Panera Bread 2006 Annual Report Download - page 60

Restricted stock of the Company under the LTIP is granted at no cost to participants. Participants are generally
entitled to cash dividends on restricted stock, although the Company does not currently pay a dividend, and has no current
plans to do so, and voting rights with respect to their respective shares. For awards of restricted stock to date under the
LTIP, restrictions limit the sale or transfer of these shares during a five year period whereby the restrictions lapse on 25%
of these shares after two years and thereafter 25% each year for the next three years, subject to continued employment
with the Company. In the event a participant is no longer employed by the Company, any unvested shares of restricted
stock held by that participant will be forfeited. Upon issuance of restricted stock under the LTIP, unearned compensation
equivalent to the market value at the date of grant is charged to stockholders’ equity and subsequently amortized to
expense over the five year restriction period. For the fiscal years ended December 26, 2006 and December 27, 2005,
restricted stock expense was $1.4 million and $0.3 million, respectively.
Under the deferred annual bonus match award portion of the LTIP, eligible participants receive an additional
50% of their annual bonus which is paid three years after the date of the original bonus. For the fiscal years ended
December 26, 2006 and December 27, 2005, compensation expense related to the deferred annual bonus match
award was $0.6 million and $0.3 million, respectively.
1992 Equity Incentive Plan
The Company adopted the 1992 Plan in May 1992. A total of 8,600,000 shares of Class A Common Stock were
authorized for issuance under the 1992 Plan as awards, which could have been in the form of stock options (both
qualified and non-qualified), stock appreciation rights, performance shares, restricted stock, or stock units, to
employees and consultants. As a result of stockholder approval of the 2006 Plan, effective as of May 25, 2006, the
Company will grant no further stock options, restricted stock or other awards under the 1992 Plan.
Formula Stock Option Plan for Independent Directors
The Company’s Board of Directors authorized the Formula Plan on January 27, 1994. The Formula Plan is
authorized for the issuance of a total of 300,000 shares and was adopted by stockholders on May 25, 1994. Each
option granted to the independent directors is fully vested at the grant date, and is exercisable, either in whole or in
part, for 6 years following the grant date. The plan expired in January 2004 and no further shares are available for
issuance under the Formula Plan. In January 2006, the Board of Directors authorized a new compensation
arrangement for independent directors that compensates directors at a fixed dollar amount, with payment consistent
with the LTIP and expected to be made through a combination of cash, stock options, and restricted stock.
2001 Employee, Director, and Consultant Stock Option Plan
The Company adopted the 2001 Plan in June 2001. A total of 3,000,000 shares of Class A Common Stock were
authorized for issuance under the 2001 Plan as awards, which could have been in the form of stock options, to
employees, directors, and consultants. As a result of stockholder approval of the 2006 Plan, effective as of May 25,
2006, the Company will grant no further stock options under the 2001 Plan.
Employee Stock Purchase Plan
The Company maintains an Employee Stock Purchase Plan (“ESPP”) which was authorized to issue
700,000 shares of Class A Common Stock. The ESPP gives eligible employees the option to purchase Class A
Common Stock (total purchases in a year may not exceed 10% of an employee’s current year compensation) at 85%
of the fair market value of the Class A Common Stock at the end of each calendar quarter. There were approximately
29,000 and 27,000 shares purchased with a weighted average fair value of purchase rights of $9.88 and $7.72 during
the fiscal years ended December 26, 2006 and December 27, 2005, respectively. For the fiscal year ended
December 26, 2006 the Company recognized expense of approximately $0.3 million related to stock purchase plan
discounts. Cumulatively, there were approximately 668,000 shares issued under this plan as of December 26, 2006.
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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)