Papa Johns 2007 Annual Report Download - page 95

Download and view the complete annual report

Please find page 95 of the 2007 Papa Johns annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 114

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114

88
20. Equity Compensation (continued)
Information pertaining to option activity during 2007 is as follows (number of options and aggregate
intrinsic value in thousands):
Weighted
Weighted Average
Number Average Remaining Aggregate
of Exercise Contractual Intrinsic
Options Price Term Value
Outstanding at December 31, 2006 2,671 $20.15
Granted 582 33.28
Exercised (765) 15.99
Cancelled (149) 27.55
Outstanding at December 30, 2007 2,339 $24.31 2.93 $7,306
Vested or expected to vest at December 30, 2007 2,310 $24.20 2.96 $7,138
Exercisable at December 30, 2007 1,261 $16.92 2.13 $7,306
The following is a summary of the significant assumptions used in estimating the fair value of options
granted in 2007, 2006 and 2005:
2007 2006 2005
Assumptions (weighted average):
Risk-free interest rate 4.7% 4.9% 3.9%
Expected dividend yield 0.0% 0.0% 0.0%
Expected volatility 0.28 0.27 0.30
Expected term (in years) 3.5 3.5 3.0
The risk-free interest rate for the periods within the contractual life of an option is based on the U.S.
Treasury yield curve in effect at the time of grant. The estimated volatility is based on the historical
volatility of our stock and other factors. The expected term of options represents the period of time that
options granted are expected to be outstanding.
The weighted average grant-date fair value of options granted during 2007, 2006 and 2005 was $8.98,
$8.95 and $4.45, respectively. The Company granted 582,000, 612,000 and 1.4 million options in 2007,
2006 and 2005, respectively.
Restricted Stock
During 2007 and 2006, we granted shares of performance-based restricted stock to employees with a
performance period of three years (there were no such grants in 2005). These restricted shares are
intended to focus participants on our long-range objectives, while at the same time serving as a retention
mechanism. The shares awarded in 2007 and 2006 have a three-year cliff vesting period with vesting
based upon the Company’s achievement of compounded annual growth rate (CAGR) of consolidated
corporate operating income from continuing operations, as defined. The fair value of the restricted stock
is based on the market price of the Company’s shares on the grant date.