Wendy's 2014 Annual Report Download - page 108

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THE WENDY’S COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(In Thousands Except Per Share Amounts)
Pursuant to the terms of the employment agreement that was entered into with our President and Chief
Executive Officer as of September 12, 2011, the Company implemented a non-qualified, unfunded, deferred
compensation plan. The plan provides that the amount of the executive’s base salary in excess of $1,000 in a tax year
will be deferred into the plan which accrues employer funded interest. The related deferred compensation liability has
been included in “Accrued expenses and other current liabilities” and was approximately $354 and $207 as of
December 28, 2014 and December 29, 2013, respectively, including both employee contributions and employer
funded interest.
(19) Leases
At December 28, 2014, Wendy’s and its franchisees operated 6,515 Wendy’s restaurants. Of the 957
company-owned Wendy’s restaurants, Wendy’s owned the land and building for 444 restaurants, owned the building
and held long-term land leases for 310 restaurants and held leases covering land and building for 203 restaurants.
Lease terms are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal
options. Certain leases contain contingent rent provisions that require additional rental payments based upon
restaurant sales volume in excess of specified amounts. The Company also leases restaurant, office and transportation
equipment. Certain leases also provide for payments of other costs such as real estate taxes, insurance and common
area maintenance, which have been excluded from rental expense and future minimum rental payments set forth in
the tables below.
As of December 28, 2014, Wendy’s also owned 230 and leased 488 properties that were either leased or
subleased principally to franchisees. Initial lease terms are generally 20 years and, in most cases, provide for rent
escalations and renewal options. Certain leases to franchisees also include contingent rent provisions based on sales
volume exceeding specified amounts. The lessee bears the cost of real estate taxes, insurance and common area
maintenance, which have been excluded from rental income and future minimum rental receipts set forth in the tables
below.
Rental expense for operating leases consists of the following components:
Year Ended
2014 2013 2012
Rental expense:
Minimum rentals ..................................... $76,218 $68,445 $70,525
Contingent rentals .................................... 19,967 10,421 10,971
Total rental expense (a) ............................ $96,185 $78,866 $81,496
(a) Amounts exclude sublease income of $46,743, $16,924, and $13,317 recognized during 2014, 2013 and 2012,
respectively.
Rental income for operating leases and subleases consists of the following components:
Year Ended
2014 2013 2012
Rental income:
Minimum rentals ..................................... $51,019 $16,245 $10,757
Contingent rentals .................................... 17,745 11,162 11,086
Total rental income ............................... $68,764 $27,407 $21,843
104