Panera Bread 2013 Annual Report Download - page 70

PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
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2006 Stock Incentive Plan
In fiscal 2006, the Company’s Board of Directors adopted the 2006 Plan, which was approved by the Company’s stockholders in
May 2006. The 2006 Plan provided for the grant of up to 1,500,000 shares of the Company’s Class A common stock (subject to
adjustment in the event of stock splits or other similar events) as incentive stock options, non-statutory stock options and stock
settled appreciation rights (collectively “option awards”), restricted stock, restricted stock units, and other stock-based awards.
Effective May 13, 2010, the Plan was amended to increase the number of the Company’s Class A common stock shares available
to grant to 2,300,000. 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 2001 Plan or the 1992 Plan. The Company’s Board of Directors
administers the 2006 Plan and has sole discretion to grant awards under the 2006 Plan. The Company’s Board of Directors has
delegated the authority to grant awards under the 2006 Plan, other than to the Company’s Chairman of the Board and Chief
Executive Officer, to the Company’s Compensation and Management Development Committee (“the Compensation Committee”).
Long-Term Incentive Program
In fiscal 2005, the Company adopted the 2005 Long Term Incentive Plan (“2005 LTIP”) as a sub-plan under the 2001 Plan and
the 1992 Plan. In May 2006, the Company amended the 2005 LTIP to provide that the 2005 LTIP is a sub-plan under the 2006
Plan. Under the amended 2005 LTIP, certain directors, officers, employees, and consultants, subject to approval by the
Compensation Committee, may be selected as participants eligible to receive a percentage of their annual salary in future years,
subject to the terms of the 2006 Plan. This percentage is based on the participant's level in the Company. In addition, the payment
of this incentive can be made in several forms based on the participant's level including performance awards (payable in cash or
common stock or some combination of cash and common stock as determined by the Compensation Committee), restricted stock,
choice awards of restricted stock or options, or deferred annual bonus match awards. On July 23, 2009, the Compensation
Committee further amended the 2005 LTIP to permit the Company to grant stock settled appreciation rights (“SSARs”) under the
choice awards and to clarify that the Compensation Committee may consider the Company’s performance relative to the
performance of its peers in determining the payout of performance awards, as further discussed below. For fiscal 2013, fiscal
2012 and fiscal 2011, compensation expense related to performance awards, restricted stock, options, SSARs, and deferred annual
bonus match was $16.0 million, $16.7 million, and $18.4 million, net of capitalized compensation expense of $0.9 million, $1.0
million, and $1.1 million, respectively.
Performance awards under the 2005 LTIP are earned by participants based on achievement of performance goals established by
the Compensation 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 metrics. The performance awards are
earned based on achievement of predetermined earnings performance metrics at the end of the three-fiscal-year performance
period, assuming continued employment, and after the Compensation Committee’s consideration of the Company’s performance
relative to the performance of its peers. The performance awards range from 0 percent to 300 percent of the participant's 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 Compensation 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 Compensation 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 Compensation
Committee. For fiscal 2013, fiscal 2012, and fiscal 2011, compensation expense related to the performance awards was $4.3
million, $6.3 million, and $7.6 million, net of capitalized compensation expense of $0.2 million, $0.3 million, and $0.4 million,
respectively.