UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported): August 3, 2005 (July 28, 2005)
Brown-Forman Corporation
(Exact name of registrant as specified in its charter)
Delaware 002-26821 61-0143150
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
850 Dixie Highway, Louisville, Kentucky 40210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (502) 585-1100
Item 1.01. Entry Into a Material Definitive Agreement.
On July 28, 2005, the Board of Directors of Brown-Forman Corporation (the
"Company") approved the compensation for the Company's non-employee directors as
set forth on Exhibit 10(k).
On July 28, 2005, the Compensation Committee (the "Committee") of the Board of
Directors of the Company, in conjunction with the Compensation and Benefit
Committee of the Company, set the compensation of the persons who are
anticipated to constitute the Company's named executive officers for fiscal 2006
as set forth on Exhibit 10(k). All of the Company's executive officers are at
will employees. Base salary increases are determined annually and become
effective on August 1 of each year. Targeted bonuses for performance periods
beginning in fiscal 2006 as well as the goals on which those bonuses will be
based were also approved at this time.
Item 9.01. Financial Statements and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
10(k) Summary of Director and Named Executive Compensation
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Brown-Forman Corporation
(Registrant)
Date: August 3, 2005 By: /s/ Nelea A. Absher
Nelea A. Absher
Vice President and Assistant
Corporate Secretary
Exhibit Index
10(k) Summary of Director and Named Executive Compensation
Exhibit 10(k)
Summary of Director and Named Executive Officer Compensation
DIRECTOR COMPENSATION
Directors who are employees of Brown-Forman do not receive additional
compensation for serving as directors. The following sets forth a summary of
compensation for non-employee directors.
1. Annual Retainer:
(a) $30,000 in cash, payable in six installments over the course of the board
service year. Directors may elect in advance of their board service year
to receive stock options in lieu of cash payments for all or part of
their retainer.
(b) $35,000 in the Black-Scholes value of stock-settled stock appreciation
rights with a ten-fiscal-year term.
2. Board Meeting Fee: $4,000 per meeting attended in person. $2,000 for
telephonic participation.
3. Committee Meeting Fee: $4,000 per meeting attended in person. $2,000 for
telephonic participation.
4. Additional Chairman Meeting Fee: $4,000 for personal attendance. $2,000 for
telephonic participation.
5. Audit Committee Chairman Review: $3,000 per quarterly review with outside
auditors conducted independently of Audit Committee Meeting.
6. International Travel Supplement: $3,000 per meeting, for directors who travel
directly from (and immediately back to) an overseas location for our meeting.
This is no longer indexed to the regular meeting fee but may be adjusted from
time to time.
7. Expense reimbursement: Directors are reimbursed for their reasonable and
necessary expenses incurred in connection with attending Board and Committee
meetings. The product promotion allowance for outside directors is $2,000 per
year. Directors are also covered under the company's Travel Accident
Insurance and D & O Liability insurance programs.
NAMED EXECUTIVE OFFICER COMPENSATION
Chief Executive Officer and Employee-Chairman
Target amounts of total compensation for the Chief Executive Officer of the
Company and the Company's employee-Chairman are as follows:
Annual Bonus Long-Term Bonus Total
Opportunity Opportunity* Compensation
Name and Title Salary at Target at Target at Target
Paul Varga
CEO $850,000 $700,000 $1,350,000 $2,900,000
Owsley Brown II
Chairman $950,000 $985,000 $ 425,000 $2,360,000
* This amount is further subdivided into equity awards and cash
bonus opportunity
For Mr. Varga, the Long-Term Bonus Opportunity at Target takes the form of
$675,000 as a performance-based restricted share opportunity, and $675,000 in
long-term cash bonus based on Company performance for the performance period
comprising fiscal 2006 through fiscal 2008 inclusive.
For Mr. Brown, the Long-Term Bonus Opportunity at Target takes the form of
$425,500 in long-term cash bonus for the performance period comprising fiscal
2006 through fiscal 2008 inclusive.
Three Remaining Named Executive Officers
The annualized salaries of the three remaining named executive officers
effective August 1, 2005 are as follows:
Phoebe A. Wood $556,354
James L. Bareuther $510,416
Michael B. Crutcher $471,875
Target bonus opportunity for the three remaining named executive officers are as
follows:
- Annual Bonus Opportunity at Target was set within a range of $225,000 to
$240,000 for target performance for each of these three executive officers.
- Long-Term Bonus Opportunity at Target was set within a range of $490,000 to
$615,000 for each of these three executive officers, and awarded in a
combination of stock-settled stock appreciation rights, performance-based
restricted stock opportunity, and cash long-term bonus for the performance
period fiscal 2006 through fiscal 2008.
Bonus Element Descriptions
Under all cash bonus programs, the plan requires certain levels of Company
operating income to occur before any bonus can be paid. Target bonus is paid for
targeted levels of operating income, and greater-than-target bonus is paid for
higher levels of operating income attained. Short-term bonus is capped at 200%
of target bonus; Long-term bonus is uncapped. Stock-settled stock appreciation
rights have a grant price equal to the closing market value of Brown-Forman
Class B stock on the grant date July 28 2005, have a term of ten fiscal years,
and cannot be exercised in the first three fiscal years. Restricted stock
opportunity, designated in cash, is adjusted based on fiscal 2006 performance
against operating income goals and converted to restricted Class A Common shares
at the end of fiscal 2006, with restrictions on shares remaining in place
through April 30, 2010.