Popeye's 2015 Annual Report Download - page 77

Popeyes Louisiana Kitchen, Inc.
Notes to Consolidated Financial Statements
For Fiscal Years 2015, 2014, and 2013 — (Continued)
Performance Based Restricted Stock Awards
The Company's current long-term incentive plan grants restricted stock awards which are earned subject to the Company
meeting three-year cumulative EBITDA goals. EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. A three-year cumulative EBITDA goal is approved by the board of directors at the start of the three-year performance
periods. Shares are earned based on a sliding scale of performance above and below the performance goal. The sliding scale
is anchored by a minimum performance requirement of 95% of three-year cumulative EBITDA. If 95% of the performance
goal is not achieved, then no performance shares are earned. If 95% is achieved, then 50% of the targeted shares are earned. If
100% of the performance goal is achieved, then award is paid at target. The maximum performance requirement is 110% of
cumulative EBITDA. If maximum performance is achieved, then 200% of the targeted shares are earned. Shares earned by
three-year cumulative EBITDA performance will be adjusted based on our three-year total shareholder return ("TSR") against
a broader group of restaurant companies. Shares earned will be adjusted -10% if TSR performance is in the bottom quartile,
and will be adjusted +10% if TSR performance is in the upper quartile. TSR represents stock price appreciation and dividends
over the three-year performance period. Earned performance shares cliff vest three years from the date of issuance.
The following table summarizes the restricted share awards activity for the 52 week period ended December 27, 2015:
(share awards in thousands) Shares
Weighted
Average
Grant
Date Fair
Value
Unvested performance stock awards:
Outstanding beginning of year 193 $ 29.88
Granted 160 $ 32.58
Vested (190) $ 17.37
Canceled (7) $ 48.17
Outstanding end of year 156 $ 47.11
The grant date fair values of the performance stock awards are determined using a Monte-Carlo simulation model. The
weighted average grant date fair value of restricted share awards granted during 2014 and 2013 were $42.92 and $36.35,
respectively.
These awards are amortized as expense on a straight line basis over the three-year vesting period. Compensation expense
reflects the number of awards that are expected to vest and are adjusted to reflect those awards that do ultimately vest. The
Company recognizes compensation expense for awards if and when the Company concludes that is is probable that the three-
year cumulative EBITDA performance condition will be achieved. The Company recognized approximately $3.3 million, $2.8
million, and $2.0 million, in stock-based compensation expense associated with these awards during 2015, 2014, and 2013,
respectively. During the vesting period, recipients of the shares are entitled to dividends on such shares, provided that such shares
are not forfeited. Dividends are accumulated and paid out at the end of the vesting period.
As of December 27, 2015, there was approximately $4.2 million in unrecognized compensation cost related to unvested
performance stock awards which are expected to be recognized over a weighted average period of approximately 1.8 years. The
total fair value at grant date of awards which vested during 2015 and 2014 and 2013 was $3.3 million, $2.2 million and $2.2
million, respectively.
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