Panera Bread 2008 Annual Report Download - page 87

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The fair value for stock options was estimated on the date of the grant using the Black-Scholes option pricing
model with the following weighted-average assumptions:
•Expected term — The expected term of the option awards represents the period of time between the grant
date of the option awards and the date the option awards are either exercised or canceled, including an
estimate for those option awards still outstanding, and is derived from historical terms and other factors.
•Expected volatility — The expected volatility is based on an average of the historical volatility of the
Company’s stock price, for a period approximating the expected term, and the implied volatility of
externally traded options of the Company’s stock that were entered into during the period.
•Risk-free interest rate — The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the
time of grant and with a maturity that approximates the options expected term.
• Dividend yield — The dividend yield is based on the Company’s anticipated dividend payout over the
expected term of the option award.
The weighted average fair value of stock options granted and assumptions used for the Black-Scholes option
pricing model were as follows for the periods indicated:
December 30,
2008
December 25,
2007
December 26,
2006
For the Fiscal Year Ended
Fair value per option ........................... $15.54 $15.69 $19.18
Assumptions:
Expected term (years) ........................ 4.5 5.0 5.0
Expected volatility ........................... 36.5% 30.0% 30.0%
Risk-free interest rate ......................... 2.5% 4.7% 4.8%
Dividend yield .............................. 0.0% 0.0% 0.0%
The fair value of restricted stock is determined based on the market value of the Company’s stock on the grant
date. A summary of the status of the Company’s restricted stock activity is set forth below:
Restricted
Stock
(in thousands)
Weighted
Average
Grant-Date
Fair Value
Non-vested at December 26, 2006 ............................. 253 $52.07
Granted ............................................... 187 43.67
Vested ................................................ (24) 54.24
Forfeited .............................................. (29) 48.86
Non-vested at December 25, 2007 ............................. 387 $48.04
Granted ............................................... 228 48.76
Vested ................................................ (55) 51.36
Forfeited .............................................. (55) 47.52
Non-vested at December 30, 2008 ............................. 505 $48.06
As of December 30, 2008, there was $16.1 million of total unrecognized compensation cost related to
restricted stock, which is net of a $3.7 million forfeiture estimate, and is expected to be recognized over a weighted-
average period of approximately 3.7 years.
80
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)