Papa Johns 2009 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 of the 2009 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 118

  • 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
  • 115
  • 116
  • 117
  • 118

49
expense decreased due to non-vested awards forfeited upon resignation by our former
CEO and other former members of management.
The following table summarizes our recorded expense (income) associated with our
management incentive programs, which are included in unallocated general and
administrative costs (in thousands):
Year Ended
December 28,
2008
Year Ended
December 30,
2007
Equity compensation (1) 2,564$ 4,883$
Performance unit plan (2) 118 (1,198)
Management incentive bonus plan (3) 3,492 2,711
Total expense
6,174
$
6,396
$
Decrease
(222)
$
(1) Stock options were awarded to management and members of our board of directors
in 2006, 2007 and 2008. The 2006 option awards follow a two-year cliff-vesting
period. The 2007 and 2008 awards follow either a two-year cliff-vesting period or a
three-year graded vesting period. Additionally, we granted performance and time-
based restricted stock in 2006, 2007 and 2008. The 2006 and 2007 restricted stock
grants were performance-based and are subject to a three-year cliff-vesting period.
The 2008 restricted stock grants were both performance-based and time-based and
are subject to a three-year cliff vesting period. At December 28, 2008, there was
$3.5 million of unrecognized compensation cost related to non-vested options and
restricted stock expected to be recognized during 2009, 2010 and 2011.
(2) Performance units were awarded in 2005 and 2006 to certain members of
management, with each award having a three-year performance period; no such
awards were made prior to 2005 or after 2006. The ultimate cost associated with the
performance units was based on the Company’s ending stock price and total
shareholder return relative to a peer group over the three-year performance period
ending in December 2007 for the 2005 program and December 2008 for the 2006
program, with the award value paid in cash following the end of the respective
performance periods. A 2007 change in employment status of our Founder
Chairman impacted the cost associated with this incentive program in that year.
(3) The annual management incentive bonus plan is based on the Company’s annual
operating income performance and certain sales and cost control measures as
compared to pre-established targets.
(b)
The Company contributed discretionary contributions to the national marketing fund and
other local advertising cooperatives in both 2007 and 2008. The majority of the 2008
contributions were in response to domestic franchise system support initiatives.
(c)
The increases in the provisions for uncollectible accounts and notes receivable were
primarily due to our evaluation of the collectability of our loan issued in connection with
the 2006 sale of the Perfect Pizza operations and a loan issued to one domestic franchisee.