Wendy's 2008 Annual Report Download - page 167

related to the then anticipated loss on the sale of the model. This former executive also had certain rights
which would have required the Company to acquire his economic interests in Deerfield through July 2008,
which were cancelled in connection with the Deerfield Sale.
The Company was being reimbursed by the Former Executives for incremental operating expenses related
to certain personal usage of corporate aircraft through the date of the Contractual Settlements (see Note 17).
Such reimbursements for 2007 through July 1, 2007 and 2006 amounted to $668 and $620, respectively and
have been recognized as a reduction of “General and administrative” in the accompanying Consolidated
Statements of Operations. (See below for discussion of arrangements since that time)
Corporate Restructuring
Agreements with Former Executives
In connection with the Corporate Restructuring discussed in Note 17, the Company entered into a series
of agreements with the Former Executives and the Management Company formed by the Former Executives
and a director, who is also the former Vice Chairman of the Company (collectively, the “Principals”). These
agreements are described in the paragraphs set forth below.
Prior to 2006, the Principals started a series of equity investment funds (the “Equity Funds”) that are
separate and distinct from the Company and that are being managed by the Principals and certain other former
senior executives of the Company (the “Management Company Employees”) through the Management
Company. Until June 29, 2007, the Management Company Employees continued to receive their regular
compensation from the Company and the Company made their services available, as well as certain support
services including investment research, legal, accounting and administrative services, to the Management
Company. Through June 29, 2007 (see below) the Company was reimbursed by the Management Company for
the allocable cost of these services, including an allocable portion of salaries, rent and various overhead costs.
Such allocated costs for 2007 (through June 29, 2007) and 2006 amounted to $2,515 and $4,345, respectively,
and have been recognized as reductions of “General and administrative” in the accompanying Consolidated
Statements of Operations. As discussed further below, effective June 29, 2007 the Management Company
Employees became employees of the Management Company and are no longer employed by the Company.
Subsequent to June 29, 2007, the Company continued to provide, and was reimbursed for, some minimal
support services to the Management Company. The Company has reduced its incentive compensation expense
for 2007 through June 29, 2007 and for the 2006 fiscal year by $2,700 and $7,400, respectively, for the
Management Company’s allocable portion of the incentive compensation attributable to the Management
Company Employees for the first six months of 2007 and for the 2006 fiscal year. In addition, in 2007, the
Company paid $171 to the Management Company representing the obligation for accrued vacation of the
Management Company Employees as of June 29, 2007 assumed by the Management Company.
As part of the agreement with the Former Executives and in connection with the Corporate Restructuring,
the Company has a two-year transition services agreement (the “Services Agreement”) with the Management
Company beginning June 30, 2007 pursuant to which the Management Company provides the Company with
a range of professional and strategic services. Under the Services Agreement, the Company is paying the
Management Company $3,000 per quarter for the first year of services and $1,750 per quarter for the second
year of services. The Company incurred $9,500 and $6,000 of such service fees for 2008 and 2007, which are
included in “General and administrative” in the accompanying Consolidated Statement of Operations. In
addition, effective as of December 28, 2007, the Company and the Management Company entered into an
amendment to the Services Agreement providing for the payment to the Management Company in 2008 of
additional fees of $2,750, for services rendered during 2007, and are attributable to the unanticipated and
extensive time commitment of Management Company Employees during 2007. The additional fees include
$1,925, in connection with the Wendy’s Merger, which are included in “Goodwill” and $825 related to the
Deerfield Sale which is included in the calculation of the “Gain on sale of consolidated business”.
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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)