Panera Bread 2009 Annual Report Download - page 83

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A SSAR is an award that allows the recipient to receive common stock equal to the appreciation in the fair
market value of the Company’s common stock between the date the award was granted and the conversion date for
the number of shares vested. SSARs under the 2005 LTIP are granted with an exercise price equal to the quoted
market value of the Company’s common stock on the date of grant. In addition, SSARs vest ratably over a four-year
period beginning two years from the date of grant and have a six-year term. As of December 29, 2009, the total
unrecognized compensation cost related to non-vested SSARs was $0.3 million, which is net of a $0.2 million
forfeiture estimate, and is expected to be recognized over a weighted average period of approximately 4.7 years.
The Company uses historical data to estimate pre-vesting forfeiture rates. Stock-based compensation expense
related to SSARs was $0.03 million in fiscal 2009 and was charged to general and administrative expenses in the
Consolidated Statements of Operations.
The following table summarizes the Company’s SSAR activity under its stock-based compensation plan
during fiscal 2009:
Shares
(in thousands)
Weighted
Average
Conversion Price(1)
Weighted Average
Contractual Term
Remaining
(years)
Aggregate
Intrinsic
Value(2)
(in thousands)
Outstanding at December 30, 2008 ..... — $ —
Granted ....................... 23 55.20
Converted ...................... — — $ —
Cancelled ...................... (1) 55.20
Outstanding at December 29, 2009 ..... 22 $55.20 5.6 $293
Convertible at December 29, 2009...... — $ — — $ —
(1) Conversion price is defined as the price from which SSARs are measured and is equal to the market value on the
date of issuance.
(2) Intrinsic value for activities other than conversions is defined as the difference between the grant price and the
market value on the last day of fiscal 2009 (or $68.63) for those SSARs where the market value is greater than
the conversion price. For conversions, intrinsic value is defined as the difference between the grant price and the
market value on the date of conversion.
All SSARs outstanding at December 29, 2009 have a conversion price of $55.20 and a contractual term
remaining of 5.6 years.
The fair value for both stock options and SSARs (collectively “option awards”) 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 option awards expected term.
•Dividend yield — The dividend yield is based on the Company’s anticipated dividend payout over the
expected term of the option awards.
77
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)