Wine maker's CEO's compensation jumps 25 percent

AP News
Posted: Jun 15, 2011 5:05 PM
Wine maker's CEO's compensation jumps 25 percent

The chief executive and president of Constellation Brands Inc. saw his pay package rise 25 percent in fiscal 2011 as the alcoholic drinks company became more profitable but lost its status as the world's biggest winemaker, according to a filing the company made with the Securities and Exchange Commission.

The maker of Robert Mondavi wine and Svedka vodka paid Robert Sands total compensation valued at $8.43 million in the fiscal year ended Feb. 28, according to an Associated Press analysis of a June 10 securities filing. That's up from $6.77 million in fiscal 2010.

The bulk of Sands' pay hike came with the doubling of his performance-based cash bonus to $2.62 million and a nearly 5 percent increase in his stock and option awards, which were valued at $4.4 million when they were granted.

His base salary rose 2.5 percent to $1.13 million from $1.1 million. His pay package also included other compensation of $273,748, including $178,251 for personal use of the company's plane and $73,365 in retirement contributions.

Sands, 53, replaced his elder brother, Richard, at the helm of Constellation in 2007 after five years as president and chief operating officer. Richard Sands, 59, who is now chairman and was CEO for 14 years, received compensation valued at $7.79 million in fiscal 2011, up 9.8 percent from $7.1 million. That includes a performance-based cash bonus of $2.64 million and options valued at $3.49 million when they were granted.

The company's wines include Clos du Bois, Woodbridge by Robert Mondavi, Blackstone and Ravenswood. It also sells liquors such as Black Velvet Canadian whiskey and imports such beers as Corona from Mexico, Tsingtao from China and St. Pauli Girl from Germany.

Based in Victor, 20 miles southeast of Rochester, Constellation Brands sold 80 percent of its struggling Australian and British wine business in January. Investors expect the sale to create a more profitable business with less risk.

But it dropped Constellation to No. 2 in the global rankings of wine makers behind E.&J. Gallo Winery of Modesto, Calif. Constellation had jumped ahead of Gallo in 2003, when it bought Australian vintner BRL Hardy Ltd. for $1.1 billion.

Despite the divestiture, wine sales still account for more than 90 percent of Constellation's revenue. The company, which employs 6,000 people, has shifted to higher-priced brands and remains the biggest seller by volume of wines that sell for $5 to $15 a bottle.

For all of fiscal 2011, Constellation Brands earned $560 million, up sharply from $99 million in fiscal 2010. But sales eased to $3.33 billion from $3.36 billion.

The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.