Wendy's 2010 Annual Report Download - page 125

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WENDY’S/ARBY’S GROUP, INC. AND SUBSIDIARIES
WENDY’S/ARBY’S RESTAURANTS, LLC AND SUBSIDIARIES
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
The following table summarizes the activity of Wendy’s/Arby’s non-vested restricted shares for 2010:
Common Stock
Shares
Weighted
Average
Fair Value
Nonvested at January 3, 2010 ........................................... 1,481 $5.00
Granted ........................................................... 192 $4.44
Vested ............................................................ (606) $5.54
Forfeited ........................................................... (14) $4.44
Nonvested at January 2, 2011 ........................................... 1,053 $4.59
Performance Shares
Under the 2010 Plan, Wendy’s/Arby’s grants performance-based awards to certain officers and key
employees. The vesting of these awards is contingent upon meeting a defined operational goal (a performance
condition) or Common Stock share prices (a market condition).
The fair value of performance condition awards was determined using the average of the high and low trading
prices of our Common Stock on the date of grant. Compensation cost recorded for performance condition awards is
reevaluated at each reporting period based on the probability of the achievement of the goal. There was no
compensation cost recorded during 2010 for the performance condition awards as Wendy’s/Arby’s believes that the
achievement of the defined operational goal is not probable.
The fair value of market condition awards was estimated on the date of the grant using the Monte Carlo
simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability
that the market conditions will be achieved, as noted in the table below:
Risk-free interest rate .................................................... 0.93%
Expected life in years .................................................... 2.98
Expected volatility ...................................................... 55.0%
Expected dividend yield (a) ............................................... 0.0%
(a) The Monte Carlo method assumes a reinvestment of dividends.
Compensation cost is recorded ratably for market condition awards during the vesting period and is not
reversed, except for forfeitures, at the vesting date, without regard as to whether the market condition is met.
The following table summarizes the activity of Wendy’s/Arby’s non-vested performance shares for 2010:
Performance Condition Awards Market Condition Awards
Shares
Weighted
Average Fair
Value Shares
Weighted
Average Fair
Value
Nonvested at January 3, 2010 ............................. — $— — $—
Granted .............................................. 1,209 $3.91 833 $5.56
Vested ............................................... — $— — $—
Forfeited ............................................. (2) $3.91 (1) $5.56
Nonvested at January 2, 2011 ............................. 1,207 $3.91 832 $5.56
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