Document:

ex10_1.htm

 

Exhibit 10.1

 

	
2010 Long-Term Performance Incentive Program

	
Denny’s Corporation

	
Performance Shares and Target Cash Opportunity

	
203 East Main Street

	
Award Certificate

	
Spartanburg, SC 29319

«Name»  (“Grantee”)

Denny’s Corporation (the “Company”) has granted to you a performance award (the “Award”), denominated one-half in performance shares (the “Performance Shares”) and one-half in cash (the “Target Cash Opportunity”). The Award is granted under the Denny’s Corporation 2004 Omnibus Incentive Plan (the “Plan”) and pursuant to the 2010 Long-Term Performance Incentive Program (the “Program Description”).  The Performance Shares entitle you to earn shares of the Company’s $0.01 par value common stock (“Shares”), on a one-for-one basis, and the Target Cash Opportunity entitles you to earn a cash payment, as set forth below. By accepting the Award, Grantee shall be deemed to have agreed to the terms and conditions set forth in this Award Certificate, the Program Description and the Plan.

Grant Date of Award: January 26, 2010

Number of Performance Shares: «Perf_Shares»

Target Cash Opportunity: «Target_Cash»

The Award is granted as a Qualified Performance-Based Award under the Section 14.11 of the Plan.  If the Company achieves at least $50,000,000 in Adjusted EBITDA for the fiscal year ending December 29, 2010 (the “Threshold Performance Goal”), then the Award shall be considered earned in an amount equal to 150% of the Performance Shares and Target Cash Opportunity; provided, however, that the number of Performance Shares and the amount of the Target Cash Opportunity actually paid under the Award will be subject to reduction based on the TSR Comparison described below, or otherwise in the discretion of the Committee, and is also subject to your continuous employment during the vesting period described below.  Prior to any conversion or payout of the Award, the Compensation and Incentives Committee of the Company’s Board of Directors shall certify in writing that the Threshold Performance Goal has been satisfied.

If the Threshold Performance Goal is satisfied, then the Award will vest (become non-forfeitable) on December 26, 2012, subject to your continued employment with the Company through such date, unless vesting is accelerated under Section 2 of the Terms and Conditions on the following page.

If the Threshold Performance Goal is satisfied and the vesting condition is satisfied, the actual number of Performance Shares and the amount of the Target Cash Opportunity to be paid to the Grantee will be adjusted to an amount between 0% and 150% of the number and amount originally granted, based on the Company’s Total Shareholder Return (“TSR,” as defined below) ranking relative to the Company’s Peer Group (as defined in the Program Description) over a three-year fiscal period ending on December 26, 2012 (the “Performance Period”), as further described in the Program Description (the “TSR Comparison”), or based on any other criteria determined by the Committee in its discretion.

  

  

  

	
 

For purposes of this Award Certificate, TSR will be calculated as follows:

 

TSR = (ending stock price – beginning stock price + reinvested dividends) / beginning stock price

 

This Award is governed by the terms of the Plan and the Program Description, and subject to the Terms and Conditions on the following page.  Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.

 

	  	  	
 

 

 

 

 

 

            February 11, 2010

	
Jill Van Pelt - Vice President, Human Resources

For Denny’s Corporation

 

	  	
Date

 

 

 

 

 

 

 

  

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TERMS AND CONDITIONS

1. Vesting and Forfeiture of Award.  If the Threshold Performance Goal is satisfied, the Award will vest and become non-forfeitable on December 26, 2012, subject to accelerated vesting under certain circumstances as provided in Section 2 below (the “Vesting Date”).  If Grantee’s employment with the Company terminates for any reason other than as set forth in paragraph (a) of Section 2 below, Grantee shall forfeit all of Grantee’s right, title and interest in and to any unvested Performance Shares and unvested Target Cash Opportunity under the Award as of the date of termination of employment. In addition, if Grantee’s employment is terminated by the Company for Cause, Grantee shall also forfeit any vested Performance Shares and Target Cash Opportunity that has not yet been paid.

 

2.  Acceleration of Vesting.  The Award shall be subject to accelerated vesting as set forth below, in each case subject to the TSR Comparison adjustment as described.

 

(a) Upon Grantee’s termination of employment with the Company due to death or Disability, a pro rata portion of the Performance Shares and the Target Cash Opportunity will vest and become non-forfeitable (the pro rata portion shall be determined by multiplying each of the number of Performance Shares and the amount of the Target Cash Opportunity by a fraction, the numerator of which is the number of days elapsed from December 31, 2009 to the termination date, and the denominator of which is 1,092). The TSR Comparison shall then be applied, and the pro rata number of Performance Shares and the pro rata amount of Target Cash Opportunity shall be adjusted, based on the Company’s TSR ranking relative to the Peer Group as of the end of the Company’s fiscal quarter immediately following the termination of employment due to death or Disability (as if the Performance Period had ended on such fiscal quarter ending date).

 

 (b) Upon a Change in Control of the Company, the Performance Shares and the Target Cash Opportunity will vest and become non-forfeitable. The TSR Comparison shall then be applied, and the number of Performance Shares and the Target Cash Opportunity amount shall be adjusted, based on the Company’s TSR ranking relative to the Peer Group as of the date of the Change in Control (as if the Performance Period had ended on the date of the Change in Control).

 

3. TSR Comparison and Award Adjustment.  The number of Performance Shares and the amount of the Target Cash Opportunity shall be adjusted following the end of the Performance Period (or the pro rata portion shall be adjusted following the end of the Company’s fiscal quarter following a termination of employment due to death or Disability, or following a Change in Control, if applicable) based on the TSR Comparison, as follows:

 

	  	
Company’s TSR Percentile Ranking Relative to Peer Group

	
Adjustment

Factor *

	
Below Threshold

	
Less than 25%

	
0%

	
Threshold

	
25%

	
50%

	
Target

	
50%

	
100%

	
Maximum

	
90%

	
150%

* TSR Comparison is interpolated on a straight-line basis for performance between points.

In addition, the Committee retains the discretion to increase (but not above 150% of the original award amounts) or decrease the number of Performance Shares and the amount of the Target Cash Opportunity to be paid based on such other factors as the Committee deems appropriate.

4. Conversion to Shares and Cash Payment.  The Performance Shares (as adjusted based on the TSR Comparison) will be converted to actual Shares, and the Target Cash Opportunity (as adjusted based on the TSR Comparison) will be paid in cash, as soon as practicable following the end of the Performance Period, and no later than January 31, 2013.  Stock certificates evidencing Shares paid upon conversion of the Performance Shares will be registered on the books of the Company in Grantee’s name as of the date of payment and delivered to Grantee as soon as practical thereafter.

5. Limitation of Rights.  The Award does not confer to Grantee or Grantee’s beneficiary any rights of a stockholder of the Company unless and until Shares are in fact issued to such person in connection with the Award.  Nothing in this Award Certificate shall interfere with or limit in any way the right of the Company or any Affiliate to terminate Grantee’s employment at any time, nor confer upon Grantee any right to continue in employment of the Company or any Affiliate.

6. Payment of Taxes.  The Company or any Affiliate employing Grantee has the authority and the right to deduct or withhold, or require Grantee to remit to the employer, an amount sufficient to satisfy federal, state, and local taxes (including Grantee’s FICA obligation) required by law to be withheld with respect to any taxable event arising as a result of the vesting or settlement of the Award. The withholding requirement with respect to the Performance Shares only may be satisfied, in whole or in part, by withholding from the settlement of the Performance Shares a number of Shares having a fair market value equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Company establishes. The obligations of the Company under this Award Certificate will be conditional on such payment or arrangements, and the Company, and, where applicable, its Affiliates will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise.

7. Restrictions on Issuance of Shares.  If at any time the Committee shall determine in its discretion, that registration,  listing or qualification of the Shares underlying the Performance Shares upon any securities exchange or similar self-regulatory organization or under any foreign, federal, or local law or practice, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to the settlement of the Performance Shares, the Shares will not be paid unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

 

  

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8. Plan Controls. The terms contained in the Plan are incorporated into and made a part of this Award Certificate and this Award Certificate shall be governed by and construed in accordance with the Plan.  In the event of any actual or alleged conflict between the provisions of the Plan and the provisions of this Award Certificate, the provisions of the Plan shall be controlling and determinative.

9. Successors.  This Award Certificate shall be binding upon any successor of the Company, in accordance with the terms of this Award Certificate and the Plan.

10. Severability.  If any one or more of the provisions contained in this Award Certificate is deemed to be invalid, illegal or unenforceable, the other provisions of this Award Certificate will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

11. Notice.  Notices and communications under this Award Certificate must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid.  Notices to the Company must be addressed to Denny’s Corporation, 203 East Main Street, Spartanburg, SC 29319-0001, Attn: Secretary, or any other address designated by the Company in a written notice to Grantee. Notices to Grantee will be directed to the address of Grantee then currently on file with the Company, or at any other address given by Grantee in a written notice to the Company.

 

 

 

- 4 -ex10_2.htm

 

Exhibit 10.2

 

 

 

Denny’s 2010 Long-Term Performance Incentive Program

 

 

Program Concept

 

The Compensation and Incentives Committee of the Board of Directors (the “Compensation Committee”) has approved the 2010 Long-Term Performance Incentive (LTPI) Program, an incentive compensation program pursuant to and subject to the Denny’s Corporation 2004 Omnibus Incentive Plan.

 

Under the program, participants are granted a target number of performance shares and a target cash award. From 0% to 150% of the target number of performance shares and the target amount of cash may be earned based on the results of Denny’s Total Shareholder Return (TSR), discussed further below. Once earned, the performance shares convert to and are settled in shares of Denny’s stock on a one-for-one basis.

 

The number of shares and the percentage of the cash target earned will be contingent upon Denny’s TSR results as compared to its peers (refer to Peer Group listed below).

 

Please refer to your individual award agreement for your target number of performance shares and target cash award.

 

Your award agreement and the 2004 Omnibus Incentive Plan govern the terms of this award. Please read these documents carefully.  If any term in this document conflicts with the award agreement, the terms of the award agreement will control the award.

 

Eligibility

 

Vice Presidents and above are eligible for the 2010 performance long-term incentive awards.  At the discretion of the Executive Committee, and with approval by the Compensation Committee, certain director-level and senior director-level employees may be eligible for these awards based on individual performance and contributions to the Company.

 

 

Performance Period & Vesting Schedule

 

The performance period will be the three-year fiscal period beginning December 31, 2009 and ending December 26, 2012.  Performance shares will vest and be earned at the end of the performance period.  Participants will have no voting or dividend rights until the shares are distributed. The cash award will also vest and be earned at the end of the performance period.

Participants must be employed on the vesting date in order to vest in the award (except in cases of death or disability, or otherwise as noted below).  Termination for cause results in forfeiture of all unpaid awards, including otherwise vested awards.

 

How Performance Is Measured

 

 

Performance will be measured based on the Total Shareholder Return (TSR) of Denny’s stock compared to the Total Shareholder Returns of the stocks of Denny’s Peer Group over the three-year performance period.  

 

 

  

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TSR combines share price appreciation and dividends paid to show the total return to the shareholder.  TSR will be calculated as follows:

 

TSR = (ending stock price – beginning stock price + reinvested dividends) / beginning stock price

 

A 20-trading day average will be used to determine the beginning and ending stock prices for Denny’s and its Peer Group.  Based on this definition, Denny’s beginning stock price as of December 31, 2009 is $2.38.

Denny’s TSR performance ranking compared to its Peer Group determines the payout level as shown below.

	  	
Denny’s TSR 

Performance Ranking vs. Peers

	
Payout as a % of Target

	
Below Threshold

	
< 25th %ile

	
0%

	
Threshold

	
25th %ile

	
50%

	
Target

	
50th %ile

	
100%

	
Maximum

	
90th %ile

	
150%

Note: Linear interpolation will be used to determine payouts which fall between given points on this scale.

 

Peer Group

 

 

Denny’s TSR will be measured against the TSR of the following twenty peer companies:

 

Bob Evans Farms

Brinker International

Buffalo Wild Wings

Burger King

California Pizza Kitchen

CKE Restaurants

Cracker Barrel

Darden Restaurants

DineEquity

Domino’s Pizza

Jack in the Box

O’Charley’s

Panera Bread

Papa John’s International

Red Robin

Ruby Tuesday

Sonic Corporation

Steak & Shake

Texas Roadhouse

Wendy’s/Arby’s Group

 

  

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Form and Timing of Payout, and Taxation

 

Participants will receive their earned shares and cash as soon as practicable following the end of the performance period, but no later than January 31, 2013.   Participants will be taxed on the value of the vested shares and the vested cash on the date of payout. All applicable federal, state, and local taxes will be withheld from the payment due to the participant.  The closing stock price of Denny’s stock on the last trading day preceding the date of payout will be used to determine the taxable value of the shares.

 

It is intended that the payments under the LTPI Program shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Internal Revenue Code.  The Program shall be construed in a manner that effects such intent.  Nevertheless, the tax treatment of the Program is not warranted or guaranteed.  Neither the Company, its affiliates nor their respective directors, officers, employees or advisers (other than in his or her capacity as a participant in the Program) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by any participant or other taxpayer as a result of the LTPI Program.

 

 

Impact of Termination Events

 

Participation in the Plan does not constitute an offer or guarantee of employment.  The table below shows the impact of various termination events and a change in control:

 

	
Termination Event

	
       Payout

	
Death or disability

	
· Termination due to death or disability prior to vesting will result in pro rata vesting  of the amount earned, calculated  at the end of the quarter following the termination due to death or disability, and paid out as soon as administratively practicable thereafter.

· Termination due to death or disability occurring between the vesting and payout dates will result in no change to the amount that would have been paid had the termination event not occurred.

	
Termination for Cause

	
· Vested but unpaid and unvested awards will be forfeited.  No payout will occur even if awards had vested.

	
Voluntary Termination (Resignation, Retirement)

	
· Vested but unpaid awards will be paid out in accordance with the regular payout schedule.  Unvested awards will be forfeited.

	
Involuntary Termination Not for Cause

	
· Vested but unpaid awards will be paid out in accordance with the regular payout schedule.  Unvested awards will be forfeited.

	
Change in Control

	
· Vested but unpaid awards will be paid out in accordance with the regular payout schedule, but no later than the date of the Change in Control.  Unvested awards will be deemed to be fully earned based on actual performance up to the date of the Change in Control, and will be paid out as soon as practicable but in no event sooner than 15 days or later than 60 days following the Change in Control.

 

 

 

Impact on Other Plans

 

Awards are not considered pay for purposes of Denny’s retirement or welfare plans. There will be no specific deferral opportunities under this plan.

 

 

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