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. 29, 2020

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, 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 ⁽¹⁾	—	—		—		(68,928	)	—
Balance at February 28, 2018	258,718,356	28,335,387		1,970		90,743,239		5,005,800



	Common Stock						Treasury Stock
	Class A		Class B		Class 1		Class A		Class B
Retirement of treasury shares ⁽²⁾	(74,000,000	)	—		—		(74,000,000	)	—
Share repurchases	—		—		—		2,352,145		—
Conversion of shares	12,968		(12,968	)	—		—		—
Exercise of stock options	1,008,854		—		1,147,654		—		—
Employee stock purchases	—		—		—		(76,844	)	—
Grant of restricted stock awards	—		—		—		(3,914	)	—
Vesting of restricted stock units ⁽¹⁾	—		—		—		(24,308	)	—
Vesting of performance share units ⁽¹⁾	—		—		—		(62,352	)	—
Balance at February 28, 2019	185,740,178		28,322,419		1,149,624		18,927,966		5,005,800
Share repurchases	—		—		—		265,593		—
Conversion of shares	350,567		(22,213	)	(328,354	)	—		—
Exercise of stock options⁽³⁾	—		—		870,957		(747,527	)	—
Employee stock purchases	—		—		—		(69,324	)	—
Vesting of restricted stock units ⁽¹⁾	—		—		—		(91,311	)	—
Vesting of performance share units ⁽¹⁾	—		—		—		(29,015	)	—
Cancellation of restricted shares	—		—		—		444		—
Balance at February 29, 2020	186,090,745		28,300,206		1,692,227		18,256,826		5,005,800


⁽¹⁾	Net of the following shares withheld to satisfy tax withholding requirements:



	For the Years Ended
	February 29, 2020	February 28, 2019	February 28, 2018
Restricted Stock Units	49,900	15,409	117,188
Performance Share Units	17,439	44,016	55,584


⁽²⁾	Shares of our Class A Treasury Stock were retired to authorized and unissued shares of our Class A Common Stock.


⁽³⁾	Includes use of Class A Treasury Stock associated with stock option exercises beginning March 1, 2019.

Stock repurchases

From time to time, our Board of Directors has authorized the repurchase of our Class A Common Stock and Class B Convertible Common Stock. Shares may be repurchased through open market or privately negotiated transactions. Shares repurchased under such authorizations have become treasury shares. A summary of share repurchase activity is as follows:



			Class A Common Shares Repurchased
	Repurchase Authorization		For the Year Ended February 29, 2020			For the Year Ended February 28, 2019			For the Year Ended February 28, 2018
	Date	Amount Authorized	Dollar Value		Number of Shares	Dollar Value		Number of Shares	Dollar Value		Number of Shares
(in millions, except share data)
2017 Authorization ⁽¹⁾	Nov 2016	$1,000.0	$	—	—	$	—	—	$	546.9	2,530,194
2018 Authorization ⁽²⁾	Jan 2018	$3,000.0	50.0		265,593	504.3		2,352,145	491.6		2,279,867
			$	50.0	265,593	$	504.3	2,352,145	$	1,038.5	4,810,061


⁽¹⁾	The 2017 Authorization was fully utilized during the year ended February 28, 2018.


⁽²⁾	As of February 29, 2020, $1,954.1 million remains available for future share repurchase under the 2018 Authorization. The Board of Directors did not specify a date upon which this authorization would expire.

Common stock dividends

In April 2020, our Board of Directors declared a quarterly cash dividend of $0.75 per share of Class A Common Stock, $0.68 per share of Class B Convertible Common Stock, and $0.68 per share of Class 1 Common Stock payable in the first quarter of fiscal 2021.