Boston Beer Company’s named executive officers (NEO) will all receive raises in 2023 and most will receive a portion of their 2022 bonuses, according to a U.S. Securities and Exchange Commission (SEC) Form 8-K filed last week.
CEO Dave Burwick’s salary will increase +3% from 2022, to $860,503. When he was hired in 2019, Burwick’s offer letter stipulated that he would receive 5% salary increases in 2022 and 2023, but he forewent last year’s raise and agreed to a limited raise in 2023, according to the filing.
Chief people officer Carolyn O’Boyle will also receive a +3% raise in 2023, bringing her salary to $515,000. Chief financial officer Frank Smalla and chief sales officer John Geist will both receive +2% raises, bringing each of their salaries to $608,650. Chief marketing officer Lesya Lysyj will also receive a +2% raise, bringing her salary to $529,045.
In addition to accepting a smaller-than-agreed-upon raise, Burwick will also forgo a cash bonus in 2023. Bonus payouts are based on the company’s 2022 performance, and the compensation committee determined Boston Beer achieved 38% of its goal last year. Employees’ bonuses are set at a percentage of their salary, and the amount paid out depends on the committee’s decision and employee performance.
“The Compensation Committee considered whether to adjust each executive officer’s final 2022 bonus payout based on the committee’s assessment of each executive officer’s overall job performance, key competencies, and the achievement of relevant objectives and key results in 2022,” the filing said. “The committee had retained the discretion to increase or decrease an officer’s bonus payout by up to 10% from the baseline target bonus, if the officer was deemed to have performed ‘successfully’ in 2022, and by up to 30% if the officer was deemed to have performed ‘exceptionally.’ The committee had also retained the discretion to decrease an officer’s 2022 bonus payout to as low as $0 if the officer was deemed to have performed ‘unsatisfactorily.’”
The rest of the NEOs will receive bonuses, including Geist ($142,250 in bonus, eligible for 75% of his salary), Smalla ($142,250 in bonus, eligible for 75% of his salary), Lysyj ($84,000 in bonus, eligible for 60% of her salary) and O’Boyle ($137,500 in bonus, eligible for 60% of her salary).
Salary increases will go into effect company-wide on March 6, and bonuses will be paid out on March 8.
In addition to raises and bonuses, the NEOs are also eligible for long-term equity awards in the form of stock options and restricted stock units (RSU), based on Boston Beer’s achievement of compounded annual growth rate targets based on increased net revenue in fiscal year 2024 compared to fiscal year 2022, according to the filing.
“If the primary target is achieved, the options will vest as to 33% of the underlying shares on March 1, 2025, 33% on March 1, 2026, and 34% on March 1, 2027, contingent on continued employment on the applicable vesting dates and subject to accelerated vesting upon the occurrence of certain specified events,” the filing read. “If the secondary target is achieved and the primary target is not achieved, the options will vest as to 16.5% of the underlying shares on March 1, 2025, 16.5% on March 1, 2026, and 17% on March 1, 2027, 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 neither target is met.”
The compensation committee will determine vesting eligibility for options by March 1, 2023. Stock options and RSUs will be based on the price of Boston Beer’s stock at the close of business on February 28. Burwick is eligible for $2 million each in both stock options and RSUs, while Smalla and Geist are eligible for $500,000 each in both, and Lysyj and O’Boyle are eligible for $275,000 each in both.
Boston Beer’s board of directors adopted a new compensation plan for non-employee directors, which will go into effect at the company’s shareholder meeting on May 17. Under the new plan, all non-employee directors will receive one-time awards upon election to the board consisting of $65,000 in both options for Class A shares and RSUs, and an annual award in the same amount.
Directors will also receive an annual cash retainer of $75,000. The lead director and committee chair people will receive annual cash retainers of $20,000. Committee members will receive annual cash retainers of $10,000. All chairs and members of the board’s ad-hoc committee will be eligible to receive an annual cash retainer upon appointment at the discretion of the compensation committee.
Boston Beer will report its Q4 and full-year 2022 earnings after the close of the market on Wednesday.
Dollar sales of the company’s products (Twisted Tea, Truly Hard Seltzer, Samuel Adams, Dogfish Head, Angry Orchard) at off-premise retailers declined -0.1%, to $2.42 billion in 2022, according to market research firm IRI. The company’s off-premise case volume declined -5.1%. It was the fifth-largest beer category vendor in 2022, with 5.43% of all off-premise beer category dollar sales.
In the first month of 2023, Boston Beer’s off-premise dollar sales have increased +1.9% through January 29, compared to the same time last year, according to IRI. However, case volume has declined -5.1% compared to the period in 2022.