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): February 23, 2024 |
The Boston Beer Company, Inc.
(Exact name of Registrant as Specified in Its Charter)
Massachusetts |
001-14092 |
04-3284048 |
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(State or Other Jurisdiction |
(Commission File Number) |
(IRS Employer |
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One Design Center Place Suite 850 |
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Boston, Massachusetts |
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02210 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s Telephone Number, Including Area Code: (617) 368-5000 |
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Class A Common Stock. $0.01 par value |
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SAM |
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The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Retirement of President and Chief Executive Officer and Appointment of New President and Chief Executive Officer
The Boston Beer Company, Inc. (the “Company”) announced today that David A. Burwick, President and Chief Executive Officer, has decided to step down from his position and as a member of the Company’s Board of Directors, effective March 31, 2024. Mr. Burwick has led the Company as CEO since April 2018 and has served on the Board since May 2005. Mr. Burwick will remain in an advisory role with the Company through March 31, 2026.
Mr. Burwick will be succeeded as President and CEO by Michael Spillane, who has been a member of the Company’s Board of Directors since 2016, as a Class A Director, and was appointed Lead Director in 2023. As the Company’s President and CEO, Mr. Spillane will also serve as President of each of the Company’s subsidiaries. Mr. Spillane will continue to serve on the Board and will stand for reelection at the Company’s 2024 Annual Meeting. He will join the Company as a senior advisor and an employee on March 4, 2024 (his “Start Date”) and assume the position of President and CEO on April 1, 2024. On his Start Date, Mr. Spillane will step down from his positions as Lead Director and on the Compensation Committee and Nominating/Governance Committee of the Company’s Board of Directors, as only independent directors may serve as Lead Director and on the Board’s standing committees. He will be succeeded as Lead Director on an interim basis by Meghan V. Joyce and on the Compensation Committee by Jean-Michel Valette effective April 1, 2024. Mr. Spillane’s position on the Nominating/Governance Committee will remain vacant until a successor is identified.
Outgoing CEO Agreement
Effective on February 23, 2024, Mr. Burwick entered into an agreement (the “Transition Agreement”) with the Company that details the financial and other principal matters that will govern Mr. Burwick’s continuing relationship with the Company through March 31, 2026. The provisions of the Transition Agreement were approved by the Board of Directors and the Compensation Committee of the Board of Directors on February 16, 2024. A copy of the agreement is attached hereto as Exhibit 10.1.
Mr. Burwick will remain as a salaried employee of the Company through June 30, 2024, and will then remain engaged by the Company in an advisory role, as a consultant, during the period of July 1, 2024 through March 31, 2026. His compensation through December 31, 2024 will be at the annual rate of $860,504, which is his current annual salary. His compensation for the calendar quarter ending March 31, 2025 will be $107,563 and his quarterly compensation for each quarter in the period April 1, 2025 through March 31, 2026 will be $10,000.
At its meeting on February 16, 2024 and as reported in the Current Report on Form 8-K filed by the Company on February 22, 2024, the Compensation Committee set Mr. Burwick’s bonus target for 120% of salary. The Transition Agreement effectively limits his covered salary to the salary earned by him while President and CEO, so that his target bonus for 2024 is $258,151.
As a consequence of his continuing advisory relationship with the Company, prior year equity grants will continue to vest in accordance with their respective terms through March of 2026. In the Transition Agreement, the Company has agreed not to terminate Mr. Burwick’s relationship with the Company prior to March 31, 2026, except in the event of the occurrence of the events described in the Transition Agreement.
Mr. Burwick is not eligible for further equity grants.
Mr. Burwick will continue to participate through June 30, 2024 in all of the various fringe benefits and perquisites that he currently enjoys, on the same basis as such benefits and perquisites are currently provided, subject only to such changes as may be adopted by the Company and apply to all executive officers of the Company. His rights to elect continued health care coverage under COBRA take effect as of July 1, 2024. Provided he remains eligible for and timely elects to continue receiving group medical insurance pursuant to COBRA, the Company will continue to pay, or reimburse him, for the period of July 1, 2024 through March 31, 2026, or until he has secured other employment or is no longer eligible for coverage under COBRA, whichever occurs first, the portion of the premium for the cost of health coverage under COBRA in excess of the active-employee portion of such premium paid by him as of June 30, 2024, payable on a monthly basis during such period.
Mr. Burwick’s responsibilities through March 31, 2026, after he steps down as President and CEO, are to advise Mr. Spillane on such matters as they may mutually agree, including with respect to the implementation of the recent changes in the Company’s contractual relationship with PepsiCo.
Pursuant to the Transition Agreement, Mr. Burwick has also confirmed his obligations under the Executive Employee Restrictive Covenant Agreement (the “Covenants”) that was executed by him when he accepted the role of President and CEO. The Covenants are more fully described in the Current Report on Form 8-K filed by the Company on February 16, 2018.
The Transition Agreement also contains mutual releases and non-disparagement provisions.
Incoming CEO Agreement
Also effective on February 23, 2024, Mr. Spillane entered into an Offer Letter with the Company that set forth the terms and conditions, including compensation, associated with his position as President and CEO. The provisions of the Offer Letter were approved by the Board of Directors and the Compensation Committee of the Board of Directors on February 16, 2024. A copy of the Offer Letter is attached hereto as Exhibit 10.2.
Mr. Spillane’s initial annual base salary will be $861,000, with his 2024 bonus determined by the Company’s performance against its “Goals” in accordance with its bonus “Scale”, both of which are described in the Current Report on Form 8-K filed by the Company on February 22, 2024. If the Company achieves the 100% payout level on the Scale in 2024, Mr. Spillane’s bonus will be 120% of his $861,000 annual base salary and not prorated. His bonus potential for Fiscal Year 2025 and subsequent years will be based on such performance criteria as are set annually by the Compensation Committee.
The Company will pay Mr. Spillane a signing bonus of $1,600,000, inclusive of relocation expenses, payable in one installment with his first paycheck after his Start Date.
Effective April 1, 2024 (the “Grant Date”), the Company will grant long-term equity awards to Mr. Spillane with a Grant Date value of $5,000,000, for the purposes of recruitment and retention. The number of shares will be determined on the Grant Date based on the market price of the Company’s Class A Shares on the day prior to the Grant Date. The structure of Mr. Spillane’s grants was approved by the Compensation Committee and the Board of Directors on February 16, 2024. Sixty percent (60%) of the long-term equity awards to be granted to Mr. Spillane will be time-based option awards that will vest over four years - 50% on March 1, 2026; 25% on March 1, 2027, and 25% on March 1, 2028 – contingent on Mr. Spillane’s continued employment on those vesting dates. Forty percent (40%) of the long-term equity grants to be awarded to Mr. Spillane will be performance-based RSUs with the same vesting criteria and schedule as the RSUs approved for the other executive officers on February 16, 2024. The details of those RSUs were explained in the Current Report on Form 8-K filed by the Company on February 22, 2024.
Mr. Spillane will be eligible to participate in the Company’s employee compensation and benefit plans and programs as may generally be made available to other Company employees at his level, except that the CEO position is not eligible to participate in the Company’s Investment Share Program.
As required under the Offer Letter, on his Start Date, Mr. Spillane will be required to sign an Executive Employee Restrictive Covenant Agreement that includes a covenant not to compete that extends for one year after he ceases to be an employee of the Company, unless his employment is terminated by the Company without cause.
Mr. Spillane has no familial or other material relationship with the Company, either directly or indirectly as a partner, shareholder, or officer of an organization that has a relationship with the Company. There are no transactions in which Mr. Spillane has an interest requiring disclosure under Item 404(a) of Regulation S-K.
Press Release
The Company issued a press release regarding Mr. Burwick’s retirement and Mr. Spillane’s appointment as President and CEO on February 27, 2024, which is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
The following exhibits are filed as part of this report:
Exhibit No. |
Description |
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10.1 |
Transition Agreement between David A. Burwick and the Company dated February 23, 2024 |
10.2 |
Offer Letter between Michael Spillane and the Company dated February 23, 2024 |
99.1 |
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104 |
Cover Page Interactive Data File (embedded within Inline XBRL document) |
SIGNATURES
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.
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The Boston Beer Company, Inc. |
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Date: |
February 27, 2024 |
By: |
/s/ David A. Burwick |
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Name: David A. Burwick |
EXHIBIT 10.1
The Boston Beer Company, Inc.
February 23, 2024
Mr. David A. Burwick
Re: Your Transition From Boston Beer Chief Executive Officer
Dear Dave,
The purpose of this letter is to confirm our mutual understandings and agreements with respect to the terms and conditions on which you will be stepping down from your positions as President and Chief Executive Officer (“CEO”) and a Director of The Boston Beer Company, Inc. (the "Company" and you and the Company are sometimes referred to as "we" or "our") and as an officer of the Company's subsidiaries, transitioning from an employee of the Company to a consultant, and then subsequently retiring from the Company. These terms and conditions shall take effect as of the date on which you countersign this letter (the "Effective Date") and are as follows:
Provided, for purposes of this paragraph 7, no act or failure to act by you shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without your reasonable belief that your action or omission was in the best interest of the Company. In determining whether your acts or failures to act are willful, relevant factors shall include whether you were operating in good faith at the direction of the Board or upon the advice of counsel for the Company.
No termination under this paragraph 7 shall be effective unless and until there shall have been delivered to you a copy of a resolution to be duly adopted by a resolution approved by a majority of the members of the Board, at a meeting of the Board called and held for such purpose (after reasonable notice is provided to you and you are provided an opportunity to be heard before the Board), finding that, in the good faith opinion of the Board, you are guilty of conduct described in this paragraph 7.
For the avoidance of doubt, this Section 9 shall not be violated by (i) statements made in the ordinary course of performance of duties to the Company (e.g., performance reviews), (ii) truthful statements made in the course of legal process or governmental or regulatory investigations, (iii) statements made by one party to correct or refute false or misleading statements made about such party by the other party hereto or (iv) regular marketing and advertising that does not expressly mention the other party.
If the foregoing accurately reflects our agreement, kindly so indicate by countersigning a copy of this letter and returning the executed document to the Company.
Very truly yours,
/s/ Jim Koch |
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C. James Koch, Chairman |
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/s/ Julio Nemeth |
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Julio Nemeth, Compensation Committee Chair |
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AGREED:
/s/ David A/ Burwick |
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David A. Burwick |
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Final Version
The Boston Beer Company, Inc.
Executive Employee Restrictive Covenant Agreement
This Executive Employee Restrictive Covenant Agreement is being entered into by and between The Boston Beer Company, Inc., a Massachusetts corporation with its principal place of business at One Design Center Place, Suite 850, Massachusetts 02210, for itself and on behalf of all of its subsidiaries and affiliates, including but not limited to Boston Beer Corporation, American Craft Brewery LLC, and A&S Brewing Collaborative LLC (collectively, the “Company”), on the one hand, and David A. Burwick, who is joining the Company as its President and Chief Executive Officer (“you”), on the other, effective as of the date (the "Effective Date") on which you so join the Company, in accordance with the letter agreement dated January 23, 2018, entered into between you and the Company (the “Offer Letter”), which was ratified and approved by the Company’s Board of Directors on February 14, 2018.
The Company is engaged in the business of producing and selling high quality craft beers, hard ciders and flavored malt beverages (the “Products”), which are sold throughout the United States and in some other countries (the “Territory”). Many of the formulas, recipes, processes, techniques, methods and technology used by the Company to produce, market and sell the Products are proprietary and valuable assets of the Company. As the Chief Executive Officer of the Company, you will have access to the valuable Proprietary Information of the Company (as defined below), in order to perform your duties for the Company. To protect this valuable Proprietary Information and the goodwill that the Company has built with its customers, it is necessary to set forth in this Agreement certain restrictions on the use and/or disclosure of this Proprietary Information and your trading upon the Company's goodwill, and thus to restrict your post-employment, competitive activities after you leave the Company’s employ. That is the purpose of this Agreement.
In consideration of the Company's commitments to you under the Offer Letter, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, you hereby agree with the Company as follows:
You acknowledge that the foregoing restrictions are fair and reasonable, given your position with the Company, and that your involvement in any proscribed activity would result in, or constitute a substantial risk of, damage or injury to the legitimate business interests of the Company.
The restriction set forth in this Section (and in paragraph 1) shall apply regardless of the reason for your departure from the Company, and regardless of whether you or the Company initiated such departure; provided that the Company provides you with all of the benefits and payments to which you are entitled under the Offer Letter. You acknowledge that you have read and you understand this provision, and that you have agreed to it knowingly and voluntarily, in order to obtain the benefits provided to you by the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed on its behalf and the undersigned have hereunto set their hands and seals in Boston, Massachusetts, all as of the date set forth below.
THE BOSTON BEER COMPANY, INC. |
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By: |
/s/ Jim Koch |
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C. James Koch, Chairman |
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/s/ David A. Burwick |
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David A. Burwick |
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EXHIBIT 10.2
The Boston Beer Company, Inc.
February 23, 2024
Michael Spillane
Dear Michael:
I am pleased to confirm our proposal for you to assume the role of President and Chief Executive Officer of The Boston Beer Company, Inc., a Massachusetts corporation (the “Company”).
Your employment will be subject to the terms and conditions set forth in this offer, which override anything discussed during our prior discussions:
EXHIBIT 10.2
EXHIBIT 10.2
EXHIBIT 10.2
If you are in agreement, kindly so indicate by countersigning this offer. I look forward to working with you as together we grow the Company.
Best regards, |
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/s/ Jim Koch |
Jim Koch |
Founder, Brewer, and Chairman of the Board |
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Accepted and Agreed: |
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/s/ Michael Spillane |
Michael Spillane |
EXHIBIT 10.2
The Boston Beer Company, Inc.
Executive Employee Restrictive Covenant Agreement
This Executive Employee Restrictive Covenant Agreement is being entered into by and between The Boston Beer Company, Inc., a Massachusetts corporation with its principal place of business at One Design Center Place, Suite 850, Massachusetts 02210, for itself and on behalf of all of its subsidiaries and affiliates, (collectively, the “Company”), on the one hand, and Michael Spillane, who is joining the Company as its President and Chief Executive Officer (“you”), on the other, effective as of the date (the "Effective Date") on which you so join the Company, in accordance with the letter agreement dated February 23, 2024, entered into between you and the Company (the “Offer Letter”).
The Company is engaged in the business of producing and selling high quality craft beers, hard ciders and flavored malt beverages (the “Products”), which are sold throughout the United States and in some other countries (the “Territory”). Many of the formulas, recipes, processes, techniques, methods and technology used by the Company to produce, market and sell the Products are proprietary and valuable assets of the Company. As the Chief Executive Officer of the Company, you will have access to the valuable Proprietary Information of the Company (as defined below), in order to perform your duties for the Company. To protect this valuable Proprietary Information and the goodwill that the Company has built with its customers, it is necessary to set forth in this Agreement certain restrictions on the use and/or disclosure of this Proprietary Information and your trading upon the Company's goodwill, and thus to restrict your post-employment, competitive activities after you leave the Company’s employ. That is the purpose of this Agreement.
In consideration of the Company's commitments to you under the Offer Letter, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, you hereby agree with the Company as follows:
EXHIBIT 10.2
You acknowledge that the foregoing restrictions are fair and reasonable, given your position with the Company, and that your involvement in any proscribed activity would result in, or constitute a substantial risk of, damage or injury to the legitimate business interests of the Company. The restriction set forth in this Section (and in paragraph 1) shall apply regardless of the reason for your departure from the Company, and regardless of whether you or the Company initiated such departure; provided that the Company provides you with all of the benefits and payments to which you are entitled under the Offer Letter.
EXHIBIT 10.2
You acknowledge that you have read and you understand this provision, and that you have agreed to it knowingly and voluntarily, in order to obtain the benefits provided to you by the Company.
For purposes of this Section 2, the term “Cause” shall have the meaning ascribed to it on Exhibit A.
You and the Company also agree that the Company’s commitment under the Offer Letter to pay you a signing bonus and make long term incentive grants represents valuable, mutually-agreed upon consideration that Executive and the Company intend supports the non-competition provisions set forth in Section 4.5, consistent with the provisions of M.G.L., Chapter 149, Section 24L, Clause (vii).
EXHIBIT 10.2
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed on its behalf and the undersigned has hereunto set his hand and seal in Boston, Massachusetts, all as of the date set forth below.
THE BOSTON BEER COMPANY, INC. |
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By: |
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/s/ Jim Koch |
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C. James Koch, Chairman |
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/s/ Michael Spillane |
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Michael Spillane |
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Dated: February 23, 2024 |
EXHIBIT 10.2
Exhibit A
“Cause”
“Cause” shall mean: (i) engaging in knowing and intentional illegal conduct that was or is materially injurious to the Company or its affiliates; (ii) violating a federal or state law or regulation applicable to the Company’s business, which violation was or is reasonably likely to be injurious to the Company; (iii) being convicted of, or entering a plea of nolo contendere to, a felony or committing any act of moral turpitude, dishonesty, or fraud against the Company, or (iv) the material misappropriation of property belonging to the Company or its affiliates.
EXHIBIT 99.1
The Boston Beer Company Announces CEO Succession Plan
Dave Burwick to Retire; Michael Spillane Appointed President and Chief Executive Officer Effective April 1
BOSTON, February 27, 2024 – The Boston Beer Company (NYSE: SAM) today announced leadership changes effective April 1, 2024. Dave Burwick will retire as President and Chief Executive Officer and member of the Board of Directors, with Michael Spillane to assume the President and CEO role effective upon Burwick’s retirement. Spillane is currently the lead director of The Boston Beer Company and has been a board member since 2016.
“I’ve known Dave for 19 years, and he’s had a tremendous impact on our company – first as a board member and for the last six years as our CEO,” said Boston Beer Founder and Brewer Jim Koch. “We’ve grown from $850 million in revenue when he began as CEO to more than $2 billion in revenue with a portfolio of powerful brands in attractive categories today. He’s built a strong and deep leadership team and he’s positioned the company very well for ongoing success in 2024 and beyond.”
“I can’t thank Dave enough for his partnership with me and for his contributions to Boston Beer over the past two decades,” Koch added. “His steady leadership, talent, work ethic, values, guidance, and motivation have been unwavering, and I appreciate all he did to make Boston Beer a more successful company and a better place to work.”
During Burwick’s tenure as CEO, Boston Beer’s revenue more than doubled and its stock generated average annual returns of 11% – by far the highest among U.S. beer producers. Burwick architected Boston Beer’s vision and long-range plan to address evolving consumer needs, helping build two billion-dollar brands in Twisted Tea and Truly and driving Boston Beer to the #2 position in the “beyond beer” space while strengthening the company’s ability to compete head on with many global beverage behemoths. He also created new-to-world partnerships with PepsiCo and Beam Suntory to further bolster the company’s brand portfolio in emerging categories, and he consistently modeled Boston Beer’s open, empathetic, and learning-based culture.
“Now that our momentum is building and we’re back on track with great plans ahead for ‘24, it’s the right time for me to move on,” said Burwick. “I’m fortunate to have been connected to this company for 19 years and I’m especially appreciative of the talented, committed, and passionate people of Boston Beer – none more than Jim – who have taught me so much about leadership and about myself. Boston Beer has a unique and powerful culture and I’m confident the company is in great hands to take advantage of the opportunities ahead.”
Spillane, who joined Boston Beer’s board in 2016, has a broad business background with extensive consumer goods experience. Over the past 17 years, he has held senior positions at Nike, Inc., most recently as President of Consumer Creation and prior to that as President of Product and Merchandising. Additionally, he served as President and CEO of subsidiaries Umbro and Converse, as well as General Manager of Greater China. He brings deep experience in the integration of product, brand, marketplace, supply chain, and in-store execution. He has been Boston Beer’s lead director since May 2023 after serving as chair of the Compensation Committee from 2016 to 2023.
EXHIBIT 99.1
He also currently serves as a director at Supergoop, a premium skin care product company.
“Michael’s strong track record as a consumer executive and his experience on our board make him the ideal person to lead Boston Beer as we continue to forge ahead in a rapidly evolving beer industry,” said Koch. “Given his already extensive knowledge of our company and our culture, we expect Michael to hit the ground running as he steps in to help lead us into our next chapter.”
“After nearly eight years on the Boston Beer Board – and as a native of the Boston area – I’m thrilled for the opportunity to help advance Boston Beer’s long-term goals as we enter a new growth phase,” said Spillane. “I am grateful for Dave’s leadership and partnership and I’m looking forward to working with Jim and so many other great people at Boston Beer to build on the strong foundation and culture that Jim, Dave and all of our coworkers have built over the course of four decades.”
About the Company
The Boston Beer Company, Inc. (NYSE: SAM) began in 1984 brewing Samuel Adams beer and has since grown to become one of the largest and most respected craft brewers in the United States. We consistently offer the highest-quality products to our drinkers, and we apply what we’ve learned from making great-tasting craft beer to making great-tasting and innovative “beyond beer” products. Boston Beer Company has pioneered not only craft beer but also hard cider, hard seltzer, and hard tea. Our core brands include household names like Angry Orchard Hard Cider, Dogfish Head, Truly Hard Seltzer, Twisted Tea Hard Iced Tea, and Samuel Adams. We have taprooms and hospitality locations in California, Delaware, Massachusetts, New York, and Ohio. For more information, please visit our website at www.bostonbeer.com, which includes links to our respective brand websites.
Contact:
Dave DeCecco
dave.dececco@bostonbeer.com
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