The Class A Common Stock has no voting rights, except (1) as required by law, (2) for the election of Class A Directors, and (3) that the approval of the holders of the Class A Common Stock is required for (a) certain future authorizations or issuances of additional securities which have rights senior to Class A Common Stock, (b) certain alterations of rights or terms of the Class A or Class B Common Stock as set forth in the Articles of Organization of the Company, (c) other amendments of the Articles of Organization of the Company, (d) certain mergers or consolidations with, or acquisitions of, other entities, and (e) sales or dispositions of any significant portion of the Company’s assets.

The Class B Common Stock has full voting rights, including the right to (1) elect a majority of the members of the Company’s Board of Directors and (2) approve all (a) amendments to the Company’s Articles of Organization, (b) mergers or consolidations with, or acquisitions of, other entities, (c) sales or dispositions of any significant portion of the Company’s assets, and (d) equity-based and other executive compensation and other significant corporate matters. The Company’s Class B Common Stock is not listed for trading. Each share of Class B Common Stock is freely convertible into one share of Class A Common Stock, upon request of any Class B holder, and participates equally in earnings.

All distributions with respect to the Company’s capital stock are restricted by the Company’s credit agreement, with the exception of distributions of capital stock from subsidiaries to The Boston Beer Company, Inc. and Boston Beer Corporation, repurchase from former employees of non-vested investment shares of Class A Common Stock issued under the Company’s equity incentive plan, redemption of certain shares of Class A Common Stock as approved by the Board of Directors and payment of cash dividends to its holders of common stock.

The Company’s Employee Equity Incentive Plan (the “Equity Plan”) currently provides for the grant of discretionary options, restricted stock awards and restricted stock units to employees, and provides for shares to be sold to employees of the Company at a discounted purchase price under its investment share program. The Equity Plan is administered by the Board of Directors of the Company, based on recommendations received from the Compensation Committee of the Board of Directors. The Compensation Committee consists of three independent directors. In determining the quantities and types of awards for grant, the Compensation Committee periodically reviews the objectives of the Company’s compensation system and takes into account the position and responsibilities of the employee being considered, the nature and value to the Company of his or her service and accomplishments, his or her present and potential contributions to the success of the Company, the value of the type of awards to the employee and such other factors as the Compensation Committee deems relevant.

Stock options and related vesting requirements and terms are granted at the Board of Directors’ discretion, but generally vest ratably over three to five-year periods and, with respect to certain options granted to members of senior management, based on the Company’s performance. Generally, the maximum contractual term of stock options is ten years, although the Board of Directors may grant options that exceed the ten-year term. During fiscal years 2023, 2022, and 2021, the Company granted options to purchase 58,054 shares, 17,114 shares, and 18,998 shares, respectively, of its Class A Common Stock to employees at market value on the grant dates. 31,117 of the 2023 stock option grants were performance-based while 26,937 were service-based.

During fiscal years 2023, 2022, and 2021, the Company granted 53,884 shares, 32,744 shares, and 12,867 shares, respectively, of restricted stock units to certain senior managers and key employees. All of the 2023 restricted stock unit grants are service-based and vest ratably over service periods of three to five years.

The Equity Plan also has an investment share program which permits employees who have been with the Company for at least one year to purchase shares of Class A Common Stock at a discount from current market value of 0% to 40%, based on the employee’s tenure with the Company. Investment shares vest ratably over service periods of five years. Participants may pay for these shares either up front or through payroll deductions over an eleven-month period during the year of purchase. During fiscal years 2023, 2022, and 2021, employees elected to purchase an aggregate of 10,594 investment shares, 10,845 investment shares, and 4,954 investment shares, respectively.

The Company has reserved 6.7 million shares of Class A Common Stock for issuance pursuant to the Equity Plan, of which 0.9 million shares were available for grant as of December 30, 2023. Shares reserved for issuance under cancelled employee stock options and forfeited restricted stock are returned to the reserve under the Equity Plan for future grants or purchases. The Company also purchases unvested investment shares from employees who have left the Company at the lesser of (i) the price paid for the shares when the employee acquired the shares or (ii) the fair market value of the shares as of the date next preceding the date on which the shares are called for redemption by the Company. These shares are also returned to the reserve under the Equity Plan for future grants or purchases.

The Company has a stock option and restricted stock unit plan for non-employee directors of the Company (the “Non-Employee Director Plan”), pursuant to which each non-employee director of the Company is granted a combination of options to purchase shares of the Company’s Class A Common Stock and restricted stock units upon election or re-election to the Board of Directors. Stock options issued to non-employee directors vest upon grant and have a maximum contractual term of ten years. Restricted stock units granted to non-employee directors vest over a 1-year service period, During fiscal years 2023, 2022, and 2021 the Company granted options to purchase an aggregate of 2,941 shares, 3,810 shares, and 1,422 shares of the Company’s Class A Common Stock to non-employee directors, respectively. During fiscal year 2023 1,442 restricted stock units were granted to non-employee directors. No restricted stock units were granted to non-employee directors during fiscal years 2022 or 2021.

The Company has reserved 0.6 million shares of Class A Common Stock for issuance pursuant to the Non-Employee Director Plan, of which 0.1 million shares were available for grant as of December 30, 2023. Shares under any cancelled non-employee directors’ restricted stock units or stock options or options that expire unexercised are returned to the reserve under the Non-Employee Director Plan for future grants.

Information related to stock options under the Equity Plan and the Non-Employee Director Plan is summarized as follows:


	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term in Years		Aggregate Intrinsic Value (in thousands)
Vested and expected to vest at December 31, 2022		204,245		$	334.26
Granted		60,995			326.17
Exercised		(50,211	)		200.62
Cancelled/Forfeited		(5,756	)		396.86
Expired		(1,463	)		464.33
Outstanding at December 30, 2023		207,810		$	361.53		6.14	$	11,419
Exercisable at December 30, 2023		110,193		$	288.62		4.23	$	9,830
Vested and expected to vest at December 30, 2023		175,897		$	350.85		5.75	$	11,101

Of the total options outstanding at December 30, 2023, 43,520 shares were performance-based options for which the performance criteria had yet to be achieved.

Weighted average assumptions used to estimate fair values of stock options on the date of grants fir fiscal 2023, 2022, and 2021 was as follows:


	2023			2022			2021
Expected volatility		39.7	%		38.0	%		36.1	%
Risk-free interest rate		3.96	%		2.11	%		1.45	%
Expected dividends		0	%		0	%		0	%
Exercise factor	2.3 times			3.0 times			2.6 times
Discount for post-vesting restrictions		0.0	%		0.0	%		0.0	%

Expected volatility is based on the Company’s historical realized volatility. The risk-free interest rate represents the implied yields available from the U.S. Treasury zero-coupon yield curve over the contractual term of the option when using the trinomial option-pricing model. Expected dividend yield is 0% because the Company has not paid dividends in the past and currently has no known intention to do so in the future. Exercise factor and discount for post-vesting restrictions are based on the Company’s historical experience.

No options vested during fiscal year 2023. The total fair value of options vested during fiscal years 2022 and 2021 was $6.6 million and $6.3 million, respectively. The aggregate intrinsic value of stock options exercised during fiscal years 2023, 2022, and 2021 was $6.6 million, $6.9 million, and $28.9 million, respectively.

The following table summarizes vesting activities of shares issued under the investment share program and restricted stock awards:


	Number of Shares			Weighted Average Fair Value
Non-vested at December 31, 2022		91,211		$	423.60
Granted		65,920			306.04
Vested		(27,640	)		341.57
Forfeited		(14,694	)		358.43
Non-vested at December 30, 2023		114,797		$	373.56

The fair value of restricted stock awards is based on the Company’s traded stock price on the date of the grants. Fair value of investment shares is calculated using the trinomial option-pricing model.

27,640 shares vested in 2023 with a weighted average fair value of $341.57, 32,476 shares vested in 2022 with a weighted average fair value of $292.27, and 42,038 shares vested in 2021 with a weighted average fair value of $227.40.

The following table provides information regarding stock-based compensation expense included in operating expenses in the accompanying consolidated statements of comprehensive income:


	2023		2022		2021
	(in thousands)
Amounts included in general and administrative expenses	$	10,370	$	8,804	$	13,003
Amounts included in advertising, promotional, and selling expenses		6,601		5,184		5,612
Total stock-based compensation expense	$	16,971	$	13,988	$	18,615
Amounts related to performance-based stock awards included in total stock-based compensation expense	$	2,518	$	1,198	$	3,384

The Company uses the straight-line attribution method in recognizing stock-based compensation expense for awards that vest based on service conditions. For awards that vest subject to performance conditions, compensation expense is recognized ratably for each tranche of the award over the performance period if it is probable that performance conditions will be met.

The Company recognizes compensation expense, less estimated forfeitures. For Equity Plan awards during fiscal year 2023, the estimated forfeiture rate was 20.0% for stock options and 12% for restricted stock units and investment shares. The estimated forfeiture rate was 19.0%, and 13.0% for all types of awards during fiscal years 2022, and 2021, respectively. The estimated forfeiture rates used are based upon historical experience with the various award types and the Company annually reviews these rates to ensure proper projection of future forfeitures.

Based on equity awards outstanding as of December 30, 2023, there is $33.1 million of unrecognized compensation costs, net of estimated forfeitures, related to unvested share-based compensation arrangements that are expected to vest. Such costs are expected to be recognized over a weighted-average period of 1.8 years.

In 1998, the Company began a share repurchase program. Under this program, the Company's Board of Directors has authorized the repurchase of the Company's Class A Stock. On May 18, 2023, the Board of Directors authorized an increase in the aggregate expenditure limit for the Company’s stock repurchase program by $269.0 million, increasing the limit from $931.0 million to $1.2 billion. The Board of Directors did not specify a date upon which the total authorization would expire and, in the future, can further increase the authorized amount. Share repurchases under this program for the periods included herein were effected through open market transactions

During fiscal year 2023, the Company repurchased and subsequently retired 276,045 shares of its Class A Common Stock for an aggregate purchase price of $92.9 million. As of December 30, 2023, the Company had repurchased a cumulative total of approximately 14.1 million shares of its Class A Common Stock for an aggregate purchase price of approximately $933.5 million and had approximately $266.5 million remaining on the $1.2 billion stock repurchase expenditure limit set by the Board of Directors.