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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
The Boston Beer Company, Inc
(Name of Registrant as Specified In Its Charter)
The Boston Beer Company, Inc
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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THE BOSTON BEER COMPANY, INC.
NOTICE OF THE 2001 ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 2001
To the Stockholders:
The 2001 Annual Meeting of the Stockholders of THE BOSTON BEER COMPANY,
INC. (the "Company") will be held on Tuesday, May 22, 2001, at 10:00 a.m. at The
Brewery located at 30 Germania Street, Jamaica Plain, Boston, Massachusetts, for
the following purposes:
1. The election by the holders of the Class A Common Stock of three (3)
Class A Directors, each to serve for a term of one (1) year.
2. For the election by the sole holder of the Class B Common Stock of four
(4) Class B Directors, each to serve for a term of one (1) year.
3. To consider and act upon any other business which may properly come
before the meeting.
The Board of Directors has fixed the close of business on March 23, 2001 as
the record date for the meeting. All stockholders of record on that date are
entitled to notice of and to vote at the meeting.
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON.
By order of the Board of Directors
C. JAMES KOCH, Clerk
Boston, Massachusetts
April 13, 2001
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THE BOSTON BEER COMPANY, INC.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Boston Beer Company, Inc. (the
"Company") for use at the 2001 Annual Meeting of Stockholders to be held on
Tuesday, May 22, 2001, at the time and place set forth in the notice of the
meeting, and at any adjournments thereof. The approximate date on which this
Proxy Statement and form of proxy are first being mailed to stockholders is
April 13, 2001.
If the enclosed proxy is properly executed and returned, it will be voted
in the manner directed by the stockholder. If no instructions are specified with
respect to any particular matter to be acted upon, proxies will be voted in
favor of such matters. Any person giving the enclosed form of proxy has the
power to revoke it by voting in person at the meeting, or by giving written
notice of revocation to the Clerk of the Company at any time before the proxy is
exercised.
The holders of a majority in interest of the issued and outstanding Class A
Common Stock are required to be present in person or to be represented by proxy
at the meeting in order to constitute a quorum for the election of the Class A
Directors. The election of each of the nominees for Class A Director, as
hereinafter set forth in greater detail, will be decided by plurality vote of
the holders of Class A Common Stock present in person or represented by proxy at
the Meeting. The affirmative vote of the sole holder of the outstanding shares
of Class B Common Stock voting in person or by proxy at the meeting is required
to elect the Class B Directors, as hereinafter set forth in greater detail, and
to approve all other matters listed in the notice of meeting.
The Company will bear the cost of the solicitation. In addition to mailing
this material to shareholders, the Company has asked banks and brokers to
forward copies to persons for whom they hold stock of the Company and request
authority for execution of the proxies. The Company will reimburse the banks and
brokers for their reasonable out-of-pocket expenses in doing so. Officers and
regular employees of the Company, without being additionally compensated, may
solicit proxies by mail, telephone, telegram, facsimile or personal contact. All
reasonable proxy soliciting expenses will be paid by the Company in connection
with the solicitation of votes for the Annual Meeting.
The Company's principal executive offices are located at 75 Arlington
Street, Boston, Massachusetts 02116, telephone number (617) 368-5000.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on March 23, 2001 are
entitled to notice of and to vote at the meeting. On that date, the Company had
outstanding and entitled to vote 12,370,582 shares of Class A Common Stock, $.01
par value per share, and 4,107,355 shares of Class B Common Stock, $.01 par
value per share. Each outstanding share of the Company's Class A and Class B
Common Stock entitles the record holder to one (1) vote on each matter properly
brought before the Class. The 4,121,850 shares of Class A Common Stock, $.01 par
value per share, held in treasury by the Company at March 23, 2001 are not
entitled to vote.
ITEMS 1 AND 2. ELECTION OF CLASS A AND CLASS B DIRECTORS
The Board of Directors proposes that the initial number of Directors be
fixed for the ensuing year at seven (7), consisting of three (3) Class A
Directors to be elected by the holders of the Class A Common Stock for a term of
one (1) year, and four (4) Class B Directors to be elected by the sole holder of
the Class B Common Stock, also for a term of one (1) year, reserving the right
of the sole holder of the Class B Common Stock to increase the number of Class B
Directors to up to six (6) at such time as he deems appropriate and to elect up
to two (2) additional Class B Directors accordingly.
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It is proposed that the holders of the Class A Common Stock elect each of
the three (3) nominees for Class A Director to serve for a term of one (1) year
and until his successor is duly elected and qualified or until he sooner dies,
resigns or is removed.
It is anticipated that the sole holder of the Class B Common Stock will
elect each of the four (4) nominees for Class B Director also to serve for a
term of one (1) year and until his successor is duly elected and qualified or
until he sooner dies, resigns or is removed.
The person named in the accompanying proxy will vote, unless authority is
withheld, for the election as Class A Directors of the three (3) nominees named
below. In the event that any of the nominees should become unavailable for
election, which is not anticipated, the person named in the accompanying proxy
will vote for such substitute nominees as the incumbent Class A Directors,
acting pursuant to Section 4.8 of the Company's By-Laws as a Nominating
Committee, may nominate. As indicated below, except for Messrs. Cummin, Wing and
Hiatt, all Directors are either Executive Officers of the Company or its
subsidiaries or related to such Executive Officers.
Nominees Proposed in Accordance with the Terms of the Articles of
Organization and By-Laws of the Company. Set forth below are the nominees for
election as Class A and Class B Directors, respectively, for terms ending in
2002 and certain information about each of them.
CLASS A DIRECTORS:
YEAR FIRST
ELECTED A POSITION WITH THE COMPANY OR PRINCIPAL
NAME OF NOMINEE AGE DIRECTOR OCCUPATION DURING THE PAST FIVE YEARS
- --------------- --- ---------- --------------------------------------
Pearson C. Cummin, III............ 58 1995 Mr. Cummin has served as a general partner of
Consumer Venture Partners, a Greenwich,
Connecticut based venture capital firm, since
January 1986. He also serves as a Director of
Pacific Sunwear of California, Inc. and Natural
Wonders, Inc.
James C. Kautz.................... 70 1995 Mr. Kautz, formerly a limited partner of The
Goldman Sachs Group, L.P., now serves as a
non-profit trustee and private investor. Mr. Kautz
is the second cousin of the Company's founder and
Chairman, C. James Koch.
Robert N. Hiatt................... 64 1998 Mr. Hiatt was Chairman of Maybelline, Inc. from
1996 until he retired in 1997. From 1990 until
1996, Mr. Hiatt was President and Chief Executive
Officer of Maybelline, Inc. Mr. Hiatt also served
as a Director of Genovese Drug Stores, Inc. from
1997 to 1999.
CLASS B DIRECTORS:
C. James Koch..................... 51 1995 Mr. Koch founded the Company in 1984 and currently
serves as the Chairman and Clerk of the Company.
Until January 2001, Mr. Koch also served as the
Company's Chief Executive Officer.
Charles Joseph Koch............... 78 1995 Mr. Koch is the father of founder C. James Koch.
In 1989, Mr. Koch retired as founder and co-owner
of Chemicals, Inc., a distributor of brewing and
industrial chemicals in southwestern Ohio.
John B. Wing...................... 54 1995 Since 1993, Mr. Wing has served as President of
Wing Aviation, Inc. Mr. Wing also served as
Chairman and Chief Executive Officer of The Wing
Group Limited, Co., a developer of energy projects
in Turkey, Kuwait and China from 1991 through
1998.
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YEAR FIRST
ELECTED A POSITION WITH THE COMPANY OR PRINCIPAL
NAME OF NOMINEE AGE DIRECTOR OCCUPATION DURING THE PAST FIVE YEARS
--------------- --- ---------- --------------------------------------
Martin F. Roper................... 38 1999 Mr. Roper was appointed the Chief Executive
Officer of the Company in January 2001, after
having served as the President and Chief Operating
Officer of the Company since December 1999. Mr.
Roper joined the Company as Vice President of
Manufacturing and Business Development in
September 1994 and became the Chief Operating
Officer in April 1997. Prior to joining the
Company, Mr. Roper had been President of the MEG
Division of Steel Works, Inc.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During the Company's 2000 fiscal year, there were five (5) meetings of the
Board of Directors of the Company. All of the Directors attended, either in
person or by telephone, (i) all of the total number of meetings of the Board of
Directors which they were entitled to attend, with the exception of one Director
who was unable to attend one meeting; and (ii) all of the total number of
meetings held by Board of Directors committees on which they served which they
were entitled to attend. The Class A Directors in office from time to time serve
as a nominating committee for the purpose of nominating persons for election as
Class A Directors. The Company does not otherwise have a nominating committee.
The Audit Committee of the Board of Directors reviews with the Company's
independent auditors the scope of the audit for the year, the results of the
audit when completed and the independent auditors' fees for services performed.
The Audit Committee also recommends independent auditors to the Board of
Directors and reviews with management various matters related to its internal
accounting controls. The charter of the Audit Committee effective May 30, 2000
is appended to this Proxy Statement as Appendix A. The present members of the
Audit Committee are Pearson C. Cummin, III (Chairman), Robert N. Hiatt, James C.
Kautz and John B. Wing. The Audit Committee met on three occasions in 2000.
The Company also has a Compensation Committee, whose purposes are to make
recommendations to the full Board of Directors concerning the Company's Employee
Equity Incentive Plan and otherwise to act with respect to matters of executive
compensation. The members of such Committee are Pearson C. Cummin, III, Robert
N. Hiatt, James C. Kautz (Chairman) and John B. Wing. The Compensation Committee
met on two occasions in 2000.
SECURITY OWNERSHIP OF PRINCIPAL HOLDERS OF
VOTING SECURITIES, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Class A Common Stock and Class B Common Stock as of
March 23, 2001 (i) by each person (or group of affiliated persons) known by the
Company to be the beneficial owner(s) of more than five percent (5%) of the
outstanding Class A Common Stock, (ii) by each Director of the Company, (iii) by
each person nominated as a Director of the Company, (iv) by the Company's Chief
Executive Officer and the other officers named below in the Summary Compensation
Table and (v) all of the Company's executive officers and Directors as a group.
Unless otherwise indicated, the individuals named below held sole voting and
investment power over the shares listed below:
SHARES BENEFICIALLY OWNED(1)
NAMED EXECUTIVE OFFICERS, ----------------------------
DIRECTORS AND 5% STOCKHOLDERS NUMBER PERCENT
----------------------------- ----------- ---------
C. James Koch(2)(3)......................................... 5,353,875 32.5%
Martin F. Roper(3)(4)....................................... 500,434 3.0%
Richard P. Lindsay(3)(5).................................... 14,950 *
Jeffrey D. White(3)(6)...................................... 21,169 *
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SHARES BENEFICIALLY OWNED(1)
NAMED EXECUTIVE OFFICERS, ----------------------------
DIRECTORS AND 5% STOCKHOLDERS NUMBER PERCENT
- ----------------------------- ----------- ---------
Robert H. Hall(3)........................................... 0 *
Pearson C. Cummin, III(3)(7)................................ 78,923 *
James C. Kautz(3)(8)........................................ 537,531 3.3%
Charles Joseph Koch(3)(9)................................... 17,000 *
John B. Wing(3)(10)......................................... 386,892 2.3%
Robert N. Hiatt(3)(11)...................................... 11,000 *
Credit Suisse Asset Management, LLC(12)..................... 1,437,000 8.7%
All Directors and Executive Officers as a group
(11 people)............................................... 6,960,500 42.2%
- ---------------
* Less than 1% of the outstanding shares of Class A Common Stock.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission and includes general voting and/or
investment power with respect to securities. Shares of Class A Common Stock
subject to options and warrants currently exercisable or exercisable within
60 days after the record date are deemed outstanding for computing the
percentage of a person holding such options but are not deemed outstanding
for computing the percentage of any other person. No shares of Class B
Common Stock are subject to options or warrants. All shares are Class A
Common Stock except for shares of Class B Common Stock held by C. James
Koch. See Note 2 below.
(2) Includes 4,107,355 shares of Class B Common Stock, constituting all of the
outstanding shares of Class B Common Stock. Includes 353,107 shares of
Class A Common Stock held in several trusts for the benefit of C. James
Koch and certain of his family members; does not include shares deposited
in Exchange Funds which have been treated as sales for reporting purposes.
Includes options to acquire 12,000 shares of Class A Common Stock
exercisable currently or within 60 days.
(3) Executive officer and/or Director and/or nominee for Director of the
Company. Mailing address is c/o The Boston Beer Company, Inc., 75 Arlington
Street, Boston, MA 02116.
(4) Includes options to acquire 482,882 shares of Class A Common Stock
exercisable currently or within 60 days.
(5) Includes options to acquire 14,750 shares of Class A Common Stock
exercisable currently or within 60 days.
(6) Includes of options to acquire 20,034 shares of Class A Common Stock
exercisable currently or within 60 days.
(7) Includes options to acquire 15,000 shares of Class A Common Stock
exercisable currently or within 60 days and 2,293 shares of Class A Common
Stock owned by a profit sharing plan, of which Mr. Cummin is trustee.
(8) Consists of options to acquire 15,000 shares of Class A Common Stock
exercisable currently or within 60 days and 522,531 shares of Class A
Common Stock owned of record by the Kautz Family Partners, L.P. of which
Mr. Kautz is general partner.
(9) Consists of options to acquire 15,000 shares of Class A Common Stock
exercisable currently or within 60 days and 2,000 shares of Class A Common
Stock owned by the spouse of Mr. Charles Joseph Koch.
(10) Includes options to acquire 15,000 shares of Class A Common Stock
exercisable currently or within 60 days
(11) Consists of options to acquire 10,000 shares of Class A Common Stock
exercisable currently or within 60 days and 1,000 shares of Class A Common
Stock owned by the spouse of Mr. Hiatt.
(12) Based on information provided to the Company on Schedule 13G for the period
ended December 31, 2000 by Credit Suisse Asset Management, LLC, 466
Lexington Avenue, New York, NY 10017.
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DIRECTOR COMPENSATION FOR THE LAST FISCAL YEAR
On May 21, 1996, the Company adopted a Non-Employee Director Stock Option
Plan pursuant to which each non-employee director of the Company receives the
grant of 2,500 shares of the Company's Class A Common Stock annually as of the
date of the Annual Stockholders' Meeting of the Company. This Plan was amended
on May 30, 2000 to increase the annual grant to 5,000 shares of the Company's
Class A Common Stock. The grant price for such options is based upon the fair
market value of the Company's stock as of the date of grant. On May 21, 1996,
each non-employee director was granted an option to purchase up to 2,500 shares
at a per share price of $18.5625 per share; on June 3, 1997, each non-employee
director was granted an option to purchase up to 2,500 shares of the Company's
stock at $9.50 per share; on June 1, 1998, each non-employee director was
granted an option to purchase up to 2,500 shares at a per share price of
$11.1875; on June 1, 1999, each non-employee director was granted an option to
purchase up to 2,500 shares at a per share price of $8.125; and on May 30, 2000,
each non-employee director was granted an option to purchase up to 5,000 shares
at a per share price of $8.575. The grant of stock options under this
Non-Employee Director Stock Option Plan is subject to the requirement that each
director comply with his fiduciary obligations with the Company. If any breach
of such obligations should occur, the Company shall be entitled, in addition to
any other remedies available to it, to recover all profit realized by him as a
result of the exercise of such option during the last 12 months of his term as
director and at any time after the expiration of such term. On December 19,
1997, the Board amended the terms of such Non-Employee Director Stock Option
Plan (and of each stock option grant made pursuant to the terms of such Plan) to
increase from ninety (90) days to three (3) years the period within which each
option would remain exercisable following the date on which the optionee ceased
to be a Director of the Company, subject in any case to the ten (10) year term
of each option.
Effective May 30, 2000, the Board of Directors adopted a program, which was
approved by the Class B Stockholder of the Company, to compensate non-employee
directors for attending meetings of the Board of Directors and meetings of the
Audit and Compensation Committees, as well as providing a retainer of $7,500
upon election to the Board of Directors. Under the program, non-employee
directors receive $2,500 for each meeting of the Board of Directors attended in
person and $1,000 for each meeting of the Board of Directors attended by
telephone. In addition, non-employee directors receive $1,000 for each meeting
of the Audit and/or Compensation Committee attended in person and $500 for each
meeting of such committees attended by telephone. Further, Chairmen of the Audit
and Compensation Committees receive $1,000 as an annual retainer upon election
to such position. In 2000, the non-employee directors received the following
compensation:
SUMMARY COMPENSATION TABLE FOR NON-EMPLOYEE DIRECTORS
FOR FISCAL YEAR ENDED DECEMBER 30, 2000
NAME COMPENSATION
- ---- ------------
Pearson C. Cummin, III...................................... $20,500
James C. Kautz.............................................. $20,500
Robert N. Hiatt............................................. $19,500
Charles Joseph Koch......................................... $11,500
John B. Wing................................................ $15,900
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy. The Company's executive compensation system
continues to be comprised of base salaries, annual bonuses and stock option
awards. Executive compensation is subject to the oversight and approval of the
Compensation Committee of the Board of Directors (the "Committee"), which
reviews executive officer compensation annually. Executive compensation is
designed to be competitive within the alcoholic beverages industry and other
companies of comparable size and complexity, so as to enable the Company to
continue to attract and retain talented and motivated individuals in key
positions.
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Compensation paid to the Company's executive officers is intended to
reflect the responsibility associated with each executive officer's position,
the past performance of the specific executive officer, the goals of management
and the profitability of the Company. Compensation in any particular case may
vary from any industry average on the basis of annual and long-term Company
performance, as well as individual performance. The Compensation Committee will
exercise its discretion to set compensation where, in its judgment, external or
individual circumstances warrant it.
Equity-Based Compensation. During 2000, the Compensation Committee again
devoted significant attention to the grant of so-called Discretionary Options
under the Company's Employee Equity Incentive Plan. The Discretionary Options
feature of the Employee Equity Incentive Plan has been used by the Compensation
Committee as an integral part of the overall compensation approach for the
officers of the Company. Such stock option awards are designed to provide
incentive to the Company's key employees to increase the market value of the
Company's stock, thus linking corporate performance and stockholder value to
executive compensation.
As amended and restated in 1997, the Employee Equity Incentive Plan calls
for the Committee to make recommendations to the full Board with respect to the
grant of Discretionary Options. In recommending the grant of options, the
Compensation Committee takes into account the position and responsibilities of
the optionee 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 and such other factors as the Compensation Committee
deems relevant. In carrying out these responsibilities in 2000, the Committee
met with the Company's Chief Executive Officer in October to review Management's
preliminary thinking with respect to Discretionary Options to be granted
effective January 1, 2001. The Committee met again with the Chief Executive
Officer in December to review final recommendations in the context of the
overall compensation plan for executives. Based on this review, the Committee
recommended that options covering an aggregate of 274,500 shares of Class A
Common Stock be granted by the Board, effective as of January 1, 2001. The
Committee also recommended, and the Board approved, that a portion of the
options granted to the Company's executive officers carry exercise prices
representing a premium over the current market price for the Company's Class A
Common Stock.
Up to an aggregate of 2,687,500 shares of Class A Common Stock may be
issued under the Employee Equity Incentive Plan. As of March 23, 2001, there
were approximately 600,000 shares of Class A Common Stock available for grant
under the Employee Equity Incentive Plan.
A detailed description of the Employee Equity Incentive Plan is included
elsewhere in this Proxy Statement. The Employee Equity Incentive Plan may be
amended or terminated by the Board of Directors, subject to the approval of the
holders of a majority in interest of the Class B Common Stock of the Company.
Chief Executive Officer Compensation. The Compensation Committee reviewed
and approved the compensation paid to C. James Koch as the Company's Chief
Executive Officer during 2000. In reviewing such compensation, the Committee
evaluated the Company's success in executing against the Company's strategic
plan for maintaining its leading position in the highly competitive craft beer
industry. The Compensation Committee believes that the compensation paid to Mr.
Koch in 2000 was reasonable in light of the Company's overall performance,
especially in the area of profitability. The Committee also believes that, even
though Mr. Koch already has a significant equity position in the Company, his
compensation should also be aligned with the interests of all stockholders.
Accordingly, the Compensation Committee recommended, and the Board approved, the
grant to Mr. Koch of a Discretionary Option covering 20,000 shares, effective
January 1, 2001, of which 4,000 shares carry an exercise price of $8.84375;
5,000 shares carry an exercise price of $11.76220; 5,000 shares carry an
exercise price of $14.76910; and 6,000 shares carry an exercise price of
$17.6875.
THE COMPENSATION COMMITTEE:
JAMES C. KAUTZ, Chairman
PEARSON C. CUMMIN, III
ROBERT N. HIATT
JOHN B. WING
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EXECUTIVE OFFICERS OF THE COMPANY
Information required by Item 7(b) of Schedule 14A with respect to executive
officers of the Company is set forth below. The executive officers of the
Company are elected annually by the Board of Directors and hold office until
their successors are elected and qualified, or until their earlier removal or
resignation.
C. James Koch, 51, currently serves as Chairman and Clerk of the Company.
Mr. Koch founded the Company in 1984 and was the Chief Executive Officer since
that time until January 2001.
Martin F. Roper, 38, was appointed Chief Executive Officer of the Company
in January 2001, and has been President of the Company since December 1999,
after having served as its Chief Operating Officer since April 1997. He joined
the Company as Vice President of Operations in September 1994 from Steel Works
Inc. where he had been President of the MEG Division.
Richard P. Lindsay, 39, serves as Chief Financial Officer and Treasurer of
the Company. Mr. Lindsay joined the Company in 1997 to assist in the acquisition
and integration of the Company's Cincinnati brewery. Immediately following the
acquisition, Mr. Lindsay served as Corporate Controller until he was appointed
Vice President of Finance in November 1998. He assumed his current position in
October 1999. Prior to joining the Company, Mr. Lindsay held various finance and
consulting positions at Agility, Inc., KPMG Peat Marwick LLP and Shawmut Bank.
Jeffrey D. White, 43, was appointed Chief Operating Officer of the Company
in February 2001, after serving as Vice President of Operations since April
1997. Mr. White had served as Director of Operations of the Company from 1994 to
1997, Operations Manager from 1991 to 1994, and as Distribution Manager from
1989 to 1991. Mr. White worked for Anheuser-Busch from 1988 to 1989 as a
Packaging Supervisor and prior to that, for New Amsterdam Brewing Company as
Operations Manager.
Robert H. Hall, 40, serves the Company as Vice President of Brand
Development. Prior to joining the Company in June 2000, Mr. Hall had been
employed by Kellogg Company from 1993 to 2000, where he held the positions of
Vice President Marketing US Natural and Functional Foods Division and Vice
President Global Cereal Innovation, North America.
David Grinnell, 43, was appointed Director of Brewing and Quality in March
2001. Prior to that time, Mr. Grinnell had been Manager of Brewing Operations of
the Company since 1988.
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EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Company's Chief Executive Officer and the Company's highest paid
executive officers, other than the Chief Executive Officer, whose total annual
salary and bonus exceeded $100,000 for all services rendered in all capacities
to the Company for the Company's three most recent fiscal years ended December
30, 2000, December 25, 1999, and December 26, 1998.
SUMMARY COMPENSATION TABLE FOR FISCAL YEARS
ENDED DECEMBER 30, 2000, DECEMBER 25, 1999 AND DECEMBER 26, 1998
ANNUAL OTHER
COMPENSATION(1) COMPENSATION
------------------- OTHER ANNUAL FROM
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(3) COMPENSATION(2) SECURITIES
- --------------------------- ---- -------- -------- --------------- ------------
C. James Koch......................... 2000 $184,465 -- $ 455 $ 4,366
Chairman and Chief Executive Officer 1999 $184,465 -- $ 976 $ 2,072
1998 $184,465 -- $ 745 --
Martin F. Roper....................... 2000 $399,579 $50,000 $ 579 --
President and Chief Operating 1999 $324,461 $45,000 $ 168 --
Officer 1998 $281,511 $40,000 $ 539 --
Richard P. Lindsay.................... 2000 $142,246 $14,000 $ 155 --
Chief Financial Officer and 1999 $128,017 $11,500 $ 84 --
Treasurer 1998 $102,898 $15,000 $ 50 --
Jeffrey D. White...................... 2000 $121,085 $12,000 -- --
Vice President of Operations 1999 $109,339 $13,000 $ 89 $ 5,471
1998 $105,651 $11,640 $ 58 $12,500
Robert H. Hall (4).................... 2000 $148,891 $35,000 $11,858 --
Vice President of Brand Development 1999 -- -- -- --
1998 -- -- -- --
- ---------------
(1) Included in this column are amounts earned, though not necessarily received,
during the corresponding fiscal year.
(2) Included in this column are amounts of other compensation paid for
miscellaneous taxable employee benefits, including costs relating to Mr.
Hall's relocation benefit.
(3) The bonus amounts for the executive officers have been restated so that the
bonus for all fiscal year periods is recorded for each officer in the year
in which such bonus is paid.
(4) Mr. Hall joined the Company in June 2000.
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The following sets forth, as of December 30, 2000, information regarding
options exercised by the Executive Officers during the fiscal year ended
December 30, 2000 as well as information regarding unexercised options held by
such Executive Officers and the value of "in-the-money" options.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
AS OF DECEMBER 30, 2000
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#) AT FY-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
C. James Koch............... 0 0 5,927 42,000 $27,075 $ 10,125
Martin F. Roper............. 0 0 407,883 307,000 $ 3,250 $159,312
Richard P. Lindsay.......... 0 0 5,500 39,500 $ 3,562 $ 49,406
Jeffrey D. White............ 0 0 11,647 31,787 $ 3,992 $ 36,310
Robert H. Hall.............. 0 0 0 180,000 0 $ 79,875
- ---------------
(1) Based upon a fair market value at December 29, 2000 of $8.84375 per share,
determined in accordance with the rules of the Securities and Exchange
Commission, less the option exercise price or purchase price.
EMPLOYMENT AGREEMENTS
The Company has not entered into employment agreements with any of its
employees. However, the Stockholder Rights Agreement between the Company and
initial stockholders of the Company provides that so long as Mr. Koch remains an
employee of the Company (i) he will devote such time and effort, as a full-
time, forty (40) hours per week occupation, as may be reasonably necessary for
the proper performance of his duties and to satisfy the business needs of the
Company, (ii) the Company will provide Mr. Koch benefits no less favorable than
those formerly provided to him by the Boston Beer Company Limited Partnership
and (iii) the Company will purchase and maintain in effect term life insurance
on the life of Mr. Koch.
THE EMPLOYEE EQUITY INCENTIVE PLAN
The Employee Equity Incentive Plan is the successor to the 1995 Management
Option Plan of the Boston Beer Company Limited Partnership (the "Partnership"),
the various Partnership employee investment unit plans, and various
discretionary options granted by the Partnership. The predecessor Incentive
Share Plans entitled eligible employees to certain deferred compensation,
generally payable after termination of employment and calculated based on
appreciation in the value of equity interests in the Company from the date of an
award, and (ii) a series of plans under which a broader group of employees of
the Partnership were permitted to purchase similar deferred compensation rights.
As of March 23, 2001, there are (i) outstanding Management Options for
34,784 shares of Class A Common Stock at an exercise price of $0.01 per share,
of which options to purchase 31,683 shares are immediately exercisable; (ii)
outstanding Discretionary Options for 1,602,378 shares of Class A Common Stock
at an average exercise price of $10.2860 per share of which the options to
purchase 721,568 shares are immediately exercisable; and (iii) rights to receive
141,529 Investment Shares, of which rights to receive 75,138 shares have vested.
A more complete discussion of the specific terms and provisions of the
Employee Equity Incentive Plan is provided below.
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STOCK OPTIONS GRANTED
The following table sets forth certain information concerning grants of
stock options made during the year ended December 30, 2000 to the executive
officers named below:
OPTION GRANTS TO EXECUTIVE OFFICERS IN YEAR ENDED DECEMBER 30, 2000
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE AT
SECURITIES TOTAL ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------------
NAME (#)(1) FISCAL YEAR PER SHARE DATE 0% 5% 10%
- ---- ---------- ------------ ----------- ----------- ------- ---------- ----------
C. James Koch........ 30,000 5.4% [See Note [See Note 0 0 $ 18,359
3 below] 3 below]
Martin F. Roper...... 170,000 30.4% [See Note [See Note 0 $ 650,324 $1,789,022
4 below] 4 below]
Richard P. Lindsay... 25,000 4.5% $ 7.15625 12/31/09 0 $ 112,513 $ 285,130
Jeffrey D. White..... 18,000 3.2% $ 7.15625 12/31/09 0 $ 81,009 $ 205,294
Robert H. Hall....... 180,000 32.2% $ 8.40 6/11/10 $34,875 $1,007,696 $2,500,195
- ---------------
(1) Options vest at 20% each year. Options become immediately exercisable in
full in the event that C. James Koch and/or members of his family cease to
control a majority of the Company's issued and outstanding Class B Common
Stock.
(2) The potential realizable value of the options reported above was calculated
by assuming 0%, 5% and 10% annual rates of appreciation above the fair
market value of the Class A Common Stock of the Company from the date of
grant (determined in accordance with the rules of the Securities and
Exchange Commission) of the options until the expiration of the options.
These assumed annual rates of appreciation were used in compliance with the
rules of the Securities and Exchange Commission and are not intended to
forecast future price appreciation of the Class A Common Stock of the
Company. The actual value realized from the options could be higher or lower
than the values reported above, depending upon the future appreciation or
depreciation of the Class A Common Stock during the option period, the
option holder's continued employment through the option period and the
timing of the exercise of the options.
(3) Options for 6,000 shares carry an exercise price of $7.15625; 7,500 shares
carry an exercise price of $9.51780; 7,500 shares carry an exercise price of
$11.9509; and 9,000 shares carry an exercise price of $14.31250. The Options
terminate on the expiration of the 10-day period that commences on the third
business day after the Company files with the Securities and Exchange
Commission its Annual Report on Form 10-K for its 2004 fiscal year.
(4) Options for 70,000 shares carry an exercise price of $7.15625 and have an
expiration date of December 31, 2009. Options for 30,000 shares, which
terminate on the expiration of the 10-day period that commences on the third
business day after the Company filed with the Securities and Exchange
Commission its Annual Report on Form 10-K for its 2004 fiscal year, carry
the exercise prices as follows: for 6,000 shares carry an exercise price of
$7.15625; 7,500 shares carry an exercise price of $9.51780; 7,500 shares
carry an exercise price of $11.9509; and 9,000 shares carry an exercise
price of $14.31250. Options for 70,000 shares carry and exercise price of
$8.40 and have an expiration date of June 11, 2010.
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OTHER RELATED TRANSACTIONS
Company Stock Performance
The chart set forth below shows the value of an investment of $100 on
November 21, 1995 in each of the Company's stock ("Boston Beer"), the Standard &
Poor's 500 Index ("S&P 500") and a peer group as of December 31, 2000.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100
[PERFORMANCE CHART]
BOSTON BEER INC S&P BEVERAGES - ALCOHOLIC PEER GROUP
--------------- ------------------------- ----------
1995 100.00 100.00 100.00
1996 43.16 119.97 32.23
1997 32.89 125.05 19.20
1998 35.79 177.73 14.43
1999 30.27 190.50 10.17
2000 37.10 248.69 9.19
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THE EMPLOYEE EQUITY INCENTIVE PLAN
On November 20, 1995, the Company adopted the Employee Equity Incentive
Plan which provided for the grant of Management Options, Discretionary Options
and Investment Shares (each is described below). The maximum number of shares of
the Company's Class A Common Stock originally authorized for issuance under the
Employee Equity Incentive Plan was 1,687,500 shares. On October 20, 1997, the
Board of Directors (the "Board") and the sole holder of the Company's Class B
Common Stock amended the Employee Equity Incentive Plan to provide for an
additional 1,000,000 authorized shares and, on December 19, 1997, the Company
further amended the Employee Equity Incentive Plan to delete the provision which
had permitted the grant of Management Options which had been granted at a per
share exercise price of $0.01 and to provide for a shift from the Compensation
Committee to the full Board of Directors authority to act under the Employee
Equity Incentive Plan, based on recommendations brought to it by the
Compensation Committee. Shares of Class A Common Stock which are the subject of
Management Options or Discretionary Options which lapse unexercised or
Investment Shares which do not vest and are repurchased by the Company or which
are redeemed by the Company shall again be available for issuance under the
Employee Equity Incentive Plan. The maximum number of shares available for
grants is subject to adjustment for capital changes.
In adopting the Employee Equity Incentive Plan, the Company has also
approved, subject to certain further restrictions described below, the
assumption of rights to acquire equity interests in the Company granted under
certain predecessor plans of the Partnership.
ADMINISTRATION, TERMINATION AND AMENDMENT
The Employee Equity Incentive Plan is administered by the Board and the
sole holder of the Company's Class B Common Stock, taking into account
recommendations from the Compensation Committee of the Board. The Compensation
Committee consists of at least two (2) members of the Board, none of whom shall
be or at any time have been employees of the Company. The members of the
Compensation Committee are appointed by the Board and the Board may at any time,
subject to the above restrictions, appoint one or more members of the
Compensation Committee in substitution for or in addition to the member or
members then in office and may fill vacancies on the Compensation Committee,
however caused. The Board, subject to the approval of the holders of a majority
in interest of the Company's then issued and outstanding Class B Common Stock,
may modify, amend or terminate the Employee Equity Incentive Plan at any time.
Termination or amendment of the Employee Equity Incentive Plan shall not,
without the consent of any person affected thereby, modify or in any way affect
any Discretionary Options granted or Investment Shares purchased prior to such
termination or amendment.
ELIGIBILITY TO PARTICIPATE
Employees eligible to participate in the Employee Equity Incentive Plan
("Eligible Employees") are those employees of the Company who (i) have been
employed by the Company for at least one (1) year and (ii) have entered into an
Employment Agreement with the Company containing certain terms and conditions as
the Board, in its discretion, may from time to time require. Only full-time
management-level Eligible Employees, as determined by the Compensation Committee
in its sole discretion, shall be selected by the Compensation Committee for a
recommendation to the Board to be granted Discretionary Options. In designating
Optionees for Discretionary Options, the Compensation Committee shall take into
account each prospective Optionee's level of responsibility, performance,
potential and such other considerations as the Compensation Committee deems
appropriate.
TERMS AND PROVISIONS
Management Options and Discretionary Options. While Management Options
granted prior to December 31, 1997 remain outstanding, effective as of December
19, 1997, the Employee Equity Incentive Plan no longer provides for the grant of
Management Options. Therefore, as of the date of its meeting in October of each
year, the Compensation Committee shall make its recommendation to the Board
concerning the overall
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total number of shares which are eligible for option grants and such other and
further details as the Compensation Committee may deem appropriate. Immediately
prior to the Board's meeting in December of each year, the Compensation
Committee will finalize its recommendation, taking into consideration the
recommendations of management, and will thereafter makes its final
recommendation to the Board with respect to the grant of Discretionary Options
to selected Optionees. The terms of each Discretionary Option shall be set forth
in an Option Agreement, which shall include the following terms, conditions and
restrictions:
(i) The right to exercise a Discretionary Option shall vest over the
period of five (5) years after the Option Date at the rate of twenty
percent (20%) of the Option Shares covered thereby per year, or upon such
other vesting schedule as the Compensation Committee recommends, and the
Board shall so approve, so long as the Optionee continues to be employed by
the Company as of each vesting date, provided, however, that (i) the Board
may permit accelerated vesting in its discretion, (ii) Discretionary
Options shall become exercisable in full in the event of an Optionee's
retirement at or after reaching age 65, death or disability, and (iii) the
Compensation Committee may recommend, and the Board may so approve, tying
exercisability to compliance by an Optionee with any applicable restrictive
covenants; and
(ii) Except as recommended by the Compensation Committee, and approved
by the Board, from time to time, a Discretionary Option shall terminate on
the earlier to occur of the expiration of (i) ninety (90) days after the
Optionee ceases to be an employee of the Company and (ii) ten (10) years
after the Option Date.
Investment Shares. Eligible Employees may also become Participants in the
Employee Equity Incentive Plan and invest up to ten percent (10%) of their most
recent annual W-2 earnings in shares ("Investment Shares") of Class A Common
Stock. The number of Investment Shares which can be purchased by each
Participant will be computed by dividing 10% of the Participant's W-2 earnings
by the Investment Share Value. The "Investment Share Value" shall be the mean
between the high and the low prices at which shares of Class A Common Stock
traded on the New York Stock Exchange or on any other exchange on which such
shares may be traded, on the day next preceding the date of a Participant's
investment in Investment Shares, which ordinarily shall be effective as of
January 1 in each applicable year (based upon the market value of the shares,
determined as set forth above, as of the last trading day in December
immediately preceding such January 1) and discounted, according to the
Participant's years of service with the Company, as follows:
YEARS OF SERVICE DISCOUNT
- ---------------- --------
Less than 2 years........................................... 0%
2-3 years................................................... 20%
3-4 years................................................... 30%
More than 4 years........................................... 40%
For each full year Investment Shares are held after issuance and the
Participant remains employed with the Company, twenty percent (20%) of such
Investment Shares will become vested. All Investment Shares which have not yet
vested shall automatically vest in the event of the termination of a
Participant's employment with the Company by reason of his or her retirement at
or after reaching age 65, death or disability. The Compensation Committee may
also accelerate vesting at any time in its discretion. All unvested Investment
Shares shall be held in escrow by an escrow agent selected by the Compensation
Committee, pursuant to a Restricted Stock Escrow Agreement.
Any Participant who is not subject to the provisions of Section 16(b) of
the Securities Exchange Act of 1934, as amended, shall have the right at any
time to cause the Company to redeem all, but not less than all, of such
Participant's Investment Shares at a price equal to the lesser of (i) the
Discounted Investment Share Value at which the Investment Shares were issued and
(ii) the fair market value of such Investment Shares, as of the date next
preceding the date on which the Investment Shares are tendered for redemption.
In the event that a Participant's employment with the Company is terminated
other than because of retirement at or after the age of 65, death or disability,
the Company has the right, but not the obligation, to redeem within ninety (90)
days after such termination any or all of the Investment Shares previously
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purchased by the Participant which have not vested, at a price, payable in cash,
equal to the lesser of (i) the Discounted Investment Share Value at which the
Shares were issued and (ii) the fair market value of such Investment Shares, as
of the date next preceding the date on which the Investment Shares are called
for redemption.
Except as otherwise specifically provided for above, no right or interest
under the Employee Equity Incentive Plan of any Eligible Employee shall be
assignable or transferable, in whole or in part, either directly or by operation
of law or otherwise, including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner, other than
by will or the laws of descent and distribution; and no such right or interest
of any Eligible Employee shall be subject to any obligation or liability of such
Eligible Employee. A Management Option or Discretionary Option shall be null and
void and without effect upon the bankruptcy of the Optionee or upon the
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition contrary to the provisions
hereof, or levy of execution, attachment, trustee process or similar process,
whether legal or equitable, upon the option.
RECENT GRANTS
The following sets forth the details of Discretionary Options granted
during the year ended December 30, 2000:
DISCRETIONARY OPTION GRANTS
----------------------------------
NAME AND POSITION DOLLAR VALUE(1) NUMBER OF SHARES
- ----------------- --------------- ----------------
C. James Koch, Chairman and Chief Executive Officer......... $(67,451) 30,000
Martin F. Roper, President and Chief Operating Officer...... $(81,736) 170,000
Richard P. Lindsay, Chief Financial Officer and Treasurer... $ 42,188 25,000
Jeffrey D. White, Vice President of Operations.............. $ 30,375 18,000
Robert H. Hall, Vice President of Brand Development......... $ 79,875 180,000
Employees as a Group (excluding Executive Officers)......... $172,125 102,000
- ---------------
(1) Dollar values below are based upon a fair market value of Class A Common
Stock at December 29, 2000 of $8.84375 per share, determined in accordance
with the rules of the Securities and Exchange Commission, less the option
exercise price, and multiplying by the number of shares subject to
Discretionary Options granted.
RECAPITALIZATION, REORGANIZATIONS
The Employee Equity Incentive Plan provides that in the event that the
outstanding shares of Class A Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation by reason of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of shares, or
dividends payable in capital stock, appropriate adjustment shall be made in the
number and kind of shares which may be issued under the Employee Equity
Incentive Plan and as to which outstanding Management Options or Discretionary
Options or portions thereof then unexercised shall be exercisable, to the end
that the proportionate interest of the Optionee shall be maintained as before
the occurrence of such event; such adjustment in outstanding Discretionary
Options shall be made without change in the total price applicable to the
unexercised portion of such Discretionary Options and with a corresponding
adjustment in the exercise price per share. The exercise price per share of
Management Options shall remain $0.01 per share.
PREVIOUSLY GRANTED OPTIONS AND INVESTMENT SHARES
All options granted by the Partnership prior to November 20, 1995, which
were assumed under the Employee Equity Incentive Plan on that date and became
Management Options or Discretionary Options, first became exercisable, to the
extent that the right to exercise had otherwise then vested, on March 1, 1996,
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except that any such options held by Optionees subject to the provisions of
Section 16(b) of the 1934 Act did not become exercisable until May 20, 1996. All
Investment Shares purchased from the Partnership prior to November 20, 1995,
which had vested prior to March 1, 1996, were issued to the applicable
Participants on that date, except that vested Investment Shares otherwise then
issuable to Participants subject to the provisions of Section 16 (b) of the 1934
Act did not become issuable until May 20, 1996.
RESALE RESTRICTIONS
Notwithstanding any other provision of the Employee Equity Incentive Plan,
the Company may delay the issuance of shares covered by the exercise of a
Management Option or a Discretionary Option or any Investment Shares which have
vested (in any such case, "Shares") until one of the following conditions shall
be satisfied:
(i) Such Shares are at the time of issuance effectively registered
under applicable federal and state securities acts, as now in force or
hereafter amended; or
(ii) Counsel for the Company shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that the
issuance of such Shares is exempt from registration under applicable
federal and state securities acts, as now in force or hereafter amended.
Moreover, unless the Shares to be issued have been effectively registered
under the Securities Act of 1933, as amended (the "1933 Act"), the Company shall
be under no obligation to issue such Shares unless the Optionee or Participant
shall first give written representation to the Company, satisfactory in form and
scope to the Company's counsel and upon which in the opinion of such counsel the
Company may reasonably rely, that he or she is acquiring the Shares to be issued
to him or her as an investment and not with a view to or for sale in connection
with any distribution thereof in violation of the 1933 Act. The Company shall
have no obligation, contractual or otherwise, to any Optionee or Participant to
register under any federal or state securities laws any Shares issued under the
Employee Equity Incentive Plan to such Optionee or Participant.
Notwithstanding the above, Shares acquired under the Employee Equity
Incentive Plan while a Registration Statement relating to such Shares is in
effect under the 1933 Act, by persons who are not affiliates of the Company may
be sold by such persons without registration under the 1933 Act, and without the
need to comply with Rule 144 thereunder. Public resales of shares acquired
(while a Registration Statement relating to such shares is in effect under the
1933 Act) under the Employee Equity Incentive Plan by persons who are affiliates
of the Company will be subject to registration or compliance with the
requirements of Rule 144 under the 1933 Act, other than the holding period
requirement of paragraph (d) of that Rule. Employees who are Directors or
officers of the Company may be deemed to be affiliates of the Company.
TAX EFFECTS OF EMPLOYEE EQUITY INCENTIVE PLAN PARTICIPATION
The Employee Equity Incentive Plan described herein is not a qualified plan
under Section 401 of the Internal Revenue Code and is not subject to the
provisions of the Employee Retirement Income Security Act of 1974.
Management and Discretionary Options. Upon the grant of a Management
Option or Discretionary Option, the Participant will not recognize ordinary
income nor will the Company be entitled to a deduction. Upon the exercise of a
Management Option or a Discretionary Option, the Participant will generally
recognize ordinary income in the amount by which the fair market value of Class
A Common Stock at the time of exercise exceeds the exercise price for the Shares
then purchased and the Company will generally be entitled to a deduction for
such amount of ordinary income recognized. Upon a subsequent disposition of
Class A Common Stock, the Participant will realize a short-term or long-term
capital gain or loss, depending upon the holding period of the Class A Common
Stock, with the basis for computing such gain or loss equal to the fair market
value of Class A Common Stock on the date of exercise.
Investment Shares. Upon the purchase of an Investment Share, the
Participant will not recognize ordinary income provided the Participant makes an
election under Section 83(b) of the Internal Revenue
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Code (such election is referred to herein as a "Section 83(b) election"). If the
Participant makes a Section 83(b) election then the Participant will immediately
recognize ordinary income in the amount by which the fair market value of the
Investment Shares on the date of acquisition exceeds the purchase price
therefor. If the Participant does not make a Section 83(b) election, then, upon
vesting of the Investment Shares, the Participant will recognize ordinary income
in the amount by which the fair market value of the Investment Shares then
vesting, as of the date of vesting, exceeds the purchase price therefor. The
Company will generally be allowed a deduction in an amount equal to the income
recognized by the Participant in the tax year in which such income is
recognized. Upon the disposition of Investment Shares, the Participant will
realize a short-term or long-term capital gain or loss, depending upon the
holding period of the Investment Shares, after they have vested, with the basis
for computing such gain or loss equal to the amount of ordinary income realized
on such shares plus the purchase price therefor. Participants purchasing
Investment Shares should consult their tax advisors regarding the advisability
of making a Section 83(b) election. A Section 83(b) election must be made within
thirty (30) days of the purchase of Investment Shares.
REPORT OF THE AUDIT COMMITTEE(1)
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended December 30,
2000.
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management. The Audit Committee has discussed with
Arthur Andersen LLP, the Company's independent accountants, the matters required
to be discussed by Statement of Auditing Standards No. 61, Communication with
Audit Committees, which provides that certain matters related to the conduct of
the audit of the Company's financial statements are to be communicated to the
Audit Committee. The Audit Committee has also received the written disclosures
and the letter from Arthur Andersen LLP required by Independence Standards Board
Standard No. 1 relating to the accountant's independence from the Company, has
discussed with Arthur Andersen LLP their independence from the Company, and has
considered the compatibility of non-audit services with the accountant's
independence.
The Audit Committee acts pursuant to the Audit Committee Charter, a copy of
which is attached as Appendix "A" to this Proxy Statement. Each of the members
of the Audit Committee qualifies as an "independent" Director under the current
listing standards of NYSE.
Fees charged by Arthur Andersen LLP for services rendered in auditing the
Company's annual financial statements for the most recent fiscal year and
reviewing the financial statements included in the Company's quarterly reports
on Form 10-Q for the most recent fiscal year, as well as the fees charged by
Arthur Andersen LLP for other professional services rendered during the most
recent fiscal year are as follows: audit fees and out-of-pocket expenses of
$110,000 and audit-related tax and consulting service fees of $40,000.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Company's Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 30, 2000.
AUDIT COMMITTEE:
PEARSON C. CUMMIN, III, Chairman
ROBERT N. HIATT
JAMES C. KAUTZ
JOHN B. WING
- ---------------
(1)The material in this report, including the Audit Committee Charter, is
not "soliciting material," is not deemed filed with the SEC and is not to be
incorporated by reference in any filing of the Company under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether
made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
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INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors appointed Arthur Andersen LLP as independent
auditors to examine the consolidated financial statements of the Company for the
fiscal year ending December 30, 2000. The engagement of Arthur Andersen LLP was
approved by the Board of Directors, at the recommendation of the Audit Committee
of the Board of Directors, and by the sole holder of the Company's Class B
Common Stock.
A representative of Arthur Andersen LLP is expected to be present at the
meeting and will have the opportunity to make a statement if he or she so
desires and to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors and persons owning more than 10% of the outstanding Class
A Common Stock of the Company to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, Directors and
greater than 10% holders of Class A Common Stock are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on copies of such forms furnished as provided above, the
Company believes that during the fiscal year ended December 30, 2000, all
Section 16(a) filing requirements applicable to its officers, Directors and
owners of greater than 10% of its Class A Common Stock were complied with on a
timely basis.
DEADLINES FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Under regulations adopted by the Securities and Exchange Commission, any
proposal submitted for inclusion in the Company's Proxy Statement relating to
the Annual Meeting of Stockholders to be held in 2002 must be received at the
Company's principal executive offices in Boston, Massachusetts on or before
December 17, 2001. Receipt by the Company of any such proposal from a qualified
stockholder in a timely manner will not ensure its inclusion in the proxy
material because there are other requirements in the proxy rules for such
inclusion.
OTHER MATTERS
Management knows of no matters which may properly be and are likely to be
brought before the meeting other than the matters discussed herein. However, if
any other matters properly come before the meeting, the persons named in the
enclosed proxy will vote in accordance with their best judgment.
The cost of this solicitation will be borne by the Company. It is expected
that the solicitation will be made primarily by mail, but regular employees or
representatives of the Company may also solicit proxies by telephone, telegraph
and in person and arrange for brokerage houses and other custodians, nominees
and fiduciaries to send proxies and proxy material to their principals at the
expense of the Company.
10-K REPORT
THE COMPANY WILL PROVIDE EACH BENEFICIAL OWNER OF ITS SECURITIES WITH A
COPY OF AN ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE COMPANY'S MOST RECENT FISCAL YEAR, WITHOUT CHARGE, UPON
RECEIPT OF A WRITTEN REQUEST FROM SUCH PERSON. SUCH REQUEST SHOULD BE SENT TO
RICHARD P. LINDSAY, CHIEF FINANCIAL OFFICER, THE BOSTON BEER COMPANY, INC., 75
ARLINGTON STREET, BOSTON, MA 02116.
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VOTING PROXIES
The Board of Directors recommends an affirmative vote for all nominees
specified herein. Proxies will be voted as specified. If signed proxies are
returned without specifying an affirmative or negative vote, the shares
represented by such proxies will be voted in favor of the nominees.
By order of the Board of Directors
C. JAMES KOCH, Clerk
Boston, Massachusetts
April 13, 2001
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APPENDIX A
THE BOSTON BEER COMPANY, INC.
AUDIT COMMITTEE CHARTER
I. Purpose. The purpose of the Audit Committee (the "Committee") of the
Board of Directors (the "Board") of The Boston Beer Company, Inc. (the
"Company"), is to provide assistance to the members of the Board in fulfilling
their responsibilities relating to corporate accounting, reporting practices of
the Company, and the quality and integrity of the financial reports of the
Company. In so doing, it is the responsibility of the Committee to maintain free
and open means of communication between the directors, the outside auditors, the
internal auditors and the financial management of the Company.
II. Structure. The Committee shall be composed of at least three (3)
persons designated by the Board, each of whom shall be a member of the Board and
none of whom shall be members of management nor have a relationship to the
Company that may interfere with the exercise of his or her independence from
management and the Company. Each member of the Committee shall be financially
literate, as such qualification is interpreted by the Board in its business
judgment, or must become financially literate within a reasonable period of time
after his or her appointment to the Committee. The Committee shall have the
power to engage such financial and accounting experts, including independent
public accountants other than the Company's outside auditors, as it deems
reasonably necessary to assist it in carrying out its responsibilities.
III. Meetings. The Committee shall meet as often and at such times and
places as determined by the Committee. A meeting may be called by any member of
the Committee. The Committee shall meet with management and with the outside
auditors prior to and at the close of the annual audit as appropriate. The
Committee shall have the authority to call before it management and other
employees of the Company or any subsidiary involved in financial or accounting
matters.
As appropriate, it is recommended that a written agenda be prepared for
each meeting and distributed to Committee members prior to the meeting, together
with any appropriate background materials. After each meeting detailed minutes,
again with appropriate background materials, should be prepared. The Committee
shall report to the Board of Directors at each Board meeting subsequent to a
Committee meeting.
IV. Duties. In carrying out its responsibilities, the Committee shall:
A. Make recommendations to the Board concerning the selection of the
outside auditors for the Company and its subsidiaries, and, together with the
Board, select, evaluate and, where appropriate, replace the outside auditor (or
to nominate the outside auditor to be proposed for shareholder approval in any
proxy statement);
B. Ensure that the outside auditor submits on a periodic basis to the
Committee a formal written statement delineating all relationships between the
auditor and the Company; to actively engage in a dialogue with the outside
auditor with respect to any disclosed relationships or services that may impact
the objectivity and independence of the outside auditor; and to recommend that
the Board take appropriate action in response to the outside auditors' report to
satisfy itself of the outside auditors' independence;
C. Review and discuss with the outside auditors, prior to the annual audit
or any interim audit, the expected scope of the audit, including the procedures
to be used and the compensation to be paid, as agreed to by management;
D. Review and discuss with the outside auditors and with management the
results of the audit and any reports or opinions to be rendered in connection
therewith; and
E. Discuss with and make inquiries of management and the outside auditors
concerning the adequacy and effectiveness of the internal financial, accounting
and operating controls and procedures of the Company and its subsidiaries.
A-1
22
In carrying out each of these duties, the Committee shall, at a minimum,
take the following steps:
1. Selection of the Outside Auditors. In making its recommendation as to
the selection of the Company's outside auditors, the Committee should review the
quality and independence of the auditors in light of the following factors:
(a) The auditors' approach to and the results of the audit, including
the quality of recommendations made by the auditors concerning the
approach of the Company and its subsidiaries to accounting
principles, policies and controls;
(b) The auditors' approach to rotation of personnel: is rotation so
frequent as to provide no continuity of personnel, thereby
increasing audit cost and, perhaps, decreasing auditor expertise
or is it so infrequent as to raise questions as to the auditors'
independence;
(c) To what extent have the auditors kept abreast and kept management
abreast of changes in accounting principles and reporting
requirements of the Securities and Exchange Commission and other
regulatory agencies, both state and federal;
(d) Other services performed by the auditors--tax, consulting and the
like: are these of the highest quality;
(e) Is the overall service given to the Company and its subsidiary by
the auditors of the highest quality and are the fees being charged
by the auditors commensurate with the level of service.
2. Review of Audit Scope. In reviewing the expected scope of the
audit--prior to the audit -- the following points should be addressed:
(a) Upon which of the internal control functions of the Company and
its subsidiaries will the audit be based;
(b) To what extent will the facilities of the Company and its
subsidiaries be visited by the auditors; what is the significance
of those facilities chosen and if not all facilities are to be
listed, why other facilities have been excluded;
(c) What audit procedures are to be used, what amount of time will
each entail and what is the approximate cost of each;
(d) If any other outside auditors are to be used, who such auditors
are and the reason for their use.
3. Review of Audit Results. The review of the results of the audit and
any reports or opinions to be rendered by the outside auditors should cover the
following points:
(a) How do the accounting principles and policies of the Company and
its subsidiaries compare with those of comparable companies;
(b) If there are alternative practices available, are the preferable
alternatives being used;
(c) What recommendations have the auditors made either as to
adjustments in the financial statements or as to changes in
practice, the reasons for such recommendations and the response of
the Company or subsidiary personnel to the recommendations.
(Subsequent meetings should follow up on these recommendations to
determine whether or not they have been properly implemented);
(d) To what extent have management and other personnel of the Company
or its subsidiaries assisted in or hindered the conduct of the
audit. Did any differences arise between management and the
auditors and, if so, how were these resolved.
4. Review of Internal Control Procedures. The review of internal control
procedures should involve discussion with management and the outside auditors
concerning the following points:
(a) Is the Company's internal accounting control system sufficient to
provide reasonable assurances that
A-2
23
(i) transactions are executed in accordance with management's
general or specific authorization and are recorded as necessary
to permit proper preparation of financial statements and to
maintain accountability for assets;
(ii) access to assets is permitted only in accordance with
management's general or specific authorization and the recorded
accountability for assets is reviewed and compared with existing
assets at reasonable intervals and appropriate action taken with
respect to any differences.
(b) Are the financial and accounting personnel of the Company and its
subsidiaries properly using the control system; are they
sufficiently capable of doing so;
(c) How does the internal accounting control system of the Company and
its subsidiaries compare with those of comparable public companies.
(d) What suggestions as to changes in the system have been made by the
outside auditors; have these been implemented; if approved by
management.
(e) In view of the foregoing, is the quality of interim reporting
adequate for the needs of the Company and its subsidiaries and the
Company's stockholders.
F. Focus of Committee Activities. The outside auditor for the Company is
ultimately accountable to the Board and the Committee. Within the general
framework set forth above, it shall be the responsibility of the Committee to
keep itself aware of those policies and practices of the Company and its
subsidiaries of particular importance at any time in view of then current
governmental or regulatory activity, especially any matters which could subject
the Company or its subsidiaries to the adverse scrutiny of the Securities and
Exchange Commission, the Internal Revenue Service, the New York Stock Exchange
or other regulatory agencies, and to potentially substantial liability.
A-3
24
THE BOSTON BEER COMPANY, INC.
PROXY - ANNUAL MEETING OF STOCKHOLDERS - MAY 22, 2001
CLASS A COMMON STOCK
The undersigned, a stockholder of THE BOSTON BEER COMPANY, INC., does
hereby appoint C. James Koch the undersigned's proxy, with full power of
substitution, to appear and vote at the Annual Meeting of Stockholders, to be
held on May 22, 2001 at 10:00 A.M., local time, or at any adjournments thereof,
upon such matters as may come before the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby instructs said proxy, or his substitute, to vote as
specified on the reverse side on the following matters and in accordance with
his judgment on other matter which may properly come before the Meeting.
(Continued and to be Completed on Reverse Side)
FOLD AND DETACH HERE
----------------
ADMISSION TICKET
----------------
THE BOSTON BEER COMPANY, INC.
2001 ANNUAL MEETING
Tuesday, May 22, 2001
10:00 A.M.
The Brewery
30 Germania Street
Boston, MA
25
SPACE BELOW. NO BOXES NEED TO BE CHECKED. your vote as [X]
indicated in
this example
1. Election of Class A Directors.
FOR all nominees WITHHOLD
listed. (Except as authority for all
marked to the contrary nominees
to the right.) listed.
[ ] [ ]
PEARSON C. CUMMIN, III, JAMES C. KAUTZ AND ROBERT N. HIATT
(Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
________________________________________________________________________________
I plan to attend the meeting. [ ]
PLANNING TO ATTEND? PLEASE HELP OUR PLANNING EFFORTS BY LETTING US KNOW IF YOU
EXPECT TO ATTEND THE ANNUAL MEETING. PLEASE CALL (617) 368-5050, AND CHECK THE
BOX ABOVE.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS INDICATED SUCH SHARES WILL BE VOTED IN FAVOR OF SUCH ITEM.
IMPORTANT: Before returning this Proxy, please sign your name or names on the
line(s) below exactly as shown hereon. Executors, administrators, trustees,
guardians or corporate officers should indicate their full title when signing.
Where shares are registered in the name of joint tenants or trustees, each joint
tenant or trustee should sign.
Dated ____________________________________________________________________, 2001
__________________________________________________________________________(L.S.)
__________________________________________________________________________(L.S.)
Stockholder(s) Sign Here
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
FOLD AND DETACH HERE
[MAP WITH DIRECTIONS TO THE BREWERY]
DIRECTIONS TO THE BREWERY
FROM THE SOUTH OF BOSTON
Take 93N to exit 18 (Mass Ave and Roxbury Exit). Go straight down Melnea Cass
Blvd toward Roxbury. Once on Melnea Cass Blvd you will go through seven lights.
At the eighth light take a left on Tremont St (Landmark: Northeastern University
and Ruggles T Station will be on your right when you turn onto Tremont St. Note:
Tremont St eventually become Columbus Ave). Follow Tremont St through seven
lights. Take a right on Amory St (Landmark: look for a big, powder blue Muffler
Mart shop on the right - directly after Centre Street). Follow Amory St through
2 lights. After the 2nd light take a left on Porter St (Landmark: Directly after
Boylston St). Go to the end of Porter St and the Brewery is on the right.
FROM THE NORTH OF BOSTON
Take 93S to exit 18 (Mass Ave and Roxbury exit) and follow the above directions.
FROM THE SUBWAY
Take the Orange Line outbound toward Forest Hills. Exit at the Stony Brook stop.
Above ground take a left onto Boylston St. Take your first right onto Amory St.
Then take your first left onto Porter St to Brewery gate (the Brewery will be at
the end of Porter St on your right).