Panera Bread 2010 Annual Report Download - page 81

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Performance awards under the 2005 LTIP are earned by participants based on achievement of performance
goals established by the Committee. The performance period relating to the performance awards is a three-fiscal-
year period. The performance goals, including each performance metric, weighting of each metric, and award levels
for each metric, for such awards are communicated to each participant and are based on various predetermined
earnings and operating metrics. The performance awards are earned based on achievement of predetermined
earnings and operating performance metrics at the end of the three-fiscal-year performance period, assuming
continued employment, and after the Committee’s consideration of the Company’s performance relative to the
performance of its peers. The performance awards range from 0 percent to 150 percent of the participants’ salary
based on their level in the Company and the level of achievement of each performance metric. However, the actual
award payment will be adjusted, based on the Company’s performance over a three-consecutive fiscal year
measurement period, and any other factors as determined by the Committee. The actual award payment for the
performance award component could double the individual’s targeted award payment, if the Company achieves
maximum performance in all of its performance metrics, subject to any adjustments as determined by the
Committee. The performance awards are payable 50 percent in cash and 50 percent in common stock or some
combination of cash and common stock as determined by the Committee. For fiscal 2010, fiscal 2009, and fiscal
2008, compensation expense related to the performance awards was $10.2 million, $5.3 million, and $2.1 million,
respectively.
Restricted stock of the Company under the 2005 LTIP is granted at no cost to participants. While participants
are generally entitled to voting rights with respect to their respective shares of restricted stock, participants are
generally not entitled to receive accrued cash dividends, if any, on restricted stock unless and until such shares have
vested. The Company does not currently pay a dividend, and has no current plans to do so. For awards of restricted
stock to date under the 2005 LTIP, restrictions limit the sale or transfer of these shares during a five year period
whereby the restrictions lapse on 25 percent of these shares after two years and thereafter 25 percent 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 2005 LTIP, unearned compensation is recorded at fair value on the date of
grant to stockholders’ equity and subsequently amortized to expense over the five year restriction period. The fair
value of restricted stock is based on the market value of the Company’s stock on the grant date. As of December 28,
2010, there was $26.3 million of total unrecognized compensation cost related to restricted stock included in
additional paid-in capital in the Consolidated Balance Sheets, and is expected to be recognized over a weighted-
average period of approximately 3.7 years. For fiscal 2010, fiscal 2009, and fiscal 2008, restricted stock expense
was $7.1 million, $5.4 million and $3.8 million, respectively. 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 30, 2008 ............................. 505 $48.06
Granted ............................................... 202 55.09
Vested ................................................ (102) 47.92
Forfeited .............................................. (36) 48.96
Non-vested at December 29, 2009 ............................. 569 $50.52
Granted ............................................... 160 76.22
Vested ................................................ (136) 48.84
Forfeited .............................................. (27) 53.26
Non-vested at December 28, 2010 ............................. 566 $58.07
74
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)