Wendy's 2008 Annual Report Download - page 147

employment agreement, the Company could have been obligated to grant stock options to the CEO having a
fair value equal to the market price of 100 restricted shares of the Company’s Class B Common Stock as of the
April 13, 2006 date of commencement of the employment term. The total fair value of such stock options
would have aggregated $1,692 and would have been recognized ratably as compensation expense over the
three-year vesting period which would have commenced retroactively as of April 13, 2006 had such options
been issued instead of the restricted shares resulting in compensation expense of $742 during the year ended
December 31, 2006. As such, the Company recognized $742 as its estimate of the minimum related
compensation expense during the year ended December 31, 2006 for the 2006 Restricted Shares. The
performance targets were agreed upon during 2007 and the Company recognized compensation expense of $66
and $495 during the years ended December 28, 2008 and December 30, 2007, respectively, related to the
2006 Restricted Shares. During 2008 and 2007, respectively, 17 and 33 shares of the time vesting shares
vested on the anniversary of the date of commencement. In addition, during 2008, 8 shares of the performance
vesting shares vested as a result of meeting 50% of the performance vesting targets set for 2007. The
remaining 8 shares related to 2007 performance were forfeited in 2008 due to the fact that the performance
targets were not fully met in 2007 and were not anticipated to be met in 2008. In addition, the Company is
not recognizing compensation expense on the remaining 17 performance shares available for 2008 due to the
fact that the performance targets were not met. These shares will be forfeited in 2009.
2005 Restricted Shares
On March 14, 2005, the Company granted certain officers and key employees 149 and 731 contingently
issuable performance-based restricted shares of Class A Common Stock and Class B Common Stock (the “2005
Restricted Shares”), respectively, under one of its Equity Plans (See Note 1). The 2005 Restricted Shares
initially vested ratably over three years, subject to meeting, in each case, certain increasing Class B Common
Share market price targets of between $12.09 and $16.09 per share, or to the extent not previously vested, on
March 14, 2010 subject to meeting a Class B Common Share market price target of $18.50 per share. Prior to
2006, no shares vested but 1 share had been cancelled. On March 14, 2006, the closing market price of the
Class B Common Stock met the market price target, resulting in the vesting of one-third of the then
outstanding 2005 Restricted Shares, less 1 share which was cancelled in 2006. On March 14, 2007, the closing
market price of the Class B Common Stock met the market price target, resulting in the vesting of one-third
of the then outstanding 2005 Restricted Shares, less 3 shares which were cancelled. On June 29, 2007, the
Performance Compensation Subcommittee of the Company’s Board of Directors, in connection with a corporate
restructuring (see Note 17), approved the vesting of the remaining one-third of the then outstanding 2005
Restricted Shares. Prior to January 2, 2006, the Company’s 2005 Restricted Shares were accounted for as
variable plan awards since they vested only if the Company’s Class B Common Stock met certain market price
targets. The Company measured compensation cost for its 2005 Restricted Shares by estimating the expected
number of shares that would ultimately vest based on the market price of its Class B Common Stock at the end
of the year. Based on the market prices of the Company’s Class A and Class B Common Stock as of January 1,
2006, the Company recognized aggregate unearned compensation of $11,602 in the “Unearned compensation”
component of “Stockholders’ equity” with an equal offsetting increase in “Additional paid-in capital.” Such
unearned compensation was recognized ratably as compensation expense over the vesting period of the related
2005 Restricted Shares and prior to the adoption of SFAS 123(R) was adjusted retrospectively based on the
market price of the Class B Common Stock at the end of each period through January 1, 2006. Upon adoption
of SFAS 123(R) effective January 2, 2006, the Company reversed the related unamortized “Unearned
compensation” balance of $5,551 with an equal offsetting reduction of “Additional paid-in capital” and
commenced recognizing the remaining fair value of the 2005 Restricted Shares of $6,535, based on the original
March 14, 2005 grant date fair value, as compensation expense ratably over the remaining vesting periods
through the June 29, 2007 accelerated vesting date, with an equal offsetting increase in “Additional paid-in
capital.”
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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)