IHOP 2009 Annual Report Download - page 141

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
17. Impairments and Closure Charges (Continued)
Impairment and closure charges in 2007 included the impairment of long lived assets for three
restaurants closed in 2007, and impairment losses on two restaurants in which the reacquisition values
exceeded the historical resale values. The decision to close or impair the restaurants in 2007 was a
result of a comprehensive analysis that examined restaurants not meeting minimum return on
investment thresholds and certain other operating performance criteria. The assets for these restaurants
were written down to their estimated fair value.
18. Stock-Based Incentive Plans
General Description
The Stock Incentive Plan (the ‘‘1991 Plan’’) was adopted in 1991 and amended and restated in
1998 to authorize the issuance of up to 3,760,000 shares of common stock pursuant to options,
restricted stock, and other long-term stock-based incentives to officers and key employees of the
Company. The 2001 Stock Incentive Plan (the ‘‘2001 Plan,’’ together with the 1991 Plan, the ‘‘Plans’’)
was adopted in 2001 and amended and restated in 2005 and 2008 to authorize the issuance of up to
4,200,000 shares of common stock. No option can be granted at an option price of less than the fair
market value at the date of grant as defined in both Plans. Exercisability of options is determined at, or
after, the date of grant by the administrator of both Plans. All options granted under both Plans
through December 31, 2009, become exercisable one-third after one year, two-thirds after two years
and 100% after three years or immediately upon a change in control of the Company, as defined in
both Plans.
The Stock Option Plan for Non-Employee Directors (the ‘‘Directors Plan’’) was adopted in 1994
and amended and restated in 1999 to authorize the issuance of up to 400,000 shares of common stock
pursuant to options to non-employee members of the Company’s Board of Directors. Options were to
be granted at an option price equal to 100% of the fair market value of the stock on the date of grant.
Options granted pursuant to the Directors Plan vest and became exercisable one-third after one year,
two-thirds after two years and 100% after three years or immediately upon a change in control of the
Company, as defined in the Directors Plan. Options for the purchase of shares were granted to each
non-employee Director under the Directors Plan as follows: (1) an option to purchase 15,000 shares on
February 23, 1995, or on the Director’s election to the Board of Directors if he or she was not a
Director on such date, and (2) an option to purchase 5,000 shares annually in conjunction with the
Company’s Annual Meeting of Stockholders for that year.
The 2005 Stock Incentive Plan for Non-Employee Directors (the ‘‘2005 Plan’’) was adopted in 2005
to authorize the issuance of up to 200,000 shares of common stock to non-employee members of the
Company’s Board of Directors. Awards may be made in common stock, in options to purchase common
stock, or in shares of common stock subject to certain restrictions (‘‘Restricted Stock’’), or any
combination thereof. The terms and conditions of awards granted are established by the Compensation
Committee of the Company’s Board of Directors, but become immediately vested upon a change in
control of the Company, as defined in the 2005 Plan. Options are to be granted at an option price not
less than 100% of the fair market value of the stock on the date of grant. The 2005 Plan provides for
an initial grant of Restricted Stock (‘‘Initial Grant’’). At the end of a specified performance period, the
number of shares in the Initial Grant will be increased or decreased, based on the percentage increase
or decrease in the fair market value of the Company’s common stock during the performance period.
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