Wendy's 2011 Annual Report Download - page 111

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THE WENDY’S COMPANY AND SUBSIDIARIES
WENDY’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 The Wendy’s Company non-vested restricted shares for 2011:
Common Stock
Shares
Weighted
Average
Fair Value
Non-vested at January 2, 2011 .......................................... 1,053 $4.59
Granted ........................................................... 721 $5.01
Vested ............................................................ (691) $4.69
Forfeited ........................................................... (40) $4.50
Non-vested at January 1, 2012 .......................................... 1,043 $4.82
The total fair value of restricted shares that vested in 2011, 2010 and 2009 was $3,223, $3,348 and $1,373,
respectively.
Performance Shares
The Wendy’s Company 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 granted in 2010 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. As a
result of the sale of Arby’s and related announcements that the Companies’ Atlanta headquarters and restaurant
support center would be relocated to Ohio, as further discussed in Note 17, the Companies recorded compensation
costs of $820 for the accelerated vesting of performance condition awards in accordance with the termination
provisions of the employment agreements for two senior executives. There was no other compensation cost recorded
during 2011 and 2010 for the performance condition awards as The Wendy’s Company believed the achievement of
the defined operational goal was not probable.
The fair value of market condition awards granted in 2011 and 2010 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:
2011 2010
Risk-free interest rate ............................................. 0.61% 0.93%
Expected life in years ............................................. 3.02 2.98
Expected volatility ............................................... 52.0% 55.0%
Expected dividend yield (a) ......................................... 0.00% 0.00%
(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. As a
result of the sale of Arby’s discussed above, the Companies recorded compensation costs of $2,347 for the accelerated
vesting of market condition awards in accordance with the termination provisions of the employment agreements for
two senior executives.
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