Papa Johns 2010 Annual Report Download - page 55

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48
(2)
The following table summarizes our recorded expense associated with our
management incentive programs, which are included in unallocated general and
administrative costs (in thousands):
Year Ended
December 27,
2009
Year Ended
December 28,
2008
Increase
(Decrease)
Equity compensation (i) 5,817$ 2,564$ 3,253$
Performance unit plan - 118 (118)
Management incentive bonus
plan (ii) 7,328 3,492 3,836
Total expense
13,145
$
6,174
$
6,971
$
(i) Stock options were awarded to management and members of our board of
directors in 2007, 2008 and 2009. The 2007 and 2008 awards follow either a
two-year cliff-vesting period or a three-year graded vesting period.
Substantially all of the 2009 awards follow a three-year graded vesting period.
Additionally, we granted performance and/or time-based restricted stock in
2007, 2008 and 2009. The 2007 and 2008 awards are subject to a three-year
cliff-vesting period while the 2009 awards are subject to a three-year graded
vesting period. At December 27, 2009, there was $5.7 million of unrecognized
compensation cost related to non-vested options and restricted stock that will
be recognized during 2010, 2011 and 2012.
(ii) The annual management incentive bonus plan is based on the Company’s
annual operating income performance and certain sales measures as compared
to pre-established targets.
(3) The sponsorship fees are primarily associated with certain non-traditional venues.
(b) Franchise support initiatives primarily consist of discretionary contributions to the national
marketing fund and other local advertising cooperatives.
(c) The 2008 provisions for uncollectible accounts and notes receivable included a provision
associated with our loan issued in connection with the 2006 sale of the Perfect Pizza
operation and increased provisions for various loans to domestic franchisees.
•
Variable Interest Entities. BIBP generated pre-tax income of $22.5 million in 2009, which was
primarily composed of income associated with cheese sold to domestic Company-owned
restaurants and franchise restaurants of $5.5 million and $18.1 million, respectively. For 2008,
BIBP reported a pre-tax loss of $10.5 million, which was primarily composed of losses
associated with cheese sold to domestic Company-owned restaurants and franchise restaurants of
$2.1 million and $6.3 million, respectively. BIBP also incurred interest expense on outstanding
debt with a third-party bank and Papa John’s in both 2009 and 2008. See Item 7A. “Quantitative
and Qualitative Disclosures About Market Risk” for additional information regarding BIBP and
the movement in cheese prices.
Diluted earnings per share were $2.06 in 2009 (including a $0.52 per share gain from the consolidation of
BIBP and a $0.04 gain from the finalization of certain income tax issues), compared to $1.30 per diluted