Common Stock and Share-Based Compensation

12 Months Ended

Dec. 27, 2025

Share-Based Payment Arrangement [Abstract]

Common Stock and Share-Based Compensation

O. Common Stock and Share-Based Compensation

Class A Common Stock

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.

Class B Common Stock

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.

Employee Stock Compensation Plan

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 2025, 2024, and 2023, the Company granted options to purchase 165,187 shares, 21,205 shares, and 58,054 shares, respectively, of its Class A Common Stock to employees at market value on the grant dates. 131,432 of the 2025 stock options were service-based while 33,755 were performance-based.

During fiscal years 2025, 2024, and 2023, the Company granted 144,080 shares, 74,262 shares, and 53,884 shares, respectively, of restricted stock units to certain senior managers and key employees. 78,299 of the 2025 restricted stock unit grants were service-based while 65,781 were 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 2025, 2024, and 2023, employees elected to purchase an aggregate of 12,251 investment shares, 12,007 investment shares, and 10,594 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 0.6 million shares were available for grant as of December 27, 2025. 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.

Non-Employee Director Plan

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 2025, 2024, and 2023 the Company granted options to purchase an aggregate of 3,276 shares, 4,430 shares, and 2,941 shares of the Company’s Class A Common Stock to non-employee directors, respectively. During fiscal years 2025, 2024, and 2023, the Company granted 1,626, 1,997, and 1,442 restricted stock units, respectively, to non-employee directors..

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 27, 2025. 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.

Option Activity

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, 2024		209,794		$	358.48
Granted		168,463			235.19
Exercised		(5,120	)		174.90
Cancelled/Forfeited		(80,767	)		276.01
Expired		(2,820	)		262.25
Outstanding at December 27, 2025		289,550		$	313.93		5.81	$	482,818
Exercisable at December 27, 2025		137,543		$	355.37		2.73	$	482,818
Vested and expected to vest at December 27, 2025		273,960		$	321.42		5.53	$	482,818

Of the total options outstanding at December 27, 2025, 6,930 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 for fiscal 2025, 2024, and 2023 was as follows:


	2025			2024			2023
Expected volatility		40.6	%		40.0	%		39.7	%
Risk-free interest rate		4.11	%		4.23	%		3.96	%
Expected dividends		0	%		0	%		0	%
Exercise factor	2.1 times			2.1 times			2.3 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.

Options to purchase 25,191 shares vested during fiscal year 2025. The total fair value of options vested during fiscal years 2025 was $5.1 million. The aggregate intrinsic value of stock options exercised during fiscal years 2025, 2024, and 2023 was $0.3 million, $0.7 million, and $6.6 million, respectively.

Non-Vested Shares Activity

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, 2024		164,551		$	328.88
Granted		157,957			231.55
Vested		(46,927	)		343.91
Forfeited		(45,978	)		293.33
Non-vested at December 27, 2025		229,603		$	265.97

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.

46,927 shares vested in 2025 with a weighted average fair value of $343.91, 32,823 shares vested in 2024 with a weighted average fair value of $381.95, and 27,640 shares vested in 2023 with a weighted average fair value of $341.57.

Stock-Based Compensation

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


	2025		2024		2023
	(in thousands)
Amounts included in general and administrative expenses	$	14,395	$	11,835	$	10,370
Amounts included in advertising, promotional, and selling expenses		7,359		7,119		6,601
Total stock-based compensation expense	$	21,754	$	18,954	$	16,971
Amounts related to performance-based stock awards included in total stock-based compensation expense	$	4,000	$	2,720	$	2,518

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 2025, the estimated forfeiture rate was 15.0% for stock options and 11.0% for restricted stock units and investment shares. For Equity Plan awards during fiscal year 2024, the estimated forfeiture rate was 16.0% for stock options and 13.0% for restricted stock units and investment shares. For Equity Plan awards during fiscal year 2023, the estimated forfeiture rate was 20.0% for stock options and 12.0% for restricted stock units and investment shares. 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 27, 2025, there is $39.9 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 1.7 years.

Stock Repurchase Program

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 October 2, 2024, the Board of Directors authorized an increase in the aggregate expenditure limit for the Company’s stock repurchase program by $400.0 million, increasing the limit from $1.2 billion to $1.6 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 2025, the Company repurchased and subsequently retired 896,521 shares of its Class A Common Stock for an aggregate purchase price of $199.2 million. As of December 27, 2025, the Company had repurchased a cumulative total of approximately 15.8 million shares of its Class A Common Stock for an aggregate purchase price of approximately $1.37 billion and had approximately $228.4 million remaining on the $1.6 billion stock repurchase expenditure limit set by the Board of Directors.

BOSTON BEER CO INC 10-K