Panera Bread 2012 Annual Report Download - page 71

PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
63
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 25, 2012, there was $30.4 million of total unrecognized
compensation cost related to restricted stock included in additional paid-in capital in the Consolidated Balance Sheets. This
unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 3.3 years. For
fiscal 2012, fiscal 2011, and fiscal 2010, restricted stock expense was $7.6 million, $7.7 million and $7.1 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 28, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566 $ 58.07
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 102.12
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (157) 50.34
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39) 66.43
Non-vested at December 27, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 $ 71.47
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 155.15
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (134) 57.97
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64) 74.38
Non-vested at December 25, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395 $ 94.98
Under the deferred annual bonus match award portion of the 2005 LTIP, eligible participants receive an additional 50 percent of
their annual bonus, which is paid three years after the date of the original bonus payment provided the participant is still employed
by the Company. For fiscal 2012, fiscal 2011, and fiscal 2010, compensation expense related to deferred annual bonus match
awards was $2.3 million, $1.9 million, and $2.0 million, respectively, and was included in general and administrative expenses
in the Consolidated Statements of Comprehensive Income.
Stock options 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, stock options generally vest 25 percent after two years and thereafter 25 percent each year
for the next three years and have a six-year term. As of December 25, 2012, the total unrecognized compensation cost related to
non-vested options was $0.1 million, which is net of a less than $0.1 million forfeiture estimate, and is expected to be recognized
over a weighted-average period of approximately 0.7 years. The Company uses historical data to estimate pre-vesting forfeiture
rates. Stock-based compensation expense related to stock options was as follows for the periods indicated (in thousands):
For the fiscal year ended
December 25,
2012 December 27, 2011 December 28, 2010
Charged to general and administrative expenses (1). . . . . . . . . . . . . . . . . . . . $ 421 $ 1,122 $ 1,510
Income tax benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (163)(428)(575)
Total stock-based compensation expense, net of tax . . . . . . . . . . . . . . . . . . . $ 258 $ 694 $ 935
Effect on basic earnings per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.01 0.02 0.03
Effect on diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.01 0.02 0.03
(1) Net of less than $0.1 million, less than $0.1 million, and less than $0.1 million of capitalized compensation cost related to the
acquisition, development, design, and construction of new bakery-cafe locations and fresh dough facilities for fiscal 2012,
fiscal 2011, and fiscal 2010, respectively.