Wendy's 2013 Annual Report Download - page 105

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THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
The fair value of market condition awards granted in 2012 and 2011 was estimated using the Monte Carlo
simulation model. There were no market condition awards granted during 2013. The Monte Carlo simulation model
utilizes multiple input variables to estimate the probability that the market conditions will be achieved and is applied
to the average of the high and low trading prices of our common stock on the date of grant. The input variables are
noted in the table below:
2012 2011
Risk-free interest rate ..................................................... 0.41% 0.61%
Expected life in years ..................................................... 2.99 3.02
Expected volatility ....................................................... 34.0% 52.0%
Expected dividend yield (a) ................................................. 0.00% 0.00%
(a) The Monte Carlo method assumes a reinvestment of dividends.
Share-based compensation expense is recorded ratably for market condition awards during the requisite service
period and is not reversed, except for forfeitures, at the vesting date without regard as to whether the market condition
is met. The Company recorded compensation expense of $2,347 for the accelerated vesting of market condition
awards in accordance with the termination provisions of the employment agreements for two senior executives in
2011 as a result of the sale of Arby’s discussed above.
The following table summarizes activity of performance shares during 2013:
Performance Condition Awards Market Condition Awards
Shares
Weighted
Average Grant
Date Fair
Value Shares
Weighted
Average Grant
Date Fair
Value
Non-vested at December 30, 2012 ....................... 511 $3.91 2,147 $6.38
Granted ............................................ 533 7.92 — —
Dividend equivalent units issued (a) ...................... 14 — 48 —
Vested ............................................. (240) 3.91 (34) 6.86
Forfeited ........................................... (287) 4.02 (639) 6.02
Non-vested at December 29, 2013 ....................... 531 $7.92 1,522 $6.52
(a) Dividend equivalent units are issued in lieu of cash dividends for non-vested performance shares. There is no
weighted average fair value associated with dividend equivalent units.
The total fair value of awards that were accelerated to vest during 2011 was $3,615.
Modifications of Share-Based Awards
During 2013, the Company modified the terms of awards granted to 20 employees in connection with the
system optimization initiative described in Note 2. These modifications resulted in (1) the accelerated vesting of
certain stock options and performance-based awards upon termination of such employees and (2) a net increase in
share-based compensation expense of $986 for 2013 of which $1,253 is included in “Facilities action charges, net”
with a $267 reduction to “General and administrative.”
During 2011, the Company modified the terms of awards granted to 168 employees in connection with the
sale of Arby’s and the announcement of the relocation of the Company’s Atlanta restaurant support center to Ohio.
These modifications resulted in (1) the accelerated vesting of stock options and restricted share units upon the
termination of such employees and (2) a net reduction in share-based compensation expense of $614 for 2011. Of
this amount, $253 is included in discontinued operations and $361 is included in “Facilities action charges, net.”
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