All of Boston Beer Company’s named executive officers (NEO) except for CEO Dave Burwick will receive salary raises in 2024, according to a U.S. Securities and Exchange Commision (SEC) Form 8-K filed on February 16.
Burwick “opted not to be considered for a base salary increase” in 2024, maintaining a salary of $860,503. He received a +3% increase in 2023, below the 5% increase first promised to him when hired in 2019. He forwent his raise in 2022.
CFO Diego Reynoso received the largest percentage increase: +4%, to $624,000. Reynoso was named CFO and treasurer in July, effective September 5. Former CFO Frank Smalla stepped down from the role in March 2023, staying on with the company in an advisory role through April 14. In the 8-K filing announcing Smalla’s departure, Boston Beer said his exit “is not related to any disagreement with the company or any matter relating to its operations, policies or practices.”
Boston Beer chief sales officer John Geist also announced he would be leaving his executive role in 2023, retiring after 26 years with the company. His last day in the role was December 31. However, he is staying with the company in a senior advisory role, and will maintain his executive salary of $608,650. Geist was “not eligible for a salary increase” in 2024, according to the filing.
All other NEOs received +3% salary increases for 2024, effective March 4:
- Chief accounting officer and VP of finance Matthew Murphy (new base salary of $393,756);
- Chief supply chain officer Philip Hodges ($633,450);
- Chief marketing officer Lesya Lysyj ($545,432).
The filing also detailed NEO’s cash bonuses for fiscal year 2023. All NEOs received 2023 bonuses, except for Smalla, who was not eligible, according to the filing. Cash bonuses are determined by whether the company meets projected goals, including depletions growth (50% of the goals), EBITA targets (30% of the goals) and “resource efficiency” (20% of the goals) – the latter of which will be referred to as “cost savings” in future filings “for the sake of clarity.”
Company performance against these goals determines the “bonus scale” and how much of the bonus pool NEOs actually receive.
“The committee has 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 2023, and by up to 30% if the officer was deemed to have performed ‘exceptionally,’” Boston Beer wrote in the filing. “The committee had also retained the discretion to decrease an officer’s 2023 bonus payout to as low as $0 if the officer was deemed to have performed ‘unsatisfactorily.’”
Boston Beer’s compensation committee determined that the company achieved 95% on the bonus scale in 2023 – significantly above the 38% Boston Beer achieved in 2022. As a result, NEOs will receive the following cash bonuses on March 6:
- Burwick: $1,032,605 (was eligible for 120% of his base salary);
- Murphy: $189,850 (was eligible for 50% of his base salary as of May 3, 2023, after taking on the interim CFO tag from March 7 through September 4);
- Geist: $432,000 (was eligible for 75% of his base salary);
- Lysyj: $332,500 (was eligible for 60% of her base salary);
- Hodges: $214,500 (was eligible for 60% of his base salary);
- Reynoso: $111,000 (was eligible for 60% of his base salary).
For 2024, the bonus target eligibility will remain the same percentage for Burwick (120%), Murphy (50%) and Hodges (60%). Reynoso and Lysyj each received a +5% increase to their bonus target eligibility percentages, now both at 65% of their base salaries. Geist received a -15% reduction, to 50% of his base salary.
All other executives have a 2024 bonus target eligibility of 50% to 100% of their base salaries.
“With one exception noted below, to be eligible for a bonus payment, executive officers and other coworkers generally must remain employed by the company on the last business day of the year,” the company wrote. “Under the terms of his senior sales advisor role, Mr. Geist will be eligible for a bonus if he remains employed by the company beyond June 30, 2024.”
In addition to raises and cash bonuses, NEOs are also eligible for long-term equity awards of restricted stock units (RSU) of shares of Boston Beer’s Class A common stock. Awards granted will be 50% time-based RSUs and 50% performance-based RSUs, according to the filing.
Time-based RSUs will be 25% per year over a four-year period, beginning March 1, 2025, and ending March 1 2028, “contingent upon continued employment with the company on the applicable vesting dates.”
Performance-based RSUs will be contingent on Boston Beer meeting “certain compounded annual growth rate targets for new revenue” in fiscal year 2026 versus fiscal year 2023 (a.k.a. CAGR targets), as well as continued employment through the vesting dates.
CAGR targets will be determined by the compensation committee prior to March 1 2027. Those targets will determine the RSU shares vested by NEOs on a “sliding linear scale.”
- “If CAGR is less than 0.5%, none of the target RSU Shares will vest;
- “If CAGR is 0.5%, then 50% of the target RSU Shares will vest on March 1, 2027;
- “If CAGR is 2.5%, then 100% of the target RSU Shares will vest on March 1, 2027;
- “If CAGR is equal to or greater than 4.5%, then 200% of the target RSU Shares will vest on March 1, 2027.”
Boston Beer also listed time-based and performance-based RSU awards for Reynoso (both $400,000), Murphy (both $125,000) and Lysyj (both $775,000), which will be granted on March 1, 2024.
“The total number of target RSUs to be granted will be calculated based on the closing price of the Company’s Class A Common Stock on February 29, 2024, the last business day before the grant date,” The company added.
Burwick “opted not to be considered for long-term equity awards in 2024,” according to the filing. Hodges is “not currently eligible to receive additional equity awards” due to “one-time special long-term equity awards granted to him in connection with his recruitment and hiring.”
While Geist is still employed at Boston Beer, the company “does not currently expect to grant long-term equity awards to him in 2024.”
Also in the 8-K filing was a new “retirement provision,” approved on February 16. In the provision, Boston Beer workers, including executives, are eligible to continue to vest share post-retirement if they meet four points of criteria:
- Are 60 or older on their last day with the company;
- Have had at least 15 years of “service to the company;”
- Provide at least six months notice of their plans to retire;
- And reaffirm in writing that they will continue to comply with the “the surviving provisions of their employment agreement, including any applicable non-competition provisions, following their retirement date.”
“If a retiring coworker meets all the above criteria, all equity awards granted after February 16, 2024, will continue to vest upon their original schedules and criteria,” the company wrote.
“In other words, those equity awards will not automatically expire upon termination of employment: (1) time-based awards will continue to vest post-retirement according to the same schedule outlined in the original grant agreement; and (2) performance-based awards will continue to vest post-retirement according to the same schedule and subject to the same performance-based vesting criteria outlined in the original grant agreement.”
Boston Beer will share its full-year and Q4 2023 earnings results after the close of the market on Tuesday.