Lawson E. Whiting

About Lawson E. Whiting

Lawson E. Whiting, 57, has served as President and Chief Executive Officer of Brown‑Forman since 2019 and as a director since 2018, following a 28‑year career at the company spanning strategy, finance, and brand leadership roles . Under his tenure, FY2025 saw reported net sales decline 5%, operating income decline 22%, and diluted EPS decline 14% due largely to divestitures, while the company returned $420M in dividends and reported 14.4% ROIC; Brown‑Forman’s 1‑, 3‑, and 5‑year TSR trailed the S&P 500 Consumer Staples and the broader S&P 500 indices during the period shown in the proxy .

Past Roles

External Roles

Fixed Compensation

Multi‑year CEO compensation (SEC Summary Compensation Table):

CEO perquisites and other compensation detail (FY2025):

• 401(k) match $15,542; company‑provided life insurance $2,496; car/aircraft benefits $154,725 including $120,711 personal aircraft use; other items $15,722 .
• CEO is required to use chartered aircraft for security; personal aircraft allowance up to $125,000 annually approved by the Compensation Committee .

Performance Compensation

Short‑Term Incentive (STC) – FY2025 Design and Outcome

• Structure: 80% company performance (underlying net sales growth, underlying operating income growth; equally weighted), 20% individual performance .
• Company results vs grid: Underlying net sales −2% (below 0% threshold), underlying operating income −3% (threshold); company component paid 7% of target .
• CEO STC: Target $1,650,000; actual $521,400 .

Long‑Term Incentives (FY2025 Grants; 3‑year performance period FY2025–FY2027)

• Equity mix: 2/3 PBRSUs; 1/3 SSARs .
• PBRSU metrics: 50% 3‑yr TSR vs S&P 500 Consumer Staples; 50% 3‑yr adjusted operating income CAGR vs same index; payout 50%–150%; floor at 50% because no time‑based RSUs .
• SSARs: Become exercisable May 1, 2027; expire Apr 30, 2034; exercise price equals grant‑date close .

Long‑Term Incentive Outcomes (Prior Cycle FY2023–FY2025)

• PBRSU payout: 50% of target based on 3‑yr TSR result at 11th percentile vs S&P 500 Consumer Staples; shares issued 6/2/2025 .
• CEO PBRSUs issued: 13,004 Class A shares for FY2023–FY2025 award .
• Long‑term cash (final cycle; program discontinued thereafter): payout 137%; CEO amount $2,448,223 .

Equity Ownership & Alignment

Beneficial Ownership (as of April 30, 2025)

• No pledged shares are disclosed for Mr. Whiting; pledge footnotes in the proxy relate to other individuals (e.g., Matias Bentel and W. A. Musselman) .
• Employee stock ownership guidelines: Brown‑Forman has no stock ownership guidelines for employees; the Committee reviews NEO ownership each year when granting stock‑based compensation .
• Hedging/derivatives/short sales are prohibited by policy for officers and directors .

Vested vs. Unvested; Upcoming Vesting/Exercise Windows

Insider selling/overhang indicators:

• No SSAR exercises by Mr. Whiting in FY2025; 13,004 Class A shares vested from PBRSUs (2022 grant cycle) in FY2025 .
• 2022 SSARs became exercisable 5/1/2025, creating potential exercise/sale capacity; 2023 and 2024 grants come due 2026 and 2027, respectively .

Employment Terms

• No employment agreements for NEOs; no formal severance plan (consulting agreements may be used for transition) .
• Change‑in‑control: No single‑trigger. On change‑in‑control, options/SSARs vest but follow original schedule; full acceleration and target cash payouts occur only upon qualifying termination within 1 year after a change‑in‑control (double‑trigger) .
• Clawbacks: SEC 10D‑compliant recoupment policy adopted in 2023; additional 2013 recoupment policy may extend lookback to six years for fraud/misconduct .
• Mandatory retirement age: 65 for NEOs and certain executives; Mr. Whiting is 57 .

Potential payments (as if termination occurred 4/30/2025):

Treatment summaries for retirement, involuntary not for cause, death/disability, and change‑in‑control scenarios (timing, pro‑ration, vesting) are detailed in the proxy .

Board Governance

• Board service: Director since 2018; Management Director (not independent) .
• Committee roles: Executive Committee member (with Chair and Lead Independent Director) .
• Other governance roles: Co‑Chair of the Brown‑Forman/Brown Family Shareholders Committee, facilitating engagement with controlling family stockholders .
• Structure: Chair and CEO roles separated since 2007; Lead Independent Director in place since 2023 to enhance independent oversight .
• Board transitions (2025): Marshall B. Farrer (Brown family) assumed Chair post‑Annual Meeting; Whiting remains CEO/director .
• Attendance/independence context: Board held 5 regular meetings in FY2025; all current directors attended ≥89% of Board/committee meetings; 6 of 11 nominees deemed independent .
• Employee directors (incl. CEO) receive no director fees .

Director compensation benchmarks and guidelines apply to non‑employee directors; 5x annual retainer stock ownership guideline for non‑employee directors (not applicable to Mr. Whiting) .

Compensation Structure Analysis

• Pay mix: High at‑risk compensation (long‑term equity and short‑term incentives), in line with market medians targeted at 50th percentile .
• Metric rigor and outcomes: FY2025 company STC component paid at 7% amid net sales and operating income declines; Committee applied uniform individual performance assessment due to restructuring, resulting in CEO STC of $521,400 vs $1.65M target .
• LTI design evolution: Cash component removed beginning FY2024; equity mix now PBRSUs and SSARs; last cash cycle (FY2023–FY2025) paid at 137% .
• PBRSU floor: 50% payout floor as a design substitute for time‑based RSUs while maintaining performance orientation; FY2023–FY2025 paid at floor due to weak relative TSR .
• Governance safeguards: No single‑trigger CIC; clawbacks; hedging/derivatives prohibited; no repricing/backdating of options/SSARs .

Say‑on‑Pay & Shareholder Feedback

• Last say‑on‑pay (2023): >99% approval; next say‑on‑pay expected at 2026 Annual Meeting .

Compensation Peer Group (Benchmarking)

• 21‑company comparator group spanning consumer staples/beverages and related categories; target pay at 50th percentile .

Performance & Track Record

• FY2025: Reported net sales −5%; operating income −22%; EPS −14% with $420M dividends returned; restructuring charges of $63M to position for growth .
• TSR vs indices: 1‑yr −26%, 3‑yr −19%, 5‑yr −10% vs positive Consumer Staples and S&P 500 benchmarks over same periods; CEO total compensation change trended downward in FY2025 (−8%) aligned with performance .
• 1Q FY2026: Net sales −3% (reported), +1% organic; operating income −7% (reported), +2% organic; outlook reaffirmed .
• Capital allocation: $400M share repurchase authorization (Oct 2025), with CEO commentary signaling confidence in cash generation .

Risk Indicators & Red Flags

• Relative TSR underperformance in PBRSU cycle (11th percentile) led to 50% payout; continued underperformance could weigh on retention if sustained, though PBRSU floor mitigates severity .
• No employee stock ownership guidelines may modestly reduce forced equity alignment, though committee monitors ownership annually .
• Governance mitigants: Double‑trigger CIC; robust clawbacks; hedging/derivatives ban; no option repricing; independent Compensation Committee .
• Leadership transitions: CFO retirement announced for May 1, 2026; search underway—execution risk during transition .

Investment Implications

• Pay‑for‑performance alignment strengthened by low FY2025 STC payout (7% company component) and 50% PBRSU cycle payout; CEO’s FY2025 compensation decreased vs FY2024, signaling downside pay sensitivity to results .
• Near‑term selling pressure appears limited: CEO executed no SSAR exercises in FY2025; however, 2022 SSARs became exercisable on 5/1/2025 and represent optionality if performance and price recover .
• Retention and incentives remain equity‑heavy (PBRSUs/SSARs) with relative metrics vs Consumer Staples, a constructive design if TSR and adjusted operating income relative performance improves .
• Governance structure (separate Chair/CEO; Lead Independent Director; double‑trigger CIC; clawbacks; hedging ban) reduces governance risk; employee directors receive no board pay, aligning compensation primarily with operating performance and equity .
• Execution watch‑items: Delivering organic growth after portfolio pruning and through restructuring (“Building Better”), absorbing CFO transition, and converting repurchase authorization and cost actions into TSR catch‑up relative to staples peers .