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This excerpt taken from the WEN DEF 14A filed Apr 30, 2007. 2006 and 2007 Activities and Compensation Developments Material compensation related activities in 2006 and 2007 to date have included the following: 28
Action With Respect to 2006 Fiscal Performance In March 2007, the Performance Committee approved the payment to Messrs. Peltz and May of bonus amounts payable under Part I of the 1999 Executive Bonus Plan in respect of 2006 performance in
the amount of $10,070,000 and $5,036,000, respectively. Of that amount $4,989,000 and $2,495,000 constituted payments of the Annual Bonus component to Messrs. Peltz and May, respectively. An
additional $5,081,000 and $2,541,000 constituted payments of the Improvement Bonus component to Messrs. Peltz and May, respectively. In March 2007, the Compensation Committee also approved payments in respect of 2006 performance to Messrs. Peltz, May, Garden, Schorr, McCarron, and another executive under Part II of the 1999
Executive Bonus Plan. In that regard, the Committee exercised negative discretion and reduced amounts payable to Messrs. Peltz, May, Garden, Schorr and McCarron from $5,000,000, $5,000,000,
$3,162,500, $3,162,500 and $2,990,625 to $650,000, $172,500, $1,445,000, $1,800,000 and $1,800,000, respectively. As discussed above, after accounting for a portion of the Part II bonus amounts payable to
Messrs. Schorr and McCarron and borne by the Management Company, the Company paid them $1,188,000 and $1,674,000, respectively Acting upon the recommendation of management, the Compensation Committee approved the payment of approximately $3.9 million in discretionary bonuses to nine officers of the Company not
covered under the 1999 Executive Bonus Plan. Of that amount, approximately $1.8 was paid by Triarc and approximately $2.1 million was paid by the Management Company. Allocation of Compensation Costs to the Management Company For fiscal 2006, approximately 36% of the aggregate base salaries for senior officers of the Company (other than Messrs. Peltz, May and Garden) providing services to the Management Company were
allocated to and reimbursed to the Company from the Management Company. In the case of Messrs. Peltz, May and Garden, 35%, 31% and 65% of their respective base salaries was allocated to and
reimbursed to the Company by the Management Company. In the case of bonus compensation payable to senior executives (other than Messrs. Peltz, May and Garden) approximately 37% of the aggregate
bonus compensation was allocated to and borne by the Management Company. No portion of the Part I bonus payable to Messrs. Peltz and May under the 1999 Executive Bonus Plan by the Company (as
provided for under their employment agreements with the Company) was paid for or reimbursed by the Management Company, as the calculation was formulaic. A portion of the Part II bonus payments
payable to Messrs. Schorr and McCarron was borne by the Management Company (as described above). McCarron Severance Agreement In fiscal 2006, the Compensation Committee approved a severance agreement for Mr. McCarron, the terms of which are described in “Certain Employment Arrangements with Executive
Officers—Francis T. McCarron” below. Year-end Tax Planning Measures Involving Messrs. Schorr and McCarron In fiscal 2006, Messrs Schorr and McCarron agreed to exercise certain vested options as part of tax planning measures undertaken by the Company to mitigate against existing tax gross up obligations to
them that could be triggered in the event that a future transaction resulted in “excess parachute 29
payments” under Sections 280G and 4999 of the Code. In that event, the Company would have an obligation under the employment agreement with Mr. Schorr to provide him with a gross-up for his excise
tax exposure and have an obligation under its severance agreement with Mr. McCarron to provide him with a gross up for his excise tax exposure up to $1.0 million of excise tax. In connection with reaching an agreement with Messrs. Schorr and McCarron, the Performance Committee granted them additional stock options to cover the exercise price and tax withholding
associated with their voluntary option exercise and Messrs Schorr and McCarron agreed that if the grant of these additional stock options would cause them to be subject to golden parachute excise taxes
Mr. Schorr would agree to forfeit up to $187,500 and Mr. McCarron would agree to forfeit up to $250,000, to the extent such forfeiture would prevent the imposition of golden parachute taxes (and provided
that in any case the amount that could be forfeited would be limited to the amount of the parachute payment attributable to the grant of the additional options). The additional options granted to Messrs.
Schorr and McCarron will expire on the same dates and under the same circumstances as the corresponding exercised options. In consideration of Mr. McCarron’s agreement to the foregoing, the
Committee agreed to consider (and in January 2007 subsequently approved) increasing the reimbursement provisions of his severance agreement to cover up to $1.5 million of excise tax. Action With Respect to 2007 Performance Goals In March 2007, the Performance Committee also established the Performance Goals for fiscal 2007 under Part II of the Plan for certain of our senior officers, including Messrs. Peltz, May, Garden,
Schorr and McCarron. Performance Goals for 2007 generally covered the same categories as in Fiscal 2006 (adjusted earnings per share, adjusted EBITDA margin for ARG and D&C, successful completion
of acquisitions, dispositions and financings, possible sale or deconsolidation of D&C, increases in our stock price, net realized capital gains, total return on investment and net investment income). Bonus
opportunities with respect to each criterion range from 50% of average base salary to 100% of average base salary at target to up to 125% of average base salary for above target performance and in the
case of acquisition and disposition activity (including the sale or deconsolidation of D&C) higher bonus opportunities for Messrs. Garden, Schorr and McCarron The recommendations of management with
respect to the establishment and weighting of the Performance Goals were accepted by the Performance Committee. As a result of the contractual settlements entered into with Messrs. Peltz and May, the
provisions of the 1999 Executive Bonus Plan are not applicable to Messrs. Peltz and May for 2007 and future years. In March 2007, the Performance Committee approved an amendment to the Plan (as well as the Company’s 2002 Equity Participation Plan), which is being submitted to stockholders for approval at the
2007 Annual Meeting (Proposals (2) and (3) in this Proxy Statement), to provide for an additional performance goal based on the achievement of “Modified EBITDA.” It is anticipated that this new
performance goal would apply to the bonus opportunity of the Chief Executive Officer of ARG, who was hired in April 2006. As proposed, “Modified EBITDA” is defined as consolidated net earnings
before interest, tax, depreciation and amortization expenses, and further adjusted to exclude the impact of financing costs associated with capital leases (as opposed to operating leases) entered into in
connection with new stores opened under ARG’s annual operating plan. 30
Action With Respect to Termination of Messrs. Peltz’ and May’s Employment Agreements In connection with consideration by the Company of a possible corporate restructuring, the Compensation Committee and Special Committee have over time reviewed the existing employment
arrangements of Messrs. Peltz and May. In April 2007, as it appeared that corporate restructuring efforts would lead to a definitive agreement for the sale by the Company of D&C and the transition of the
Company into a “pure play” restaurant company, the Compensation Committee and Special Committee undertook a further review of the options available to the Company regarding these employment
arrangements and the advantages to the Company of ultimately consolidating its corporate and headquarters operations with its Arby’s operations in Atlanta. The Compensation Committee and Special
Committee met together on numerous occasions regarding these matters and ultimately the Compensation Committee recommended and the Special Committee approved contractual settlements with
Messrs. Peltz and May (which included negotiated contractual settlement payments) providing for the termination of their employment agreements and their resignations as executive officers of the
Company as of June 29, 2007. Their employment agreements would otherwise have expired on April 30, 2012 (had they not otherwise been extended). After June 29, 2007, they will continue as directors of
the Company, with it being anticipated that Mr. Peltz will serve as non-executive Chairman and Mr. May will serve as non-executive Vice-Chairman, respectively. The Company decided to enter into
contractual settlements with Messrs. Peltz and May due to the desirability of ultimately consolidating the Company’s corporate operations and headquarters in Atlanta with its Arby’s operations and relying
upon the skills and experience of the senior executive team of Atlanta based ARG. The steps taken by the Company in connection with the contractual settlements with Messrs. Peltz and May included the following:
•
A joint review by the Special Committee and Compensation Committee (with the assistance of the independent compensation consultant to the Compensation Committee and outside counsel to each
of the Special Committee and Compensation Committee) of (i) the compensation and other expenses that would be incurred in connection with continued operations of the New York City
headquarters through the end of the current term of the Peltz and May agreements (April, 2012)(assuming no further extension) and (ii) the rights and obligations of the Company and the executives
under their existing employment agreements for the remainder of the current term. Specifically, the independent compensation consultant projected that the contractual settlement of the obligations
of the Company under these employment agreements, in conjunction with the consolidation of the Company’s corporate and headquarters operations with its Arby’s operations in Atlanta, would
result in significant annual corporate savings and concluded that the contractual settlement represented a reasonable alternative, based on the economics, that was fair to the Company. • Entering into contractual settlement agreements with Messrs. Peltz and May, which were recommended by the Compensation Committee and approved by the Special Committee, providing for the
termination of their employment agreements and their resignations as executive officers as of June 29, 2007, in return for payments of $50,213,753 and $25,106,877 to Messrs. Peltz and May,
respectively, subject to applicable taxes and withholding. These payments are 25% less than the cash payments estimated to be owed to each of these executives under their employment agreements if
their employment had been terminated as of June 29, 2007 by the Company. The Company has agreed to fund these payment obligations in separate rabbi trusts for the benefit of Messrs. Peltz and
May and the payment of amounts in the trust will be made to the executives after six months following their June 29, 2007 separation of employment from the 31
Company. At the time of the termination of their employment, and in connection with their contractual settlements, their outstanding unvested restricted stock in the Company and their unvested
Class B Units of Triarc Deerfield Holdco and Jurl Holdco will also vest in full. Under the terms of these contractual settlement agreements, Mr. Peltz and May are not entitled to receive any further
compensation, bonus, perquisites or other payments (other than payment of accrued and vested amounts in an existing deferred bonus account). • Entering into a transition services agreement with the Management Company, which was approved by the Special Committee, which provides that the Management Company and its employees and
affiliates (including Messrs. Peltz and May and others) will provide the Company and ARG with a range of consultation and advice in connection with mergers and acquisitions, capital markets
transactions, investment banking, accounting, legal, tax, finance, investor relations and corporate communications, corporate development and other professional and strategic services, in each case as
needed by the Company or ARG. Under the terms of the agreement, the Company will pay a quarterly service fee of $3 million per quarter for the first year of services and $1.75 million per quarter
for the second year of services. At the end of the second year, a review will be conducted to determine if any further services are required. • Agreeing to pay to the Management Company, effective January 1, 2008, the standard management fee and incentive fee charges paid by any unaffiliated third party investors with a similarly sized
investment and not to withdraw the funds in its managed account prior to December 31, 2010. The Compensation Committee has recommended, and the Special Committee approved, these arrangements based on their belief that the business prospects and future of the Company as a “pure
play” restaurant operation are best served by ultimately consolidating the Company’s operations and headquarters in Atlanta with its Arby’s operations and relying upon the ARG senior executive
team; that the costs associated with the contractual settlements with Messrs. Peltz and May represent a significant discount of the amounts that would have otherwise been payable under their
agreements in connection with the termination of such agreements; and, that the Company will benefit from significant annual savings as a result. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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