Capital Stock. Each share of Class A common stock and Class B common stock participates equally in dividends. The Class B stock has limited voting rights and as a class has the right to elect 30% of the Board of Directors; the Class A stock has unlimited voting rights, including the right to elect a majority of the Board of Directors.

During 2020, 2019, and 2018 the Company purchased a total of 406,112, 3,392, and 199,023 shares, respectively, of its Class B common stock at a cost of approximately $161.8 million, $2.1 million, and $118.0 million, respectively. On September 10, 2020, the Board of Directors authorized the Company to purchase up to 500,000 shares of its Class B Common Stock. The Company did not announce a ceiling price or time limit for the purchases. No shares remained under the previous authorization. At December 31, 2020, the Company had remaining authorization from the Board of Directors to purchase up to 364,151 shares of Class B common stock.

Stock Awards. In 2012, the Company adopted an incentive compensation plan (the 2012 Plan), which, among other provisions, authorizes the awarding of Class B common stock to key employees in the form of stock awards, stock options and other awards involving the actual transfer of shares. All stock awards, stock options and other awards involving the actual transfer of shares issued subsequent to the adoption of this plan are covered under this incentive compensation plan. Stock awards made under the 2012 Plan are primarily subject to the general restriction that stock awarded to a participant will be forfeited and revert to Company ownership if the participant’s employment terminates before the end of a specified period of service to the Company. The number of Class B common shares authorized for issuance under the 2012 Plan is 772,588 shares. At December 31, 2020, there were 557,871 shares reserved for issuance under the 2012 incentive compensation plan. Of this number, 218,171 shares were subject to stock awards and stock options outstanding, and 339,700 shares were available for future awards.

For the share awards outstanding at December 31, 2020, the aforementioned restriction will lapse in 2021 for 12,575 shares and in 2023 for 14,665 shares. Also, early in 2021, the Company issued stock awards of 19,293 shares. Stock-based compensation costs resulting from Company stock awards were $4.1 million, $4.2 million and $4.4 million in 2020, 2019 and 2018, respectively.

As of December 31, 2020, there was $4.7 million of total unrecognized compensation expense related to these awards. That cost is expected to be recognized on a straight-line basis over a weighted average period of 1.1 years.

Stock Options. Stock options granted under the 2012 Plan cannot be less than the fair value on the grant date, generally vest over six years and have a maximum term of ten years. In 2020, a grant was issued that vests over six years.

Of the shares covered by options outstanding at the end of 2020, 100,804 are now exercisable; 18,626 will become exercisable in 2021; 14,500 will become exercisable in 2022; 14,502 will become exercisable in 2023; 14,167 will become exercisable in 2024; 14,166 will become exercisable in 2025; and 14,166 will become exercisable in 2026. For 2020, the Company recorded expense of $2.2 million related to stock options. For 2019 and 2018, the Company recorded expense of $2.0 million related to stock options each year. Information related to stock options outstanding and exercisable at December 31, 2020, is as follows:


	Options Outstanding				Options Exercisable
Range of Exercise Prices	Shares Outstanding at 12/31/2020	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price		Shares Exercisable at 12/31/2020	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price
$244	1,931	1.9	$	243.85	1,931	1.9	$	243.85
427	85,000	9.7	426.86		—	—	—


719	77,258	3.8	719.15		77,258	3.8	719.15
805–872	26,742	5.0	865.02		21,615	4.9	865.62

	190,931	6.6	604.65		100,804	4.0	741.45

At December 31, 2020, the intrinsic value for all options outstanding, exercisable and unvested was $9.6 million, $0.6 million and $9.0 million, respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The market value of the Company’s stock was $533.38 at December 31, 2020. At December 31, 2020, there were 90,127 unvested options related to this plan with an average exercise price of $451.64 and a weighted average remaining contractual term of 9.4 years. At December 31, 2019, there were 22,461 unvested options with an average exercise price of $780.81 and a weighted average remaining contractual term of 5.4 years.

As of December 31, 2020, total unrecognized stock-based compensation expense related to stock options was $8.1 million, which is expected to be recognized on a straight-line basis over a weighted average period of approximately 5.4 years. There were 77,258 options exercised during 2020. The total intrinsic value of options exercised during 2020 was $11.1 million; a tax benefit from these stock option exercises of $2.9 million was realized. There were 1,743 options exercised during 2019. The total intrinsic value of options exercised during 2019 was $0.6 million; a tax benefit from these stock option exercises of $0.2 million was realized. There were 588 options exercised during 2018. The total intrinsic value of options exercised during 2018 was $0.2 million; a tax benefit from these option exercises of $0.1 million was realized.

During 2020, the Company granted 85,000 options at an exercise price above the fair market value of its common stock at the date of grant. The weighted average grant-date fair value of options granted during 2020 was $93.79. No options were granted during 2019 or 2018.

The Company also maintains a stock option plan at Kaplan. Under the provisions of this plan, options are issued with an exercise price equal to the estimated fair value of Kaplan’s common stock, and options vest ratably over the number of years specified (generally four to five years) at the time of the grant. Upon exercise, an option holder may receive Kaplan shares or cash equal to the difference between the exercise price and the then fair value.

At December 31, 2020, a Kaplan senior manager holds 7,206 Kaplan restricted shares. The fair value of Kaplan’s common stock is determined by the Company’s compensation committee of the Board of Directors, and in January 2021, the committee set the fair value price at $1,247 per share. No options were awarded during 2020, 2019, or 2018; no options were exercised during 2020, 2019 or 2018; and no options were outstanding at December 31, 2020.

Kaplan recorded a stock compensation credit of $1.1 million and $1.3 million in 2020 and 2019, respectively. In 2018, Kaplan recorded stock compensation expense of $0.5 million. At December 31, 2020, the Company’s accrual balance related to the Kaplan restricted shares totaled $9.0 million. There were no payouts in 2020, 2019 or 2018.

Earnings Per Share. The Company’s unvested restricted stock awards contain nonforfeitable rights to dividends and, therefore, are considered participating securities for purposes of computing earnings per share pursuant to the two-class method. The diluted earnings per share computed under the two-class method is lower than the diluted earnings per share computed under the treasury stock method, resulting in the presentation of the lower amount in diluted earnings per share. The computation of earnings per share under the two-class method excludes the income attributable to the unvested restricted stock awards from the numerator and excludes the dilutive impact of those underlying shares from the denominator.


	Year Ended December 31
(in thousands, except per share amounts)	2020			2019			2018
Numerator:
Numerator for basic earnings per share:
Net income attributable to Graham Holdings Company common stockholders	$	300,365		$	327,855		$	271,206
Less: Dividends paid–common stock outstanding and unvested restricted shares	(29,970)			(29,553)			(28,617)
Undistributed earnings	270,395			298,302			242,589
Percent allocated to common stockholders	99.45		%	99.45		%	99.39		%
	268,917			296,665			241,115
Add: Dividends paid–common stock outstanding	29,812			29,387			28,423
Numerator for basic earnings per share	298,729			326,052			269,538
Add: Additional undistributed earnings due to dilutive stock options	4			13			10
Numerator for diluted earnings per share	$	298,733		$	326,065		$	269,548
Denominator:
Denominator for basic earnings per share:
Weighted average shares outstanding	5,124			5,285			5,333
Add: Effect of dilutive stock options	15			42			37
Denominator for diluted earnings per share	5,139			5,327			5,370
Graham Holdings Company Common Stockholders:
Basic earnings per share	$	58.30		$	61.70		$	50.55
Diluted earnings per share	$	58.13		$	61.21		$	50.20

The 2020 diluted earnings per share amount excludes the effects of 189,000 stock options outstanding, as their inclusion would have been antidilutive due to a market condition. The 2019 and 2018 diluted earnings per share amounts exclude the effects of 104,000 stock options outstanding, as their inclusion would have been antidilutive due to a market condition. The 2018 diluted earnings per share amounts also exclude the effects of 2,650 restricted stock awards, as their inclusion would have been antidilutive due to a performance condition.