Wendy's 2008 Annual Report Download - page 149

dates. The total fair value of 2007 Restricted Shares which vested during 2008 was $356 as of the May 23,
2008 vesting date.
Equity Instruments of Subsidiaries
Deerfield had granted membership interests in future profits (the “Profit Interests”) to certain of its key
employees prior to 2006 for which no payments were required from the employees to acquire the Profit
Interests. The estimated fair market value at the date of grant of the Profit Interests was $2,050 in accordance
with their fair market value and represented the probability-weighted present value of estimated future cash
flows to those Profit Interests. This estimated fair market value resulted in aggregate unearned compensation of
$1,260, net of minority interests, being charged to the “Unearned compensation” component of “Stockholders’
equity” with an equal offsetting increase in “Additional paid-in capital” at the date of grant. The scheduled
vesting of the Profit Interests varied by employee either vesting ratably in each of the three years ended August
20, 2007, 2008 and 2009 or 100% on August 20, 2007. This unrecognized compensation cost was recorded as
compensation expense as earned over periods of three or five years. Upon adoption of SFAS 123(R) effective
January 2, 2006, the Company reversed the related unamortized “Unearned compensation” balance of $743, net
of minority interests, with an equal offsetting reduction of “Additional paid-in capital” and recognized the
remaining fair value of the Profit Interests as compensation expense, less minority interests, ratably over the
remaining vesting periods, with an equal offsetting increase in “Additional paid-in capital.” The vesting of the
portion of the Profit Interests scheduled to vest on February 15, 2008 was accelerated in connection with the
corporate restructuring (see Note 17) and the remaining unamortized balance was recognized as compensation
expense in 2007.
Prior to 2006, the Company granted to certain members of its then management equity interests (the
“Class B Units” and together with the Profits Interests, the “Equity Interests”) in TDH and Jurl which held or
hold the Company’s respective interests in Deerfield and Jurlique as applicable. The Class B Units consist of a
capital interest portion reflecting the subscription price paid by each employee, which aggregated $600, and a
profits interest portion of up to 15% of the equity interest of those subsidiaries in the respective net income of
Deerfield and Jurlique and up to 15% of any investment gain derived from the sale of any or all of their equity
interests in Deerfield or Jurlique. The grant of the Class B Units resulted in aggregate unearned compensation
of $10,880, net of minority interests, being charged to the “Unearned compensation” component of
“Stockholders’ equity” at the grant date. The unearned compensation represented the excess of the estimated
fair market value of the Class B Units as of the date of grant, which reflected the probability-weighted present
value of estimated future cash flows to the Class B Units, over the $600 aggregate subscription price paid by
the employees. The profits interest portion of the Class B Units vested ratably on each of February 15, 2006,
2007 and 2008. Accordingly, the unrecognized compensation cost was being recognized ratably as
compensation expense over the three-year vesting period. Upon adoption of SFAS 123(R) effective January
2, 2006, the Company reversed the related unamortized “Unearned compensation” balance of $5,038 with an
equal offsetting reduction of “Additional paid-in capital” and recognized the remaining fair value of the
Class B Units as compensation expense, less minority interests, ratably over the remaining vesting periods,
with an equal offsetting increase in “Additional paid-in capital.” On June 29, 2007, the Performance
Compensation Subcommittee of the Company’s Board of Directors, in connection with the corporate
restructuring (see Note 17), approved the vesting of the remaining portion of the Profit Interests and the
remaining unamortized balance was recognized as compensation expense in 2007.
The aggregate estimated fair value of the Equity Interests which vested, including the amount related to
the accelerated vesting, during 2006 and 2007 were $3,633 and $2,240, respectively.
Share-Based Compensation Expense
Total share-based compensation expense and related income tax benefit and minority interests recognized
in the Company’s consolidated statements of operations were as follows:
141
Wendy’s/Arby’s Group, Inc. and Subsidiaries
(Formerly Triarc Companies, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)