Constellation Brands, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

Stockholders' Equity

12 Months Ended

Feb. 28, 2018

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY:

Common stock –

We have two classes of common stock with a material number of shares outstanding: Class A Common Stock and Class B Convertible Common Stock. Class B Convertible Common Stock shares are convertible into shares of Class A Common Stock on a one-to-one basis at any time at the option of the holder. Holders of Class B Convertible Common Stock are entitled to ten votes per share. Holders of Class A Common Stock are entitled to one vote per share and a cash dividend premium. If we pay a cash dividend on Class B Convertible Common Stock, each share of Class A Common Stock will receive an amount at least ten percent greater than the amount of the cash dividend per share paid on Class B Convertible Common Stock. In addition, the Board of Directors may declare and pay a dividend on Class A Common Stock without paying any dividend on Class B Convertible Common Stock. However, our senior credit facility limits the cash dividends that we can pay on our common stock to a fixed amount per quarter but the fixed amount may be exceeded subject to various conditions set forth in the senior credit facility.

In addition, we have a class of common stock with an immaterial number of shares outstanding: Class 1 Common Stock. Shares of Class 1 Common Stock generally have no voting rights. Class 1 Common Stock shares are convertible into shares of Class A Common Stock on a one-to-one basis at any time at the option of the holder, provided that the holder immediately sells the Class A Common Stock acquired upon conversion. Because shares of Class 1 Common Stock are convertible into shares of Class A Common Stock, for each share of Class 1 Common Stock issued, we must reserve one share of Class A Common Stock for issuance upon the conversion of the share of Class 1 Common Stock. Holders of Class 1 Common Stock do not have any preference as to dividends, but may participate in any dividend if and when declared by the Board of Directors. If we pay a cash dividend on Class 1 Common Stock, each share of Class A Common Stock will receive an amount at least ten percent greater than the amount of cash dividend per share paid on Class 1 Common Stock. In addition, the Board of Directors may declare and pay a dividend on Class A Common Stock without paying a dividend on Class 1 Common Stock. The cash dividends declared and paid on Class B Convertible Common Stock and Class 1 Common Stock must always be the same.

The number of shares of common stock issued and treasury stock, and associated share activity, are as follows:



	Common Stock					Treasury Stock
	Class A	Class B		Class 1		Class A		Class B
Balance at February 28, 2015	250,839,359	28,389,608		—		79,681,859		5,005,800
Share repurchases	—	—		—		246,143		—
Conversion of shares	31,079	(31,079	)	—		—		—
Exercise of stock options	4,687,588	—		2,000		—		—
Employee stock purchases	—	—		—		(89,155	)	—
Grant of restricted stock awards	—	—		—		(4,984	)	—
Vesting of restricted stock units ⁽¹⁾	—	—		—		(157,052	)	—
Vesting of performance share units ⁽²⁾	—	—		—		(223,044	)	—
Cancellation of restricted shares	—	—		—		244		—
Balance at February 29, 2016	255,558,026	28,358,529		2,000		79,454,011		5,005,800
Share repurchases	—	—		—		7,407,051		—
Conversion of shares	2	(2	)	—		—		—
Exercise of stock options	1,948,156	—		80		—		—
Employee stock purchases	—	—		—		(77,671	)	—
Grant of restricted stock awards	—	—		—		(4,088	)	—
Vesting of restricted stock units ⁽¹⁾	—	—		—		(325,773	)	—
Vesting of performance share units ⁽²⁾	—	—		—		(190,559	)	—
Balance at February 28, 2017	257,506,184	28,358,527		2,080		86,262,971		5,005,800
Share repurchases	—	—		—		4,810,061		—
Conversion of shares	29,640	(23,140	)	(6,500	)	—		—
Exercise of stock options	1,182,532	—		6,390		—		—
Employee stock purchases	—	—		—		(75,023	)	—
Grant of restricted stock awards	—	—		—		(3,848	)	—
Vesting of restricted stock units ⁽¹⁾	—	—		—		(181,994	)	—
Vesting of performance share units ⁽²⁾	—	—		—		(68,928	)	—
Balance at February 28, 2018	258,718,356	28,335,387		1,970		90,743,239		5,005,800


⁽¹⁾	Net of 117,188 shares, 241,870 shares and 112,851 shares withheld for the years ended February 28, 2018, February 28, 2017, and February 29, 2016, respectively, to satisfy tax withholding requirements.


⁽²⁾	Net of 55,584 shares, 168,811 shares and 216,396 shares withheld for the years ended February 28, 2018, February 28, 2017, and February 29, 2016, respectively, to satisfy tax withholding requirements.

Stock repurchases –

In April 2012, our Board of Directors authorized the repurchase of up to $1.0 billion of our Class A Common Stock and Class B Convertible Common Stock (the “2013 Authorization”), which was fully utilized during the year ended February 28, 2017. Shares repurchased under the 2013 Authorization have become treasury shares.

In November 2016, our Board of Directors authorized the repurchase of up to $1.0 billion of our Class A Common Stock and Class B Convertible Common Stock (the “2017 Authorization”), which was fully utilized during the year ended February 28, 2018. Shares repurchased under the 2017 Authorization have become treasury shares.

In January 2018, our Board of Directors authorized the repurchase of up to $3.0 billion of our Class A Common Stock and Class B Convertible Common Stock (the “2018 Authorization”). The Board of Directors did not specify a date upon which this authorization would expire. Shares repurchased under the 2018 Authorization have become treasury shares.

For the year ended February 28, 2018, we repurchased 2,530,194 shares of Class A Common Stock pursuant to the 2017 Authorization at an aggregate cost of $546.9 million and 2,279,867 shares of Class A Common Stock pursuant to the 2018 Authorization at an aggregate cost of $491.6 million through a combination of open market transactions and an accelerated share repurchase agreement with a third-party financial institution. Subsequent to February 28, 2018, we repurchased 93,287 shares of Class A Common Stock pursuant to the 2018 Authorization at an aggregate cost of $21.2 million through open market transactions.

As of April 23, 2018, total shares repurchased under these authorizations are as follows:



			Class A Common Shares
	Repurchase Authorization		Dollar Value of Shares Repurchased		Number of Shares Repurchased
(in millions, except share data)
2013 Authorization	$	1,000.0	$	1,000.0	18,670,632
2017 Authorization	$	1,000.0	$	1,000.0	5,536,741
2018 Authorization	$	3,000.0	$	512.8	2,373,154

Common stock dividends –

In March 2018, our Board of Directors declared a quarterly cash dividend of $0.74 per share of Class A Common Stock, $0.67 per share of Class B Convertible Common Stock and $0.67 per share of Class 1 Common Stock payable in the first quarter of fiscal 2019.