Craft Brew Alliance (CBA) has amended the contracts of its executive team members, according to a filing last week with the U.S. Securities and Exchange Commission.
According to a Form 8-K filed on November 29, CBA amended and restated employment contracts for CEO Andy Thomas, chief operating officer J. Scott Mennen, chief financial and strategy officer Christine Perich, VP of sales Derek Hahm, and corporate controller and principal accounting officer Edwin Smith.
Among the most notable changes to the contracts is an extension to the time in which severance pay can be triggered from one year to two years, following a change in control of the company, should any of the executives’ employment be terminated without cause or for good reason.
The move comes nearly three weeks after Anheuser-Busch InBev announced plans to acquire the remaining stake in the publicly traded Portland, Oregon-headquartered craft beer company.
According to the filing, severance payments “are calculated without regard to any reductions in compensation following a change in control.”
CBA also revised its definitions of “cause” and “good reason” in order “to provide for a more objective standard.” The company also included procedural protections in its definition of “cause.”
The form also specified cash retention awards for each executive, to be paid before December 31. Thomas will receive $1.25 million, Mennen and Perich will each receive $350,000 and Smith will receive $170,000.
If CBA and A-B do not complete the merger or if any of the executives depart the company prior to the deal closing, they will be required to pay back the after-tax portion of the bonuses. Smith’s bonus is contingent on his remaining with the company 90 days after the merger closes.
In January, CBA extended the contracts of Thomas and Mennen through December 31, 2021.
The employment agreement for Perich, who joined the company in March, runs through December 31, 2020.
Hahm’s contract runs through December 31, 2021, while Smith’s contract is slated to expire on June 30, 2022.
A-B agreed to acquire CBA for $16.50 per share last month; the world’s largest beer manufacturer already owned a 31.2% stake in CBA. The acquisition came three months after A-B declined to make a qualifying offer to purchase CBA for $24.50 per share.
CBA’s brands include Kona Brewing, Widmer Brothers, Redhook, Omission, Square Mile Cider, Wynwood Brewing, Cisco Brewers and Appalachian Mountain Brewery, as well as innovation arm the pH Experiment. The portfolio of brands will join A-B’s craft division, the Brewers Collective, which includes acquired brands such as Goose Island, Elysian, 10 Barrel, Golden Road, and Wicked Weed, among others.
Clarification: this story was edited on Tuesday, December 3 to clarify that the contract extension applied to the time period in which severance payments can be triggered, not an extension to the severance pay itself.