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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
69
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 have generally been paid
100 percent in cash but may be paid in some other combination of cash and common stock as determined by the Compensation
Committee. In fiscal 2015, in lieu of a performance award, the Compensation Committee granted a restricted stock award and a
choice award, each which will vest in full on the third anniversary of the grant date in an aggregate amount having a value at the
time of grant equal to the participant's targeted performance award payment. For fiscal 2015, fiscal 2014, and fiscal 2013,
compensation expense related to the performance awards was $2.0 million, $1.2 million, and $4.3 million, net of capitalized
compensation expense of less than $0.1 million, $0.1 million, and $0.2 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 29, 2015, there was $46.5 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
3.4 years. For fiscal 2015, fiscal 2014, and fiscal 2013, restricted stock expense was $12.6 million, $8.3 million, and $9.2 million,
net of capitalized compensation expense of $1.3 million, $0.9 million, and $0.6 million, respectively. For fiscal 2015, fiscal 2014,
and fiscal 2013, the income tax benefit related to restricted stock expense was $5.0 million, $3.3 million, and $3.4 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, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325 $ 142.41
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 187.76
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (82) 121.46
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (49) 151.05
Non-vested at December 29, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 $ 166.15
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 2015, fiscal 2014, and fiscal 2013, compensation expense related to deferred annual bonus
match awards was $1.1 million, $1.3 million, and $2.1 million, net of capitalized compensation expense of $0.1 million, $0.1
million, and $0.1 million, respectively, and was included in general and administrative expenses in the Consolidated Statements
of 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.