Wendy's International (WEN)

Overview

Under one part of the 1999 Executive Bonus Plan (“Part II”), eligible executives are designated each year by the Performance Committee to receive an annual Performance Goal Bonus Award that is tied to the achievement of various “Performance Goals” (i.e., objective quantifiable measures for the Company or its operating units). Part I of the 1999 Executive Bonus Plan is no longer applicable.

Under the terms of the 1999 Executive Bonus Plan, individual performance and individual contributions are not recognized as separate compensable elements, and participants are eligible for bonus compensation based only on Company results. Each year, the Performance Committee is responsible for establishing the Performance Goals in a timely manner and may exercise negative discretion with respect to the payment of all or a portion of any Performance Goal Bonus Award even if all Performance Goals have been achieved. In 2008 none of the named executives qualified for a bonus with respect to awards under the 1999 Executive Bonus Plan and consequently no such negative discretion was exercised. With respect to 2007, no negative discretion was exercised in connection with payment under the bonus awards made to Mr. Smith, who was the sole participant in 2007. During 2006 the Performance Committee exercised negative discretion with respect to bonuses payable to certain former named executive officers of the Company then eligible for such bonuses under Part II of the plan.

Under the terms of the 1999 Executive Bonus Plan no payment under Part II to any participant can exceed $5 million. Performance Goal Bonus Awards may result in payment if actual results satisfy or exceed designated “Performance Goals.” The size of the payment is expressed as a percentage of the participants’ base salary as determined by the Performance Committee, with payments keyed to various percentages of base salary, depending on the level of achievement. In cases where the Performance Committee has denominated multiple performance goals, achievement of multiple goals could result in an incentive bonus payment in excess of 100% of an executive’s base salary, subject to reduction by the Performance Committee.

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At the time that the Performance Goals are established for any fiscal year, the compensation that would be payable if the goals were to be achieved is intended to be “qualified performance based compensation” under Section 162(m) of the Code, in that the goals that are selected are substantially uncertain of being achieved at the time they are established and there can be no guarantee that all or any one of the performance goals will be satisfied based on actual fiscal year results.

With respect to Part II payments under the 1999 Executive Bonus Plan, before 2008, the Company met minimum or target levels for certain performance goals. Fiscal 2007 was the first year in which the plan included the “Modified EBITDA” performance goal, which was applied to Arby’s operating unit results, and, based on fiscal 2007 results the level of achievement for the Arby’s operating unit exceeded the minimum threshold for performance. In the case of fiscal 2008, however, target levels were not achieved with respect to the three performance goals and no amounts were paid out under the plan. Modified EBITDA is defined below under Performance Goal Bonus Awards, which is part of the section of this Proxy Statement entitled “PROPOSAL 7. REAPPROVAL OF PERFORMANCE GOAL BONUS AWARDS PORTION OF THE 1999 EXECUTIVE BONUS PLAN.”

In connection with the administration of the 1999 Executive Bonus Plan, the Company’s CFO provides the Performance Committee with a certificate regarding the computation of the various components of the Part II bonus awards and the Company’s outside accountants confirm the amount of the bonus awards relative to the underlying financial statement detail.

Overview

2006 was a year of growth and opportunity for the Company as it continued to consolidate and grow the Arby’s^® restaurant system. In connection with the Company’s corporate restructuring, and in addition to the Company’s regular quarterly cash dividends, the Company in 2006 also declared special extraordinary cash dividends on our outstanding common stock, totaling $0.45 per share (which we will refer to collectively as the “Special Dividend”).

In April 2007 the Company’ restructuring efforts culminated in a definitive agreement to sell its controlling interest in D&C. In conjunction with the D&C disposition, and in connection with the transition of the Company to a “pure play” restaurant business, the Company also entered into contractual settlements with Messrs. Peltz and May providing for the termination of their employment agreements and their resignations as executive officers of the Company (effective June 29, 2007), which the Company believes is consistent with the objective of ultimately consolidating the Company’s corporate operations and headquarters in Atlanta with its Arby’s operations and transferring senior executive responsibilities to the ARG team in Atlanta.

There were a number of compensation-related developments affecting the Company and its executives in 2006:

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In April, 2007, as corporate restructuring efforts led to a definitive agreement for the sale by the Company of D&C and in furtherance of the Company’s corporate restructuring and the transition of

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the Company into a “pure play” restaurant company, the Company entered into contractual settlements with Messrs. Peltz and May providing for the termination of their employment agreements and their resignations as executive officers of the Company, effective June 29, 2007, which services would have otherwise extended until April 30, 2012 (without any further extension), and also entered into a transition services agreement with the Management Company to provide strategic transition services–through Messrs. Peltz, May and other employees who will work for the Management Company. These arrangements resulted from the desirability of ultimately consolidating the Company’s corporate and headquarters in Atlanta with its Arby’s operations and transferring senior executive responsibilities to the ARG executive team in Atlanta, which will, in turn, eliminate the need for maintaining a New York City headquarters. The terms of the contract settlement agreements with Messrs Peltz and May, and the services agreement with the Management Company are discussed below.

A discussion regarding the Company’s compensation programs, as well as compensation activity undertaken in 2006 and the compensation paid to the Company’s executive officers in and with respect to 2006, follows.

Overview

Deerfield Capital Management LLC (DCM) is a Chicago-based asset manager that offers clients a variety of investment products focused on fixed income securities and related financial instruments. DCM is a Delaware limited liability company that is wholly owned by Deerfield & Company LLC (Deerfield), an Illinois limited liability company. Deerfield also wholly owns Deerfield Capital Management (Europe) Ltd. (DCM Europe), a United Kingdom company formed in 2006 that provides investment advisory services related to European collaterized debt obligation vehicles (CDOs) managed by DCM. We own an approximate 64% capital interest, a profits interest of at least 52% and approximately 94% of the outstanding voting interests in Deerfield, which we acquired in July 2004. DCM (together with its predecessor companies) has acted as an asset manager since 1993 and has been registered with the Securities and Exchange Commission (the SEC) as an investment adviser since 1997. As of December 31, 2006, Deerfield had approximately $13.2 billion of assets under management.

Overview

       Deerfield Capital Management LLC (“DCM”) is a Chicago-based asset manager that offers clients a variety of investment products focused on fixed income securities and related financial instruments. DCM is a Delaware limited liability company that is wholly owned by Deerfield & Company LLC (“D&C”), an Illinois limited liability company. We own an approximate 64% capital interest, a profits interest of at least 52% and approximately 94% of the outstanding voting interests in D&C, which we acquired in July 2004. DCM (together with its predecessor companies) has acted as an asset manager since 1993 and has been registered with the Securities and Exchange Commission (the “SEC”) as an investment adviser since 1997. As of January 1, 2006, Deerfield had approximately $12.3 billion of assets under management.