Wendy's 2008 Annual Report Download - page 146

The Company reduced the exercise prices of all outstanding stock options for each of three special cash
dividends of $0.15 for each share of Class A and Class B Common Stock effective as of the ex-dividend dates,
on December 14, 2006. The exercise prices were reduced by $0.45 for each of the Package Options and by
$0.15 for each of the Class A Options and Class B Options on each of the ex-dividend dates of February 15,
2006, June 28, 2006 and December 1, 2006, resulting in maximum adjustments to the exercise prices of
$1.35 for each of the Package Options and $0.45 for each of the Class A Options and Class B Options. Those
option holders who exercised stock options prior to December 14, 2006, but subsequent to the respective ex-
dividend dates, received cash payments by the Company aggregating $125, effectively representing retroactive
adjustments to the exercise prices which had not yet been reflected upon the exercise of such stock options.
Such reduction of the exercise prices of the stock options did not result in any compensation expense to the
Company since the fair value of the options immediately after each of the adjustments was less than the fair
value immediately before the adjustments.
On December 14, 2006 the Company also amended all outstanding stock options under the Equity Plans
by permitting optionees to pay both the exercise price and applicable minimum statutory withholding taxes by
having the Company withhold shares that would have been issued to the optionee upon exercise (the “Net
Exercise Features”). By utilizing the Net Exercise Features, an optionee would not be required to tender the
purchase price or applicable withholding taxes of the shares being acquired under the option in cash, but
rather, upon exercise, the optionee receives only such numbers of shares as is equal in value to the excess of the
aggregate fair market value of the shares being purchased, based on the closing price of the Company’s stock on
the exercise date, over the aggregate exercise price and applicable withholding taxes for those shares. The Net
Exercise Features are permitted under SFAS 123(R) and, accordingly, such amendment did not result in any
compensation expense to the Company. The shares withheld from exercises of stock options under the Net
Exercise Features in 2006, 2007, and 2008 are included in “Common shares received or withheld as payment
in connection with exercises of stock options” and “Common shares withheld as payment for withholding taxes
on capital stock transactions” in the table which summarizes changes in shares of common stock and common
stock held in treasury in Note 15 and, for presentation purposes, have not been offset within “Common shares
issued upon exercises of stock options” in that table.
Pursuant to other agreements the Company entered into for its own tax planning reasons, on December
21, 2006 two of the Company’s then senior executive officers (the “Former Senior Officers”) other than the
Chairman and then Chief Executive Officer and the Vice Chairman and then President and Chief Operating
Officer of the Company (the “Former Executives”) exercised an aggregate 131 Package Options and 215
Class B Options utilizing the Net Exercise Features. The Company withheld 84 and 353 shares of its Class A
and Class B Common Stock, respectively, otherwise issuable in connection with the stock option exercises to
satisfy the Former Senior Officers’ exercise prices and applicable minimum statutory withholding taxes. On
December 21, 2006 the Company then granted the Former Senior Officers an aggregate 84 and 353 Class A
Options and Class B Options, respectively, to compensate the Former Senior Officers for the unintended
economic disadvantage relative to future price appreciation from the shares of the Company’s Class A and
Class B Common Stock withheld by the Company to satisfy the exercise prices and withholding taxes. The
newly granted options, which were granted with exercise prices equal to the closing market prices of the
Company’s Class A and Class B Common Stock of $21.45 and $19.55, respectively, on December 21, 2006,
were fully vested at the grant date and had the same expiration dates as the corresponding exercised options.
The Company recognized compensation expense of $1,758 during the year ended December 31, 2006 related
to such options granted on December 21, 2006 representing the fair value of such awards. During 2007, 33
and 67 of these Class A Options and Class B Options, respectively, expired unexercised.
The Company was obligated to grant 100 restricted shares of the Company’s Class B Common Stock to
its current Chief Executive Officer (the “CEO”) and also then Chief Executive Officer of Arby’s in accordance
with the terms of an employment agreement effective April 13, 2006. Such restricted shares (the “2006
Restricted Shares”) have both time vesting targets (67 shares) and performance vesting targets (33 shares). As
the performance vesting targets had not been agreed upon by December 31, 2006, pursuant to the CEO’s
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Wendy’s/Arby’s Group, Inc. and Subsidiaries
(Formerly Triarc Companies, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)