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 2020, 2019, and 2018, the Company granted options to purchase 21,992 shares, 26,507 shares, 27,490 shares, respectively, of its Class A Common Stock to employees at market price on the grant dates. Of the shares granted in 2020, all shares related to performance-based stock options.

During fiscal years 2020, 2019, and 2018, the Company granted 33,403 shares, 22,509 shares, and 83,561 shares, respectively, of restricted stock units or awards to certain senior managers and key employees. Of the total 2020 restricted stock unit grants, 30,707 are service-based and vest ratably over service periods of one to five years and 2,696 are performance-based.

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 2020, 2019, and 2018, employees elected to purchase an aggregate of 9,127 investment shares, 7,901 investment shares, and 9,214 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 1.0 million shares were available for grant as of December 26, 2020. 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 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 an option to purchase shares of the Company’s Class A Common Stock 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. During fiscal years 2020, 2019, and 2018 the Company granted options to purchase an aggregate of 4,410 shares, 4,779 shares, and 5,080 shares of the Company’s Class A Common Stock to non-employee directors, respectively.

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 26, 2020. Shares under any cancelled non-employee directors’ 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)
Outstanding at December 28, 2019		315,678		$	186.53
Granted		26,402			393.54
Forfeited		(2,595	)		242
Exercised		(97,638	)		136.87
Outstanding at December 26, 2020		241,847		$	228.58		5.93	$	190,176
Exercisable at December 26, 2020		53,638		$	211.32		5.16	$	43,104
Vested and expected to vest at December 26, 2020		217,604		$	227.97		5.91	$	171,246

Of the total options outstanding at December 26, 2020, 14,962 shares were performance-based options for which the performance criteria had yet to be achieved and 24,699 shares were performance-based options for which the performance criteria had been met but yet to be approved for vesting by the Board of Directors.

On April 30, 2018, the Company granted its incoming Chief Executive Officer a performance-based stock option to purchase 9,959 shares of the Company’s Class A Common stock with a weighted average fair value of $100.50 per share, which vests through 2022. The Chief Executive Officer was also granted 64,325 restricted stock awards with a weighted-average fair value of $229.30 per share with service-based vesting through 2023.

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

	2020		2019		2018
	(in thousands)
Amounts included in advertising, promotional and selling expenses	$	4,467	$	3,996	$	3,243
Amounts included in general and administrative expenses		10,815		8,341		6,792
Total stock-based compensation expense	$	15,282	$	12,337	$	10,035
Amounts related to performance-based stock awards included in total stock-based compensation expense	$	2,771	$	1,944	$	1,750

As permitted by ASC 718, the Company uses a lattice model, such as the trinomial option-pricing model, to estimate the fair values of stock options. The Company believes that the Black-Scholes option-pricing model is less effective than the trinomial option-pricing model in valuing long-term options, as it assumes that volatility and interest rates are constant over the life of the option. In addition, the Company believes that the trinomial option-pricing model more accurately reflects the fair value of its stock awards, as it takes into account historical employee exercise patterns based on changes in the Company’s stock price and other relevant variables. The weighted-average fair value of stock options granted in fiscal years 2020, 2019, and 2018 was $153.31, $131.91, and $92.89 per share, respectively, as calculated using a trinomial option-pricing model.

Weighted average assumptions used to estimate fair values of stock options on the date of grants are as follows:

	2020			2019			2018
Expected volatility		32.6	%		32.1	%		34.0	%
Risk-free interest rate		1.09	%		2.63	%		2.68	%
Expected dividends		0	%		0	%		0	%
Exercise factor	2.1 times			2.33 times			2.52 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.

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.

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 of 13.0%. The forfeiture rate is based upon historical experience and the Company periodically reviews this rate to ensure proper projection of future forfeitures.

The total fair value of options vested during fiscal years 2020, 2019, and 2018 was $4.8 million, $2.5 million, and $3.2 million, respectively. The aggregate intrinsic value of stock options exercised during fiscal years 2020, 2019, and 2018 was $45.9 million, $20.9 million, and $19.2 million, respectively.

Based on equity awards outstanding as of December 26, 2020, there is $28.6 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 2.0 years.

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 28, 2019		122,142		$	213.52
Granted		42,530			350.96
Vested		(45,860	)		214.23
Forfeited		(4,496	)		236.63
Non-vested at December 26, 2020		114,316		$	263.47

45,860 shares vested in 2020 with a weighted average fair value of $214.23, 33,205 shares vested in 2019 with a weighted average fair value of $188.63, and 20,678 shares vested in 2018 with a weighted average fair value of $156.50.

In 1998, the Board of Directors authorized management to implement a stock repurchase program. As of December 26, 2020, the Company has repurchased a cumulative total of approximately 13.8 million shares of its Class A Common Stock for an aggregate purchase price of approximately $840.7 million as follows:

	Number of Shares		Aggregate Purchase Price
	(in thousands)
Repurchased at December 30, 2017		13,447,346	$	752,352
2018 repurchases		349,691		88,312
Repurchased at December 29, 2018		13,797,037		840,664
2019 repurchases		—		—
Repurchased at December 28, 2019		13,797,037		840,664
2020 repurchases		—		—
Repurchased at December 26, 2020		13,797,037	$	840,664