The booze flows at Constellation Brands…

June 21, 2012

Hollywood has two main stereotypes for the corporate executive: The buttoned-down, ruthless suit who schemes coldly to accomplish his ends; and the sad-sack good-old-boy immersed in nostalgia and/or indulgence (and usually about to have his lunch eaten by the buttoned-down suit). Neither, we’re sure, tells the full story, but company spin tends to hew a little closer to the former — businesslike, no-nonsense — than the latter.

And yet, every once in a while, that indulgence shows through, and, with the notable exception of casino companies, rarely more clearly than at consumer-products companies. Let’s face it, everyone likes free stuff, including people making $7 million a year, and consumer-products companies have some of the best free stuff.

Exhibits A and B: the brothers Robert and Richard Sands, respectively chief executive and chairman of Constellation Brands (STZ). The big seller of wine, beer and spirits, whose brands include Robert Mondavi and Ravens Wood wines, Corona Extra beer and Svedka vodka, filed its proxy last week. (Note: We fixed the ticker symbol in this paragraph, after incorrectly using STX instead of STZ. Sorry about that!)

The Sands brothers get big paychecks, of course, at $7.7 million for Robert Sands and $6.7 million for Richard Sands ($2.8 million of it in cash for each of them). They also get lot of the usual perks — between them, they racked up an impressive $775,269 in company-paid personal flights on company aircraft and each got $9,969 as an “automobile lease allowance”; Robert Sands also somehow managed to incur another $21,585 for “car/driver services” on top of that.

But nothing says free like free drinks, and the Sands brothers appear to have gotten plenty of those as well. At least, we’re pretty sure they did. Constellation brands sells wine, beer and spirits, after all, and the proxy says Robert Sands got “$5,532 for product allowance” and that his brother got a full $10,000 — maxing out the perk that the filing elsewhere describes as helping to

“enhance knowledge and appreciation of our products and serve as an additional tool to facilitate their role as ambassadors for our brands in both on and off premise retail establishments where making a purchase is important for customer relations and with third parties who we desire to sample our products.”

That last bit puzzles us — we assume it means Constellation Brands is hoping the Sands’ friends buy more company merchandise — but the upshot is pretty clearly free booze. And they aren’t the only ones at the company who are indulging: The other top executives get allowances of up to $5,000 apiece; one maxed out the perk (Chief Operating Officer Jay Wright), another came close (Chief Financial Officer Robert Ryder, at $4,521) and the third (Keith Wilson, head of human resources) was clearly focused on other things, because he only spent $1,893 of his allowance.

All told, that’s as much as $26,946 of free liquor for the top brass, or about 2,074 bottles of Robert Mondavi Select, at the $12.99 a bottle price charged by Hoffend’s Discount Liquor & Wine, in the company’s hometown of Victor, New York. If beer in a bar is more your thing, it’s nearly 8,300 bottles of Corona at a bar a little way down the road from headquarters. Either way, it’s enough to sponsor several rounds for every shareholder that Constellation Brands has — the 10-K filed in April lists just 855 owners of Class A stock, and fewer than 200 holders apiece of classes B and C.

Now, we try to save our dudgeon for companies that lavish pay and perks on executives despite lousy performance. In this case, Constellation Brands hasn’t completely embarrassed itself, but shareholders could have done better. In the fiscal year ended February 29 — the period covered by this proxy — company shares beat the S&P 500 by a reasonable margin. But the stock’s total return has managed to trail the industry and the S&P 500 alike year-to-date, as well as over the last 12 months and during the 2011 calendar year.

So shareholders have a choice: They can drown their sorrows, or toast the hope of a better year to come. Either way, the Sands should be able to spot them a drink or two to do it.

Image source: Corona brand Facebook page

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