Panera Bread 2014 Annual Report Download - page 74

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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
62
million, $4.3 million, and $6.3 million, net of capitalized compensation expense of $0.1 million, $0.2 million, and $0.3 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 granted to date under the 2005 LTIP, restrictions generally 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 30, 2014, there was $39.1 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
3.7 years. For fiscal 2014, fiscal 2013, and fiscal 2012, restricted stock expense was $8.3 million, $9.2 million and $7.6 million,
net of capitalized compensation expense of $0.9 million, $0.6 million, and $0.5 million, respectively. For fiscal 2014, fiscal 2013,
and fiscal 2012, the income tax benefit related to restricted stock expense was $3.3 million, $3.4 million, and $3.0 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 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351 $ 124.26
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 150.14
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (106) 92.47
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37) 137.75
Non-vested at December 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325 $ 142.41
Under the deferred annual bonus match award portion of the 2005 LTIP, eligible participants received an additional 50 percent of
their annual bonus, which was to be paid three years after the date of the original bonus payment provided the participant was still
employed by the Company. For fiscal 2014, fiscal 2013, and fiscal 2012, compensation expense related to deferred annual bonus
match awards was $1.3 million, $2.1 million, and $2.3 million, net of capitalized compensation expense of $0.1 million, $0.1
million, and $0.2 million, respectively, and was included in general and administrative expenses in the Consolidated Statements
of Comprehensive Income. The Company determined that it would no longer grant the deferred annual bonus match award portion
under the 2005 LTIP beginning with the 2014 measurement year. Compensation expense related to deferred annual bonus match
awards for years prior to fiscal 2014 will continue to be recognized through fiscal 2016.
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 from the date of grant and thereafter
25 percent each year for the next three years and have a six-year term. The Company uses historical data to estimate pre-vesting
forfeiture rates. As of December 30, 2014, there was no unrecognized compensation cost related to non-vested options.
For fiscal 2014, fiscal 2013, and fiscal 2012, stock-based compensation expense related to stock options charged to general and
administrative expenses was $0.1 million, $0.2 million and $0.4 million, respectively. For fiscal 2014, fiscal 2013, and fiscal
2012, the income tax benefit related to stock-based compensation expense was less than $0.1 million, $0.1 million, and $0.2
million, respectively.