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WEN » Topics » 162(m) Performance-Based Awards.

This excerpt taken from the WEN DEF 14A filed May 1, 2006.
162(m) Performance-Based Awards. The Committee may determine that an award of Options, SARs, Restricted Shares or Restricted Share Units which would not otherwise qualify as “performance-based compensation” under Section 162(m) of the Code shall be made to so qualify by the implementation of additional vesting conditions based on the attainment of performance standards in accordance with rules set forth in the 2002 Plan. The performance standards will be based on objective, quantifiable measures for the Company as a whole, or the operating units of the Company, with respect to a period established by the Committee (a “Performance Period”) and may include, and will be limited to, one or more of the following:

       1.   earnings per share;
       2.   market share;
       3.   margins (limited to gross margin, “Adjusted EBITDA” (as defined below) margin, and Adjusted EBITDA (as defined below, but excluding clause (1) thereof) margin);
       4.   productivity improvement;
       5.   costs or expenses;
       6.   successful completion of acquisitions, dispositions, recapitalizations, financings or refinancings;
       7.   total return on investment portfolio;
       8.   pre-tax net realized capital gains;
       9.   stock price;
       10.   net investment income.

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      No award under the 2002 Plan which is intended to qualify as “performance-based compensation” under Section 162(m) of the Code will vest in respect of a period in which performance fails to attain or exceed the minimum level for any of the performance standards.

      For purposes of the performance goals described above, “Adjusted EBITDA” for any referenced period shall mean the Company’s (or with respect to an acquired company, the acquired company’s) operating income for such period, as reflected on its consolidated audited financial statements, adjusted to exclude the impact of:

       (1)   depreciation and amortization expenses;
       (2)   any amounts accrued pursuant to management bonus plans and related employer payroll taxes for the fiscal year;
       (3)   any discretionary or matching contributions to the Company’s 401(k) Plan and other deferred compensation plans for the applicable fiscal year;
       (4)   all items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles, all as determined in accordance with standards established by Opinion No. 30 of the Accounting Principles Board, and any amendment, restatement, modification, supplement or successor thereto (“APB Opinion No. 30”);
       (5)   all items of gain, loss or expense related to restructuring charges of subsidiaries whose operations are not included in operating income for the fiscal year;
       (6)   all items of gain, loss or expense related to discontinued operations that do not qualify as a segment of a business as defined under APB Opinion No. 30;
       (7)   any profit or loss attributable to the business operations of any entity acquired by the Company or any consolidated subsidiary during the Plan Year;
       (8)   the reduction in carrying value of long-lived assets, in accordance with FASB Pronouncement No. 121 and/or FASB Pronouncement No. 144, and any amendment, restatement, modification, supplement or successor thereto; and
       (9)   all items of expense related to equity-based compensation determined in accordance with the standards established by Opinion No. 25 of the Accounting Principles Board or FASB Pronouncement No. 123, and any amendment, restatement, modification, supplement or successor thereto.

      In addition, operating income will not be adjusted for a minority interest holder’s share of a consolidated subsidiary’s operating income or loss.

      

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