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Boston Beer Company DEF 14A 2007 Table of Contents
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment
No. )
Check the appropriate box:
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):
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 4) Proposed maximum aggregate value of transaction: 5) Total fee paid:
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.
May 31, 2007
To the Stockholders:
The 2007 Annual Meeting of the Stockholders of THE BOSTON BEER
COMPANY, INC. (the “Company”) will be held on
Thursday, May 31, 2007, 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. 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
April 2, 2007 as the record date for the meeting. Only
stockholders of record on that date are entitled to notice of
and to vote at the meeting.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this letter.
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 18, 2007
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THE
BOSTON BEER COMPANY, INC.
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 2007
Annual Meeting of Stockholders to be held on Thursday,
May 31, 2007, 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 18, 2007.
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, proxies will be voted in favor of
the election of directors as set forth in this proxy statement.
In addition, if other matters come before the meeting, the
persons named in the accompanying proxy and acting thereunder
will have discretion to vote on these matters in accordance with
their best judgment. 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. Please
note, however, that if your shares are held of record by a
broker, bank or nominee and you wish to vote at the meeting, you
will not be permitted to vote in person unless you first obtain
a proxy issued in your name from the record holder.
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 set forth below in this Proxy Statement 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, also as set forth below in this Proxy
Statement in greater detail.
Abstentions and “non-votes” are counted as present in
determining whether the quorum requirement is satisfied. A
“non-vote” occurs when a nominee holding shares for a
beneficial owner votes on one proposal, but does not vote on
another proposal because the nominee does not have discretionary
voting power and has not received instructions from the
beneficial owner. Abstentions and broker non-votes will not be
taken into account in determining the outcome of the election of
directors.
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
One Design Center Place, Suite 850, Boston, Massachusetts
02210, telephone number
(617) 368-5000.
Only stockholders of record at the close of business
April 2, 2007 are entitled to notice of and to vote at the
meeting. On that date, the Company had outstanding and entitled
to vote 10,206,225 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.
Upon the recommendation of the Nominating/Governance Committee,
the Board of Directors proposes that the initial number of
Directors for the ensuing year be fixed 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
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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.
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. Three
(3) of the four (4) nominees for Class B
Directors are either Executive Officers of the Company or
immediate family members of such Executive Officers.
The persons 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 persons 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, none of the
nominees for Class A Directors are Executive Officers of
the Company or its subsidiaries nor immediate family members of
such Executive Officers.
Nominees Proposed in Accordance with the Terms of the
Articles of Organization, By-Laws of the Company and the
Corporate Governance Guidelines. Set forth below
are the nominees for election as Class A and Class B
Directors, respectively, for terms ending in 2008 and certain
information about each of them.
Class A
Directors:
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Class B
Directors:
The Company is committed to having sound corporate governance
principles. The Company’s Code of Business Conduct and
Ethics, which applies to the Company’s directors, officers
and employees, the Company’s Corporate Governance
Guidelines and the charters of the Audit, Compensation and
Nominating/Governance Committees are available on the
Company’s website,
www.bostonbeer.com/CorporateGovernance, and are also
available in print to any stockholder who requests them. Such
requests should be directed to the Investor Relations
Department, The Boston Beer Company, Inc., One Design Center
Place, Suite 850, Boston, MA 02210.
The Board has determined that all of the Class A directors
standing for election, namely, Messrs. Burwick, Cummin and
Valette, and one (1) of the Class B directors standing
for election, namely, Mr. Margolis, together constituting a
majority of the Board of Directors, have no material
relationship with the Company (either directly or as a partner,
shareholder or officer of an organization that has a
relationship with the Company) and are independent as provided
in the New York Stock Exchange (“NYSE”) and Securities
and Exchange Commission (“SEC”) director independence
standards. In addition, the Board has determined that each
member of the Audit, Compensation and Nominating/Governance
Committees has no material relationship with the Company (either
directly or as a partner, shareholder or officer of an
organization that has a relationship with the Company) and is
independent as provided in the NYSE and SEC director
independence standards.
During the Company’s 2006 fiscal year, there were five
(5) regular meetings of the Board of Directors of the
Company. All of the Directors attended, either in person or by
telephone, all board meetings and all meetings of the Committees
of the Board of Directors on which they served, except for one
director who was absent from one board meeting and the regular
committee meetings held on the same date.
The Company strongly encourages all directors to attend annual
meetings of stockholders. All Directors, including retiring
Director, Robert N. Hiatt, except one, attended the last annual
meeting of stockholders.
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As of the date of this Proxy Statement, the Board has seven
(7) directors and three (3) standing committees,
namely, the Audit Committee, the Compensation Committee and the
Nominating/Governance Committee. From January 2006, when
Mr. Margolis joined the Board as a Class B Director,
to May, 2006, the Board had eight (8) members. When Robert
N. Hiatt, a Class A Director since 1998, retired from the
Board at the end of his term in May 2006, the number of
directors returned to seven (7). Committee membership and the
function of each committee are described below. Each of the
committees operates under a written charter adopted by the Board.
Audit
Committee
The Audit Committee of the Board of Directors assists the Board
in fulfilling its responsibility to oversee management’s
conduct of the Company’s financial reporting process,
including overseeing the financial reports and other financial
information provided by the Company’s systems of internal
accounting and financial controls and the annual independent
audit of the Company’s financial statements. The Audit
Committee prepares the Audit Committee report for inclusion in
the annual proxy statement; annually reviews the Audit Committee
charter and the committee’s performance; appoints,
evaluates and determines the compensation of the Company’s
independent auditors; reviews and approves the scope of the
annual audit, the audit fee and the financial statements;
pre-approves all audit and non-audit services provided to the
Company by the Company’s independent auditors; reviews the
Company’s disclosure controls and procedures, internal
controls and corporate policies relating to financial
information and earnings guidance; and reviews other risks that
may have a significant impact on the Company’s financial
statements.
The present members of the Audit Committee are Pearson C.
Cummin, III (Chair), Jay Margolis, and Jean-Michel Valette.
The Audit Committee had four (4) meetings in 2006. The
report of the Audit Committee is included in this Proxy
Statement on page 20.
Compensation
Committee
The Compensation Committee discharges the Board’s
responsibilities relating to compensation of the Company’s
officers and directors and exercises overall responsibility for
evaluating and approving compensation programs and policies of
the Company relating to officers and directors; provides general
oversight of the Company’s compensation structure,
including the Company’s equity compensation plans; reviews
and makes recommendations to the Board concerning policies or
guidelines with respect to employment agreements, severance
arrangements,
change-in-control
agreements or arrangements involving senior executive officers
and directors of the Company; reviews and approves corporate
goals and objectives relevant to the compensation of the
Chairman and CEO, evaluates the performance of the Chairman and
the CEO in light of those goals and objectives, and sets the
compensation level for the Chairman and the CEO; reviews and
approves the compensation parameters of other senior executives
of the Company; makes reports to the Board of Directors on a
regular basis; reviews its own performance and reviews and
reassesses the adequacy of its charter and recommends any
proposed changes to the Board of Directors for its approval; and
issues an annual report, including a discussion and analysis of
executive compensation, for inclusion in the Company’s
proxy statement. The charter of the Compensation Committee was
amended in November 2006 to expand the responsibilities of the
Committee to clarify its role in reviewing and approving goals
and objectives relevant to the Chairman and the CEO, the
evaluation of their performance in light of those goals and
objectives and setting compensation for such officers and
approving compensation parameters of other senior executives of
the Company.
The present members of the Compensation Committee are David A.
Burwick (Chair), Pearson C. Cummin III, and Jay Margolis.
The Compensation Committee held three (3) meetings in 2006.
The Compensation Discussion and Analysis and the Report of the
Compensation Committee are included in this Proxy Statement
beginning on page 8.
Nominating/Governance
Committee
The Nominating/Governance Committee assists the Board by
identifying individuals qualified to become Board members,
recommending nominees for election as Class A Directors to
the full Board of Directors, recommending to the Board nominees
for each Board committee, developing and recommending to the
Board a set of corporate governance principles applicable to the
Company and overseeing an annual evaluation of the Board. The
Nominating/Governance Committee periodically assesses the size
and composition of the Board; reviews the adequacy of the
Company’s corporate governance guidelines and recommends
any necessary changes to the full
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Board for approval; and conducts a preliminary review of
director independence and financial literacy and expertise of
Audit Committee members. The Chairman of the
Nominating/Governance Committee receives communications directed
to non-management directors.
The present members of the Nominating/Corporate Governance
Committee are Jean-Michel Valette (Chair), David A. Burwick and
Jay Margolis. The Nominating/Corporate Governance Committee met
three (3) times in 2006.
Those non-management directors who are independent met in
scheduled executive sessions without management five
(5) times during the Company’s 2006 fiscal year, which
were chaired by Mr. Jean-Michel Valette.
Each year, non-management directors receive $7,500 as an annual
retainer, as well as an option grant for 5,000 shares of
the Company’s Class A Common Stock. Members of the
Audit Committee receive an additional annual retainer of $9,000,
except for the Chair of the Audit Committee who received an
annual retainer of $11,000 for his services as a member and
Chair. The Chairs of the Compensation Committee and
Nominating/Governance Committee each receive an additional
annual retainer of $2,500. Non-management Directors other than
the Chair receive an annual retainer of $500 for each Committee
of which such Director is a member. All retainers and the annual
option grant are pro rated if the non-management Director is
appointed after the annual meeting of stockholders.
Non-management Directors also receive compensation for attending
Board and Committee meetings as follows: $3,000 for each Board
meeting attended in person; $1,000 for each Board meeting
attended by telephone; $750 for each Committee meeting attended
in person; and $200 for each Committee meeting attended by
telephone. The first time a non-management Director is elected
to the Board of Directors, he or she receives an option grant
for 5,000 shares of the Company’s Class A Common
Stock pursuant to the Company’s Non-Employee Director Stock
Option Plan, as amended and restated. On February 14, 2003,
the Board of Directors voted to make a one-time option grant for
5,000 shares to all current non-management directors upon
their re-election to the Board.
All options to non-management Directors are granted under the
Company’s Non-Employee Director Stock Option Plan, as
amended and restated, pursuant to which options are granted at
the fair market value on the date of grant, are immediately
vested and will expire the earlier of ten (10) years or
three (3) years after the grantee ceases to be a director
of the Company. In October 2004, the Non-Employee Director Stock
Option Plan was amended and restated by action of the Board of
Directors and the sole Class B Stockholder, pursuant to
which the number of shares of Class A Common Stock
available for issuance under the Plan was increased from
200,000 shares to 350,000 shares.
The following table sets forth certain information concerning
the compensation of all Directors who are not named executive
officers of the Company for the Company’s fiscal year ended
December 30, 2006:
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The Nominating/Governance Committee employs a variety of methods
for identifying and evaluating nominees for director. The
Committee assesses and reviews with the full Board at least
annually the skills and characteristics that should be reflected
in the composition of the Board as a whole. The review includes
an examination of the extent to which the requisite skills and
characteristics are reflected in the then current Board members
and seeks to identify any particular qualifications that should
be sought in new directors for the purpose of augmenting the
skills and experience represented on the Board. The assessment
takes into account issues of experience, judgment, age and
diversity in aspects of business relevant to the Company’s
affairs, all in the context of the perceived needs of the Board
at that time. Candidates may come to the attention of the
Committee through a number of sources, including current Board
members, professional search firms, shareholders or other
persons. Candidates are evaluated at regular or special meetings
of the Nominating/Governance Committee and may be considered at
any point during the year.
The policy of the Nominating/Governance Committee is to consider
properly submitted shareholder nominations for candidates for
membership on the Board as described above under
“Identifying and Evaluating Nominees for the Board
Directors.” The same process is used for evaluating a
director candidate submitted by a shareholder as is used in the
case of any other potential nominee. Any shareholder nominations
proposed for consideration by the Nominating/Governance
Committee should include the nominee’s name and
qualifications for Board membership and should be addressed to:
Chair, Nominating/Governance Committee
The Boston Beer Company, Inc. One Design Center Place, Suite 850 Boston, MA 02210
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If the Company receives a communication from a shareholder
nominating a candidate that is not submitted as described above,
it will forward such communication to the Chairman of the
Nominating/Governance Committee.
Stockholders and other interested parties may communicate with
the Board of Directors or any individual director by submitting
an email to the Company’s Board at
bod@bostonbeer.com. All directors have access to
this email address. Communications that are intended
specifically for non-management directors should be sent to the
email address above to the attention of the Chairman of the
Nominating/Governance Committee.
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 April 2, 2007 by:
The information provided in the table is based on the
Company’s records, information filed with the SEC and
information provided to the Company, except where otherwise
noted.
Beneficial ownership is determined under the rules of the SEC
and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under those rules, beneficial
ownership includes any shares as to which the individual has the
sole or shared voting power or investment power and also any
shares that the individual has the right to acquire under
certain circumstances. Unless otherwise indicated, each person
named below held sole voting and investment power over the
shares listed below. All shares are Class A Common Stock,
except for shares of Class B Common Stock held by C. James
Koch.
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COMPENSATION
DISCUSSION AND ANALYSIS AND
REPORT OF THE COMPENSATION COMMITTEE(1)
Role
and Composition of the Compensation Committee
The Compensation Committee discharges the Board’s
responsibilities relating to compensation of the Company’s
officers and directors, with overall responsibility for
evaluating and approving compensation programs and policies of
the Company relating to officers and directors, as well as the
Company’s Employee Equity Incentive Plan which applies to
all employees of the Company. This includes reviewing the
competitiveness of executive
(1) The
material in this report 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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compensation programs, evaluating the performance of the
Company’s executive officers, and approving their annual
compensation and equity awards. The Committee assists the Board
in establishing the annual goals for the Chairman and the Chief
Executive Officer (“CEO”) and, after considering the
result of the performance of the Chairman and the CEO,
recommends their compensation to the other independent Board
members for approval. The specific authority and
responsibilities of the Compensation Committee are set forth in
the Compensation Committee Charter, a copy of which may be found
on the Company’s web site, www.bostonbeer.com.
The Compensation Committee is comprised of three
(3) members, each of whom meets the independence
requirements established by the New York Stock Exchange. The
Committee met three (3) times in 2006, with all members
present and acting throughout, except that one Committee member
was not able to attend the final portion of one meeting that was
adjourned and reconvened on a subsequent date. The Chairman and
CEO attended each of the meetings, but recused themselves when
the matters of their performance evaluation and compensation
were discussed. In November 2006, the Committee amended its
charter to add to its responsibilities the review and discussion
with management of the Company’s Compensation Discussion
and Analysis for recommendation to the Board.
The Committee has the authority to retain outside advisors to
assist it in carrying out its duties and responsibilities. In
late 2004, the Committee engaged the Pearl Meyer &
Partners, a nationally-recognized consulting firm specializing
in executive compensation, to provide it with competitive
benchmarking for executive compensation and to assist the
Committee in developing a long-term incentive strategy. Pearl
Meyer & Partners was directly accountable to the
Committee and does not provide any other services for the
Company.
Compensation
Philosophy and Practice
The Company operates in the highly competitive alcoholic
beverages industry. The key objectives of the Company’s
executive compensation programs are to attract, motivate and
retain executives who drive Boston Beer’s success. The
Company achieves these objectives through a compensation
philosophy that provides employees with a distinctive overall
compensation package under which performers have the opportunity
to earn competitive compensation over the long term through a
combination of base salary and cash and equity awards based on
performance. These programs are designed to (i) provide
executives with competitive cash and stock compensation with a
significant portion of total compensation at risk tied to
individual performance and Company performance, as well as the
creation of shareholder value; (ii) provide higher
compensation to high-value contributors and high performers in
the most critical areas of the Company’s business; and
(iii) encourage executives to act as owners with an equity
stake in the Company.
Components
of Executive Compensation
Compensation of executives at Boston Beer is substantially
weighted towards performance-based compensation. Salary
generally constitutes 40% to 60% of the Company’s executive
officers’ total compensation, with the remainder being
bonuses and equity compensation, both of which are typically
performance-based. For executives and other senior managers of
the Company, the proportion of compensation provided by equity
and the proportion of total compensation at risk increases with
the level of responsibility and ability to impact the value of
the business. In 2006, of the total compensation paid to the
Company’s executive officers other than the CEO and
Chairman, salary constituted 48% to 62%, bonuses (based on 2005
performance) constituted 10% to 21%, and equity compensation,
all of which was through performance-based stock options,
constituted 17% to 37%.
Base Salary. Base salaries are
determined based on a variety of factors, including the
executive’s scope of responsibilities, tenure and a
comparison of salaries paid to peers within the Company and to
those with similar roles at other companies. Base salaries are
set at levels that allow the Company to attract and retain
superior managers that will enable the Company to deliver on its
business goals. Base salaries are reviewed annually and may be
adjusted after considering the above factors.
The CEO makes recommendations to the Compensation Committee for
base salaries for each executive officer, excluding the Chairman
and the CEO. When setting the base salaries of these executive
officers, the Committee, while considering the recommendations
of the CEO, makes the final determination based on the factors
listed above and the executive officer’s performance during
the previous year.
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Bonus. Executives have the opportunity
to earn a bonus based on a percentage of their base salary.
Criteria for these executive bonuses are determined based on a
combination of qualitative and quantitative measures, the
details of which are established each year for each executive as
performance goals. These goals will vary for each executive
based on
his/her
responsibilities and role within the Company and may include
financial or strategic measures, including, among others, sales,
profitability, brand health, quality, cost reductions, customer
satisfaction and other strategic initiatives. The goals are
intended to require performance beyond the expected which
results in matching or exceeding the Company’s plan.
Individual bonus awards reflect the individual’s
performance compared to
his/her
performance goals for the year, as well as the overall
performance of the Company. In 2006, between 30% and 40% of the
bonus potential for executive officers other than the CEO and
the Chairman was based on the achievement of the Company-wide
goals and between 60% and 70% of their bonus potential was based
on the achievement of goals specifically set for each officer.
The weighting remains the same in 2007. In 2006, bonuses for the
Company’s executive officers other than the CEO and the
Chairman ranged from 19% to 52% of base salary and the bonus
potential for performance against 2007 goals for these officers
ranges from 30% to 50% of base salary.
The CEO makes recommendations to the Committee for the
Company-wide performance goals and the bonus goals and weighting
for each executive officer, including those of the CEO and the
Chairman. The CEO also provides the Committee with his
assessment of the performance of each executive against
his/her
bonus goals and proposed bonus payout. When determining the
bonus structure and goals and the bonus payout for executive
officers, the Committee, while considering the recommendations
of the CEO, makes the final determination based on the factors
listed above and the executive officer’s performance, and
that of the department which
he/she led
during the year relative to the performance-based goals. The
determination of the bonus earned is generally made within the
first three months after the end of the fiscal year, allowing
sufficient time to assess the achievement of the bonus goals. On
occasion, additional bonuses in excess of those calculated to
have been earned have been given by the Compensation Committee
in recognition of exceptional performance.
Equity
Compensation.
Discretionary Stock Options. Under the
Company’s Employee Equity Incentive Plan (the
“EEIP”), employees are eligible to receive stock
option grants. While generally granted on an annual basis, all
option grants are discretionary and may be granted by the Board,
upon the recommendation of the Committee, at any time. Most of
the options granted by the Company vest over a
5-year
period, at the rate of 20% each year, and have a term of
10 years. Recently, options have been granted only to
executive officers and other senior managers of the Company and
vesting has been contingent on the Company achieving certain
performance criteria. That is, the number of shares as to which
the option shall become exercisable in any year, if any, is
dependent upon the Company’s performance as measured
against a benchmark as determined by the Company’s Board of
Directors. The performance-based options provide that 50% or all
of the shares that would have vested had the performance
criteria been met, would lapse if such criteria is not met. Each
year, the conditions for vesting are determined by the Board of
Directors for the performance-based options that are granted in
that year. The Committee believes that stock options are an
effective way to reward executives and senior managers, as they
provide significant equity compensation if the value of the
Company increases; and the performance-based vesting is intended
to provide such compensation only if the Company’s
performance exceeds benchmarks.
In October of each year, the CEO makes preliminary
recommendations to the Committee for stock option grants to each
of the other executive officers and senior managers, as well as
the Company’s performance criteria which will determine
vesting, and his assessment of the executive’s expected
future contributions to the Company and past performance. Then,
in December, the Committee makes its recommendation to the Board
of Directors, which makes the final determination of all
discretionary stock option grants. When determining the size of
the stock option grant and vesting criteria for executive
officers, the Committee, while considering the recommendations
of the CEO, makes its determination based on the factors listed
above. Generally, all grants are effective January 1 of the
following year and are priced at fair market value as of
January 1. In the years
1999-2003,
some options granted to certain executive officers where priced
at a premium to fair market value. Although rare, under certain
circumstances, such as the hiring of a new executive officer, as
a part of a performance review, a promotion or making a mid-year
compensation adjustment, options may be granted at other times
during the year
and/or with
different vesting and performance criteria.
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Restricted Stock Awards. In December 2005, the
Board of Directors, acting on the recommendation of the
Compensation Committee, and the sole Class B Stockholder
amended the EEIP to provide for the issuance of restricted stock
to eligible employees. As with discretionary options, restricted
stock awards are generally granted on an annual basis on
January 1st,
with the first awards having been made on January 1, 2006.
These shares of restricted stock vest over a
5-year
period, at the rate of 20% a year. Vesting is generally not tied
to any performance criteria, although on January 1, 2007
two senior managers of the Company were awarded restricted
stock with vesting dependent upon certain performance criteria.
Restricted stock awards are generally granted to senior managers
and key employees of the Company. This form of equity
compensation is used because the Company believes that these
employees prefer restricted stock to an equivalent option,
because restricted stock has value even if the share price
decreases after the date of the award, and, therefore, the
effectiveness of its compensation program is maximized. The
Company currently does not grant restricted stock awards to its
most senior executives (approximately six individuals, including
each of the named executive officers), as the Company currently
believes their equity compensation should be tied to the
performance of the Company through stock options as described
above. In January 2007, however, the Company did award
10,000 shares of restricted stock, the vesting of which is
not performance-based, having a value at the time of $350,000,
to a new executive officer as part of the total compensation
package to entice him to join the Company.
Each year, the CEO makes recommendations to the Committee for
restricted stock awards to senior managers and key employees,
along with his assessment of the employee’s expected future
contributions to the Company and past performance. When
determining the size of the restricted stock awards, the
Committee, while considering the recommendations of the CEO,
makes its determination based on the factors listed above. The
Committee then makes its recommendation to the Board of
Directors which makes the final determination of all restricted
stock awards.
Investment Shares. Also under the EEIP, all
employees who have been employed by the Company for at least one
year may purchase such number of shares of the Company’s
Class A Common Stock as have a value, as determined
pursuant to the EEIP, no greater than 10% of their annual base
salary and bonus received in the immediately preceding year, up
to a maximum investment of $17,500. After two full years of
service, Investment Shares may be purchased at a discount. The
amount of the discount is tied to years of service and the
maximum discount is 40%. In December 2005, the Committee
evaluated the participation in this Investment Share program by
the CEO and Chairman and concluded that they were receiving
adequate equity compensation opportunities through other EEIP
programs. Therefore, upon the recommendation of the Compensation
Committee, the Board of Directors adopted a policy precluding
the Chairman and the CEO from further participation in the
Investment Share program, effective January 1, 2006. Other
executive officers continue to be able to participate in the
program. Investment Shares vest at the rate of 20% per year
over the
5-year
period commencing on the date of purchase, contingent on
continued employment with the Company.
Executive
Benefits
In 2006, Boston Beer’s executives were eligible for the
same level and offering of benefits as were made available to
other employees, including the Company’s 401(k) plan and
welfare benefit programs. Except for access by the CEO to a
parking space included in the Company’s lease of its former
office space, which lease expired in October 2006, the Company
provides no additional benefits to its executives.
How
Executive Pay Levels are Determined
The Compensation Committee considers a number of factors in
determining executive compensation, including, but not limited
to, individual performance, responsibility level, role within
the Company, tenure and a comparison of salaries paid to peers
within the Company and to those with similar roles at other
companies. As noted above, in late 2004, the Committee retained
Pearl Meyer & Partners to perform a benchmarking
compensation study of a peer group in the 11 companies in
the food, beverage and consumer products industry with similar
revenue and market cap. The companies in the peer group included
Elizabeth Arden, Inc., Green Mountain Coffee Roasters,
Inc., Guess, Inc., Kenneth Cole Products, Inc., Movado Group,
Inc., Oakley, Inc., Peet’s Coffee & Tea, Inc.,
Pyramid Breweries Inc., Redhook Ale Brewery, Inc., The
Chalone Wine Group, Ltd., and Tootsie Roll Industries, Inc. In
addition, Pearl Meyer & Partners presented to the
Committee a report on the Company’s long-term incentive
strategy, with its views regarding the use and structure of
equity compensation.
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While the Committee has utilized the knowledge gained through
this study in evaluating executive compensation, it has not made
significant changes to its process for or criteria used in
determining executive compensation.
The Committee uses tally sheets that ascribe dollar amounts to
the components of executive officer compensation, including
salary, bonus and equity compensation. It also tabulates gains
made by the executive officers through the exercise of options,
unrealized gains in vested options, and potential gains from
unvested options at current market prices.
How
Boston Beer’s Use of Equity Compensation is
Determined
As described above, based upon an overall review of equity
compensation in the prior year through the Pearl
Meyer & Partners benchmarking study and a survey of
executive officers and senior managers regarding their
preference in type of equity compensation, the Company’s
compensation and retention strategy in 2006 included the use of
stock options and restricted stock awards, as well as the
continued availability of Investment Shares for purchase by all
eligible employees (except the CEO and Chairman). The level of
usage of discretionary options and restricted stock awards was
determined based on factors such as individual performance and
contribution to the Company’s performance, the desired mix
of cash and equity pay for different individuals, and, to a
limited extent, the compensation levels at comparable companies
relative to Boston Beer’s target compensation levels. Each
year, the Compensation Committee, taking into consideration the
recommendations of the CEO, determine the appropriate usage,
balancing these factors against the projected needs of the
business as well as financial considerations, including the
projected impact on shareholder dilution. The Company emphasizes
differentiation in executive compensation, with greatest
emphasis on performers and individuals who significantly impact,
or who have the potential to significantly impact, the
Company’s business.
Executive
Compensation Recovery Policy
The Committee has adopted an executive compensation recovery
policy which applies to executive officers and the corporate
controller. Under this policy, the Company may recover incentive
income that was based on achievement of quantitative performance
targets if an executive officer engaged in intentional
misconduct that resulted in an increase in his or her incentive
income. Incentive income includes income related to annual
bonuses, discretionary options or restricted stock awards.
Compensation
of the Chief Executive Officer
The Committee reviewed and approved the compensation paid to
Martin F. Roper as the Company’s CEO during 2006. In
February 2006, the Committee set Mr. Roper’s annual
base salary for 2006 at $606,700 and approved a bonus against
his 2005 performance objectives of $225,000, inclusive of a
discretionary bonus of $45,000. In December 2005, the Committee
established bonus opportunities for him for 2006 equal to 80% of
his 2006 salary, with an incremental 64% tied to achieving
certain goals that would require substantial out-performance of
the Company’s financial plan for the year.
Mr. Roper’s objectives for 2006 as a percentage of his
bonus opportunities, including the out-performance goals, were
(i) depletions growth — 52.8%,
(ii) increased gross profit — 16.7%,
(iii) cost reductions and other strategic
initiatives — 13.8%, and (iv) stock
price — 16.7%. In February 2007, the Committee
approved a bonus of $798,600, based on its assessment of
Mr. Roper’s achievement against those objectives and
the overall performance of the Company in 2006.
In December 2006, the Committee established bonus opportunities
for Mr. Roper in 2007 equal to 80% of his 2007 salary, with
an incremental 64% tied to achieving certain goals that would
require substantial out-performance of the Company’s
financial plan for the year. The objectives for 2007 as a
percentage of Mr. Roper’s bonus opportunities,
including the out-performance goals, are (i) depletions
growth — 40%, (ii) increased gross profit and
margin — 20%, (iii) long-term security of
supply — 20%, (iv) cost reductions and other
strategic initiatives — 10%, and (v) upgrading
certain organizational capabilities — 10%. In February
2007, the Compensation Committee recommended an annual base
salary for 2007 of $635,000 for Mr. Roper.
The Committee believes that Mr. Roper’s compensation
is appropriate based on his responsibilities, performance level
and contribution to the Company. The Pearl Meyer &
Associates benchmarking study of executive compensation
presented to the Compensation Committee in February 2005 placed
Mr. Roper’s total cash
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compensation near the median of the peer group and his long-term
equity compensation (prior to a grant of an option for
300,000 shares of the Company’s Class A Common
Stock, with vesting contingent on the Company
out-performing
plan, in June 2005) substantially below the median of the
peer group.
The Summary Compensation Table sets forth all compensation
received by Mr. Roper during fiscal year 2006. There is no
Company-sponsored retirement program for Mr. Roper other
than the Company’s 401(k) plan, and he receives no benefits
or perquisites from the Company other than the general Company
benefits described above, except that, until October 2006,
Mr. Roper did have the benefit of a parking space with a
value of $385 per month. Mr. Roper does not have a
change of control arrangement other than an acceleration of the
vesting of the options granted under the EEIP nor does he have a
severance arrangement with the Company.
Compensation
of
Chairman.
The Compensation Committee also reviewed and approved the
compensation paid to C. James Koch, the Chairman and a full-time
employee of the Company, in 2006. In February 2006, the
Committee set Mr. Koch’s annual base salary for 2006
at $250,000. In addition, in February 2006, the Committee
approved a bonus of $250,000, based on its assessment of the
overall performance of the Company in 2005, and, upon the
recommendation of the Committee, the Board granted to
Mr. Koch an option to acquire 15,000 shares of the
Company’s Class A Common Stock under the EEIP, with
vesting contingent on the Company’s performance as measured
against a benchmark determined by the independent members of the
Company’s Board of Directors. In December 2005, the
Committee established bonus opportunities for Mr. Koch in
2006 equal to 100% of his 2006 salary. The objectives for 2006
as a percentage of Mr. Koch’s bonus opportunities are
(i) depletions growth — 30%, (ii) relative
depletions growth — 30%, (iii) gross
profit — 15%, and (iv) stock price —
25%. In December 2006, upon the recommendation of the Committee,
the Board of Directors granted an option to Mr. Koch for
12,000 shares of the Company’s Class A Common
Stock, with vesting contingent on the Company’s performance
as measured against a benchmark determined by the independent
members of the Company’s Board of Directors. In February
2007, the Committee approved a bonus for 2006 of $250,000, based
on its assessment of Mr. Koch’s achievement against
those objectives and the overall performance of the Company in
2006.
In December 2006, the Compensation Committee established a bonus
opportunity for Mr. Koch in 2007 equal to 100% of his 2007
salary. The objectives for 2007 as a percentage of
Mr. Koch’s bonus opportunities are (i) depletions
growth — 30%, (ii) relative depletions
growth — 30%, (iii) gross profit and
margin — 15%, and (iv) stock price —
25%.
The Committee believes that Mr. Koch’s compensation is
significantly lower than appropriate based on his
responsibilities, performance level and contribution to the
Company. However, Mr. Koch declined to accept a base salary
of $450,000 for 2006 that was considered by the Committee to be
competitive, in part because of his significant ownership
interest in the Company. In February 2007, the Committee
recommended an annual base salary for 2007 of $260,000 for
Mr. Koch.
The Summary Compensation Table sets forth all compensation
received by Mr. Koch during fiscal year 2006. There is no
Company-sponsored retirement program for Mr. Koch other
than the Company’s 401(k) plan, and he receives no benefits
or perquisites from the Company other than the general Company
benefits described above. Mr. Koch does not have a change
of control arrangement other than an acceleration of the vesting
of the options granted under the EEIP nor does he have a
severance arrangement with the Company.
Tax
Limitation.
Section 162(m) of the U.S. Internal Revenue Code
limits the tax deductibility by a corporation of compensation in
excess of $1,000,000 paid to the Chief Executive Officer and any
other of its named executive officers. However, compensation
which qualifies as “performance-based” is excluded
from the $1,000,000 limit if, among other requirements, the
compensation is payable only upon attainment of pre-established,
objective performance goals under a plan approved by
stockholders. Mr. Roper’s bonuses and stock option
grants have been approved by the sole holder of the
Company’s Class B Common Stock, who acts with sole
authority on such matters, in accordance with the requirements
of Section 162(m).
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The Compensation Committee does not presently expect that total
cash compensation to any individual executive that is not
performance-based will exceed $1,000,000. The Compensation
Committee will continue to monitor the compensation levels
potentially payable under the Company’s compensation
programs, but intends to retain the flexibility necessary to
provide total compensation in line with competitive practice,
the Company’s compensation philosophy and the
Company’s best interests. The Company has not adopted a
policy that all executive compensation be fully deductible.
Report
of the Compensation Committee
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K,
promulgated under the Securities Act of 1933, as amended. Based
on such review and discussions, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in the Company’s Annual
Report on
Form 10-K
and the Company’s Proxy Statement on Schedule 14A.
The Compensation
Committee:
David A. Burwick, Chair Pearson C. Cummin, III Jay Margolis
During the fiscal year ended December 30, 2006, the members
of the Compensation Committee were David A. Burwick (Chair),
Pearson C. Cummin, III and Jay Margolis. No member of the
Compensation Committee was an officer or employee of the Company
or any of its subsidiaries during fiscal year 2006.
Information 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, 57, currently serves as Chairman and Clerk
of the Company. Mr. Koch founded the Company in 1984 and
was the Chief Executive Officer from that time until January
2001.
Martin F. Roper, 44, 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.
William F. Urich, 50, was appointed Chief Financial Officer and
Treasurer of the Company in September 2003. Prior to joining the
Company, Mr. Urich had been the Chief Financial Officer of
Acirca, Inc., a producer of organic foods and beverages, from
2001 to 2003. From 1998 to 2000, Mr. Urich served as Vice
President Finance and Business Development for United
Distillers & Vintners, a subsidiary of Diageo, PLC, and
from 1995 to 1998 as its Vice President Finance and Treasurer.
Jeffrey D. White, 49, was appointed Chief Operating Officer of
the Company in February 2001, after serving as Vice President of
Operations since April 1997. Mr. White joined the Company
in 1989, and 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 will be
leaving the Company at the end of April 2007.
Robert H. Hall, 46, 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.
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Thomas W. Lance, 53, joined the Company as Vice President of
Operations in January 2007. Prior to joining the Company,
Mr. Lance had served as Executive Vice President of
Ken’s Foods, Inc., a food product manufacturer located in
Marlborough, MA, from January 2001 to January 2007. Prior to
joining Ken’s Foods, Mr. Lance held a number of
positions in operations with Bausch and Lomb, a manufacturer of
vision care products located in Rochester, NY.
John C. Geist, 47, was appointed Vice President of Sales of the
Company in February 2007, after serving as National Sales
Manager of the Company since December 1998. Mr. Geist came
to the Company in 1997 from a large alcohol beverage distributor
where he had been a sales manager.
The following table sets forth all compensation awarded to,
earned by or paid to the Company’s Chief Executive Officer,
the Chief Financial Officer and the Company’s three
(3) most highly compensated executive officers, other than
the Chief Executive Officer and the Chief Financial Officer,
whose total annual compensation exceeded $100,000 for all
services rendered in all capacities to the Company for the
Company’s most recent fiscal year.
SUMMARY
COMPENSATION TABLE OF EXECUTIVE OFFICERS
FOR FISCAL YEAR ENDED DECEMBER 30, 2006
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The Company has not paid or provided any perquisites to any of
its officers, either individually or in the aggregate, in excess
of $10,000. Not included in the above Summary Compensation Table
are shares of the Company’s Class A Common Stock
purchased by such officers at a discount under the
Company’s EEIP (the “Investment Shares”). Under
the Investment Share program, all employees who have been with
the Company for at least one year have the opportunity to
purchase Investment Shares, and after two years of employment,
Investment Shares may be purchased at a discount. Eligible
employees may purchase Investment Shares in January of each year
and may pay for such stock through payroll deduction throughout
the year. The Investment Shares vest at the rate of 20% per
year commencing on the following
January 1st.
As noted in the Compensation Discussion and Analysis, in
December 2005, the Board of Directors, on the recommendation of
the Compensation Committee, determined that the Chairman and the
Chief Executive Officer of the Company would no longer be
eligible to purchase Investment Shares, effective
January 1, 2006. Other executive officers are still
eligible to participate in the Investment Share plan. At
December 30, 2006, only Messrs. Koch, Roper and White
held unvested ISP Shares.
The following table sets forth certain information concerning
grants of stock options of the Company’s Class A
Common Stock made during the year ended December 30, 2006
to the executive officers named below:
GRANTS OF
PLAN-BASED AWARDS TO EXECUTIVE OFFICERS
IN FISCAL YEAR ENDED DECEMBER 30, 2006
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The following sets forth information regarding outstanding
equity awards granted to the named executive officers, as well
as option exercises and stock vested, at December 30, 2006.
Those performance-based options that had not either vested or
lapsed as of December 30, 2006 are considered unexercised
and unearned.
OUTSTANDING
EQUITY AWARDS
TO EXECUTIVE OFFICERS AT DECEMBER 30, 2006
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18
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The following sets forth, as of December 30, 2006,
information regarding options exercised by the named executive
officers during the fiscal year ended December 30, 2006, as
well as information regarding the value realized on such
exercise. None of the named executive officers have been granted
any stock awards.
A Stockholder Rights Agreement between the Company and initial
stockholders of the Company provides that, so long as C. James
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. Further, all employees of the Company, including
each of the named executive officers, are required to enter into
a non-competition agreement with the Company which prohibits the
employee from accepting employment with a competitor for a
period of one year after leaving the Company. Nevertheless, all
employees of the Company are employed “at-will.”
All options granted under the Employee Equity Incentive Plan,
including those granted to the named executive officers, with
the exception of the option granted to Mr. Roper on
June 28, 2005, 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.
The option granted to Mr. Roper on June 28, 2005
provides for partial accelerated vesting 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 or in the event of
Mr. Roper’s death or total disability or termination
of employment by the Company not for cause prior to May 1,
2008.
The Audit Committee of the Board of Directors reviews the
Company’s auditing, accounting, financial reporting and
internal control functions and selects and engages the
Company’s independent registered public accounting firm. In
discharging its duties, the Audit Committee reviews and approves
the scope of the annual audit and non-audit services to be
performed by the independent registered public accounting firm
and the independent registered public accounting firm’s
audit and non-audit fees. The Audit Committee also reviews the
audited financial statements to be included in the Annual Report
on
Form 10-K
for filing with the Securities and Exchange Commission
(“SEC”); meets independently with the company’s
manager of internal audit, independent registered public
accounting firm and senior management; and reviews the general
scope of the company’s accounting, financial reporting,
annual audit and internal audit programs and matters relating to
internal control systems, as well as the results of the annual
audit and interim financial statements, and auditor independence
issues. The Audit
(2) 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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Committee acts pursuant to an Audit Committee Charter, a copy of
which is available on the Company’s website at
www.bostonbeer.com.
The Audit Committee of the Board of Directors is composed of
three directors and each of them qualifies as independent under
the current listing standards of the New York Stock Exchange and
applicable SEC rules and regulations. In addition, the Board of
Directors has determined that each member of the Audit Committee
qualifies as an “audit committee financial expert” in
accordance with applicable SEC rules based on their relevant
experience. Mr. Cummin served for many years as a partner
in a venture capital firm where he had extensive experience in
assessing the performance of companies and evaluating their
financial statements, and served for several years on an audit
committee of another publicly-held company. Mr. Margolis
joined the Audit Committee in May 2006 and has many years
experience in senior management positions where he supervised
the primary financial officers. Currently the CEO/President of a
national retail company, Mr. Margolis had served as
President and Chief Operating Officer of an international
manufacturing and retail company. Mr. Valette, who joined
the Audit Committee in August 2004, worked as a securities
analyst for several years and has served as CEO of two companies
where he supervised the primary financial officers. He currently
serves as a member of the audit committees of two other
publicly-held companies, one of which as its Chairman.
The Audit Committee’s policy is to pre-approve all audit
and permissible non-audit services provided by the
Company’s independent registered public accounting firm.
The Audit Committee pre-approved all such audit and non-audit
services provided by the Company’s independent registered
public accounting firm, Ernst & Young LLP, during 2006.
Such services included for 2006 audit services, audit-related
services, tax services and other services as follows:
The Audit Committee has reviewed and discussed the
Company’s audited financial statements with management and
the Company’s independent registered public accounting
firm, Ernst & Young LLP, with respect to the
Company’s quarterly results and during the first quarter of
2007 with respect to the Company’s audited financial
statements for the fiscal year ended December 30, 2006. In
addition, throughout the year, the Audit Committee met with
Ernst & Young LLP regarding the Company’s internal
controls and compliance with Section 404 of the
Sarbanes-Oxley Act of 2002. The Audit Committee has discussed
with Ernst & Young LLP the matters required to be
discussed by Statement of Auditing Standards No. 61,
Communication with Audit Committees, as amended by SAS
No. 90, “Audit Committee Communications,”
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
received the written disclosures and the letter from
Ernst & Young LLP required by Independence Standards
Board Standard No. 1 relating to the accountant’s
independence from the Company, has discussed with such
accountant its independence from the Company, and has considered
the compatibility of non-audit services with the
accountant’s independence.
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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, 2006
Audit Committee:
Pearson C.
Cummin, III, Chair
Jay Margolis
Jean-Michel Valette
On March 14, 2005, the Audit Committee of the Board of
Directors terminated the engagement of Deloitte &
Touche LLP (“Deloitte”) as the Company’s
independent public accountants and engaged the firm of
Ernst & Young LLP (“Ernst & Young”)
as its independent auditors to serve as its independent public
accountants to audit the Company’s financial statements for
the 2005 fiscal year. Ernst & Young were engaged as the
Company’s independent auditors to serve as its independent
public accountants to audit the Company’s financial
statements for the 2006 fiscal year.
Neither the report of Ernst & Young on the
Company’s financial statements for 2005 nor on the
Company’s financial statements for 2006 contained an
adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or
accounting principles.
During the Company’s two most recent fiscal years, there
were no disagreements with Ernst & Young on any matter
of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which, if not
resolved to such accountants’ satisfaction, would have
caused such accountants to make reference to the subject matter
of the disagreement in connection with its reports; and there
were no reportable events as defined in Item 304(a)(1)(v)
of
Regulation S-K
promulgated by the Securities and Exchange Commission.
During the Company’s two most recent fiscal years and
through the date of engagement, the Company did not consult
Ernst & Young with respect to the application of
accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that
Ernst & Young might render on the Company’s
financial statements.
Representatives of Ernst & Young are expected to be
present at the annual meeting, will have the opportunity to make
a statement if they desire to do so and are expected to be
available to respond to appropriate questions.
Section 16(a) of the Securities Exchange Act of 1934
requires the Company’s officers and Directors and persons
owning more than ten percent (10%) of the outstanding
Class A Common Stock of the Company to file reports of
ownership and changes in ownership with the SEC. Officers,
Directors and greater than ten percent (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.
The Company believes that during the fiscal year ended
December 30, 2006, all Section 16(a) filing
requirements applicable to its officers, directors, and
beneficial owners of greater than ten percent (10%) of its
Common Stock were complied with, except that through
inadvertence Pearson C. Cummin, III reported late on a
Form 4 the sale of 5,000 shares of the Company’s
Class A Common Stock. In making this statement, the Company
has relied upon examination of the copies of Forms 3, 4
and 5, and amendments thereto, provided to the Company and
the written representations of its directors, executive officers
and 10% stockholders.
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Stockholders interested in submitting a proposal for inclusion
in the proxy materials for the Annual Meeting of Stockholders to
be held in 2008 may do so by following the procedures set forth
in
Rule 14a-8
of the Securities Exchange Act of 1934, as amended. To be
eligible for inclusion, stockholder proposals must be received
at the Company’s principal executive offices in Boston,
Massachusetts on or before December 20, 2007.
If a stockholder wishes to present a proposal at the 2008 Annual
Meeting of Stockholders but not have it included in the
Company’s proxy materials for that meeting, the proposal
must be received by the Company no later than March 4, 2008
and must relate to subject matter which could not be excluded
from a proxy statement under any rule promulgated by the
Securities and Exchange Commission.
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.
A COPY OF AN ANNUAL REPORT ON
FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO,
REQUIRED TO BE FILED WITH THE SEC FOR THE COMPANY’S MOST
RECENT FISCAL YEAR, MAY BE FOUND ON THE COMPANY’S WEBSITE,
www.bostonbeer.com. IN ADDITION, THE COMPANY WILL
PROVIDE EACH BENEFICIAL OWNER OF ITS SECURITIES WITH A COPY OF
THE ANNUAL REPORT WITHOUT CHARGE, UPON RECEIPT OF A WRITTEN
REQUEST FROM SUCH PERSON. SUCH REQUEST SHOULD BE SENT TO THE
INVESTOR RELATIONS DEPARTMENT, THE BOSTON BEER COMPANY, INC.,
ONE DESIGN CENTER PLACE, SUITE 850, BOSTON, MA 02210.
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 18, 2007
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WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING, Internet and telephone voting is available through 11:59 PM Eastern Time Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
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THE BOSTON BEER COMPANY, INC. PROXY – Annual Meeting of Stockholders – May 31, 2007 CLASS A COMMON STOCK The undersigned, a stockholder of THE BOSTON BEER COMPANY, INC., does hereby appoint C. James Koch and Frederick H. Grein, Jr., or either of them, acting singly, the undersigned’s proxy, with full power of substitution, to appear and vote at the Annual Meeting of Stockholders, to be held on Thursday, May 31, 2007 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 matters which may properly come before the Meeting. (Continued and to be Completed on Reverse Side)
THE BOSTON BEER COMPANY, INC. 2007 ANNUAL MEETING Thursday, May 31, 2007
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