administrator, in its sole
discretion, to be
appropriate, then the Plan Administrator shall, in such manner as it may
deem equitable:
|
(a)
|
|
adjust any or all of (1) the aggregate number of Shares or other
securities of the
Company (or number and kind of other securities or property) with respect
to
which Awards may be granted under the Plan; (2) the number of Shares or
other
securities of the Company (or number and kind of other securities or
property)
subject to outstanding Awards under the Plan; and (3) the grant or
exercise price
with respect to any Award under the Plan, provided that the number of
shares
subject to any Award shall always be a whole number;
|
|
(b)
|
|
if deemed appropriate, provide for an equivalent award in respect
of securities of
the surviving entity of any merger, consolidation or other transaction or
event
having a similar effect; or
|
|
(c)
|
|
if deemed appropriate, make provision for a cash payment to the
holder of an
outstanding Award.
|
ARTICLE 5
ELIGIBILITY AND PARTICIPATION
5.1
|
|
ELIGIBILITY. Participation in this Plan is open to all Employees and
Directors.
|
E-12
5.2
|
|
OUTSIDE DIRECTOR ELIGIBILITY. Notwithstanding Section 5.1, Directors
who are
not Employees shall be eligible to receive only Awards granted consistent
with Section
10.2.
|
|
5.3
|
|
ACTUAL PARTICIPATION. The Plan Administrator may from time to time
select,
from all eligible Persons, those to whom Awards shall be granted and shall
determine the
nature and amount of each Award Opportunity and Award.
|
|
5.4
|
|
EMPLOYMENT.
|
(a)
|
|
Rights Not Affected. Nothing in the Plan shall interfere with or
limit in any way
the Companys right to terminate any Participants employment at any time,
nor
confer upon any Participant any right to continue in the Companys employ.
|
|
(b)
|
|
Transfer Not Termination. A transfer of a Participants
employment between the
Company and an Affiliate, or between Affiliates, shall not be deemed to be
a
termination of employment. Upon such a transfer, the Plan Administrator
may,
subject to Sections 12.2 and 12.3, make such adjustments to outstanding
Awards
as it deems appropriate to reflect the changed reporting relationships.
|
|
(c)
|
|
No Right to Award. An Employees status as an Employee confers
no right on
that Employee to receive an Award under this Plan, or, having received any
Award, to receive a future Award.
|
5.5
|
|
PRO RATA PLAN YEAR OR PERFORMANCE PERIOD PARTICIPATION. Except
as otherwise provided in this Section 5.5, the Plan Administrator may
allow Employees
who become eligible after the Plan Year or Performance Period begins to
participate
under this Article on a pro rata basis. Such situations include, but are
not limited to:
|
(a)
|
|
new hires;
|
|
(b)
|
|
the promotion of an Employee from a position which did not
previously meet the
eligibility criteria; or
|
|
(c)
|
|
the transfer of an Employee from an entity which does not
participate in the Plan.
|
|
|
A Designated Executive Officer who becomes eligible after the Plan Year or
Performance
Period begins may participate under this Article on a pro rata basis, but
only if (i) such
Designated Officer is granted the Award during the first twenty-five
percent (25%) of the
Performance Period, or (ii) the Plan Administrator specifically determines
such Award
will not comply with the Performance-Based Exception. Notwithstanding the
foregoing,
Options may be granted under this Plan to Designated Executive Officers at
any time.
|
E-13
(a)
|
|
If, during a Plan Year or Performance Period, a Participant other
than a
Designated Executive Officer changes employment positions at the Company
or
an Affiliate to one which corresponds to a level of Award Opportunity
different
than that existing on the first day of such Plan Year or Performance
Period, the
Participants Award Opportunity may be adjusted by the Plan Administrator
to
reasonably reflect the appropriate level of the Participants Award
Opportunity for
the entire Plan Year or Performance Period.
|
|
(b)
|
|
Except as provided in Section 12.3, the Plan Administrator may
not adjust the
Award Opportunity of a Designated Executive Officer.
|
(a)
|
|
Timing. As soon as practicable in each Plan Year or Performance
Period, the Plan
Administrator shall establish an Award Opportunity for each Participant.
An
Award Opportunity may consist of an Annual Incentive Award, a Long-Term
Incentive Award or both types of Awards. As soon as is necessary to
comply with
Code Section 162(m), the Plan Administrator shall establish an Award
Opportunity pursuant to Article 8 for each Designated Executive Officer.
|
|
(b)
|
|
Measures. An Award Opportunity shall be a function of one or
more performance
measures and goals selected by the Plan Administrator, and shall reflect
the
Participants job responsibilities and opportunity and authority to affect
overall
financial results. For Designated Executive Officers, the Plan
Administrator can
apply performance measures only as set forth in Article 8.
|
|
(c)
|
|
Alignment. The Plan Administrator shall align the potential
levels of
achievement of the performance goals with the Award Opportunities (the
Target
Incentive Award), such that the level of achievement of the
pre-established
performance goals at the end of the Plan Year or Performance Period will
determine the final Award amounts.
|
5.8
|
|
AWARD DETERMINATIONS.
|
(a)
|
|
Following the completion of each Plan Year or Performance Period,
the Plan
Administrator shall certify, in writing, whether the applicable
performance targets
have been achieved and the amounts, if any, payable to Designated
Executive
Officers for such Performance Period.
|
(b)
|
|
Upon that certification, the final Award shall be computed for
each Participant as
determined by the Plan Administrator according to the pre-established
performance measures and goals and the requirements of this Plan.
|
E-14
(c)
|
|
Subject to Section 5.8(d), Award amounts may vary above or below
the Target
Incentive Award based on the level of achievement of the applicable pre-
established corporate, division, business unit and/or individual goals or
financial
measures, or such other measures as the Plan Administrator shall, from
time to
time, determine, unless otherwise limited by the Plan.
|
|
(d)
|
|
For Designated Executive Officers, the final Award determination
shall be solely
a function of the degree to which the pre-established objective
performance
measures and goals have been achieved but the Plan Administrator may
adjust
such final Award determinations downward.
|
ARTICLE 6
ANNUAL INCENTIVE AWARDS
(a)
|
|
Subject to Section 5.8(a), Annual Incentive Awards shall be paid
in cash or Shares
within ninety (90) calendar days after the end of each Plan Year. In the
event the
Plan Administrator determines that an Annual Incentive Award shall be
payable in
Shares, the Plan Administrator may attach such restrictions to these
Shares as the
Plan Administrator determines is in the best interests of the Company.
|
|
(b)
|
|
No Participant or any other party claiming an interest in amounts
earned under the
Plan shall have any interest whatsoever in any specific Company asset. To
the
extent that any party acquires a right to receive payments under the Plan,
such
right shall be equivalent to that of an unsecured general creditor of the
Company.
|
6.2
|
|
TERMINATION OF EMPLOYMENT. If a Participants employment is
terminated
before the end of the Plan Year for any reason (including termination as a
result of not
returning from a leave of absence granted by the Company), the Participant
shall forfeit
all of the Participants rights to a final Annual Incentive Award for the
Plan Year then in
progress. The Plan Administrator may, however, adopt policies and
procedures pursuant
to which a Participant may receive a part or all of the Annual Incentive
Award for the
Plan Year in which a Participants employment terminates, depending on the
circumstances of such termination.
|
ARTICLE 7
LONG TERM INCENTIVE AWARDS
(a)
|
|
Grant of Awards. Subject to Article 4, the Plan Administrator,
at any time and
from time to time, may, in its discretion, grant or award Options, MVUs,
|
E-15
|
|
Restricted Stock, Shares, Freestanding SARs, Tandem SARs, Performance
Units, cash or any combination thereof to Participants in such amounts as
the Plan
Administrator shall determine. The Plan Administrator may apply
Performance
Periods and performance measures, and may set threshold, target and
maximum
goals for each type of Award, as it chooses.
|
|
(b)
|
|
Source of Shares. The Company will endeavor to limit the source
of Shares
delivered to Participants under this Plan to Shares purchased by the
Company
from time to time on the open market, in private transactions or
otherwise. If the
Company determines that the timing of such purchases may unduly influence
the
market price of the Shares, the purchases may be spread over a period of
time
sufficient to alleviate such influence. The Company shall maintain a
separate
accounting of Shares purchased for this purpose. Should there be
insufficient shares in the separate account to cover exercises or other Award
redemptions, the
Company may use other available shares including newly issued shares to
cover
those exercises or redemptions, and then purchase that equal number of
shares on
the open market or otherwise as quickly as is reasonably practicable. In
determining the number of Shares to be purchased for these purposes, the
Company need only to take into account the net number Shares actually
delivered
rather than any Shares withheld pursuant to any exercise for tax or any
other
purposes.
|
|
(c)
|
|
Termination of Employment. The Plan Administrator shall have the
full power
and authority to determine the terms and conditions that shall apply to
any Award
upon a termination of employment with the Company, its Affiliates,
including a
termination by the Company or any Affiliate with or without Cause, by a
Participant voluntarily or by reason of death, Disability or Retirement,
and may
provide such terms and conditions in the Award Agreement or in such rules
and
regulations as it may prescribe. Such provisions need not be uniform
among all
Awards granted or issued pursuant to this Plan and may reflect
distinctions based
on the reasons for termination of employment and the needs of the Company
as
they are determined from time to time.
|
|
(d)
|
|
Other Restrictions. Subject to Article 8, the Plan Administrator
may impose such
other conditions and/or restrictions on any Long Term Incentive Awards
granted
pursuant to the Plan as the Plan Administrator deems advisable, including
time-based restrictions on vesting following the attainment of the performance
goals,
and/or restrictions under applicable Federal or state securities laws.
|
|
(e)
|
|
Limited Transferability of Awards. Except as otherwise provided
in the Plan, no
Award shall be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant, except (i) by will or the laws
of
descent and distribution, (ii) to a Permitted Transferee and/or (iii) as
may be
provided by the Plan Administrator in its discretion, at or after grant,
in the Award
|
E-16
|
|
Agreement; provided, however, that an Incentive Stock Option shall not be
assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant except by will or the laws of descent and
distribution. No transfer of an Award by will or by laws of descent and
distribution shall be effective to bind the Company unless the Company
shall have
been furnished with written notice thereof and an authenticated copy of
the will
and/or such other evidence as the Committee may deem necessary or
appropriate
to establish the validity of the transfer. A Permitted Transferee may not
transfer
an Award other than by will or the laws of descent and distribution.
|
7.2
|
|
SHARES; RESTRICTED STOCK.
|
(a)
|
|
Award Agreement. Each grant of Shares or Restricted Stock shall
be evidenced
by an Award Agreement that shall specify the Period(s) of Restriction (if
any), the
number of Shares or Shares of Restricted Stock granted and such other
terms as
the Plan Administrator shall determine.
|
|
(b)
|
|
Non-Transferability of Restricted Stock. Except as provided in
this Article, the
Shares of Restricted Stock granted herein may not be sold, transferred,
pledged,
assigned or otherwise alienated until the end of the applicable Period of
Restriction established by the Plan Administrator and specified in the
Award
Agreement, or upon earlier satisfaction of any other conditions, as
specified by the
Plan Administrator and set out in the Award Agreement. During a
Participants
lifetime, only that Participant may exercise any rights with respect to
the
Restricted Stock granted to that Participant.
|
|
(c)
|
|
Other Restrictions on Restricted Stock.
|
(1)
|
|
The Company shall keep custody of the certificates representing
Shares of
Restricted Stock until all conditions and/or restrictions applicable to
such
Shares have been satisfied.
|
|
(2)
|
|
Except as otherwise provided in this Article, Shares of
Restricted Stock
covered by each Restricted Stock grant made under the Plan shall become
freely transferable by the Participant after the last day of the
applicable
Period of Restriction.
|
(d)
|
|
Voting Rights. Awards of Shares shall have whatever voting
rights accompany
the class of Shares awarded. During the Period(s) of Restriction,
Participants
holding Shares of Restricted Stock may exercise full voting rights with
respect to
those Shares to the extent the Shares normally have such voting rights.
|
E-17
(e)
|
|
Dividends and Other Distributions.
|
(1)
|
|
During the Period of Restriction, Participants holding Shares of
Restricted
Stock may be credited with regular cash dividends paid with respect to the
underlying Shares while they are so held. The Plan Administrator may
apply any restrictions to the dividends that it deems appropriate.
|
|
(2)
|
|
Without limiting the generality of the preceding paragraph, if
the grant or
vesting of Restricted Shares granted to a Designated Executive Officer is
designed to comply with the requirements of the Performance-Based
Exception, the Plan Administrator may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such
Restricted Shares, such that the dividends and/or the Restricted Shares
maintain eligibility for the Performance-Based Exception.
|
|
(3)
|
|
Participants holding unrestricted Shares will be entitled to
receive any cash
dividends paid with respect to the Shares.
|
7.3
|
|
MARKET VALUE UNITS (MVUS).
|
(a)
|
|
Award Agreement. Each MVU grant shall be evidenced by an Award
Agreement
that shall specify the duration of the MVU, the number of Shares on which
the
MVU grant is based, and such other terms as the Plan Administrator shall
determine.
|
|
(b)
|
|
Non-Transferability. Except as provided in this Article, the
MVUs granted
herein may not be sold, transferred, pledged, assigned or otherwise
alienated until
specified in the Award Agreement, or upon earlier satisfaction of any
other
conditions, as specified by the Plan Administrator and set out in the
Award
Agreement. During a Participants lifetime, only that Participant may
exercise
any rights with respect to the MVUs granted to that Participant.
|
|
(c)
|
|
Dividends and Other Distributions.
|
(1)
|
|
During the MVUs duration, Participants holding MVUs may be
credited
with regular cash dividends paid with respect to the underlying Shares
while they are so held. The Plan Administrator may apply any restrictions
to the dividends that it deems appropriate.
|
|
(2)
|
|
Without limiting the generality of the preceding paragraph, if
the grant or
vesting of MVUs granted to a Designated Executive Officer is designed
to comply with the requirements of the Performance-Based Exception, the
Plan Administrator may apply any restrictions it deems appropriate to the
payment of dividends declared with respect to such MVUs, such that the
|
E-18
|
|
dividends and/or the MVUs maintain eligibility for the Performance-Based Exception.
|
|
(3)
|
|
Notwithstanding any other plan term, the Plan Administrator may
impose
such conditions on the accrual or payment of dividends with respect to
MVUs, as may be required to comply with Section 16 of the Exchange
Act.
|
(d)
|
|
Payment of MVU Amount.
|
(1)
|
|
Each MVU shall have a value equal to the Fair Market Value of a
Share.
|
|
(2)
|
|
MVUs shall be paid in cash, Shares, other securities or other
property, as
determined in the sole discretion of the Plan Administrator, upon the
lapse
of the restrictions thereto, or otherwise in accordance with the
applicable
Award Agreement.
|
(a)
|
|
Award Agreement. Each Option grant shall be evidenced by an
Award
Agreement that shall specify the Option Price, the Options duration, the
number
of Shares to which the Option pertains, and such other terms as the Plan
Administrator shall determine. The Award Agreement shall also specify
whether
the Option is intended to be an ISO, Indexed Option or an NQSO, and what
Performance Period (if any) applies. Even if an Option is designated as
an ISO, it
shall be treated as an NQSO to the extent the Fair Market Value of the
Shares
with respect to which ISOs are exercisable for the first time during any
calendar
year by any Participant exceeds $100,000.
|
|
(b)
|
|
Option Price and Duration. The Plan Administrator, in its sole
discretion, shall
establish the Option Price at the time each Option is granted. The Option
Price
for each grant of an Incentive Stock Option under this Plan and for each
grant of
any Option to a Designated Executive Officer shall be at least one hundred
percent (100%) of the Fair Market Value of a Share on the date the Option
is
granted. Options may be Indexed Options. Each Option granted to an
Employee
shall expire as the Plan Administrator shall determine at the time of
grant but no
Option shall be exercisable later than the tenth anniversary of its grant.
|
|
(c)
|
|
Exercise of Options. Options granted under this Section shall be
exercisable at
such times and be subject to such restrictions and conditions as the Plan
Administrator shall in each instance approve, which need not be the same
for each
grant or for each Participant.
|
E-19
(1)
|
|
Options granted under this Section shall be exercised by the
delivery of a
written notice of exercise to the Company, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied
by full payment for the Shares.
|
|
(2)
|
|
The Option Price upon exercise of any Option shall be payable to
the
Company in full either:
|
(A)
|
|
in cash or its equivalent, or
|
|
(B)
|
|
by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price
(but only if the Shares which are tendered have been held by the
Participant for at least six (6) months before their tender to satisfy
the Option Price); or
|
|
(C)
|
|
by a combination of (A) and (B).
|
(3)
|
|
The Plan Administrator also may allow cashless exercise as
permitted
under Federal Reserve Boards Regulation T, subject to applicable
securities law restrictions, or by any other means which the Plan
Administrator determines to be consistent with the Plans purpose and
applicable law.
|
|
(4)
|
|
As soon as practicable after receipt of a written notification of
exercise and
full payment, the Company shall deliver to the Participant, in the
Participants name, Share certificates in an appropriate amount based upon
the number of Shares bought under the Option(s).
|
(e)
|
|
Ten Percent Stock Rule. Notwithstanding any other provisions in
the Plan, if at
the time an Incentive Stock Option or Tandem SAR is to be granted pursuant
to
the Plan, the Participant owns directly or indirectly (within the meaning
of Section
424(d) of the Code) Shares of the Company possessing more than ten percent
(10%) of the total combined voting power of all Share classes of the
Company or
its parent or Affiliate corporations (within the meaning of Section
422(b)(6) of the
Code), then any Incentive Stock Option or Tandem SAR to be granted to such
Participant pursuant to the Plan shall satisfy the requirement of Section
422(c)(5)
of the Code, and the Option Price shall be not less than one hundred ten
percent
(110%) of the Fair Market Value of the Shares of the Company, and the
Option by
its terms shall not be exercisable after the expiration of five (5) years
from the
date the Option is granted.
|
E-20
7.5
|
|
STOCK APPRECIATION RIGHTS (SARS).
|
(a)
|
|
Award Agreement. Each SAR grant shall be evidenced by an Award
Agreement
specifying the grant price, the SARs duration, and such other terms as
the Plan
Administrator shall determine.
|
|
(b)
|
|
Grant Prices and Duration of SARs. The grant price of a
Freestanding SAR shall
equal the Fair Market Value of a Share on the date of the SAR grant. The
grant
price of Tandem SARs shall equal the Option Price of the related Option.
The
term of an SAR granted under the Plan shall be determined by the Plan
Administrator but such term shall not exceed ten years.
|
|
(c)
|
|
Exercise of Tandem SARs.
|
(1)
|
|
Tandem SARs may be exercised for all or part of the Shares
subject to the
related Option upon the surrender of the right to exercise the equivalent
portion of the related Option. A Tandem SAR may be exercised only with
respect to the Shares for which its related Option is then exercisable.
|
|
(2)
|
|
Notwithstanding any other contrary Plan provision, with respect
to a
Tandem SAR granted in connection with an ISO:
|
(A)
|
|
the Tandem SAR will expire no later than the expiration of the
underlying ISO;
|
|
(B)
|
|
the payout value with respect to the Tandem SAR may not exceed
one hundred percent (100%) of the difference between the Option
Price of the underlying ISO and the Fair Market Value of the
Shares subject to the underlying ISO at the time the Tandem SAR
is exercised; and
|
|
(C)
|
|
the Tandem SAR may be exercised only when the Fair Market
Value of the Shares subject to the ISO exceeds the Option Price of
the ISO.
|
(d)
|
|
Exercise of Freestanding SARs. Freestanding SARs may be
exercised upon
whatever terms and conditions the Plan Administrator imposes upon them.
|
|
(e)
|
|
Payment of SAR Amount.
|
(1)
|
|
Upon exercise of an SAR, a Participant shall be entitled to
receive
payment from the Company in an amount determined by multiplying:
|
E-21
(A)
|
|
the difference between the Fair Market Value of a Share on the
date of exercise and the grant price; by
|
|
(B)
|
|
the number of Shares with respect to which the SAR is exercised.
|
(2)
|
|
The Plan Administrator may allow for payment upon SAR exercise to
be
in cash, in Shares of equivalent value or in some combination of cash and
Shares.
|
(a)
|
|
Award Agreement. Each Performance Unit grant shall be evidenced
by an Award
Agreement specifying an initial value for each Performance Unit as of its
grant
date, as well as performance goals which will determine the number and/or
value
of Performance Units that will be paid out to the Participant at the end
of the
Performance Period. Performance goals may be based on the performance of:
the
Company; its Shares; any of its divisions, affiliates or other business
units; or any
combination of such performance measures as set forth in Section 8.3.
|
|
(b)
|
|
Form and Timing of Payment of Performance Units.
|
(1)
|
|
The Plan Administrator may allow for payment of Performance Units
to be
in cash, in Shares of equivalent value or in some combination of cash and
Shares.
|
|
(2)
|
|
Payment of earned Performance Units shall be made as soon as
practicable
following the close of the applicable Performance Period.
|
|
(3)
|
|
The Plan Administrator may allow Participants to elect to defer
the receipt
of Performance Unit pay-outs upon such terms as the Plan Administrator
deems appropriate, as long as Participants make such deferral elections
before the relevant Performance Period begins, or as otherwise permitted
for U.S. federal income tax purposes.
|
(c)
|
|
Non-Transferability. Except as otherwise provided in an Award
Agreement:
|
(1)
|
|
During a Participants lifetime, only the Participant or the
Participants
legal representative may exercise any Plan rights related to Performance
Units.
|
|
(2)
|
|
Participants may not sell, pledge, assign or otherwise alienate
their Performance Units.
|
E-22
(3)
|
|
Participants may transfer Performance Units only by will or by
the laws of descent and distribution.
|
7.7
|
|
CASH PAYMENT OF AWARDS OTHERWISE PAYABLE IN SHARES. The Plan
Administrator may allow for payment of a Long Term Incentive Award
otherwise payable
in Shares to be paid in cash. Such a cash equivalent Award shall be:
|
(a)
|
|
computed as the value of the Participants long-term bonus
opportunity at the end
of the Performance Period, adjusted for the actual performance results;
and
|
|
(b)
|
|
paid to the Participant upon vesting after the end of the
Performance Period.
|
ARTICLE 8
PERFORMANCE MEASURES
8.1
|
|
GENERALLY. No later than ninety (90) days following the commencement
of each
Performance Period (or such other time as is necessary to comply with Code
Section
162(m)), the Plan Administrator shall in writing, (1) select the
performance goal or goals
applicable to the performance period, (2) establish the various targets
and bonus amounts
which may be earned for such performance period, and (3) specify the
relationship
between performance goals and targets and the amounts to be earned by each
Designated
Executive Officer for such performance period. Following the completion
of each
performance period, the Plan Administrator shall certify in writing
whether the applicable
performance targets have been achieved and the amounts, if any, payable to
Designated
Executive Officers for such performance period. In determining the amount
earned by a
Designated Executive Officer for a given performance period, subject to
any applicable
Award Agreement, the Plan Administrator shall have the right to reduce
(but not
increase) the amount payable at a given level of performance to take into
account
additional factors that the Plan Administrator may deem relevant to the
assessment of
individual or corporate performance for the performance period.
|
8.2
|
|
PERFORMANCE MEASURES FOR OTHER PARTICIPANTS. For Participants other
than Designated Executive Officers, the Plan Administrator may approve and
adopt either
the performance measures set out in Section 8.3 or other performance
measures without
obtaining stockholder approval.
|
8.3
|
|
PERFORMANCE MEASURES FOR DESIGNATED EXECUTIVE OFFICERS. The
Plan Administrator may grant Awards that are intended to qualify for the
Performance-Based Exception to Designated Executive Officers based solely upon the
attainment of
performance targets related to one or more performance goals selected by
the Plan
Administrator from among the goals specified below. For the purposes of
this Article 8,
performance goals shall be limited to one or more of the following
Company, Affiliate,
operating unit or division financial performance measures:
|
E-23
(a)
|
|
earnings before interest, taxes, depreciation and/or
amortization;
|
|
(b)
|
|
operating income or profit;
|
|
(c)
|
|
operating efficiencies;
|
|
(d)
|
|
return on equity, assets, capital, capital employed or
investment;
|
|
(e)
|
|
after tax operating income;
|
|
(f)
|
|
net income;
|
|
(g)
|
|
earnings or book value per Share;
|
|
(h)
|
|
cash flow(s);
|
|
(i)
|
|
total sales or revenues or sales or revenues per employee;
|
|
(j)
|
|
production (separate work units or SWUs);
|
|
(k)
|
|
stock price or total stockholder return;
|
|
(l)
|
|
dividends; or
|
|
(m)
|
|
strategic business objectives, consisting of one or more
objectives based on
meeting specified cost targets, business expansion goals and goals
relating to
acquisitions or divestitures;
|
|
|
or any combination thereof. Each goal may be expressed on an absolute
and/or relative
basis, may take into account the exclusion of certain items deemed
appropriate by the
Plan Administrator, may be based on or otherwise employ comparisons based
on internal
targets, the past performance of the Company or any Affiliate, operating
unit or division
of the Company and/or the past or current performance of other companies,
and in the
case of earnings-based measures, may use or employ comparisons relating to
capital,
stockholders equity and/or Shares outstanding, or to assets or net
assets.
|
8.4
|
|
ADJUSTMENTS. The Plan Administrator may adjust the compensation
payable upon
the attainment of the pre-established performance goals, but the Plan
Administrator may
not adjust upward any Awards which are designed to qualify for the
Performance-Based
Exception, and which are held by Designated Executive Officers.
|
8.5
|
|
OTHER CHANGES. If applicable tax and/or securities laws change to
permit Plan
Administrator discretion to change the governing performance measures
without
obtaining stockholder approval of such changes, the Plan Administrator may
make such
|
E-24
|
|
changes without obtaining stockholder approval. In addition, if the Plan
Administrator
determines that it is advisable to grant Awards which shall not qualify
for the
Performance-Based Exception, the Plan Administrator may make such grants
without
satisfying the requirements of Code Section 162(m).
|
ARTICLE 9
BENEFICIARY DESIGNATION
9.1
|
|
GENERALLY. Each Participant under the Plan may, from time to time,
name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom
any benefit under the Plan is to be paid if the Participant dies before
receiving any or all
of such benefit.
|
9.2
|
|
MANNER OF DESIGNATION. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Company, and
will be effective only when filed by the Participant in writing with the
Company during
the Participants lifetime.
|
9.3
|
|
DEFAULT. Absent such designation, benefits remaining unpaid at the
Participants
death shall be paid to the Participants estate.
|
ARTICLE 10
DEFERRALS/GRANTS TO NON-EMPLOYEE DIRECTORS
10.1
|
|
DEFERRALS BY EMPLOYEES. The Plan Administrator may permit a
Participant to
defer receipt of the payment of cash or the delivery of Shares that would
otherwise be due
to such Participant by virtue of the satisfaction of any requirements or
goals with respect
to Awards, the exercise of an Option or SAR, or the lapse or waiver of
restrictions with
respect to Restricted Stock or MVUs. If any such deferral election is
required or
permitted, the Plan Administrator shall establish rules and procedures for
such payment
deferrals. Such rules and procedures shall be consistent with the
provisions of Code
Section 162(m) where applicable.
|
10.2
|
|
NON-EMPLOYEE DIRECTOR AWARDS.
|
(a)
|
|
The Board may provide that all or a portion of a Non-Employee
Directors annual
retainer, meeting fees and/or other awards or compensation as determined
by the
Board, be payable (either automatically or at the election of a
Non-Employee
Director) in the form of Non-Qualified Stock Options, Restricted Shares,
Restricted Share Units and/or other stock-based awards, including
unrestricted
Shares. The Board shall determine the terms and conditions of any such
Awards,
including the terms and conditions which shall apply upon a termination of
the
Non-Employee Directors service as a member of the Board, and shall have
full
|
E-25
|
|
|
power and authority in its discretion to administer such Awards, subject
to the terms of the Plan and applicable law.
|
|
|
(b)
|
|
The Board may also grant Awards to Outside Directors pursuant to
the terms of the Plan, including any Award described in Articles 6 and 7 above. With
respect to such Awards, all references in the Plan to the Plan Administrator shall
be deemed to be references to the Board.
|
ARTICLE 11
CHANGE IN CONTROL
11.1
|
|
TREATMENT OF AWARDS UPON A CHANGE IN CONTROL. Notwithstanding
anything in this Plan to the contrary, upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by the rules
and regulations of any governing governmental agencies or national securities exchanges:
|
|
(a)
|
|
Any and all Options and SARs granted shall become immediately
vested and non-forfeitable upon the occurrence of the Change in Control; provided,
that such Options and SARs shall become exercisable pursuant to their original
vesting schedule, notwithstanding any earlier termination of employment of a
Participant, except that if within one year following a Change in Control, a
Participants employment is terminated by the Company without Cause or by the
Participant within 60 days after the Participant becomes aware of an event
constituting a Constructive Discharge, upon the effective date of such employment
termination, the Participants Options and SARs shall become immediately exercisable
and shall remain exercisable until 30 days following the original scheduled
vesting date of such Options and SARs. If a Participant is no longer an Employee
as of the original vesting date under the vesting schedule for an Option or SAR,
and has not terminated employment under one of the circumstances described in the
immediately preceding sentence, the Participants Option and SAR shall
nonetheless become exercisable on the original vesting date and remain
exercisable for 30 days following the original vesting date.
|
|
|
(b)
|
|
If within one year following a Change in Control, a Participants
employment is terminated by the Company without Cause or by the Participant within 60
days after the Participant becomes aware of an event constituting a
Constructive Discharge, upon the effective date of such employment termination:
|
|
(1)
|
|
any restriction periods and restrictions imposed on Restricted
Stock or MVUs granted to a Participant shall lapse,
|
|
|
(2)
|
|
the Target Incentive Awards attainable under all outstanding
Awards of the Participant shall be deemed to have been earned, and
|
E-26
|
(3)
|
|
the vesting of all outstanding Awards of the Participant shall be
accelerated, and the Company shall pay out in cash to the Participant
within 30 days following the effective date of the employment termination
a pro rata portion of all Target Incentive Award cash payout opportunities
associated with outstanding Awards, based on the number of complete and
partial calendar months within the Performance Period which had elapsed
as of such effective date. This subparagraph (b)(3) shall not apply to
Options and SARs.
|
11.2
|
|
TREATMENT OF OUTSTANDING OPTION AND SAR AWARDS UPON A
POTENTIAL CHANGE IN CONTROL. Notwithstanding anything in this Plan to the
contrary, with respect to Options and SARs, in the event of a Potential
Change in Control, the following restrictions shall apply to any such outstanding
Options and SARs:
|
|
(a)
|
|
Except as otherwise provided in this Section 11.2, any Option (or
SAR) exercised by a Participant during a Restricted Period shall be exercisable solely
for a lump sum cash payment from the Company equal to the product of (i) the number
of Shares for which the Option (or SAR) is being exercised, times (ii) the
excess, if any, of (A) the Adjusted Market Value per Share of the Shares subject to
the Option (or SAR), over (B) the exercise (or grant price) per Share of such
Option
(or SAR). The Compensation Committee may, in its discretion, provide the
Participant with Shares with a Fair Market Value equal to the cash payment
otherwise due upon exercise pursuant to the immediately preceding
sentence, in
lieu of the cash payment. This Section 11.2(a) shall not be applicable if
the Fair
Market Value per Share is less than the Adjusted Market Value per Share of
the
Shares subject to an Option (or SAR) upon the date a Participant exercises
a Stock
Option (or SAR), unless the Compensation Committee specifically determines
it
to be applicable in its sole discretion.
|
|
|
(b)
|
|
For purposes of this Section 11.2, Adjusted Market Value shall
mean the Base
Period Fair Market Value as adjusted, on a pro rata monthly basis at the
beginning
of each month, from the end of the Base Period (the date of grant for
Options (and
SARs) granted during the Restricted Period prior to a Change in Control
shall be
the end of the Base Period for such Options and SARs) until the exercise
date of
the Option (or SAR), by the greater of (i) 5% per year or (ii) the
percentage
increase (or decrease) in the S&P 500 composite index for the previous
calendar
month.
|
|
|
(c)
|
|
This Section 11.2 shall continue to apply following a Change in
Control;
provided, that in the event that in connection with a Change in Control,
Shares are
converted into or exchanged for cash, or for securities that are not
publicly traded,
the Company shall, immediately before such Change in Control, set aside in
an
escrow account for the benefit of each Participant an amount equal to the
potential
|
E-27
|
|
|
cash payment (under subparagraph (a) above) for the Participant, with such
escrow amount to be adjusted on a quarterly basis following the Change in
Control to provide for sufficient funding to pay such amounts to
Participants.
|
11.3
|
|
ACCELERATION OF AWARD VESTING. Notwithstanding any provision of this
Plan
or any Award Agreement provision to the contrary, other than during a
Restricted Period
or in anticipation of the occurrence of a Potential Change in Control or
of a Change in
Control, the Plan Administrator may at any time accelerate the vesting of
any Award
granted under the Plan to a Participant, including without limitation
acceleration to such a
date that would result in said Awards becoming immediately vested.
|
11.4
|
|
TERMINATION, AMENDMENT AND MODIFICATIONS OF CHANGE IN
CONTROL PROVISIONS. Sections 11.1, 11.2, 11.3 and any other provisions of
the
Plan that would materially impact the operation or intent of Sections
11.1, 11.2 and 11.3,
shall not be amended by the Board or waived by the Company in a manner
favorable to
Participants without approval by more than 75 percent of the combined
voting power of
the Outstanding Voting Securities of Brown-Forman Corporation; provided,
that if
following a Change in Control, Brown-Forman Corporation (or its successor
corporation)
is not a publicly-traded corporation, and is a direct or indirect
subsidiary of a publicly-traded corporation, the stockholder approval required by this Section 11.4
must be
approval by more than 75 percent of the combined voting power of the
Outstanding
Voting Securities of the publicly-traded corporation that is the direct or
indirect parent of
Brown-Forman Corporation (or its successor corporation). Notwithstanding
the
foregoing, the Board Compensation Committee may, in its discretion, waive
the effect of
Section 11.2 following a Potential Change in Control described in Section
2.47; provided,
that, the waiver must by approved by the Compensation Committee prior to
the
occurrence of a Change in Control. Notwithstanding any other Plan term or
any Award
Agreement term, this Article may not be terminated, amended or modified on
or after the
date of a Change in Control to affect adversely any Award already granted
under the Plan
without the prior written consent of the Participant with respect to said
Participants
outstanding Awards.
|
11.5
|
|
OPTIONAL GROSS-UP FOR EXCISE TAXES. If, for any reason, any part or
all of the
amounts payable to a Participant pursuant to this Plan (or otherwise, if
the Company or
any of its Affiliates pays amounts after there has been a Change in
Control) are deemed to
be excess parachute payments within the meaning of Code Section
280G(b)(1), the
Plan Administrator may, in its sole discretion, provide in the Award
Agreement that the
Company shall pay to such Participant, in addition to any other amounts
the Participant
may be entitled to receive pursuant to this Plan, an amount which after
all Federal, state
and local taxes (of whatever kind) imposed on the Participant with respect
to such
amount are subtracted therefrom, equals the excise taxes imposed on such
excess
parachute payments under Code Section 4999.
|
E-28
ARTICLE 12
AMENDMENT, MODIFICATION AND TERMINATION
|
(a)
|
|
Except as limited by the provisions of Section 11.4 above, the
Board may at any
time and from time to time, alter, amend, suspend or terminate the Plan in
whole
or in part but no amendment needing stockholder approval in order for
the Plan
to continue to comply with Rule 16b-3 under the Exchange Act, the rules or
listing standards of the principal securities exchange on which the Shares
are
traded or Section 162(m) of the Code shall be effective unless such
amendment
shall be approved by the requisite vote of Company stockholders entitled
to vote
on it.
|
|
|
(b)
|
|
Except as provided by the Plan or by the terms of an Award, the
Plan
Administrator may not cancel outstanding Awards and issue substitute
Awards
without the written consent of the Participant holding such Award.
|
12.2
|
|
OUTSTANDING AWARDS. Subject to the restrictions of Sections 3.1 and
7.4 the Plan
Administrator may waive any conditions or rights under, amend any terms of
or alter,
suspend, discontinue, cancel or terminate any Awards theretofore granted,
prospectively
or retroactively; provided that any such waiver, amendment, alteration,
suspension,
discontinuance, cancellation or termination that would adversely affect
the rights of any
Participant or any holder or beneficiary of any Award theretofore granted
shall not to that
extent be effective without the consent of the affected Participant,
holder or beneficiary.
|
12.3
|
|
COMPLIANCE WITH CODE SECTION 162(M). At all times when Code Section
162(m) applies, all Awards granted to Designated Executive Officers under
this Plan
shall comply with its requirements, unless the Plan Administrator
expressly determines
that compliance is not desired with respect to any Award or Awards
available for grant
under the Plan. In addition, such Award(s) need not comply if changes are
made to Code
Section 162(m) to permit greater flexibility with respect to any Award or
Awards
available under the Plan, in which case the Plan Administrator may,
subject to this
Article, make any adjustments it deems appropriate. However, an Award
made available
for grant to a Designated Executive Officer as performance-based cannot be
replaced by a
non-performance-based Award if performance goals are not achieved, nor can
the
characterization of an Executive Officer as a Designated Executive
Officer, once made,
be changed for a given Performance Period.
|
ARTICLE 13
WITHHOLDING
13.1
|
|
TAX WITHHOLDING. The Company may deduct or withhold, or require a
Participant
to remit to the Company, an amount sufficient to satisfy federal, state
and local taxes and
|
E-29
|
|
withholding obligations, domestic or foreign, required by law or
regulation to be withheld
with respect to any taxable event arising as a result of this Plan.
|
|
|
|
13.2
|
|
SHARE WITHHOLDING. With respect to withholding required upon the
exercise of
Options or SARs, upon the lapse of restrictions on Restricted Stock, the
payment of
MVUs, or upon any other taxable event arising as a result of Awards
granted hereunder,
Participants may elect, subject to the approval of the Plan Administrator,
to satisfy the
withholding requirement, in whole or in part, by having the Company
withhold Shares
having a Fair Market Value on the date the tax is to be determined equal
to the statutory
total tax which could be imposed on the transaction. All such elections
shall be
irrevocable, shall be made in writing, shall be signed by the Participant
and shall be
subject to any restrictions or limitations that the Plan Administrator
deems appropriate.
|
ARTICLE 14
INDEMNIFICATION
14.1
|
|
GENERALLY. The Company shall indemnify and hold harmless each current
and
former Director against and from any loss, cost, liability or expense that
may be imposed
upon or reasonably incurred by such Director in connection with or
resulting from any
claim, action, suit or proceeding to which such Director may be a party or
in which such
Director may be involved by reason of any action taken or failure to act
under the Plan
and against and from any and all amounts paid by such Director in
settlement thereof,
with the Companys approval, or paid by such Director in satisfaction of
any judgment in
any such action, suit or proceeding against such Director but only if
such Director gives
the Company an opportunity, at its own expense, to handle and defend the
same before
such Director undertakes to handle and defend it personally.
|
14.2
|
|
NON-EXCLUSIVITY. This right of indemnification shall not exclude any
other
indemnification rights to which such persons may be entitled under the
Companys
Certificate of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that
the Company may have to indemnify them or hold them harmless.
|
ARTICLE 15
LEGAL CONSTRUCTION
15.1
|
|
SEVERABILITY. If any Plan section is held illegal or invalid for any
reason, the
illegality or invalidity shall not affect the remaining parts of the Plan,
and the Plan shall
be construed and enforced as if the illegal or invalid provision had not
been included.
|
15.2
|
|
REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under
the Plan shall be subject to all applicable laws, rules and regulations,
and to such
approvals by any governmental agencies or national securities exchanges as
may be
required.
|
E-30
15.3
|
|
NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect
other compensation arrangements, which may, but need not, provide for the
grant of
Options, Restricted Shares, Restricted Share Units, Other Stock-Based
Awards or other
types of Awards provided for hereunder.
|
15.4
|
|
SUCCESSORS. All Company obligations under the Plan with respect to
Awards granted
shall be binding on any successor to the Company, whether the existence of
such
successor is the result of a direct or indirect purchase, merger,
consolidation or otherwise,
of all or substantially all of the Companys business and/or assets.
|
15.5
|
|
GOVERNING LAW. To the extent not preempted by Federal law, the Plan
and all
agreements made under it, shall be construed in accordance with and
governed by the
laws of the State of Delaware.
|
E-31
AMENDMENT TO THE
BROWN-FORMAN 2004 OMNIBUS COMPENSATION PLAN
EFFECTIVE AUGUST 1, 2006
WHEREAS, Brown-Forman Corporation (the Company) maintains the Brown-Forman 2004
Omnibus Compensation Plan (the Plan); and
WHEREAS, pursuant to Section 12.1(a) of the Plan, the Board of Directors of the
Company (the Board) may amend the Plan; and
WHEREAS, the Board desires to amend the Plan (i) to revise the provisions in
Section 4.4 of the Plan regarding adjustments in connection with a recapitalization
(or other similar event) to the Shares granted thereunder and (ii) to revise the
provisions in Section 7.4(d)(2) of the Plan to add a net-exercise option to the
payment methods permitted upon the exercise of awards granted thereunder.
NOW, THEREFORE, effective August 1, 2006, the Company hereby amends the Plan as
follows:
1. The first paragraph of Section 4.4 is amended to read as follows:
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4.4
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ADJUSTMENTS. In the event the Plan Administrator determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares,
then the Plan Administrator shall:
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2. Section 7.4(d)(2) of the Plan is amended to read as follows:
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(2)
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The Option Price upon exercise of any Option shall be payable to the
Company in full either:
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(A)
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in cash or its equivalent; or
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(B)
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by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price;
or
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(C)
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by withholding from Participant sufficient Shares, subject to an
underlying Award, having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price of such underlying Award; or
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(D)
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by a combination of (A), (B) or (C).
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IN WITNESS WHEREOF, the Board has caused this Amendment to the Brown-Forman 2004
Omnibus Compensation Plan to be executed by its duly authorized representative on this
27th day of July, 2006, effective August 1, 2006.
E-32
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 23, 2009:
The Notice of Annual Meeting, Proxy Statement and 2009 Annual Report are available at
www.brown-forman.com/proxy.
You are
encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE
SIDE, but you need not mark any boxes if you wish to vote in accordance with the Board of
Directors recommendations. The Proxies cannot vote your shares unless you sign and return
this card.
Proxy
card must be signed and dated below.
ê
Please fold and detach card at perforation before mailing.
ê
BROWN-FORMAN CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
For Use by Holders of Class A Common Stock at the
Annual Meeting of Stockholders July 23, 2009.
THE
UNDERSIGNED hereby appoint(s) Geo. Garvin Brown IV, Paul C. Varga and Matthew E. Hamel, and each
of them, attorneys and proxies, with power of substitution, to vote all of the shares of Class A
Common Stock of Brown-Forman Corporation (the Corporation) standing of record in the name of the
undersigned at the close of business on June 15, 2009, at the Annual Meeting of Stockholders of the
Corporation to be held on July 23, 2009, and at any adjournment or postponement thereof. The
undersigned acknowledges receipt of the Notice of Annual Meeting and accompanying Proxy Statement
and revokes any proxy heretofore given with respect to such meeting.
The votes entitled to be cast
by the undersigned will be cast as instructed.
If this proxy is executed, but no instruction is
given, the votes entitled to be cast by the undersigned will be cast FOR each of the nominees for
director and FOR the re-approval of the performance measures set forth in the Corporations 2004
Omnibus Compensation Plan. The votes entitled to be cast by the
undersigned will be cast in the
discretion of the named proxy holders upon any other matter that may properly come before the
meeting and any adjournment or postponement thereof.
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Signature
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Signature (if held jointly)
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Dated:
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Signature should be
exactly as name or
names appear on
this proxy. If
stock is held
jointly, each
holder should sign,
if signature is by
attorney, executor,
administrator,
trustee or
guardian, please
give full title.
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PLEASE DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
YOUR
VOTE IS IMPORTANT.
Please promptly return your proxy in
the enclosed envelope.
Proxy
card must be signed and dated on reverse side.
ê
Please fold and detach card at perforation before mailing.
ê
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BROWN-FORMAN CORPORATION
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PROXY
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This
proxy, when properly executed, will be voted in the manner directly
below by the undersigned stockholder(s). If no direction is given,
this proxy will be voted FOR the election of the directors and FOR
proposal 2.
The Board of Directors recommends that you vote FOR ALL NOMINEES and
FOR proposal 2.
1.
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Election of Directors:
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FOR
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AGAINST
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ABSTAIN
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FOR
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AGAINST
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ABSTAIN
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(01)
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Patrick Bousquet-Chavanne
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o
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o
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o
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(07)
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William E. Mitchell
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o
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o
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o
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(02)
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Geo. Garvin Brown IV
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o
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o
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o
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(08)
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William M. Street
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o
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o
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o
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(03)
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Martin S. Brown, Jr.
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o
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o
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o
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(09)
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Dace Brown Stubbs
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o
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o
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o
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(04)
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John D. Cook
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o
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o
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o
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(10)
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Paul C. Varga
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o
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o
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o
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(05)
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Sandra A. Frazier
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o
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o
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o
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(11)
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James S. Welch, Jr.
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o
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o
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o
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(06)
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Richard P. Mayer
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o
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o
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o
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2.
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Re- approval of the
performance measures set forth in the 2004 Omnibus Compensation Plan,
as described in the Proxy Statement.
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q
FOR
q
AGAINST
q
ABSTAIN
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In their
discretion, the Proxies are authorized to vote upon such other
corporate business as may properly come before the meeting.
THIS PROXY
IS CONTINUED ON THE REVERSE SIDE. PLEASE DATE, SIGN AND RETURN
PROMPTLY.
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