Item 5.02 Departure of Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
2017 Bonus Opportunities
At its meeting on December 7, 2016, the Compensation Committee of the Board of Directors of
the Company approved Shared Company-Wide Goals (the Goals) and related 2017 bonus objectives for
the Companys Named Executive Officers (NEOs). The Goals consist of achieving: (1) certain
depletions growth targets over 2016, which are weighted as 60% of the Goals; (2) certain Earnings
Before Interest & Tax (EBIT) targets, which are weighted as 20% of the Goals; and (3) the
generation of certain resource efficiency and cost savings targets, which are weighted as 20% of
the Goals. Bonus payouts will be determined in accordance with a scale that provides for between
0% and 250% payout, based on the Companys performance against the depletions growth, EBIT, and
resource efficiency targets in 2017 (the Scale). The payout levels will be based on the
weighting and achievement of those targets. Assessment of the achievement of the Goals is within
the purview of the Compensation Committee.
The 2017 bonus opportunities for the NEOs, approved by the Compensation Committee, will be
100% based on the Companys performance against the Goals in accordance with the Scale. If the
Company achieves the 100% payout level on the Scale, the bonus potential of the NEOs will range
between 60% and 100% of their respective base salaries. The bonus potential of the Companys
currently-serving NEOs are as follows:
Martin F. Roper, President and Chief Executive Officer: 80% of base salary;
C. James Koch, Founder and Executive Chairman: 100% of base salary;
John C. Geist, Chief Sales Officer: 60% of base salary; and
Frank H. Smalla, Chief Financial Officer and Treasurer, 60% of base salary.
The bonus potential of the Companys other executive officers will range between 25% and 50% of
their respective base salaries, with payout levels to be calculated in accordance with the Scale.
Equity Compensation
At its meeting on December 7, 2016, the Compensation Committee approved, subject to
ratification and approval by the full Board of Directors, the following option and restricted stock
award grants of shares of the Companys Class A Common Stock, pursuant to the Companys Employee
Equity Incentive Plan. The grants were subsequently ratified and approved by the full Board of
Directors at its December 8, 2016 meeting and will be effective January 1, 2017.
Grant of Options to Executive Chairman
The Compensation Committee approved a grant to Mr. Koch of an option, effective on January 1,
2017. The option will have an accounting value of $225,000, based on the closing price of the
Companys Class A Common Stock on December 30, 2016. The number of shares that may become
exercisable will be dependent upon the Company achieving certain compounded annual growth rate
targets based on depletions growth in Fiscal Year 2019 over Fiscal Year 2016. The determination of
the eligibility for vesting of these options will be made by the Compensation Committee before
March 1, 2020. If the primary depletions target is achieved, 33% of the eligible shares will vest
on March 1, 2020, 33% of the shares will vest on January 1, 2021, and 34% of the shares will on
January 21, 2022, contingent on continued employment on the applicable vesting dates and subject to
accelerated vesting upon the occurrence of certain specified events. If the secondary depletions
target is achieved and the primary depletions target is not achieved, 16.5% of the eligible shares
will vest on March 1, 2020, 16.5% of the shares will vest on January 1, 2021, and 17% of the shares
will on January 21, 2022, contingent on continued employment on the applicable vesting dates and
subject to accelerated vesting upon the occurrence of certain specified events. The options will
lapse to the extent that the depletions targets are not met.
Other Equity Grants
In addition to the option to be granted to the Executive Chairman, an option with an
accounting value of $200,000, based on the closing price of the Companys Class A Common Stock on
December 30, 2016, will be granted to another executive officer of the Company. The option will be
subject to the same vesting criteria and schedule as the option granted to the Executive Chairman.
The approved equity grants also include an aggregate of $2,112,000 in restricted stock award
grants to be awarded to two executive officers and to other senior managers and key employees of
the Company, effective as of January 1, 2017. These restricted stock awards will vest 20% per year
on January 1 in each of the years 2018 through 2022, contingent on continued employment on the
respective vesting dates, and subject to accelerated vesting upon the occurrence of certain
specified events. No NEOs will receive restricted stock awards.
Approval of Class B Stockholders
All of the bonus opportunities and equity compensation grants described above were approved by
the holders of the Companys Class B Common Stock.