How does Hardees record reversals of share-based compensation expense?

According to Hardees's 2025 Franchise Disclosure Document, the company records reversals of share-based compensation expense for forfeitures as they occur. This accounting practice means that if an employee or executive leaves the company or fails to meet the conditions required to vest their share-based compensation (such as profit sharing interests), Hardees will reduce the compensation expense recognized in its financial statements in the period that the forfeiture occurs. This is a standard accounting practice that ensures the company's financial statements accurately reflect the actual compensation earned by its employees.

Hardees's equity-based compensation structure includes both time vesting and performance vesting profit sharing interests. The company recognizes compensation expense relating to time vesting profit sharing interests ratably over the requisite service period for the entire award. For performance vesting profit sharing interests, Hardees records compensation expense when it deems the achievement of the performance goals to be probable, recognizing the expense ratably over the requisite service period that is determined to be the most likely outcome for each separately vesting portion.

In fiscal year 2025, Hardees recorded reversals of $545 of share-based compensation expense due to forfeitures of profit sharing interests. Understanding how Hardees accounts for share-based compensation and its reversals can provide a prospective franchisee with insight into the company's financial management and compensation practices.