PRELIMINARY
COPY SUBJECT TO COMPLETION — DATED APRIL 13, 2017
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☒
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Preliminary
Proxy Statement
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☐
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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☐
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Definitive
Proxy Statement
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☐
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Definitive
Additional Materials
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☐
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Soliciting
Material under §240.14a-12
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FIESTA
RESTAURANT GROUP, INC.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
☐
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it
was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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☐
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Fee
paid previously with preliminary materials.
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☐
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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PRELIMINARY
COPY SUBJECT TO COMPLETION —DATED APRIL 13, 2017
2017
Annual
Meeting of Shareholders
Notice
and Proxy Statement
[●],
2017
[●]
a.m.
FIESTA
RESTAURANT GROUP, INC.
14800
Landmark Boulevard, Suite 500
Dallas,
TX 75254
[●],
2017
Deal
Fellow Shareholders,
We
are pleased to invite you to attend the annual meeting of shareholders of Fiesta Restaurant Group, Inc. to be held at [●]
on [●], [●], 2017, at [●] A.M. ([●]). The formal notice of annual meeting appears on the next page.
Your vote will be especially important at
this annual meeting. As you may have heard certain individuals and funds who purchased shares of Fiesta Restaurant Group in
the last twelve months (collectively, the “
Dissident Group
”) notified us of their intent to nominate three
nominees for election as a director at the annual meeting in opposition to the nominees recommended by the board of
directors. However, as of April 12, 2017, the Dissident Group has publicly withdrawn one of their nominees and has now
indicated their intent to nominate two director nominees for election at the 2017 Annual Meeting in opposition to two of the
nominees recommended by the board of directors.
We strongly urge you to read the accompanying
proxy statement carefully and vote FOR the nominees proposed by the board of directors, and in accordance with the board’s
recommendations on the other proposals, by using the enclosed
WHITE
proxy card. If you have voted using the proxy
card sent to you by the Dissident Group, you can subsequently revoke it by using the
WHITE
proxy card to vote. Only
your latest-dated vote will count—any prior proxy card may be revoked at any time prior to the annual meeting as described
in the accompanying proxy statement.
We look forward to greeting personally
those shareholders who are able to be present at the meeting. However, regardless of whether you plan to be with us at the meeting,
it is important that your voice be heard. Accordingly, we request that you vote on the
WHITE
proxy card by telephone,
by Internet or by signing, dating and returning the
WHITE
proxy card in the postage-paid envelope provided.
If you have any questions or require
any assistance with voting your
WHITE
proxy card, please contact our proxy solicitation firm MacKenzie Partners,
Inc. at:
105
Madison Avenue
New
York, New York 10016
proxy@mackenziepartners.com
Call
Collect: (212) 929-5500
or
Toll-Free:
(800) 322-2885
Email:
fiesta@mackenziepartners.com
Very
truly yours,
Stacey Rauch,
Chairman of the Board of Directors
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|
Rich Stockinger
Chief Executive Officer and President
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FIESTA
RESTAURANT GROUP, INC.
14800 Landmark Boulevard, Suite 500
Dallas, Texas 75254
To
the Shareholders of Fiesta Restaurant Group, Inc.:
You
are invited to attend the 2017 Annual Meeting of Shareholders, which we refer to as the “
2017 Annual Meeting
”,
of FIESTA RESTAURANT GROUP, INC., a Delaware corporation, which we refer to as “
we
”, “
us
”,
“
our
”, the “
Company
” and “
Fiesta Restaurant Group
”, at [●] on [●],
[●], 2017, at [●] A.M. ([●]), for the following purposes:
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(1)
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To
elect three directors of the Company as Class II directors to serve for a term of
three years and until their successors have been duly elected and qualified;
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(2)
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To
adopt, on an advisory basis, a non-binding resolution approving the compensation of the
Company’s Named Executive Officers, as described in the Proxy Statement under “Executive
Compensation”;
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(3)
|
To
approve the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan, as amended, for
purposes of complying with Section 162(m) of the Internal Revenue Code of 1986, as amended;
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(4)
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To
approve an amendment to the Company’s Restated Certificate of Incorporation to
implement a majority voting standard in uncontested elections of directors;
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(5)
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To
ratify the appointment of Deloitte & Touche LLP as the independent registered public
accounting firm of the Company for the 2017 fiscal year; and
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(6)
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To
consider and act upon such other matters as may properly come before the 2017 Annual
Meeting.
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Only
shareholders of record at the close of business on [●], 2017, which we refer to as the “
record date
”,
are entitled to receive notice of, and to vote at, the 2017 Annual Meeting, and at any adjournment or postponements thereof. Such
shareholders are urged to submit an enclosed
WHITE
proxy card, even if your shares were sold after such date. If
your brokerage firm, bank, broker-dealer or other similar organization is the holder of record of your shares (i.e., your shares
are held in “street-name”), you will receive voting instructions from the holder of record. You must follow these
instructions in order for your shares to be voted. We recommend that you instruct your broker or other nominee, by following those
instructions, to vote your shares for the enclosed
WHITE
proxy card. A list of our shareholders as of the close
of business on [●], 2017 will be available for inspection during business hours for ten days prior to the 2017 Annual Meeting
at our principal executive offices located at 14800 Landmark Boulevard, Suite 500, Dallas, TX 75254.
The accompanying
Proxy Statement provides detailed information about the matters to be considered at the 2017 Annual Meeting. It is important that
your voice be heard and your shares be represented at the 2017 Annual Meeting whether or not you are personally able to attend.
Even if you plan to attend the 2017 Annual Meeting, we hope that you will read the Proxy Statement and the voting instructions
on the enclosed
WHITE
proxy card.
We urge you to vote TODAY by completing, signing and dating the
WHITE
proxy card and mailing it in the enclosed, postage pre-paid envelope, or vote by telephone or the Internet by following the instructions
on the
WHITE
proxy card.
If your shares are not registered in your own name and you would like to attend the 2017 Annual
Meeting, please ask the broker, bank or other nominee that holds the shares to provide you with evidence of your record date share
ownership.
As you may know, JCP
Investment Management, LLC, JCP Investment Partnership, LP, JCP Single-Asset Partnership, LP, JCP Investment Partners, LP,
JCP Investment Holdings, LLC, James C. Pappas, BLR Partners LP, BLRPart, LP, BLRGP Inc., Fondren Management, LP, FMLP Inc.,
Bradley L. Radoff, Bandera Master Fund L.P., Bandera Partners LLC, Gregory Bylinsky, Jefferson Gramm, Lake Trail Managed
Investments LLC, Lake Trail Capital LP, Lake Trail Capital GP LLC, Thomas W. Purcell, Jr., Joshua E. Schechter, John Morlock
and Alan Vituli, including each of their affiliates and associates (collectively, the “
Dissident
Group
”), purchased shares of Fiesta Restaurant Group in the last twelve months and notified the Company of their
intent to nominate three nominees for election as a director of the Company at the 2017 Annual Meeting in opposition to the
nominees recommended by the board of directors. However, as of April 12, 2017, the Dissident Group has publicly withdrawn one
of their nominees and has now indicated their intent to nominate two director nominees for election at the 2017 Annual
Meeting in opposition to two of the nominees recommended by the board of directors. You may receive proxy solicitation
materials from the Dissident Group. The Company is not responsible for the accuracy of any information provided by or
relating to the Dissident Group or its nominee contained in solicitation materials filed or disseminated by or on behalf of
the Dissident Group or any other statements that the Dissident Group may make.
The board does NOT endorse the Dissident
Group nominees and strongly and unanimously recommends that you NOT sign or return any proxy card sent to you by the
Dissident Group. If you have previously voted using a proxy card sent to you by the Dissident Group, you can subsequently
revoke that proxy by following the instructions on the enclosed
WHITE
proxy card to vote over the Internet or by
telephone or by completing, signing and dating the proxy card and mailing it in the postage pre-paid envelope provided. Only
your latest dated proxy will count. Any proxy may be revoked at any time prior to its exercise at the 2017 Annual Meeting as
described in the accompanying Proxy Statement.
THE
BOARD UNANIMOUSLY RECOMMENDS VOTING
FOR
THE ELECTION OF EACH OF THE BOARD’S NOMINEES ON PROPOSAL 1 AND
FOR
PROPOSALS 2, 3, 4 AND 5 USING THE ENCLOSED
WHITE
PROXY CARD.
THE
BOARD URGES YOU NOT TO SIGN, RETURN OR VOTE ANY PROXY CARD SENT TO YOU
BY
THE DISSIDENT GROUP.
You
are cordially invited to attend the 2017 Annual Meeting in person. In accordance with our security procedures, all persons attending
the 2017 Annual Meeting will be required to present a form of government-issued picture identification. If you hold your shares
in “street-name”, you must also provide proof of ownership (such as recent brokerage statement). If you are a holder
of record and attend the 2017 Annual Meeting, you may vote by ballot in person even if you have previously returned your proxy
card. If you hold your shares in “street-name” and wish to vote in person, you must provide a “legal proxy”
from your bank or broker.
Please
note that, even if you plan to attend the 2017 Annual Meeting, we recommend that you vote using the enclosed
WHITE
proxy card prior to the 2017 Annual Meeting to ensure that your shares will be represented.
Regardless
of the number of shares of common stock of the Company that you own, your vote is important. Thank you for your continued support,
interest and investment in Fiesta Restaurant Group.
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Very
truly yours,
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By
order of the Board of Directors,
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JOSEPH
A. ZIRKMAN,
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Senior
Vice President, General Counsel & Secretary
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Dallas,
Texas
[●],
2017
IMPORTANT
TO ASSURE THAT YOUR
SHARES ARE REPRESENTED AT THE 2017 ANNUAL MEETING, WE URGE YOU TO COMPLETE, DATE AND SIGN THE ENCLOSED
WHITE
PROXY
CARD AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, OR VOTE BY TELEPHONE OR THE INTERNET AS INSTRUCTED ON THE
WHITE
PROXY CARD, WHETHER OR NOT YOU PLAN TO ATTEND THE 2017 ANNUAL MEETING. YOU CAN REVOKE YOUR PROXY AT ANY TIME BEFORE THE PROXIES
YOU APPOINTED CAST YOUR VOTES.
If
you have any questions or need any assistance in voting your shares, please contact our proxy solicitor:
105
Madison Avenue
New
York, New York 10016
proxy@mackenziepartners.com
Call
Collect: (212) 929-5500
or
Toll-Free: (800) 322-2885
Email:
fiesta@mackenziepartners.com
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2017 ANNUAL MEETING TO BE HELD ON [●], 2017: THE PROXY STATEMENT
FOR THE 2017 ANNUAL MEETING AND THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR-ENDED JANUARY 1, 2017 ARE AVAILABLE FREE OF
CHARGE ON OUR WEBSITE AT WWW.FRGI.COM.
The
Notice of Annual Meeting of Shareholders and the attached Proxy Statement are first being made available to shareholders of record
as of [●], 2017 on or about [●], 2017.
FIESTA
RESTAURANT GROUP, INC.
TABLE
OF CONTENTS
PRELIMINARY
COPY SUBJECT TO COMPLETION — DATED APRIL 13, 2017
FIESTA
RESTAURANT GROUP, INC.
14800 Landmark Boulevard, Suite 500
Dallas, Texas 75254
PROXY
STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
[●], 2017
This
Proxy Statement is furnished in connection with the solicitation of proxies by the board of directors of FIESTA RESTAURANT GROUP,
INC., a Delaware corporation, to be used at the Annual Meeting of Shareholders, which we refer to as the “
meeting
”,
of the Company which will be held at [●] on [●], 2017, at [●] A.M. (CDT), and at any adjournment or adjournments
thereof. Only shareholders of record at the close of business on [●], 2017, which we refer to as the “
record date
”,
will be entitled to vote at the 2017 Annual Meeting. This Proxy Statement, the enclosed
WHITE
proxy card, and the
Annual Report on Form 10-K for the fiscal year ended January 1, 2017 are first being mailed to shareholders of record as of [●],
2017 on or about [●], 2017.
Holders
of our common stock at the close of business on [●], 2017 will be entitled to vote at the 2017 Annual Meeting. As of the
date of this Proxy Statement, [●] shares of our common stock, $0.01 par value per share, were outstanding and entitled to
vote. Shareholders are entitled to one vote for each share of common stock held. A majority, or [●], of these shares, present
in person or represented by proxy at the 2017 Annual Meeting, will constitute a quorum for the transaction of business.
The
Notice of Annual Meeting of Shareholders, this Proxy Statement, the enclosed
WHITE
proxy card and the Annual Report
on Form 10-K for the Company’s fiscal year-ended January 1, 2017 are also available at
www.frgi.com
.
All
references in this Proxy Statement to “
Fiesta Restaurant Group
”, the “
Company
”, “
we
”,
“
us
” and “
our
” refer to Fiesta Restaurant Group, Inc. References to the “
board
of directors
” or “
board
” refer to the board of directors of Fiesta Restaurant Group.
QUESTIONS
AND ANSWERS ABOUT THE 2017 ANNUAL MEETING
Why
am I receiving this Proxy Statement?
At
the 2017 Annual Meeting, the Company asks you to vote on six proposals:
Proposal
1
: to elect three directors of the Company, each to hold office for a three-year term and until his successor has been duly
elected and qualified;
Proposal
2
: to adopt, on an advisory basis, a non-binding resolution approving the compensation of the Company’s Named
Executive Officers, as described in the Proxy Statement under “Executive Compensation”;
Proposal
3
: to approve the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan, as amended, for purposes of complying with Section
162(m) of the Internal Revenue Code of 1986, as amended;
Proposal
4
: to approve an amendment to the Company’s Restated Certificate of Incorporation to implement a majority voting standard
in uncontested elections of directors;
Proposal
5
: to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company
for the 2017 fiscal year; and
Proposal
6
: to consider and act upon such other matters as may properly come before the 2017 Annual Meeting.
The
board may also ask you to participate in the transaction of any other business that is properly be brought before the 2017 Annual
Meeting in accordance with the provisions of our Restated Certificate of Incorporation, as amended (the “
Restated Certificate
of Incorporation
”) and Amended and Restated Bylaws (the “
Bylaws
”).
You
are receiving this Proxy Statement as a shareholder of the Company as of [●], 2017, the record date for purposes of determining
the shareholders entitled to receive notice of and vote at the 2017 Annual Meeting. As further described below, we request that
you promptly use the enclosed
WHITE
proxy card to vote, by Internet, by telephone or by mail, in the event you desire
to express your support of or opposition to the proposals.
THE
BOARD UNANIMOUSLY RECOMMENDS VOTING
FOR
THE ELECTION OF EACH OF THE BOARD’S NOMINEES ON PROPOSAL 1 AND
FOR
PROPOSALS 2, 3, 4 AND 5 USING THE ENCLOSED
WHITE
PROXY CARD.
THE
BOARD URGES YOU NOT TO SIGN, RETURN OR VOTE ANY PROXY CARD SENT TO YOU
BY
THE DISSIDENT GROUP, EVEN AS A PROTEST VOTE AS ONLY YOUR LATEST DATE PROXY CARD WILL BE COUNTED.
When
will the 2017 Annual Meeting be held?
The
2017 Annual Meeting is scheduled to be held at [●] A.M. (CDT), on [●], [●], 2017, at [●].
Who
is soliciting my vote?
In
this Proxy Statement, the board is soliciting your vote.
How
does the board recommend that I vote?
The
board unanimously recommends that you vote by proxy using the
WHITE
proxy card with respect to the proposals, as
follows:
|
●
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FOR
the election of all three board nominees set forth on the
WHITE
proxy
card;
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|
●
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FOR
on an advisory basis, the approval of the non-binding resolution on the compensation
of the Company’s Named Executive Officers as described in the Proxy Statement under
“Executive Compensation”;
|
|
●
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FOR
the approval of the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan, as amended,
which we refer to as the “
Plan
” for purposes of complying with Section
162(m) of the Internal Revenue Code of 1986, as amended, which we refer to as the “
Code
”;
|
|
●
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FOR
the approval of an amendment to our Restated Certificate of Incorporation to implement
a majority voting standard in uncontested elections of directors; and
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●
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FOR
the ratification of the appointment of Deloitte & Touche LLP as the independent
registered public accounting firm of the Company for the 2017 fiscal year.
|
Why
is the board recommending FOR Proposals 1, 2, 3, 4 and 5?
We
describe all proposals and the board’s reasons for supporting Proposals 1, 2, 3, 4 and 5 in detail beginning at page 14
of this Proxy Statement.
Who
can vote?
Holders
of our common stock at the close of business on [●], 2017, the record date, may vote at the 2017 Annual Meeting. At the
close of business on that date, we had [●] shares of our common stock outstanding and entitled to vote.
As
of the date of this Proxy Statement, there are [●] shares of our common stock outstanding, each entitled to one vote.
How
do I vote if I am a record holder?
You
can vote by attending the 2017 Annual Meeting and voting in person, or you can vote by proxy. If you are the record holder of
your stock, you can vote in the following four ways:
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●
|
By
Internet
: You may vote by submitting a proxy over the Internet. Please refer to the
WHITE
proxy card or voting instruction form provided to you by your broker
for instructions of how to vote by Internet.
|
|
●
|
By
Telephone
: Shareholders located in the United States that receive proxy materials
by mail may vote by submitting a proxy by telephone by calling the toll-free telephone
number on the
WHITE
proxy card or voting instruction form and following
the instructions.
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●
|
By
Mail
: If you received proxy materials by mail, you can vote by submitting a proxy
by mail by marking, dating, signing and returning the
WHITE
proxy card
in the postage-paid envelope.
|
|
●
|
In
Person at the 2017 Annual Meeting
: If you attend the 2017 Annual Meeting, you may
deliver your completed
WHITE
proxy card in person or you may vote by completing
a ballot, which we will provide to you at the 2017 Annual Meeting. You are encouraged
to complete, sign and date the
WHITE
proxy card and mail it in the enclosed
postage pre-paid envelope regardless of whether or not you plan to attend the 2017 Annual
Meeting.
|
How
do I vote if my common shares are held in “street name”?
If
you hold your shares beneficially in street name through a nominee (such as a bank or broker), you may be able to complete your
proxy and authorize your vote by proxy by telephone or the Internet as well as by mail. You should follow the instructions you
receive from your nominee to vote these shares.
If
you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares of our common stock for you,
your shares will not be voted with respect to any proposal, as we do not believe any of the proposals qualify for discretionary
voting treatment by a broker. We therefore encourage you to provide voting instructions on a proxy card or a provided voting instruction
form to the bank, broker, trustee or other nominee that holds your shares by carefully following the instructions provided in
their notice to you.
How
many votes do I have?
Shareholders
are entitled to one vote per proposal for each share of common stock held.
How
will my shares of common stock be voted?
The
shares of common stock represented by any proxy card which is properly executed and received by the Company prior to or at the
2017 Annual Meeting will be voted in accordance with the specifications you make thereon. Where a choice has been specified on
the
WHITE
proxy card with respect to the proposals, the shares represented by the
WHITE
proxy will
be voted in accordance with the specifications. If you return a validly executed
WHITE
proxy card without indicating
how your shares should be voted on a matter and you do not revoke your proxy, your proxy will be voted:
FOR
the election
of the three named director nominees as Class II directors set forth on the
WHITE
proxy card (Proposal 1);
FOR
,
on an advisory basis, the approval of the non-binding resolution on the compensation of the Company’s Named Executive Officers
as described in the Proxy Statement under “Executive Compensation,” (Proposal 2);
FOR
the approval of the Fiesta
Restaurant Group, Inc. 2012 Stock Incentive Plan, as amended, for purposes of complying with Section 162(m) of the Internal Revenue
Code of 1986, as amended, (Proposal 3);
FOR
the approval of an amendment to our Restated Certificate of Incorporation to
implement a majority voting standard in uncontested elections of directors (Proposal 4); and
FOR
the ratification of the
appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2017 fiscal
year (Proposal 5).
What
vote is required with respect to the proposals?
Proposal
1, regarding the election of three directors to our board, will require approval of a plurality of the votes cast, meaning that
the director nominees receiving the highest numbers of “for” votes of the shares entitled to be voted for them, up
to the number of directors to be elected by such shares, will be elected. As a result, the three director nominees receiving the
most “for” votes at the 2017 Annual Meeting will be elected. The enclosed
WHITE
proxy card enables a
shareholder to vote “FOR” or “WITHHOLD” from voting as to each person nominated by the board.
Proposals
2, 3, 5, and 6 will be decided by the affirmative vote of a majority of the votes cast. The enclosed
WHITE
proxy
card enables a shareholder to vote “FOR,” “AGAINST” or “ABSTAIN” on these proposals. Each
of Proposals 2, 3, 5, and 6 will pass if the total votes cast “for” a given proposal exceed the total number of votes
cast “against” such given proposal.
Proposal
4 will be decided by the affirmative vote of 66 2/3% of the outstanding shares of our common stock.
What
is the effect of abstentions and broker non-votes on voting?
Abstentions
and broker “non-votes” are included in the determination of the number of shares present at the 2017 Annual Meeting
for quorum purposes. Abstentions will count as a vote against the proposals, other than for the election of directors. Abstentions
will not have an effect on the election of directors because directors are elected by a plurality of the votes cast. Broker “non-votes”
are not counted in the tabulations of the votes cast or present at the 2017 Annual Meeting and entitled to vote on any of the
proposals and therefore will have no effect on the outcome of the proposals. A broker “non-vote” occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received instructions from the beneficial owner. We do not anticipate any of the proposals
presented at the 2017 Annual Meeting will allow nominees to exercise discretionary voting power.
What
happens if proposal 4, which would implement majority voting, receives a majority of the votes cast but not a vote of 66 2/3%
of the outstanding shares of our common stock?
Our
Restated Certificate of Incorporation contains provisions which incorporate the plurality voting standard. In order to implement
majority voting, an amendment to the Restated Certificate of Incorporation is required and such amendment requires the vote of
66 2/3% of the outstanding shares of our common stock. If this threshold is not met, then the amendment to the Restated Certificate
of Incorporation will not be adopted. However, if the proposal receives the support of a majority of the votes cast but less than
66 2/3% of the outstanding shares of our common stock, then the board will adopt a policy whereby, if a director nominee is elected
but receives more votes withholding support than votes FOR, the director must offer his or her resignation, to the board.
If
I have already voted by proxy against the proposals, can I still change my mind?
Yes.
To change your vote by proxy, simply sign, date and return the enclosed
WHITE
proxy card or voting instruction form
in the accompanying postage-paid envelope, or vote by proxy by telephone or via the Internet in accordance with the instructions
in the proxy card or voting instruction form. We strongly urge you to vote by proxy FOR Proposals 1, 2, 3, 4 and 5. Only your
latest dated proxy will count at the 2017 Annual Meeting.
Will
my shares be voted if I do nothing?
If
your shares of our common stock are registered in your name, you must sign and return a proxy card in order for your shares to
be voted, unless you vote over the Internet or by telephone or attend the 2017 Annual Meeting and vote in person.
If
your shares of common stock are held in “street name,” that is, held for your account by a broker, bank or other nominee,
and you do not instruct your broker or other nominee how to vote your shares, then, because all of the proposals are “non-routine
matters,” your broker or other nominee would not have discretionary authority to vote your shares on the proposals. If your
shares of our common stock are held in “street name,” your broker, bank or nominee has enclosed a proxy card or voting
instruction form with this Proxy Statement. We strongly encourage you to authorize your broker or other nominee to vote your shares
by following the instructions provided on the proxy card or voting instruction form.
Please
return your proxy card or voting instruction form to your broker or other nominee by proxy, simply sign, date and return the enclosed
proxy card or voting instruction form in the accompanying postage-paid envelope, or vote by proxy by telephone or via the Internet
in accordance with the instructions in the proxy card or voting instruction form. Please contact the person responsible for your
account to ensure that a proxy card or voting instruction form is voted on your behalf.
We
strongly urge you to vote by proxy FOR Proposals 1, 2, 3, 4 and 5 by signing, dating and returning the enclosed
WHITE
proxy
card today in the envelope provided
. You may also vote by proxy over the Internet using the Internet address on the proxy
card or by telephone using the toll-free number on the proxy card. If your shares are held in “street name,” you should
follow the instructions on your proxy card or voting instruction form provided by your broker or other nominee and provide specific
instructions to your broker or other nominee to vote as described above.
What
constitutes a quorum?
A
majority of the outstanding shares of common stock, present in person or represented by proxy, will constitute a quorum for the
transaction of business at the 2017 Annual Meeting. Votes withheld, abstentions and broker non-votes will be counted as present
or represented for purposes of determining the presence or absence of a quorum for this meeting. In the absence of a quorum, the
2017 Annual Meeting may be adjourned by a majority of the votes entitled to be cast represented either in person or by proxy.
Has
the Company received notice from one or more shareholders that they are intending to nominate director candidates at the 2017
Annual Meeting?
Yes. The Dissident Group
has indicated that it beneficially owns an aggregate of [●] shares of our common stock (representing approximately [●]%
of our outstanding common stock), and has delivered notice to the Company of its intention to nominate two director candidates
for election to the board at the 2017 Annual Meeting to serve a three-year term until their successors are elected and qualified.
Whom
should I call if I have questions about the 2017 Annual Meeting?
If
you have any questions or require any assistance with voting your shares, or if you need additional copies of the proxy materials,
please contact:
105
Madison Avenue
New
York, New York 10016
proxy@mackenziepartners.com
Call
Collect: (212) 929-5500
or
Toll-Free: (800) 322-2885
Email:
fiesta@mackenziepartners.com
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2017 ANNUAL MEETING TO BE HELD ON [●], 2017: THE PROXY STATEMENT
FOR THE 2017 ANNUAL MEETING AND THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR-ENDED JANUARY 1, 2017 ARE AVAILABLE FREE OF
CHARGE ON OUR WEBSITE AT WWW.FRGI.COM.
ANNUAL
MEETING PROCEDURES
Annual
Meeting Admission
Only
Fiesta Restaurant Group shareholders or their duly authorized and constituted proxies may attend the 2017 Annual Meeting. Proof
of ownership of our common stock must be presented in order to be admitted to the 2017 Annual Meeting. If your shares are held
in the name of a bank, broker or other holder of record and you plan to attend the 2017 Annual Meeting in person, you must bring
a brokerage statement, the proxy card mailed to you by your bank or broker or other proof of ownership as of the close of business
on [●], 2017, the record date, to be admitted to the 2017 Annual Meeting. Otherwise, proper documentation of a duly authorized
and constituted proxy must be presented. This proof can be: a brokerage statement or letter from a broker, bank or other nominee
indicating ownership on the record date, a proxy card, or a valid, legal proxy provided by your broker, bank or other nominee.
After
the chairman of the meeting opens the 2017 Annual Meeting, further entry will be prohibited. No cameras, recording equipment,
electronic devices, large bags, briefcases or packages will be permitted in the 2017 Annual Meeting, the use of mobile phones
during the 2017 Annual Meeting is also prohibited. All persons attending the 2017 Annual Meeting will be required to present a
valid government-issued picture identification, such as a driver’s license or passport, to gain admittance to the 2017 Annual
Meeting.
Who
Can Vote, Outstanding Shares
Holders
of record of our common stock at the close of business on [●], 2017 may vote at the 2017 Annual Meeting. At the close of
business on that date, we had [●] shares of our common stock outstanding and entitled to vote. A majority, or [●],
of these shares, present in person or represented by proxy at this meeting, will constitute a quorum for the transaction of business.
As
of the date of this Proxy Statement, there are [●] shares of our common stock outstanding, each entitled to one vote.
Voting
Procedures
You
can vote by attending the 2017 Annual Meeting and voting in person, or you can vote by proxy. If you are the record holder of
your stock, you can vote in the following four ways:
|
●
|
By
Internet
: You may vote by submitting a proxy over the Internet. Please refer to the
WHITE
proxy card or voting instruction form provided to you by your broker
for instructions of how to vote by Internet.
|
|
●
|
By
Telephone
: Shareholders located in the United States that receive proxy materials
by mail may vote by submitting a proxy by telephone by calling the toll-free telephone
number on your proxy card or voting instruction form and following the instructions.
|
|
●
|
By
Mail
: If you received proxy materials by mail, you can vote by submitting a proxy
by mail by marking, dating, signing and returning the
WHITE
proxy card
in the postage-paid envelope.
|
|
●
|
In
Person at the 2017 Annual Meeting
: If you attend the 2017 Annual Meeting, you may
deliver your completed
WHITE
proxy card in person or you may vote by completing
a ballot, which we will provide to you at the 2017 Annual Meeting. You are encouraged
to complete, sign and date the
WHITE
proxy card and mail it in the enclosed
postage pre-paid envelope regardless of whether or not you plan to attend the 2017 Annual
Meeting.
|
If
you hold your shares of common stock in “street name,” meaning such shares are held for your account by a broker,
bank or other nominee, then you will receive instructions from such institution or person on how to vote your shares. Your broker,
bank or other nominee will allow you to deliver your voting instructions via the Internet and may also permit you to submit your
voting instructions by telephone.
Proxy
Solicitation of the Dissident Group
The Dissident Group
has notified the Company of its intention to nominate two candidates for election as a director at the 2017 Annual Meeting in opposition
to the current directors who have been nominated by the board. You may receive proxy solicitation materials from the Dissident
Group. The Company is not responsible for the accuracy of any information provided by or relating to the Dissident Group or its
nominees contained in solicitation materials filed or disseminated by or on behalf of the Dissident Group or any other statements
that the Dissident Group may make.
The board does NOT endorse the Dissident Group nominees and strongly recommends that you
NOT sign or return any proxy card sent to you by the Dissident Group. If you have previously voted using a proxy card sent to you
by the Dissident Group, you can subsequently revoke that vote by following the instructions on the
WHITE
proxy card to vote
over the Internet or by telephone or by completing, signing and dating the enclosed
WHITE
proxy card and mailing it in the
postage pre-paid envelope provided. Only your latest dated proxy will count. Any proxy may be revoked at any time prior to its
exercise at the 2017 Annual Meeting as described in the accompanying Proxy Statement
.
Proxy
Card
The
shares represented by any proxy card which is properly executed and received by the Company prior to or at the 2017 Annual Meeting
will be voted in accordance with the specifications made thereon. Where a choice has been specified on the
WHITE
proxy card with respect to the proposals, the shares represented by the
WHITE
proxy card will be voted in accordance
with the specifications. If you return a validly executed
WHITE
proxy card without indicating how your shares should
be voted on a matter and you do not revoke your proxy, your proxy will be voted:
FOR
the election of the three director
nominees of the board set forth on the
WHITE
proxy card (Proposal 1);
FOR
, on an advisory basis, the approval
of the non-binding resolution on the compensation of the Company’s Named Executive Officers as described in the Proxy Statement
under “Executive Compensation,” (Proposal 2);
FOR
the approval of the Fiesta Restaurant Group, Inc. 2012 Stock
Incentive Plan, as amended, for purposes of complying with Section 162(m) of the Internal Revenue Code of 1986, as amended, (Proposal
3);
FOR
the approval of an amendment to our Restated Certificate of Incorporation to implement a majority voting standard
in uncontested elections of directors (Proposal 4); and
FOR
the ratification of the appointment of Deloitte & Touche
LLP as the independent registered public accounting firm of the Company for the 2017 fiscal year (Proposal 5).
The
board is not aware of any matters that are expected to come before the 2017 Annual Meeting other than those described in this
Proxy Statement. If any other matter should be presented at the 2017 Annual Meeting upon which a vote may be properly taken, shares
represented by all
WHITE
proxy cards received by the board will be voted with respect thereto at the discretion
of the persons named as proxies in the enclosed proxy card.
Record
Date
Only
holders of record of common stock at the close of business on [●], 2017 will be entitled to notice of and to vote at the
2017 Annual Meeting.
Quorum
A
majority of the outstanding shares of common stock, present in person or represented by proxy at the 2017 Annual Meeting, will
constitute a quorum for the transaction of business. Votes withheld, abstentions and broker non-votes will be counted as present
or represented for purposes of determining the presence or absence of a quorum for this meeting. In the absence of a quorum, the
2017 Annual Meeting may be adjourned by a majority of the votes entitled to be cast represented either in person or by proxy.
Required
Vote
As
a holder of our common stock, you are entitled to one vote per share on any matter submitted to a vote of the shareholders, subject
to rights shareholders may have to cumulate votes for Proposal 1, as described below.
Our
Restated Certificate of Incorporation and Bylaws require that directors are elected by a plurality of the votes cast. Proposal
1, regarding the election of three directors to our board, therefore will require approval of a plurality of the votes cast, meaning
that the director nominees receiving the highest numbers of “for” votes of the shares entitled to be voted for them,
up to the number of directors to be elected by such shares, will be elected. As a result, the three director nominees receiving
the most “for” votes at the 2017 Annual Meeting will be elected.
The
enclosed
WHITE
proxy card enables a shareholder to vote “FOR” or “WITHHOLD” from voting
as to each director nominated by the board. If you vote “withhold” for any director nominee, as opposed to voting
“FOR” any such director nominee, your shares voted as such will be counted for purposes of establishing a quorum,
but will not be considered to have been voted FOR the director nominee and as such will have no effect the outcome of the vote
on Proposal 1. Abstentions and broker non-votes will not constitute votes cast or votes withheld on Proposal 1 and will accordingly
have no effect on the outcome of the vote on Proposal 1.
PLEASE SUPPORT
THE BOARD’S NOMINEES BY VOTING “
FOR
” THE ELECTION OF THE BOARD’S NOMINEES UNDER PROPOSAL 1 USING
THE ENCLOSED
WHITE
PROXY CARD. DO NOT COMPLETE OR RETURN A PROXY CARD FROM THE DISSIDENT GROUP, EVEN IF YOU VOTE “WITHHOLD”
ON THEIR DIRECTOR NOMINEES. DOING SO MAY CANCEL ANY PREVIOUS VOTE YOU CAST ON THE COMPANY’S
WHITE
PROXY CARD
Approval
of Proposals 2, 3, 5, and 6 requires the affirmative vote of a majority of the votes cast. The enclosed
WHITE
proxy
card enables a shareholder to vote “FOR,” “AGAINST” or “ABSTAIN” on these proposals. Each
of Proposals 2, 3, 5, and 6 will pass if the total votes cast “for” a given proposal exceed the total number of votes
cast “against” such given proposal.
Approval
of Proposal 4 requires the affirmative vote of 66⅔% of the outstanding shares of our common stock.
THE
BOARD UNANIMOUSLY RECOMMENDS VOTING
FOR
THE ELECTION OF EACH OF THE BOARD’S NOMINEES ON PROPOSAL 1 AND
FOR
PROPOSALS 2, 3, 4 AND 5 USING THE ENCLOSED
WHITE
PROXY CARD.
THE
BOARD URGES YOU NOT TO SIGN, RETURN OR VOTE ANY PROXY CARD SENT TO YOU
BY
THE DISSIDENT GROUP.
Abstentions
and Broker Non-Votes
If
you are a beneficial owner holding your shares in “street name” and you do not provide voting instructions to your
bank, broker, trustee or other nominee holding shares of our common stock for you, your shares of common stock will not be voted
with respect to any proposal for which the shareholder of record does not have “discretionary” authority to vote.
You are deemed to beneficially own your shares in “street name” if your shares are held in an account at a brokerage
firm, bank, broker-dealer, trust or other similar organization. If this is the case, you will receive a separate voting instruction
form with this Proxy Statement from such organization. As the beneficial owner, you have the right to direct your broker, bank,
trustee, or nominee how to vote your shares. If you hold your shares in street name and do not provide voting instructions to
your broker, bank, trustee or nominee, your shares will not be voted on any proposals on which such party does not have discretionary
authority to vote (a “broker non-vote”). Broker “non-votes” are not counted in the tabulations of the
votes cast or present at the meeting and entitled to vote on any of the proposals and therefore will have no effect on the outcome
of the proposals.
Because
the Dissident Group has initiated a proxy contest, to the extent that the Dissident Group provides a proxy card or voting instruction
form to shareholders in street name, none of proposals in this Proxy Statement will be discretionary. We encourage you to provide
voting instructions on a
WHITE
proxy card or a provided voting instruction form to the bank, broker, trustee or
other nominee that holds your shares by carefully following the instructions provided in their notice to you.
Revocability
of Proxy
A
shareholder of record who has properly executed and delivered a proxy may revoke such proxy at any time before the 2017 Annual
Meeting in any of the four following ways:
|
●
|
timely
complete and return a new proxy card bearing a later date;
|
|
●
|
vote
on a later date by using the Internet or telephone;
|
|
●
|
deliver
a written notice to our Secretary prior to the 2017 Annual Meeting by any means, including
facsimile, stating that your proxy is revoked; or
|
|
●
|
attend
the 2017 Annual Meeting and vote in person.
|
If
you have previously submitted a proxy card sent to you by the Dissident Group, you may change your vote by completing and returning
the enclosed
WHITE
proxy card in the accompanying postage pre-paid envelope, or by voting by telephone or via the
Internet by following the instructions on the
WHITE
proxy card. Submitting a proxy card sent to you by the Dissident
Group will revoke votes you have previously made via the Company’s
WHITE
proxy card.
If
your shares are held of record by a bank, broker, trustee or other nominee other nominee and you desire to vote at the 2017 Annual
Meeting, you may change your vote by submitting new voting instructions to your broker in accordance with such broker’s
procedures.
Appraisal
Rights
Holders
of shares of common stock do not have appraisal rights under Delaware law in connection with this proxy solicitation.
Shareholder
List
A
list of our shareholders as of the close of business on [●], 2017 will be available for inspection during business hours
for ten days prior to the 2017 Annual Meeting at our principal executive offices located at 14800 Landmark Boulevard, Suite 500,
Dallas, TX 75254.
Communications
with the Board
Any
shareholder or other interested party who desires to communicate with our Chairman of the board of directors or any of the other
members of the board of directors may do so by writing to: Board of Directors, c/o Stacey Rauch, Chairman of the Board of Directors,
Fiesta Restaurant Group, Inc., 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254 or by email at frgiboard@frgi.com. Communications
may be addressed to the Chairman of the board, an individual director, a board committee, the non-management directors, or the
full board. Communications will then be distributed to the appropriate directors unless the Chairman determines that the information
submitted constitutes “spam,” offensive or inappropriate material, and/or communications offering to buy or sell products
or services.
Other
Matters
If
you have any questions or require any assistance with voting your shares, or if you need additional copies of the proxy materials,
please contact:
105
Madison Avenue
New
York, New York 10016
proxy@mackenziepartners.com
Call
Collect: (212) 929-5500
or
Toll-Free:
(800) 322-2885
Email:
fiesta@mackenziepartners.com
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2017 ANNUAL MEETING TO BE HELD ON [●], 2017: THE PROXY STATEMENT
FOR THE 2017 ANNUAL MEETING AND THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR-ENDED JANUARY 1, 2017 ARE AVAILABLE FREE OF
CHARGE ON OUR WEBSITE AT WWW.FRGI.COM.
OTHER
INFORMATION
Participants
in the Solicitation
Under
applicable regulations of the SEC, each of our directors and certain of our executive officers and other employees are “participants”
in this proxy solicitation. Please refer to the sections entitled “Security Ownership of Certain Beneficial Owners and Management”
and “Proposal 1
—
Election of Directors” for information about our directors and executive officers. Additional
information relating to our directors and director nominees as well as certain of our officers and employees who are considered
“participants” in our solicitation under the rules of the SEC by reason of their position as directors and director
nominees of the Company or because they may be soliciting proxies on our behalf is attached to this Proxy Statement
as
Appendix A
.
Other than the persons described in this Proxy Statement, no general class of employee of the Company
will be employed to solicit shareholders in connection with this proxy solicitation. However, in the course of their regular duties,
employees may be asked to perform clerical or ministerial tasks in furtherance of this solicitation.
Costs
of Solicitation
We are required by
law to convene an annual meeting of shareholders at which directors are elected. Because our shares are widely held, it would be
impractical for our shareholders to meet physically in sufficient numbers to hold a meeting. Accordingly, the Company is soliciting
proxies from our shareholders. United States federal securities laws require us to send you this Proxy Statement, and any amendments
and supplements thereto, and to specify the information required to be contained in it. The Company will bear the expenses of calling
and holding the 2017 Annual Meeting and the solicitation of proxies therefor. These costs will include, among other items, the
expense of preparing, assembling, printing and mailing the proxy materials to shareholders of record and beneficial owners, and
reimbursements paid to brokerage firms, banks and other fiduciaries for their reasonable out-of pocket expenses for forwarding
proxy materials to shareholders and obtaining beneficial owner’s voting instructions. In addition to soliciting proxies by
mail, directors, officers and employees may solicit proxies on behalf of the board, without additional compensation, personally
or by telephone. We may also solicit proxies by email from shareholders who are our employees or who previously requested to receive
proxy materials electronically. As a result of the potential proxy solicitation by the Dissident Group, we may incur additional
costs in connection with our solicitation of proxies. The Company has retained MacKenzie Partners, Inc. to solicit proxies. Under
our agreement with MacKenzie Partners, Inc., MacKenzie Partners, Inc. will receive a fee of up to $[●] plus the reimbursement
of reasonable expenses. MacKenzie Partners, Inc. expects that approximately [●] of its employees will assist in the solicitation.
MacKenzie Partners, Inc. will solicit proxies by mail, telephone, facsimile or email. Our aggregate expenses, including those of
MacKenzie Partners, Inc., related to our solicitation of proxies, excluding salaries and wages of our regular employees, are expected
to be approximately $[●], of which approximately $[●] has been incurred as of the date of this Proxy Statement.
FORWARD-LOOKING
STATEMENTS
This
Proxy Statement contains forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933, as amended
(the “
Securities Act
”), Section 21E of the Securities Exchange Act of 1934 (the “
Exchange Act
”)
and the Private Securities Litigation Reform Act of 1995. All statements relating to events or results that may occur in the future,
including, but not limited to, the Company’s future costs of solicitation, record or meeting dates, compensation arrangements,
plans or amendments (including those related to profit sharing and stock-based compensation), company policies, corporate governance
practices, documents or amendments (including charter or bylaw amendments, shareholder rights plans or similar arrangements) as
well as capital and corporate structure (including major shareholders, board structure and board composition), are forward-looking
statements. Forward-looking statements generally can be identified by words such as “expect,” “will,”
“change,” “intend,” “target,” “future,” “potential,” “estimate,”
“anticipate,” “to be,” and similar expressions. These statements are based on numerous assumptions and
involve known and unknown risks, uncertainties and other factors that could significantly affect the Company’s operations
and may cause the Company’s actual actions, results, financial condition, performance or achievements to be substantially
different from any future actions, results, financial condition, performance or achievements expressed or implied by any such
forward-looking statements. Those factors include, but are not limited to, (i) increases in food and other commodity costs, (ii)
risks associated with the expansion of our business, including increasing construction costs, (iii) risks associated with food
borne illness or other food safety issues, including negative publicity through traditional and social media, (iv) our ability
to manage our growth and successfully implement our business strategy, (v) labor and employment benefit costs, including the impact
of increases in federal and state minimum wages, increases in exempt status salary levels and healthcare costs imposed by the
Affordable Care Act, (vi) cyber security breaches, (vii) general economic conditions, particularly in the retail sector, (viii)
competitive conditions, (ix) weather conditions, (x) significant disruptions in service or supply by any of our suppliers or distributors,
(xi) increases in employee injury and general liability claims, (xii) changes in consumer perception of dietary health and food
safety, (xiii) regulatory factors, (xiv) fuel prices, (xv) the outcome of pending or future legal claims or proceedings, (xvi)
environmental conditions and regulations, (xvii) our borrowing costs; (xviii) the availability and terms of necessary or desirable
financing or refinancing and other related risks and uncertainties, (xix) the risk of an act of terrorism or escalation of any
insurrection or armed conflict involving the United States or any other national or international calamity, (xx) factors that
affect the restaurant industry generally, including product recalls, liability if our products cause injury, ingredient disclosure
and labeling laws and regulations and (xxi) other risks, uncertainties and factors indicated from time to time in the Company’s
reports and filings with the SEC including, without limitation, most recently the Company’s Annual Report on Form 10-K for
the year ended January 1, 2017, under the heading Item 1A - “Risk Factors” and the heading “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” The Company does not intend, and undertakes no
obligation to update or publicly release any revision to any such forward-looking statements, whether as a result of the receipt
of new information, the occurrence of subsequent events, the change of circumstance or otherwise. Each forward-looking statement
contained in this Proxy Statement is specifically qualified in its entirety by the aforementioned factors. You are hereby advised
to carefully read this Proxy Statement in conjunction with the important disclaimers set forth above prior to reaching any conclusions
or making any investment decisions.
BACKGROUND
TO THE SOLICITATION
On February 24,
2016, the Company announced its intent to pursue a tax-efficient spin-off of Taco Cabana, subject to board and regulatory approval,
to be effected in late 2017 or in 2018. The Company further indicated that a more detailed separation plan, including the transaction
structure, timing, composition of senior management, and capital structure, would be disclosed as the Company’s plans evolved.
Poor restaurant industry
market conditions that developed in late 2015 further worsened throughout the first half of 2016, dramatically accelerating a
downturn in our business. As the board evaluated what impact the deteriorating market dynamics would have on the potential spin-off
and the emerging market development plan, it also began discussions with our then Chief Executive Officer and President on his
potential retirement. These discussions, along with shareholder engagement and further evaluation of the Company’s operating
performance, continued over the next several months.
On August 9, 2016, at the
request of James Pappas and as part of our ongoing shareholder engagement efforts, members of the Company’s management team
spoke to Mr. Pappas and other members of the yet-to-be-formed Dissident Group by telephone and discussed a range of topics relating
to the Company’s business.
On August 25, 2016, the
Company issued a press release announcing that then Chief Executive Officer and President Timothy Taft would retire at the end
of 2016, and that the board had appointed a Special Committee to search for a new Chief Executive Officer and President and to
consider the composition of the board. The committee consisted of Stacey Rauch (who served as chair), Stephen Elker and Barry Alperin.
The Company also announced its intent to formally review the Company’s strategic plan, including the previously announced
spin-off of Taco Cabana and the Company’s emerging market development plan, in light of new market dynamics and recent operating
performance.
On
August 26, 2016, Mr. Pappas informed the Company that the Dissident Group was approaching 5% ownership of the Company’s
outstanding common stock and requested another meeting with management of the Company.
On
September 7, 2016, members of the Company’s management team met with Mr. Pappas, who indicated that the Dissident Group
intended to continue accumulating shares of the Company’s common stock.
On
September 19, 2016, the Dissident Group filed a Schedule 13D with the SEC, disclosing aggregate beneficial ownership of approximately
6.2% of the outstanding shares of the Company’s common stock and indicating its intent to engage in discussions with the
board and management regarding the Company’s capital allocation, corporate governance, operations and other strategic plans.
On
September 22, 2016, director Nicholas Daraviras and Mr. Pappas spoke by telephone to discuss scheduling a call with Mr. Pappas
and additional members of the board.
On September 27, 2016, the
Company issued a press release providing an update on the board composition, management transition and strategic plan review previously
announced in August. The press release announced (i) the appointment of Danny Meisenheimer, then Chief Operating Officer of Pollo
Tropical, as interim Chief Executive Officer and President, (ii) the commencement of a search for a seasoned restaurant executive
to fill the Chief Executive Officer and President position permanently and for additional non-executive director candidates with
extensive restaurant industry experience and (iii) the retention of Heidrick & Struggles – a leading global executive
search firm – to assist with both the executive and director searches. Additionally, the Company announced that it would
not proceed with the spin-off of Taco Cabana and would suspend the development of additional Pollo Tropical Restaurants in Texas.
On
September 29, 2016, Mr. Daraviras and other members of the board, and Mr. Pappas and Mr. Radley L. Radoff, spoke
by telephone regarding a potential settlement proposal.
On
September 30, 2016, the Dissident Group delivered a term sheet outlining a settlement proposal (the “Dissident
Settlement Proposal”) between the Dissident Group and the Company. The terms of the Dissident Settlement Proposal
included, among other terms, (i) the immediate appointment of James C. Pappas and an additional director candidate
to-be-identified by the Dissident Group to the board, (ii) the inclusion of a proposal to declassify the board in the agenda
for the 2017 Annual Meeting, (iii) the creation of a Special Committee of the board to review strategic
alternatives, with Mr. Pappas as member, (iv) the addition of Mr. Pappas to the CEO search committee of the Company, (v)
a limited standstill covering the 2017 Annual Meeting and (iv) expense reimbursement for the Dissident Group.
On
October 7, 2016, Mr. Pappas contacted Mr. Daraviras by email inquiring about the status of the Company’s response to the
Dissident Settlement Proposal and setting a deadline of October 14, 2016 for the Dissident Group to receive a response by the
Company before moving forward with a proxy contest.
On October 14, 2016,
the board delivered a letter to JCP Investment Partnership, LP (“JCP Partnership”) indicating that the board had
reviewed the Dissident Settlement Proposal and determined that entering into settlement negotiations was inappropriate at
that time, but that the board and management remained open to constructive dialogue with the Dissident Group. In the letter,
the board also invited the Dissident Group to submit names and resumes of director candidates that are qualified for the
Corporate Governance and Nominating Committee (the “CG&N Committee”) to consider for appointment to the
board as part of the Company’s ongoing review of board composition previously announced in August. The correspondence
between the Company and the Dissident Group was disclosed by the Dissident Group in an amended Schedule 13D filed by the
Dissident Group on October 18, 2016.
On October 17, 2016, the
board appointed a Special Committee to evaluate potential strategic alternatives available to the Company, including a possible
sale of the Company. The Special Committee consisted of Mr. Elker (who served as Chair), Ms. Rauch and Jack A. Smith and it retained
separate financial and legal advisors to assist it in this evaluation.
On October 24, 2016,
the Company announced that, in connection with a thorough strategic review of the Company’s ongoing operations, previously
announced in August, and the economic environment impacting the restaurant industry, the Company was closing 10 Pollo Tropical
restaurants, up to three of which would be rebranded as Taco Cabana restaurants in certain Texas locations.
On
December 12, 2016, and December 13, 2016, Mr. Daraviras and Mr. Pappas corresponded by email to discuss scheduling a call
with Mr. Pappas and additional members of the board.
On December 20, 2016, members
of the board spoke with Joshua E. Schechter and Mr. Pappas by telephone regarding the Dissident Group’s demands. During this
call, Mr. Schechter spoke at length in support of the appointment of Mr. Pappas to the board. No other potential nominees of the
Dissident Group were discussed or put forward.
Throughout December
2016 and January 2017 the board continued to pursue the initiatives previously announced in August to (i) consider strategic options
for the company, (ii) hire an experienced Chief Executive Officer and President, and (iii) identify and appoint an additional industry
leader to the board.
On
January 26, 2017, JCP Partnership delivered a letter (the “Nomination Notice”) to Joseph A. Zirkman, Senior Vice President,
General Counsel and Secretary of the Company. The letter was a formal notice of intent to nominate John B. Morlock, James C. Pappas
and Joshua E. Schechter as candidates for election to the board as Class II directors at the 2017 Annual Meeting. The Nomination
Notice disclosed that the Dissident Group beneficially owned approximately 7.1% of the outstanding shares of the Company’s
common stock. The Dissident Group disclosed the nominations in a press release on January 30, 2017 and filed an amended Schedule
13D on the same day, disclosing both the nominations and its increased ownership of the Company’s common stock.
On
January 30, 2017, the Company issued a press release stating that it would review the Nomination Notice and present its recommendations
to the Company’s shareholders in its proxy statement for the 2017 Annual Meeting.
On
February 14, 2017, Mr. Pappas, on behalf of JCP Partnership, delivered a letter (the “JCP Demand Letter”) to the Company
demanding an inspection pursuant to applicable Delaware law of the Company’s shareholder lists and certain other books and
records.
On
February 21, 2017, the Company’s outside legal counsel, Vinson & Elkins, L.L.P., delivered a letter to JCP Partnership
in response to the JCP Demand Letter. The letter stated that the Company was prepared to make available information to which a
shareholder is entitled under applicable Delaware law, subject to customary conditions which JCP Partnership subsequently fulfilled.
On February 22, 2017,
upon the recommendation of the Special Committee formed in August 2016 and tasked with conducting a review of the board’s
composition and of the Corporate Governance and Nomination Committee, the board met and voted unanimously to appoint Paul E. Twohig,
a restaurant industry veteran, as a Class I member of the board effective February 28, 2017.
Between
February 24, 2017 and March 3, 2017, members of management and the board engaged in several conversations with members of the
Dissident Group regarding a potential settlement of the proxy contest.
On February 27,
2017, the Company issued a press release providing an update on the board composition, management transition and strategic plan
review previously announced in August. The press release announced the appointment of (i) Richard C. Stockinger, an accomplished
industry executive, as Chief Executive Officer and President of the Company; (ii) Danny Meisenheimer, the former Interim Chief
Executive Officer and President of the Company, as Senior Vice President, Chief
Operating Officer of the Company; (iii) Paul E. Twohig as a Class I member of the board; and (iv) Stacey Rauch, a current member
of the board, as Chairman of the board of directors, in each case effective as of February 28, 2017. The board also provided a
strategic update which included the suspension of the review of strategic alternatives, in which no potential counterparty presented
a final proposal to acquire the Company, and the Company’s intent to pursue a refocused growth strategy going forward.
On
February 28, 2017, the Dissident Group filed an amended Schedule 13D with the SEC, disclosing aggregate beneficial ownership of
approximately 8.5% of the outstanding shares of the Company’s common stock.
On
March 5, 2017, the board met to discuss potential settlement of the proxy contest with the Dissident Group.
On
March 6, 2017, Mr. Zirkman and Mr. Daraviras spoke to Mr. Pappas by telephone to indicate that the board was prepared to interview
Mr. Pappas and Mr. Morlock as potential nominees to the board in order to thoroughly evaluate their qualifications. Mr. Zirkman
and Mr. Daraviras further expressed that, at that time, the board could not commit to adding any specific number of directors
or to removing any existing directors from the board in connection with a settlement of the proxy contest.
On
March 12, 2017 and March 15, 2017, members of the board (along with certain members of management) met with Mr. Morlock and Mr.
Pappas to interview them as candidates for the board.
On
March 19, 2017, the board met by telephone to discuss the status of negotiations with the Dissident Group and initial interviews
with Mr. Morlock and Mr. Pappas. The board agreed to consider appointing Mr. Pappas to the board as part of a settlement proposal
to the Dissident Group.
On March 20, 2017, Jamba,
Inc. (“Jamba”) filed a Form 12b-25 with the SEC disclosing that it would be delayed in filing its Annual Report on
Form 10-K for 2016 because Jamba had not yet completed its financial statements, which prevented Jamba’s accounting firm
from completing its audit of the Company’s financial statements and assessment of the Company’s internal control over
financial reporting. Mr. Pappas is a director of Jamba and a member of Jamba’s audit committee. On March 24, 2017, Jamba
filed a Form 8-K announcing that it had received a letter from the Nasdaq Stock Market LLC (“NASDAQ”) indicating that
Jamba is not in compliance with NASDAQ’s requirements for continued listing because the Company had delayed in filing its
Form 10-K.
From March 20, 2017 to
March 27, 2017, Mr. Daraviras engaged in conversations by telephone with Mr. Pappas regarding a potential settlement of the proxy
contest by an agreement to appoint Mr. Pappas to the board. In the conversations with Mr. Pappas, Mr. Daraviras advised Mr. Pappas
that the board was willing to appoint Mr. Pappas to the board and to the CG&N Committee and would
agree to make a public statement that the board was willing to consider adding an additional industry expert to the board at a
later date.
On March 27, 2017,
Mr. Daraviras and Mr. Pappas had an additional discussion regarding the appointment of an additional independent director, and
the Dissident Group’s new request that the Board remove an existing director. Mr. Pappas asked if Mr. Daraviras would speak
to Mr. Schechter in order to convey the Company’s position. Later that date, Mr. Daraviras spoke to Mr. Schechter by telephone
on the same subject. At the end of the discussion, Mr. Daraviras asked for the appropriate contact person for the Dissident Group
regarding the potential settlement, and Mr. Schechter advised that the board should contact Mr. Pappas. Following that discussion,
Mr. Daraviras called Mr. Pappas and left a voice mail message which was never returned. Neither Mr. Pappas nor Mr. Schechter has
followed up with Mr. Daraviras to continue conversations since March 27.
On April 6, 2017 and
April 10, 2017, nearly two weeks after the board’s last effort to continue settlement discussions with Mr. Pappas,
Thomas Purcell, another member of the Dissident Group, contacted Mr. Daraviras to engage in another round of settlement
discussions. Mr. Purcell and Mr. Daraviras spoke a number of times by telephone over the course of two days to discuss a
potential settlement of the proxy contest. Mr. Daraviras advised Mr. Purcell that as the Company had recently added Paul E.
Twohig, an industry expert, to the board, the board did not consider it prudent to commit to adding Mr. Pappas plus an
additional candidate to the board at that time. Mr. Purcell advised Mr. Daraviras that the Dissident Group remained committed
to requiring the appointment of an additional industry expert to the board, possibly in conjunction with the removal of one
of the Company’s current directors, and that the appointment of the proposed new industry expert to the board would
require their approval. Mr. Daraviras also requested additional information on how the delayed filing disclosed by Jamba
would impact Mr. Pappas’s fitness as a nominee for the Company’s board. As of the date of the publication of the
document, Mr. Pappas has not provided the Company with sufficient assurances that these circumstances are not pertinent to
the Company's considerations of Mr. Pappas's candidacy as a director of the Company.
On April 11, 2017, Mr.
Purcell and Mr. Daraviras continued their discussion regarding potential settlement. Mr. Daraviras advised Mr. Purcell that the
Company was prepared to agree to add (i) Mr. Pappas to the board, and appoint him to serve on the CG&N Committee (ii) an additional
board member with restaurant experience within the next 12 months. In return, the Dissidents Group would agree to a two-year standstill
with respect to any proxy contest in connection with election of the Company’s directors. Mr. Daraviras indicated the Company
would consider payment of a portion of the Dissident Group’s legal fees and further requested an accounting of any such
reimbursement request. Mr. Daraviras also requested an update on the status of a response from Mr. Pappas on the questions related
to the Jamba disclosures. Mr. Purcell responded later that day that the remainder of the Dissident Group would require that the
proposed new independent director must be approved unanimously by the CG&N Committee or by a majority of the CG&N Committee
(provided Mr. Pappas was in the majority), rather than by a simple majority of the CG&N Committee on which the Company offered
Mr. Pappas membership, and that they were unwilling to enter into a two-year standstill.
On April 12, 2017,
the Dissident Group delivered an open letter to the Chairman of the Company’s board of directors, rejecting the Company’s
proposal that was discussed on April 11, 2017 and indicating its intent to withdraw the nomination of Mr. Schechter.
On April 13, 2017,
the Company filed the preliminary version of this Proxy Statement with the SEC.
PROPOSAL
1—ELECTION OF DIRECTORS
Our
board of directors is divided into three classes of directors, with the classes as nearly equal in number as possible, each serving
staggered three-year terms as described below.
The
terms of office of our Class I, Class II, and Class III directors are:
|
●
|
Class
I directors, whose term will expire at the 2019 Annual Meeting of Shareholders and when
their successors are duly elected and qualified;
|
|
●
|
Class
II directors, whose term will expire at this 2017 Annual Meeting and when their successors
are duly elected and qualified; and
|
|
●
|
Class
III directors whose term will expire at the 2018 Annual Meeting of Shareholders and when
their successors are duly elected and qualified.
|
Our
Class I directors are Stacey Rauch and Paul E. Twohig; our Class II directors are Brian P. Friedman, Stephen P. Elker and Barry
J. Alperin; and our Class III directors are Nicholas Daraviras and Jack A. Smith.
Three directors will
be elected at the 2017 Annual Meeting as Class II directors of the Company for a term of three years expiring at the Annual Meeting
of Shareholders to be held in 2020 and until their successors shall have been elected and qualified. The election of directors
requires the affirmative vote of a plurality of the shares of common stock present in person or by proxy at the 2017 Annual Meeting.
Each proxy received will be voted FOR the election of the three directors named below unless otherwise specified in the proxy.
At this time, our board of directors knows of no reason why the Company’s three nominees would be unable to serve. There
are no arrangements or understandings between any nominee and any other person pursuant to which such person was selected as a
nominee.
Our
Corporate Governance and Nominating Committee has reviewed the qualifications of the three Class II director nominees and has
recommended the election of the three directors recommended by the board.
Director
Nominees’ Principal Occupations, Business Experience, Qualifications and Directorships
Name
of Nominee
|
|
Committee
Membership
|
|
Principal
Occupation
|
|
Age
|
|
Director
Since
|
Barry
J. Alperin
|
|
Audit,
Corporate Governance and Nominating, Finance (Chair)
|
|
Director
of Fiesta Restaurant Group
|
|
76
|
|
2012
|
Stephen
P. Elker
|
|
Audit
(Chair), Corporate Governance and Nominating
|
|
Director
of Fiesta Restaurant Group
|
|
65
|
|
2012
|
Brian
P. Friedman
|
|
Compensation,
Corporate Governance and Nominating
|
|
President
and a director of Leucadia National Corporation; Director of Fiesta Restaurant Group
|
|
61
|
|
2011
|
Barry
J. Alperin
Director
since 2012
Age: 76
|
|
Having
served as both an executive within the retail industry and an attorney, Mr. Alperin possesses deep financial, operational,
legal and management skills. Additionally, his service on the boards of several public companies allows him to bring significant
corporate governance and leadership experience to our board of directors.
|
Committee
Membership:
● Audit
● Corporate
Governance and Nominating
● Finance
(Chair)
|
|
Biography:
Barry
J. Alperin has served as a director of Fiesta Restaurant Group since July 2012. Mr. Alperin, who is retired, served as
Vice Chairman of Hasbro, Inc. (“Hasbro”) from 1990 through 1995, as Co-Chief Operating Officer of Hasbro from
1989 through 1990 and as Senior Vice President or Executive Vice President of Hasbro from 1985 through 1989. He was a
director of Hasbro from 1985 through 1996. Prior to joining Hasbro, Mr. Alperin practiced law in New York City for 20
years, dealing with corporate, public and private financial transactions, corporate mergers and acquisitions, compensation
issues and securities law matters. Mr. Alperin currently serves as a director of Henry Schein, Inc. (and is Chairman of
its Compensation Committee and a member of its Audit Committee and its Nominating and Governance Committee) and is a director
of a privately held marine construction corporation, Weeks Marine, Inc. Since November 2013, Mr. Alperin has served as
a director of Jefferies Group LLC (a wholly-owned subsidiary of Leucadia National Corporation, where Mr. Friedman is an
executive officer and director) and serves on its Audit, Compensation, and Governance Committees. During the past five
years, Mr. Alperin served on the board of directors of The Hain Celestial Group, Inc. (and was Chairman of its Corporate
Governance and Nominating Committee and a member of its Audit Committee). He serves as a trustee and member of the Executive
Committee of The Caramoor Center for Music and the Arts, President Emeritus and a Life Trustee of The Jewish Museum in
New York City and is a past President of the New York Chapter of the American Jewish Committee where he also served as
Chairman of the Audit Committee of the national organization. Mr. Alperin also formerly served as Chairman of the Board
of Advisors of the Tucker Foundation at Dartmouth College, was President of the Board of the Stanley Isaacs Neighborhood
Center in New York City, was a trustee of the Hasbro Children’s Foundation, was President of the Toy Industry Association
and was a member of the Columbia University Medical School Health Sciences Advisory Council.
|
Stephen
P. Elker
Director
since 2012
Age: 65
|
|
Mr.
Elker, with over 36 years of experience with KPMG LLP, brings to our board of directors extensive knowledge of accounting
and tax practices that strengthens our board of directors’ collective knowledge, capabilities and experience.
|
Committee
Membership:
|
|
|
● Audit
(Chair)
● Corporate
Governance and Nominating
|
|
Biography:
Stephen
P. Elker has served as a director of Fiesta Restaurant Group since May 7, 2012. Until 2009, Mr. Elker spent over 36 years
with KPMG LLP, the U.S. member firm of KPMG International, beginning in its Washington D.C. office, and then with offices
in Rochester, New York and Orlando, Florida. In 1999, Mr. Elker was appointed as managing partner of the Orlando office
and served as partner in charge of the Florida business tax practice from 2001 to 2009. Mr. Elker also served as a member
of the Nominating Committee and Strategy Committee of KPMG. During his career with KPMG, Mr. Elker led engagements for
several hospitality and retail clients including large, multi-unit restaurant companies. Mr. Elker is a certified public
accountant and currently serves as an independent director and Chairman of the Audit Committee of CNL Growth Properties,
Inc., a public, non-traded real estate investment trust. Mr. Elker also serves on the board of directors of other privately
held companies in the finance and payments industries.
|
Brian
P. Friedman
Director
since 2011
Age: 61
|
|
Having
an extensive career in the legal, investment banking, investments and management fields, Mr. Friedman brings to our board
of directors significant experience related to the business and financial issues facing public corporations. In addition,
through Mr. Friedman’s service on the boards of a number of his firm’s portfolio companies over time, he combines
significant executive experience with his knowledge of the strategic, financial and operational issues of restaurant companies.
|
Committee
Membership:
|
|
|
● Compensation
● Corporate
Governance and Nominating
|
|
Biography:
Brian
P. Friedman has served as a director of Fiesta Restaurant Group since April 2011. Mr. Friedman has been the President
and a director of Leucadia National Corporation (“Leucadia”) since March 1, 2013, a director and executive
officer of Jefferies Group LLC since July 2005, Chairman of the Executive Committee of Jefferies LLC since 2002, and President
of Jefferies Capital Partners LLC (“Jefferies Capital Partners”) and its predecessors since 1997. Mr. Friedman
was previously employed by Furman Selz LLC and its successors, including serving as Head of Investment Banking and a member
of its Management and Operating Committees. Prior to his 17 years with Furman Selz and its successors, Mr. Friedman was
an attorney with the law firm of Wachtell Lipton Rosen & Katz. Mr. Friedman serves on boards of directors/managers
of Leucadia’s and Jefferies Capital Partners’ private subsidiaries and investee companies. Mr. Friedman also
serves or has served on the board of the following public companies: HomeFed Corporation (majority-owned by Leucadia)
from April 2014 to present; and Carrols Restaurant Group, Inc. from July, 2009 to May, 2012.
|
Your
board unanimously recommends a vote FOR the election of our three named Class II nominees to your board of directors, Brian P.
Friedman, Stephen P. Elker, and Barry J. Alperin. Proxies received in response to this solicitation will be voted FOR the election
of the three named Class II nominees to our board of directors unless otherwise specified in the proxy.
Principal
Occupation, Business Experience, Qualifications and Directorships of Other Members of the Board of Directors
The
following table sets forth information with respect to each of the other members of the board of directors whose term extends
beyond the 2017 Annual Meeting, including the Class of such director and the year in which each such director’s term will
expire.
Name
of Director
|
|
Committee
Membership
|
|
Age
|
|
Director
Since
|
|
Year
Term Expires
|
Stacey
Rauch
|
|
Compensation
(Chair), Corporate Governance and Nominating
|
|
59
|
|
2012
|
|
2019
Class I
|
Paul
E. Twohig
|
|
Compensation,
Corporate Governance and Nominating
|
|
63
|
|
2017
|
|
2019
Class I
|
Nicholas
Daraviras
|
|
Corporate
Governance and Nominating, Finance
|
|
43
|
|
2011
|
|
2018
Class II
|
Jack
A. Smith
|
|
Audit,
Compensation, Corporate Governance and Nominating (Chair)
|
|
81
|
|
2011
|
|
2018
Class II
|
Stacey
Rauch (Chair)
Director
since 2012
Age: 59
|
|
With
her public company board experience and distinguished career working with retailers, wholesalers and manufacturers
during her 24 years at McKinsey & Company, Inc., Ms. Rauch brings to our board substantial expertise in business strategy,
marketing, merchandising and operations in the retail industry.
|
Committee
Membership:
|
|
|
● Compensation
(Chair)
● Corporate
Governance and Nominating
|
|
Biography:
Stacey
Rauch has served as the non-executive Chairman of the board of directors of Fiesta Restaurant Group since February 2017
and as a director of Fiesta Restaurant Group since 2012. Ms. Rauch is a Director Emeritus of McKinsey & Company, Inc.
from which she retired in September 2010. Ms. Rauch was a leader in McKinsey’s Retail and Consumer Goods Practices,
served as the head of the North American Retail and Apparel Practice, and acted as the Global Retail Practice Convener.
A 24 year veteran of McKinsey, Ms. Rauch led engagements for a wide range of retailers, apparel wholesalers, and consumer
goods manufacturers. Her areas of expertise include strategy, organization, marketing, merchandising, multi-channel management,
global expansion, and retail store operations. Ms. Rauch was a co-founder of McKinsey’s New Jersey office, and was
the first woman at McKinsey appointed as an industry practice leader. Ms. Rauch is also a non-Executive director of Land
Securities, PLC, the UK’s largest commercial property company, where she sits on its Audit Committee. Previously,
Ms. Rauch served on the board of directors of CEB, Inc, a leading member-based advisory company, Ann, Inc., a women’s
specialty apparel retailer and, Tops Holding Corporation, the parent company of Tops Markets LLC, a US grocery retailer.
Prior to joining McKinsey, Ms. Rauch spent five years in product management for the General Foods Corporation.
|
Paul
E. Twohig
Director
since 2017
Age: 63
|
|
With
over 30 years of experience in the restaurant industry, Mr. Twohig brings to our board of directors significant leadership,
management, operational, financial, marketing and franchising experience.
|
Committee
Membership:
|
|
|
● Compensation
● Corporate
Governance and Nominating
|
|
Biography:
Paul
E. Twohig has served as a director of Fiesta Restaurant Group since February 2017. Mr. Twohig is a global retail and food
service senior executive with demonstrated success leading some of the world’s most prominent brands. From 2009
until 2017, Mr. Twohig served as President of Dunkin Donuts, U.S. and Canada. He was a member of the senior executive
team that completed Dunkin Donuts’ initial public offering in 2011. Previously, Mr. Twohig held several senior executive
roles with Starbucks Corporation, including Vice President and General Manager, U.K., and Senior Vice President, Eastern
Division. Additionally, Mr. Twohig served as Chief Operating Officer and Executive Vice President at Panera Bread Company.
His governance experience includes serving as a member of the Board of Directors for Dentistry for Children from 2011
to 2014, and for Solantic Urgent Care, Inc. from 2007 to 2011.
|
Nicholas
Daraviras
Director
since 2011
Age: 43
|
|
Mr.
Daraviras brings significant experience with the strategic, financial and operational issues of retail companies in connection
with his service on the boards of a number of his firm’s portfolio companies over time.
|
Committee
Membership:
|
|
|
● Corporate
Governance and Nominating
● Finance
|
|
Biography:
Nicholas
Daraviras has served as a director of Fiesta Restaurant Group since April 2011. Mr. Daraviras has been a Managing Director
of Leucadia since 2014. Mr. Daraviras has served as Vice President, Acquisitions of Landcadia Holdings, Inc. since May 2016.
From 1996 through 2014, Mr. Daraviras was employed with Jefferies
Capital Partners or its predecessors (of which Mr. Friedman is
President and a director). He also served on the boards of Edgen Group
Inc., a global distributor of specialty steel products, or its
predecessors from February 2005 until 2013, and Carrols Restaurant Group from
2009 until 2013. Mr. Daraviras served on the Compensation Committee of
Carrols Restaurant Group, Inc. as well as the Compensation, Corporate
Governance, and Nominating Committees of Edgen Group Inc. He also serves on
several boards of directors of private portfolio companies of Jefferies
Capital Partners and Leucadia.
|
Jack
A. Smith
Director
since 2011
Age: 81
|
|
Mr.
Smith, as a former senior executive of several major retail organizations, together with service on the boards of public companies,
including Carrols Restaurant Group and Darden Restaurants, Inc., brings significant leadership, management, operational, financial
and brand management experience to our board of directors.
|
Committee
Membership:
|
|
|
● Audit
● Compensation
● Corporate
Governance and Nominating (Chair)
|
|
Biography:
Jack
A. Smith has served as a director of Fiesta Restaurant Group since 2011, and served as the non-executive Chairman of the
board of directors of Fiesta Restaurant Group from February 2012 to February 2017. Mr. Smith also served as a director
of Carrols Restaurant Group, Inc. and as Chairman of its Audit Committee from 2006 until 2012. Mr. Smith is President
of SMAT, Incorporated, a consulting company specializing in consumer services. Mr. Smith founded The Sports Authority,
Inc., a national sporting goods chain, in 1987 where he served as Chief Executive Officer until September 1998 and as
Chairman until 1999. From 1982 until 1987, Mr. Smith served as Chief Operating Officer of Herman’s Sporting Goods.
Prior to Herman’s, Mr. Smith served in executive management positions with other major retailers including Sears
& Roebuck, Montgomery Ward, Jefferson Stores and Diana Shops. Mr. Smith currently serves as a non-executive director
of Omagine, Inc., a hospitality and tourism company with significant property management and real estate development operations.
Mr. Smith previously served on the board of directors of Darden Restaurants, Inc. and was the Chairman of its Audit Committee
from 1995 through 2009.
|
Leadership
Update
In
February 2017, the Board provided a leadership update which included a number of changes designed to strengthen the Company and
enhance our ability to create value for shareholders. These changes included the appointment of a new Chief Executive Officer
(“CEO”) as well as a new independent director, both of whom bring substantial industry expertise and strong track
records of creating value at restaurant companies. These appointments were made as a result of extensive process to identify
the strongest candidates to lead our company forward. On August 25, 2016, the board chose to form a Special Committee to lead
the search process. Stacey Rauch served as the Chair of the Special Committee, with Steve Elker and Barry Alperin serving as members.
Additionally, the Special Committee engaged a prominent executive search firm to identify CEO and director candidates. As a result
of this process:
|
●
|
The
board appointed Richard Stockinger as CEO. Mr. Stockinger has a strong track record
as a director and executive with multiple private and public restaurant companies.
The board is confident that he has the skills necessary to be an effective leader at
this critical juncture.
|
|
●
|
Danny
Meisenheimer, who acted as interim CEO from September 2016 – February 2017, assumed
the role of Senior Vice President, Chief Operating Officer.
|
|
●
|
The
Board appointed Paul Twohig as an independent director. Mr. Twohig brings a fresh
perspective and extensive operating experience with highly successful and growing restaurant
brands. His appointment was the result of an extensive process which included evaluating
the skills of our current directors, and we believe Mr. Twohig is an ideal complement
to our current directors.
|
|
●
|
The
Board appointed Stacey Rauch as non-executive Chairman of the Board. This expanded
leadership role was a natural progression for Ms. Rauch as she has been a director at
Fiesta since 2012 and has extensive experience in the consumer and retail industries
in her role as a 24 year veteran of McKinsey & Company, Inc.
|
Board
Skills Assessment
The
Board Skills assessment below illustrates the key skills that our board has identified as particularly valuable to the effective
oversight of the Company and our strategy. This highlights the depth and breadth of skills possessed by current directors.
Information
Regarding Executive Officers
Name of Officer
|
|
Age
|
|
Position
|
Richard Stockinger
|
|
58
|
|
Chief Executive Officer and President
|
Lynn S. Schweinfurth
|
|
49
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
Danny K. Meisenheimer
|
|
57
|
|
Senior Vice President, Chief Operating Officer
|
Joseph A. Zirkman
|
|
56
|
|
Senior Vice President, General Counsel and Secretary
|
Joseph W. Brink
|
|
50
|
|
Vice President, Chief Procurement Officer
|
Richard
“Rich” Stockinger
Age:
58
Chief
Executive Officer and President
|
|
Biography:
Richard
“Rich” Stockinger has been Chief Executive Officer and President of Fiesta Restaurant Group since February
2017. Previously, he served as President and Chief Executive Officer of Benihana, Inc. (“Benihana”) from 2009
until 2014, as a member of the Board of Directors of Benihana from 2008 until 2014, as a member of the Audit Committee
of Benihana from 2008 until 2009, and as Chairman of the Board of Directors of Benihana from 2010 until 2012. Prior to
joining Benihana, Mr. Stockinger spent more than two decades at The Patina Restaurant Group, LLC and its predecessor Restaurant
Associates, Inc. during which time he served in various senior executive capacities, including as President from 2003
until 2008 and as a director from 1998 until 2006. Most recently, Mr. Stockinger had served as a consultant to Bruckmann,
Rosser, Sherrill & Co., a private equity firm, from 2014 until 2017, and Not Your Average Joes, a private restaurant
company of which Mr. Stockinger is also a member of its board of directors.
|
Lynn
S. Schweinfurth
Age:
49
Senior
Vice President, Chief Financial Officer and Treasurer
|
|
Biography:
Lynn
S. Schweinfurth has been Vice President, Chief Financial Officer and Treasurer of Fiesta Restaurant Group since 2012 and
was appointed Senior Vice President in February 2015. From 2010 to 2012, Ms. Schweinfurth served as Vice President of
Finance and Treasurer of Winn-Dixie Stores, Inc. Ms. Schweinfurth was Chief Financial Officer of Lone Star Steakhouse
and Texas Land & Cattle from 2009 to 2010. She was Vice President, Finance, at Brinker International, Inc. from 2004
to 2009.
|
Danny
K. Meisenheimer
Age:
57
Senior
Vice President, Chief Operating Officer
|
|
Biography:
Danny
K. Meisenheimer has served as Fiesta Restaurant Group’s Senior Vice President and Chief Operating Officer since
February 2017 and formerly served as the Interim Chief Executive Officer and President from September 2016 until February
2017. Mr. Meisenheimer has also served as Pollo Tropical’s Vice President and Chief Operating Officer from February
2013 until September 2016, the Interim Chief Operating Officer from September 2012 until February 2013 and as Chief Brand
Officer from April 2012 until September 2012. Mr. Meisenheimer was Chief Operating Officer at Souper Salad, Inc. from
2010 until 2012 and Chief Brand Officer at Souper Salad, Inc. from 2008 until 2010. Mr. Meisenheimer was Vice President,
Brand Management at Pizza Inn, Inc. from 2005 until 2008.
|
Joseph
A. Zirkman
Age:
56
Senior
Vice President, General Counsel and Secretary
|
|
Biography:
Joseph
A. Zirkman has been Vice President, General Counsel and Secretary of Fiesta Restaurant Group since 2011 and was appointed Senior
Vice President in February 2015. Mr. Zirkman was Vice President, General Counsel and Secretary of Carrols Restaurant Group, Inc.
from 1993 until 2012. Mr. Zirkman was an associate with the New York City law firm of Baer Marks & Upham from 1986 until 1993.
|
Joseph
W. Brink
Age:
50
Vice
President, Chief Procurement Officer
|
|
Biography:
Joseph
W. Brink has been Vice President, Supply Chain Management of Fiesta Restaurant Group since 2011 and was appointed Chief Procurement
Officer in October 2016. From 2008 to 2011, Mr. Brink served as Vice President of Supply Chain Management of Souper Salad, Inc.
From 2005 to 2008, Mr. Brink served as Senior Director of Purchasing of Pizza Inn, Inc.
|
Information
Regarding the Board of Directors and Committees
Director
Attendance
During
the fiscal year ended January 1, 2017, our board of directors met or acted by unanimous consent on twelve occasions. During the
fiscal year ended January 1, 2017, each of the directors attended 100% of the aggregate number of meetings of the board of directors
and of any committees of the board of directors on which they served. We do not have a policy on attendance by directors at our
Annual Meeting of Shareholders. Four of our directors attended our 2016 Annual Meeting of Shareholders.
Independence
of Directors
As
required by the listing standards of NASDAQ, a majority of the members of our board of directors must qualify as “independent,”
as affirmatively determined by our board of directors. Our board of directors determines director independence based on an analysis
of such listing standards and all relevant securities and other laws and regulations regarding the definition of “independent.”
Consistent
with these considerations, after review of all relevant transactions and relationships between each director, any of his or her
family members, and us, our executive officers and our independent registered public accounting firm, the board of directors has
affirmatively determined that all of the members of our board of directors are independent pursuant to NASDAQ.
Committees
of the Board
The
standing committees of our board of directors consist of an Audit Committee, a Compensation Committee, a Corporate Governance
and Nominating Committee, and a Finance Committee. Our board of directors may also establish from time to time any other committees
that it deems necessary or advisable.
Audit
Committee
|
|
Members:
Elker*, Smith, and Alperin*
|
Chair:
Stephen
P. Elker
(Financial Expert)
|
|
Key
Responsibilities:
● Reviews
our annual and interim financial statements and reports to be filed with the SEC
;
● Monitors
our financial reporting process and internal control system;
● Appoints
and replaces our independent outside auditors from time to time, determines their compensation and other terms of engagement
and oversees their work;
● Oversees
the performance of our internal audit function;
● Conducts
a review of all related party transactions for potential conflicts of interest and approves all such related party transactions;
● Establishes
procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or
auditing matters and the confidential anonymous submission by employees of concerns regarding questionable accounting
or auditing matters; and
● Oversees
our compliance with legal, ethical and regulatory matters.
|
*Denotes
director up for election at the 2017 Annual Meeting
All
three current members of the Audit Committee satisfy the independence requirements of Rule 10A-3 of the Exchange Act and Rule
5605 of the NASDAQ listing standards. Each member of our Audit Committee is financially literate. In addition, Mr. Elker
serves as our Audit Committee “financial expert” within the meaning of Item 407 of Regulation S-K of the Securities
Act and has the financial sophistication required under the NASDAQ listing standards.
The
Audit Committee has the sole and direct responsibility for appointing, evaluating and retaining our independent registered public
accounting firm and for overseeing their work. All audit services to be provided to us and all permissible non-audit services,
other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm are approved
in advance by our Audit Committee. During the fiscal year ended January 1, 2017, the Audit Committee met or acted by unanimous
consent on four occasions. The Audit Committee has adopted a formal written Audit Committee charter that complies with the requirements
of the Exchange Act and the NASDAQ listing standards. A copy of the Audit Committee charter is available on the investor relations
section of our website at www.frgi.com.
Audit
Committee Report
The
Company’s management has the primary responsibility for the financial statements and the reporting process, including the
Company’s system of internal controls and disclosure controls and procedures. The independent registered public accounting
firm audits the Company’s financial statements and expresses an opinion on the financial statements based on their audit.
The Audit Committee oversees on behalf of the board (i) the accounting, financial reporting, and internal control processes
of the Company, and (ii) the audits of the financial statements and internal controls of the Company. The Audit Committee
operates under a written charter adopted by the board.
The
Audit Committee reviews and approves the internal audit plan once a year and receives periodic updates of internal audit activity
in meetings held at least quarterly throughout the year. Updates include discussions of audit project results, as well as quarterly
assessments of internal controls.
The
Audit Committee has met and held discussions with management and Deloitte & Touche LLP (“
Deloitte
”),
the Company’s independent registered public accounting firm. Management represented to the Audit Committee that the Company’s
financial statements for the year ended January 1, 2017 were prepared in accordance with generally accepted accounting principles.
The Audit Committee reviewed discussed the financial statements with both management and Deloitte. The Audit Committee also discussed
with Deloitte the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board (PCAOB). The Audit Committee also
reviewed and discussed with Deloitte the firm’s independence from the Company and management, including the independent
auditor’s written disclosures required by Independent Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1,
Independence Discussions with Audit Committees
) as adopted by the PCAOB.
The
Audit Committee also discussed with Deloitte the overall scope and plans for the audit. The Audit Committee met with Deloitte
both with and without management, to discuss the results of their examination, the evaluation of the Company’s internal
controls and the overall quality of the Company’s financial reporting.
Management
has completed its annual documentation, testing, and evaluation of the Company’s system of internal control over financial
reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations.
The Audit Committee continues to oversee the Company’s efforts related to its internal controls.
Based
on the foregoing, we have recommended to the board of directors that the Company’s audited financial statements be included
in its Annual Report on Form 10-K for the year ended January 1, 2017, for filing with the Securities and Exchange Commission.
Audit
Committee
Stephen
P. Elker, Chairman
Jack
A. Smith
Barry
J. Alperin
Compensation
Committee
|
|
Members:
Rauch, Friedman*, Smith, and Twohig
|
Chair:
Stacey
Rauch
|
|
Key
Responsibilities:
● Provides
oversight on the development and implementation of the compensation programs for our executive officers and outside directors
and disclosure relating to these matters; and
● Reviews
and approves the compensation of our Chief Executive Officer and our executive officers
|
*Denotes
director up for election at the 2017 Annual Meeting
The
processes and procedures by which the Compensation Committee considers and determines executive officer compensation and outside
directors’ compensation are described in the Compensation Discussion and Analysis included in this Proxy Statement. During
the 2016 fiscal year, the Compensation Committee again retained Pearl Meyer & Partners, LLC, which we refer to as “
Pearl
Meyer
”, to review the Company’s compensation policies, plans, and amounts for the CEO and other executive officers,
including the Named Executive Officers. The role of Pearl Meyer in determining or recommending the amount or form of executive
and director compensation, the nature and scope of Pearl Meyer’s assignment and the material elements of the instructions
or directions given to Pearl Meyer with respect to the performance of their duties under the engagement are described in the Compensation
Discussion and Analysis included in this Proxy Statement. We believe that the use of an independent compensation consultant provides
additional assurance that our compensation programs are reasonable and consistent with our goals and objectives. The Compensation
Committee may form one or more subcommittees, each of which shall take such actions as shall be delegated by the Compensation
Committee. All of the members of our Compensation Committee are “independent” as defined under Rule 5605 of the NASDAQ
listing standards. The Compensation Committee has adopted a formal, written Compensation Committee charter that complies with
SEC rules and regulations and the NASDAQ listing standards. During the fiscal year ended January 1, 2017, the Compensation Committee
met or acted by unanimous consent on seven occasions. A copy of the Compensation Committee charter is available on the investor
relations section of our website at
www.frgi.com.
Corporate Governance and Nominating Committee
|
|
Members:
Rauch, Friedman*, Elker*, Alperin*,
Daraviras, Smith and Twohig
|
Chair:
Jack A. Smith
|
|
Key Responsibilities:
● Establishes
criteria for board and committee membership and recommends to our board of directors proposed nominees for election to the board
of directors and for membership on committees of the board of directors;
● Makes
recommendations regarding proposals submitted by our shareholders; and
● Makes
recommendations to our board of directors regarding corporate governance matters and practices.
|
*Denotes
director up for election at the 2017 Annual Meeting
All
of the members of our Corporate Governance and Nominating Committee are “independent” as defined under Rule 5605 of
the NASDAQ listing standards. The Corporate Governance and Nominating Committee has adopted a formal written Corporate Governance
and Nominating Committee charter that complies with SEC rules and regulations and the NASDAQ listing standards. During the fiscal
year ended January 1, 2017, the Compensation Committee met or acted by unanimous consent on two occasions, and the Special Committee
charged with the search for a replacement Chief Executive Officer and President and an additional independent director met or
acted by unanimous consent on numerous occasions. A copy of the Corporate Governance and Nominating Committee charter is available
on the investor relations section of our website at
www.frgi.com
.
Nominations for the Board of Directors
The
Corporate Governance and Nominating Committee of the board of directors considers director candidates based upon a number of qualifications.
The qualifications for consideration as a director nominee vary according to the particular area of expertise being sought as
a complement to the existing composition of the board. At a minimum, however, the Corporate Governance and Nominating Committee
seeks candidates for director who possess:
|
●
|
the
highest personal and professional ethics, integrity and values;
|
|
●
|
the
ability to exercise sound judgment;
|
|
●
|
the
ability to make independent analytical inquiries;
|
|
●
|
willingness
and ability to devote adequate time, energy, and resources to diligently perform board
and board committee duties and responsibilities; and
|
|
●
|
a
commitment to representing the long-term interests of the shareholders.
|
In
addition to such minimum qualifications, the Corporate Governance and Nominating Committee takes into account the following factors
when considering a potential director candidate:
|
●
|
whether
the individual possesses specific industry expertise and familiarity with general issues
affecting our business; and
|
|
●
|
whether
the person would qualify as an “independent” director under SEC and NASDAQ
rules.
|
The
Corporate Governance and Nominating Committee has not adopted a specific diversity policy with respect to identifying nominees
for director. However, the Corporate Governance and Nominating Committee takes into account the importance of diversified board
membership in terms of the individuals involved and their various experiences and areas of expertise.
The
Corporate Governance and Nominating Committee shall make every effort to ensure that the board and its committees include at least
the required number of independent directors, as that term is defined by applicable standards promulgated by NASDAQ and/or the
SEC. Backgrounds giving rise to actual or perceived conflicts of interest are undesirable. In addition, prior to nominating an
existing director for election to the board, the Corporate Governance and Nominating Committee will consider and review such existing
director’s board and committee attendance and performance, independence, experience, skills, and the contributions that
the existing director brings to the board.
The
Corporate Governance and Nominating Committee has relied upon third-party search firms to identify director candidates, and may
continue to employ such firms in the future if so desired. The Corporate Governance and Nominating Committee also relies upon,
receives and reviews recommendations from a wide variety of contacts, including current executive officers, directors, community
leaders, and shareholders as a source for potential director candidates. The board retains complete independence in making nominations
for election to the board.
The
Corporate Governance and Nominating Committee will consider qualified director candidates recommended by shareholders in compliance
with our procedures and subject to applicable inquiries. The Corporate Governance and Nominating Committee’s evaluation
of candidates recommended by shareholders does not differ materially from its evaluation of candidates recommended from other
sources. Pursuant to our amended and restated bylaws, as amended, any shareholder may recommend nominees for director not less
than 90 days nor more than 120 days in advance of the anniversary date of the immediately preceding annual meeting of shareholders,
by writing to Joseph A. Zirkman, Senior Vice President, General Counsel and Secretary, Fiesta Restaurant Group, Inc., 14800 Landmark
Boulevard, Suite 500, Dallas, Texas 75254, giving the name, Company stockholdings and contact information of the person making
the nomination, the candidate’s name, address and other contact information, any direct or indirect holdings of our securities
by the nominee, any information required to be disclosed about directors under applicable securities laws and/or stock exchange
requirements, information regarding related party transactions with us, the nominee and/or the shareholder submitting the nomination,
and any actual or potential conflicts of interest, the nominee’s biographical data, current public and private company affiliations,
employment history and qualifications and status as “independent” under applicable securities laws and/or stock exchange
requirements. All of these communications will be reviewed by our Secretary and forwarded to Jack A. Smith, the Chairman of the
Corporate Governance and Nominating Committee, for further review and consideration in accordance with this policy. Any such shareholder
recommendation should be accompanied by a written statement from the candidate of his or her consent to be named as a candidate
and, if nominated and elected, to serve as a director.
Finance Committee
|
|
Members:
Alperin* and Daraviras
Lynn S. Schweinfurth serves as non-board advisor
|
Chair:
Barry
J. Alperin
|
|
Key Responsibilities:
● Reviews
and provides guidance to our board of directors and management about policies relating to the Company’s working capital;
shareholder dividends and distributions; share repurchases; significant investments; capital stock and debt issuances; material
financial strategies and strategic investments; and other transactions or financial issues that management desires to have reviewed
by the Finance Committee; and
● Obtains
or performs an annual evaluation of the Finance Committee’s performance and makes applicable recommendations to the board
of directors.
|
*Denotes
director up for election at the 2017 Annual Meeting
A
copy of the Finance Committee charter is available on the investor relations section of our website at
www.frgi.com
.
Board
Leadership Structure and Role in Risk Oversight
Board
Leadership
Our
board of directors believes that our current model of separate individuals serving as Chairman of the board of directors and as
Chief Executive Officer is the appropriate leadership structure for us at this time. The board of directors believes that each
of the possible leadership structures for a board has its particular advantages and disadvantages, which must be considered in
the context of the specific circumstances, culture and challenges facing a company. The Company does not have a member of our
board of directors who is formally identified as the “lead independent director.” However the board of directors has
determined that having an independent director serve as Chairman of the board of directors is in the best interest of our shareholders
at this time. This structure ensures a greater role for the independent directors in the oversight of Fiesta Restaurant Group,
active participation of the independent directors in setting agendas and establishing the board of directors’ priorities
and procedures, including with respect to our corporate governance.
Risk
Oversight
Our
board of directors believes that oversight of risk management is the responsibility of the full board, with support from its committees
and senior management. The board of directors’ principal responsibility in this area is to ensure that sufficient resources,
with appropriate technical and managerial skills, are provided throughout the Company to identify, assess, and facilitate processes
and practices to address material risks. We believe that the current leadership structure enhances the board of directors’
ability to fulfill this oversight responsibility, as the Chairman, with the support and input of the Chief Executive Officer,
is able to focus the board’s attention on the key risks facing us.
Some
risks, particularly those relating to potential operating liabilities, the protection against physical loss or damage to our facilities,
and the possibility of business interruption resulting from a large loss event, are contained and managed by legal contracts of
insurance. Our insurance contracts are reviewed, managed and procured by our Risk Management and Legal departments along with
our Chief Financial Officer to optimize their completeness and efficacy. We also have a Risk Committee that meets periodically
throughout the year to develop and oversee our risk management program. The Risk Committee’s responsibilities include identifying
our exposures, developing a risk control program, and establishing a risk financing strategy. Periodic presentations are made
to the board to identify and discuss risks and the mitigation of risk.
In
addition, the board believes that the Audit Committee plays a particularly important role in overseeing risk. The Audit Committee
assesses and oversees business risks as a component of their review of the business and financial activities of the Company.
Codes
of Ethics
We
have adopted written codes of ethics applicable to our directors, officers, and employees in accordance with the rules of the
SEC and the NASDAQ listing standards. With respect to our Code of Ethics for Executives and Principal Financial Employees, our
policy requires covered employees to execute an annual certification confirming that they understand and will comply with the
Code. We make our codes of ethics available on the investor relations section of our website at
www.frgi.com
. We will disclose
on our website amendments to, or waivers from, our codes of ethics in accordance with all applicable laws and regulations.
Section 16(a)
Beneficial Ownership Reporting Compliance
Based
upon a review of the filings furnished to us pursuant to Rule 16a-3(e) promulgated under the Exchange Act, and on representations
from our executive officers and directors and persons, if any, who beneficially own more than 10% of our common stock, all filing
requirements of Section 16(a) of the Exchange Act were complied with in a timely manner during the fiscal year ended January
1, 2017 other than Statement of Changes of Beneficial Ownership on Form 4 filed by each of Timothy P. Taft, Lynn Schweinfurth,
Joseph A. Zirkman, Danny Meisenheimer, Todd Coerver, John Todd and Cheri Kinder on March 7, 2016 reporting the grant of restricted
stock on March 2, 2016.
Shareholder
Communications with the Board of Directors
Any
shareholder or other interested party who desires to communicate with our Chairman of the board of directors or any of the other
members of the board of directors may do so by writing to: Board of Directors, c/o Stacey Rauch, Chairman of the Board of Directors,
Fiesta Restaurant Group, Inc., 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254. Communications may be addressed to the
Chairman of the board, an individual director, a board committee, the non-management directors, or the full board. Communications
will then be distributed to the appropriate directors unless the Chairman determines that the information submitted constitutes
“spam,” pornographic material, and/or communications offering to buy or sell products or services.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table provides information regarding beneficial ownership of our common stock as of April 10, 2017 by:
|
●
|
each
person known by us to beneficially own more than 5% of all outstanding shares of our
common stock;
|
|
●
|
each
of our directors, nominees for director, and Named Executive Officers (as set forth in
“Executive Compensation-Summary Compensation Table” herein) individually;
and
|
|
●
|
all
of our directors and executive officers as a group.
|
27,063,800
shares of our common stock were outstanding on April 10, 2017.
Except
as otherwise indicated, to our knowledge, all persons listed below have sole voting power and investment power and record and
beneficial ownership of their shares, other than to the extent that authority is shared by spouses under applicable law.
The
information contained in this table reflects “beneficial ownership” as defined in Rule 13d-3 of the Exchange Act.
Except as otherwise indicated, the address for each beneficial owner is c/o Fiesta Restaurant Group, Inc., 14800 Landmark Boulevard,
Suite 500, Dallas, Texas 75254.
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
|
Percent of Class
|
|
Wasatch Advisors, Inc. (1)
|
|
|
3,194,095
|
|
|
|
11.8
|
%
|
BlackRock Inc. (2)
|
|
|
3,072,291
|
|
|
|
11.4
|
%
|
JCP Investment Partnership, LP et al (3)
|
|
|
2,272,161
|
|
|
|
8.4
|
%
|
The Vanguard Group, Inc. (4)
|
|
|
2,139,225
|
|
|
|
7.9
|
%
|
Morgan Stanley (5)
|
|
|
1,349,054
|
|
|
|
5.0
|
%
|
Morgan Stanley Investment Management
|
|
|
|
|
|
|
|
|
Danny K. Meisenheimer
|
|
|
31,936
|
|
|
|
*
|
|
Timothy P. Taft (6)
|
|
|
177,041
|
|
|
|
*
|
|
Richard C. Stockinger
|
|
|
79,235
|
|
|
|
*
|
|
Lynn S. Schweinfurth
|
|
|
88,946
|
|
|
|
*
|
|
Joseph A. Zirkman
|
|
|
128,614
|
|
|
|
*
|
|
Joseph Brink
|
|
|
17,773
|
|
|
|
*
|
|
John Todd (7)
|
|
|
14,054
|
|
|
|
*
|
|
Todd Coerver (8)
|
|
|
28,684
|
|
|
|
*
|
|
Paul E. Twohig
|
|
|
9,820
|
|
|
|
*
|
|
Stacey Rauch
|
|
|
14,262
|
|
|
|
*
|
|
Brian P. Friedman (9)
|
|
|
1,068,349
|
|
|
|
3.9
|
%
|
Stephen P. Elker
|
|
|
14,262
|
|
|
|
*
|
|
Barry J. Alperin
|
|
|
13,277
|
|
|
|
*
|
|
Nicholas Daraviras
|
|
|
11,609
|
|
|
|
*
|
|
Jack A. Smith
|
|
|
40,452
|
|
|
|
*
|
|
All directors and executive officers as a group (10)
|
|
|
1,518,535
|
|
|
|
5.6
|
%
|
|
(1)
|
Information
was obtained from a Schedule 13G/A filed on February 28, 2017 with the SEC. The address
for Wasatch Advisors, Inc. is 505 Wakara Way, Salt Lake City, Utah 84108.
|
|
(2)
|
Information
was obtained from a Schedule 13G/A filed on January 12, 2017 with the SEC. The address
for BlackRock Inc. is 55 East 52nd Street, New York, New York 10022.
|
|
(3)
|
Information
was obtained from a Schedule 13D/A filed on January 20, 2016 with the SEC by JCP Investment
Partnership, LP, which we refer to as “
JCP Partnership
”, JCP Single-Asset
Partnership, LP, which we refer to as the “
JCP Single-Asset
”, JCP
Investment Partners, LP, which we refer to as “
JCP Partners
”, JCP
Investment Holdings, LLC, which we refer to as “
JCP Holdings
”, JCP
Investment Management, LLC, which we refer to as “
JCP Management
”,
James, C. Pappas, BLR Partners LP, which we refer to as “
BLR Partners
”,
BLRPart, LP, which we refer to as “
BLRPart LP
”, BLRGP Inc., which
we refer to as “
BLRGP
”, Fondren Management, LP, which we refer to
as “
Fondren Management
”, FMLP Inc., which we refer to as “
FMLP
”,
Bradley L. Radoff, Bandera Master Fund L.P., which we refer to as “
Bandera Master
Fund
”, Bandera Partners LLC, which we refer to as “
Bandera Partners
”,
Gregory Bylinsky, Jefferson Gramm, Lake Trail Managed Investments LLC, which we refer
to as “
Lake Trail Fund
”, Lake Trail Capital LP, which we refer to
as “
Lake Trail Capital
”, Lake Trail Capital GP LLC, which we refer
to as “
Lake Trail GP
”, Thomas W. Purcell, Jr., Joshua Schechter and
John B. Morlock, which we refer to collectively as the “
Dissident Group
”.
JCP Partnership beneficially owns our shares as follows: (a) Sole Voting Power: 455,012
(b) Shared Voting Power: 0, (c) Sole Dispositive Power: 455,102 and (d) Shared Dispositive
Power: 0. JCP Single-Asset beneficially owns our shares as follows: (a) Sole Voting Power:
219,096 (b) Shared Voting Power: 0, (c) Sole Dispositive Power: 219,096 and (d) Shared
Dispositive Power: 0. JCP Partners, as general partner of each of JCP Partnership and
JCP Single-Asset, may be deemed the beneficial owner of the (i) 455,012 shares owned
by JCP Partnership and (ii) 219,096 shares owned by JCP Single-Asset. JCP Partners beneficially
owns our shares as follows: (a) Sole Voting Power: 674,108 (b) Shared Voting Power: 0,
(c) Sole Dispositive Power: 674,108 and (d) Shared Dispositive Power: 0. JCP Holdings,
as the general partner of JCP Partners, may be deemed the beneficial owner of the (i)
455,012 shares owned by JCP Partnership and (ii) 219,096 shares owned by JCP Single-Asset.
JCP Holdings beneficially owns our shares as follows: (a) Sole Voting Power: 674,108
(b) Shared Voting Power: 0, (c) Sole Dispositive Power: 674,108 and (d) Shared Dispositive
Power: 0. JCP Management, as the investment manager of each of JCP Partnership and JCP
Single-Asset, may be deemed the beneficial owner of the (i) 455,012 shares owned by JCP
Partnership and (ii) 219,096 shares owned by JCP Single-Asset. JCP Management beneficially
owns our shares as follows: (a) Sole Voting Power: 674,108 (b) Shared Voting Power: 0,
(c) Sole Dispositive Power: 674,108 and (d) Shared Dispositive Power: 0. Mr. Pappas,
as the managing member of JCP Management and sole member of JCP Holdings, may be deemed
the beneficial owner of the (i) 455,012 shares owned by JCP Partnership and (ii) 219,096
shares owned by JCP Single-Asset. Mr. Pappas beneficially owns our shares as follows:
(a) Sole Voting Power: 674,108 (b) Shared Voting Power: 0, (c) Sole Dispositive Power:
674,108 and (d) Shared Dispositive Power: 0. BLR Partners beneficially owns our shares
as follows: (a) Sole Voting Power: 600,000 (b) Shared Voting Power: 0, (c) Sole Dispositive
Power: 600,000 and (d) Shared Dispositive Power: 0. BLRPart LP, as the general partner
of BLR Partners, may be deemed the beneficial owner of the 600,000 shares owned by BLR
Partners. BLRPart LP beneficially owns our shares as follows: (a) Sole Voting Power:
600,000 (b) Shared Voting Power: 0, (c) Sole Dispositive Power: 600,000 and (d) Shared
Dispositive Power: 0. BLRGP, as the general partner of BLRPart LP, may be deemed the
beneficial owner of the 600,000 shares owned by BLR Partners. BLRGP beneficially owns
our shares as follows: (a) Sole Voting Power: 600,000 (b) Shared Voting Power: 0, (c)
Sole Dispositive Power: 600,000 and (d) Shared Dispositive Power: 0. Fondren Management,
as the investment manager of BLR Partners, may be deemed the beneficial owner of the
600,000 shares owned by BLR Partners. Fondren Management beneficially owns our shares
as follows: (a) Sole Voting Power: 600,000 (b) Shared Voting Power: 0, (c) Sole Dispositive
Power: 600,000 and (d) Shared Dispositive Power: 0. FMLP, as the general partner of Fondren
Management, may be deemed the beneficial owner of the 600,000 shares owned by BLR Partners.
FMLP beneficially owns our shares as follows: (a) Sole Voting Power: 600,000 (b) Shared
Voting Power: 0, (c) Sole Dispositive Power: 600,000 and (d) Shared Dispositive Power:
0. Mr. Radoff, as the sole shareholder and sole director of each of BLRGP and FMLP, may
be deemed the beneficial owner of the 600,000 shares owned by BLR Partners. Mr. Radoff
beneficially owns our shares as follows: (a) Sole Voting Power: 600,000 (b) Shared Voting
Power: 0, (c) Sole Dispositive Power: 600,000 and (d) Shared Dispositive Power: 0. Bandera
Master Fund beneficially owns our shares as follows: (a) Sole Voting Power: 378,654 (b)
Shared Voting Power: 0, (c) Sole Dispositive Power: 378,654 and (d) Shared Dispositive
Power: 0. Bandera Partners, as the investment manager of Bandera Master Fund, may be
deemed the beneficial owner of the 378,654 shares owned by Bandera Master Fund. Bandera
Partners beneficially owns our shares as follows: (a) Sole Voting Power: 378,654 (b)
Shared Voting Power: 0, (c) Sole Dispositive Power: 378,654 and (d) Shared Dispositive
Power: 0. Each of Mr. Bylinsky and Mr. Gramm, as the managing partners, managing directors
and portfolio managers of Bandera Partners, may be deemed the beneficial owner of the
378,654 shares owned by Bandera Master Fund. Each of Mr. Bylinsky and Mr. Gramm beneficially
owns our shares as follows: (a) Sole Voting Power: 378,654 (b) Shared Voting Power: 0,
(c) Sole Dispositive Power: 378,654 and (d) Shared Dispositive Power: 0. Lake Trail Fund
beneficially owns our shares as follows: (a) Sole Voting Power: 600,000 (b) Shared Voting
Power: 0, (c) Sole Dispositive Power: 600,000 and (d) Shared Dispositive Power: 0. Lake
Trail Capital, as the manager and investment manager of Lake Trail Fund, may be deemed
the beneficial owner of the 600,000 shares owned by Lake Trail Fund. Lake Trail Capital
beneficially owns our shares as follows: (a) Sole Voting Power: 600,000 (b) Shared Voting
Power: 0, (c) Sole Dispositive Power: 600,000 and (d) Shared Dispositive Power: 0. Lake
Trail GP, as the general partner of Lake Trail Capital, may be deemed the beneficial
owner of the 600,000 shares owned by Lake Trail Fund. Lake Trail GP beneficially owns
our shares as follows: (a) Sole Voting Power: 600,000 (b) Shared Voting Power: 0, (c)
Sole Dispositive Power: 600,000 and (d) Shared Dispositive Power: 0. Mr. Purcell, as
the sole member of Lake Trail GP, may be deemed the beneficial owner of the 600,000 Shares
owned by Lake Trail Fund. Mr. Purcell beneficially owns our shares as follows: (a) Sole
Voting Power: 600,000 (b) Shared Voting Power: 0, (c) Sole Dispositive Power: 600,000
and (d) Shared Dispositive Power: 0. Mr. Schechter beneficially owns our shares as follows:
(a) Sole Voting Power: 17,700 (b) Shared Voting Power: 1,700, (c) Sole Dispositive Power:
17,700 and (d) Shared Dispositive Power: 1,700. Mr. Morlock beneficially owns our shares
as follows: (a) Sole Voting Power: 0 (b) Shared Voting Power: 0, (c) Sole Dispositive
Power: 0 and (d) Shared Dispositive Power: 0. The Dissident Group, as members of a “group”
for the purposes of Section 13(d)(3) of the Exchange Act may be deemed the beneficial
owner of our shares directly owned by the other members of the Dissident Group. Each
member of the Dissident Group disclaims beneficial ownership of such shares except to
the extent of his or its pecuniary interest therein. The address of the principal office
of each of JCP Partnership, JCP Single-Asset, JCP Partners, JCP Holdings, JCP Management
and Mr. Pappas is 1177 West Loop South, Suite 1650, Houston, Texas 77027. The address
of the principal office of each of BLR Partners, BLRPart LP, BLRGP, Fondren Management,
FMLP and Mr. Radoff is 1177 West Loop South, Suite 1625, Houston, Texas 77027. The address
of the principal office of each of Bandera Master Fund, Bandera Partners and Messrs.
Bylinsky and Gramm is 50 Broad Street, Suite 1820, New York, New York 10004. The address
of the principal office of each of Lake Trail Fund, Lake Trail Capital, Lake Trail GP
and Mr. Purcell is 400 Park Avenue, 21st Floor, New York, New York 10022. The address
of the principal office of Mr. Schechter is 302 South Mansfield Avenue, Los Angeles,
California 90036. The address of the principal office of Mr. Morlock is 1328 Dublin Road,
Columbus, Ohio 43215.
|
|
(4)
|
Information
was obtained from a Schedule 13G/A filed on February 10, 2017 with the SEC. The address
for The Vanguard Group, Inc. is 100 Vanguard Blvd. Malvern, PA 19355.
|
|
(5)
|
Information
was obtained from a Schedule 13G/A filed on February 10, 2017 with the SEC. Morgan Stanley
beneficially owns our shares as follows: (a) Sole Voting Power: 1,348,354 (b) Shared
Voting Power: 0, (c) Sole Dispositive Power: 0 and (d) Shared Dispositive Power: 1,349,354.
Morgan Stanley Investment Management Inc. beneficially owns our shares as follows: (a)
Sole Voting Power: 1,348,354 (b) Shared Voting Power: 0, (c) Sole Dispositive Power:
0 and (d) Shared Dispositive Power: 1,349,354. The address of the principal office of
each of Morgan Stanley and Morgan Stanley Investment Management Inc. is 1585 Broadway,
New York, New York 10036.
|
|
(6)
|
Mr.
Taft served as our Chief Executive Officer and President and a member of our board of
directors until September 30, 2016. Information was obtained from a Statement of Changes
in Beneficial Ownership on Form 4 filed March 7, 2016 with the SEC. The address of Mr. Taft
is 5606 Palomar Lane, Dallas, Texas 75229.
|
|
(7)
|
Mr.
Todd served as our Group Vice President, Chief Development Officer until January 1, 2017.
Information was obtained from a Statement of Changes in Beneficial Ownership on Form
4 filed August 24, 2016 with the SEC. The address of Mr. Todd is 1080 W. Bethel
Road, Coppell, Texas 75019.
|
|
(8)
|
Mr.
Coerver served as our Chief Operating Officer, Taco Cabana until October 20, 2016. Information
was obtained from a Statement of Changes in Beneficial Ownership on Form 4 filed March
7, 2016 with the SEC. The address of Mr. Coerver is 700 12
th
Street,
#220, Golden, Colorado 80401.
|
|
(9)
|
Information
was obtained from a Statement of Changes in Beneficial Ownership on Form 4 filed April
30, 2015 with the SEC. Includes 1,007,000 shares of Common Stock held by Leucadia, 28,668
shares of Common Stock held by 2055 Partners L.P., which we refer to as “
2055
Partners
”, and 32,681 shares of our Common Stock held directly by Mr. Friedman.
Mr. Friedman is the President and a director of Leucadia. Mr. Friedman disclaims beneficial
ownership over our shares held by Leucadia except to the extent of his indirect pecuniary
interest. Mr. Friedman is the general partner of 2055 Partners and, in such capacity,
may be deemed to beneficially own the 28,668 shares of our Common Stock beneficially
owned by 2055 Partners. The address of Mr. Friedman is 520 Madison Avenue, 11
th
Floor, New York, New York 10022.
|
|
(10)
|
Includes
1,007,000 shares of Common Stock held by Leucadia and 28,668 shares of Common Stock held
by 2055 Partners as reported in footnote (9) above.
|
Equity
Compensation Plan
The
following table summarizes our 2012 Stock Incentive Plan, which is the equity compensation plan under which our common stock may
be issued as of January 1, 2017. Our shareholders have approved the Plan.
|
|
Number of securities
to be
issued upon exercise of
outstanding options,
warrants, and rights
|
|
|
Weighted-
average
exercise price
of outstanding
options
|
|
|
Number of securities
remaining
available for
future issuance under
equity compensation
plans
|
|
Equity compensation plans approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
2,169,321
|
|
Equity compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
2,169,321
|
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Related
Party Transaction Procedures
The
board of directors has assigned responsibility for reviewing related party transactions to our Audit Committee. The board of directors
and the Audit Committee have adopted a written policy pursuant to which certain transactions between us or our subsidiaries and
any of our directors or executive officers must be submitted to the Audit Committee for consideration prior to the consummation
of the transaction as required by the rules of the SEC. The Audit Committee reports to the board of directors on all related party
transactions considered.
Family
Relationships
There
are no family relationships between any of our executive officers or directors.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The
purpose of this Compensation Discussion & Analysis, which we refer to as the “
CD&A
”, is to provide
relevant information to shareholders regarding the Company’s executive compensation processes, procedures, plan designs,
and practices with respect to its executive officers named in the Summary Compensation Table, which we refer to each as a “
Named
Executive Officer
” or “
NEO
”, for 2016. The following are the Company’s NEOs for 2016:
|
●
|
Mr. Timothy P.
Taft – Former Chief Executive Officer and President (until September 30, 2016)
|
|
●
|
Mr. Danny K.
Meisenheimer – Senior Vice President and Chief Operating Officer (since February
28, 2017); Former Interim Chief Executive Officer and President (October 1, 2016 through
February 28, 2017) and former Chief Operating Officer, Pollo Tropical (until September 30, 2016)
|
|
●
|
Ms. Lynn S.
Schweinfurth – Senior Vice President, Chief Financial Officer, and Treasurer
|
|
●
|
Mr. Joseph A.
Zirkman – Senior Vice President, General Counsel, and Secretary
|
|
●
|
Mr. John
Todd – Former Chief Development Officer (until January 1, 2017)
|
|
●
|
Mr. Joseph
Brink – Chief Procurement Officer
|
|
●
|
Mr. Todd
Coerver – Former Chief Operating Officer, Taco Cabana (until October 20, 2016)
|
Executive
Summary
The
key objective of the executive compensation program is to align executive pay with performance in a straightforward manner that
promotes the recruitment and retention of our executives. Accordingly, the majority of the compensation for our NEOs is at-risk
and based primarily on the Company’s performance. Our executives will receive larger rewards when performance objectives
are exceeded and conversely will receive lower or no rewards when performance falls below targeted levels.
Fiesta
Restaurant Group is focused on growing the Company and building shareholder value. To help accomplish these goals, we attract,
retain, and reward executive talent with a compensation plan comprised of three components: base salaries, annual cash incentive
compensation, and equity compensation in the form of restricted stock and performance-based restricted stock units.
2016
Performance Results
Our
2016 Company performance results included:
|
●
|
Total
revenues increased 3.5% to $711.8 million. Excluding the extra fiscal week in 2015, total
revenues increased 5.4%
;
|
|
●
|
Same
Restaurant Sales, which we refer to as “SRS” decreased 2.0% in 2016 on a
consolidated basis
;
|
|
●
|
Comparable
restaurant sales at Pollo Tropical decreased 1.6% and comparable restaurant transactions
decreased 3.1%, partially due to sales cannibalization that negatively impacted comparable
restaurant transactions by approximately 1.5%;
|
|
●
|
Comparable
restaurant sales at Taco Cabana decreased 2.5% and comparable restaurant transactions
decreased 3.6%;
|
|
●
|
Adjusted
EBT (as defined below) in 2016 decreased to $27.5 million compared to Adjusted EBT of
$62.4 million in 2015;
|
|
●
|
Adjusted
EPS (as defined below) in 2016 declined to $0.68 compared to Adjusted EPS of $1.48 in
2015;
|
|
●
|
32
Company-owned Pollo Tropical and four Company-owned Taco Cabana restaurants were opened;
and
|
|
●
|
14
Company-owned Pollo Tropical restaurants were reimaged.
|
The
Company has made several key decisions in 2016 that we believe will benefit future financial performance of the Company but some
of which have resulted in increased near term headwinds and costs. These decisions include:
|
●
|
Initiation
of a comprehensive review of the Company’s strategic plan;
|
|
●
|
Suspension
of the Taco Cabana separation process;
|
|
●
|
Suspension
of new Pollo Tropical restaurant development in emerging markets that contributed approximately
$4.8 million of pre-tax operating losses to results in 2016;
|
|
●
|
Closure
of 10 underperforming Pollo Tropical restaurants in emerging markets; and
|
|
●
|
Upon
the retirement of the Company’s former Chief Executive Officer and President, Tim
Taft, initiated a search for a new Chief Executive Officer and a new member of the Board
of Directors designed to strengthen the Company and its governance which resulted in
the appointment of Richard Stockinger as Chief Executive Officer and President of the
Company effective February 28, 2017 and the appointment of Paul E. Twohig to the Company’s
board of directors effective February 28, 2017.
|
We
believe the Company’s compensation results for 2016 were aligned with the Company’s financial and
strategic results for the year. SRS and Adjusted EBT were negatively impacted by factors that include impairment and other
lease charges, challenging market conditions impacting the restaurant industry, sales cannibalization from new
Company-owned restaurants on existing Company-owned restaurants at Pollo Tropical, and Company-owned Pollo Tropical
restaurant performance in emerging markets. As a result, there were no short-term cash incentive payouts given the
Company’s performance relative to budget for SRS and Adjusted EBT. In addition, The Company did not achieve at least
75% of its EBT target for 2016 and, accordingly, the first 25% of the 2016 restricted stock awards and the second 25% of the
2015 restricted stock awards to the NEOs did not vest and were forfeited.
Significant
Portion of Targeted CEO Compensation is At-Risk
72%
of CEO pay is at-risk which incentivizes executive performance to drive shareholder value
The
Role of Shareholder Feedback and Vote Results
The
Company’s board of directors, Compensation Committee, and management value the opinions of the Company’s shareholders.
The Company is open to receiving feedback from shareholders and provides shareholders with the opportunity to cast an advisory
vote to approve NEO compensation every year, or Say-on-Pay. The Compensation Committee considers any feedback it receives from
shareholders, as well as the outcome of the vote, when making compensation decisions for NEOs. For the Say-on-Pay proposal at
the 2016 Annual Meeting, more than 99% of the shares cast on the proposal were voted in favor of the proposal. The Compensation
Committee believes that this evidences the Company’s shareholders’ support for its approach to executive compensation.
The Compensation Committee will continue to consider shareholder feedback and the outcome of the Company’s Say-on-Pay votes
when making future compensation decisions for its NEOs.
Executive
Compensation Components
Base
Salary
The
Compensation Committee reviews and considers salary increases of our NEOs on an annual basis, taking into consideration factors
such as the Company’s compensation philosophy and strategy, the Company’s performance, individual executive performance
and tenure, internal equity among executives, and competitive market pay levels. In 2016, the Compensation Committee increased
Mr. Meisenheimer’s salary by 14.4% and Mr. Brink’s salary by 8%. No other NEOs received a base salary increase in
2016 and no NEOs received a base salary increase in 2017. Mr. Meisenheimer’s annual base salary was increased effective
October 1, 2016 when he became Interim Chief Executive Officer and President.
Short-Term
Incentive
The
Short-Term Incentive Program creates a variable pay opportunity tied to corporate, brand, and individual executive performance.
The purpose of the Short-Term Incentive Program is to align annual incentive payments with annual performance goals that are aligned
with our strategy to create sustainable value for shareholders. For the Company’s short-term incentive compensation program
in 2016, all NEOs were eligible to receive a cash bonus tied to the achievement of SRS, Adjusted Earnings Before Tax, which we
refer to as “
Adjusted EBT
”, and individual goals and objectives, which we refer to as “
MBO
”.
SRS is referred to as comparable restaurant sales in the Company’s Annual Report on Form 10-K for the fiscal year ended
January 1, 2017 filed with the SEC on February 27, 2017, which we refer to as the “2016 Form 10-K”. Adjusted EBT refers
to income before taxes (which is set forth in Note 11 to the Company’s consolidated financial statements included in the
2016 Form 10-K).
For
2016, each NEO had a threshold, target, and maximum award opportunity for SRS and Adjusted EBT, where the threshold award opportunity
was equal to 50% of target and the maximum award opportunity was equal to 150% of target. For 2016, each NEO also had an award
opportunity for MBO performance measures ranging from 0% to 100% of the target award opportunity, subject to achievement of at
least 75% of budgeted EBT target.
The
following table sets forth the target weighting applicable to each measure for each NEO in 2016:
|
|
|
|
FRGI
Consolidated
|
|
|
Pollo
Tropical
|
|
|
Taco
Cabana
|
|
|
|
|
|
|
|
Executive
|
|
Position
Title
|
|
SRS
|
|
|
Adjusted
EBT
|
|
|
SRS
|
|
|
Adjusted
EBT
|
|
|
SRS
|
|
|
Adjusted
EBT
|
|
|
Individual
MBO
|
|
|
Total
% of
Target
|
|
Timothy P. Taft
|
|
Former CEO & President
|
|
|
20.0
|
%
|
|
|
60.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
20.0
|
%
|
|
|
100.0
|
%
|
Danny K. Meisenheimer
|
|
Senior Vice President and Chief
Operating Officer, Former Interim CEO & President (1)
|
|
|
2.5
|
%
|
|
|
7.5
|
%
|
|
|
24.5
|
%
|
|
|
45.5
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
20.0
|
%
|
|
|
100.0
|
%
|
Lynn S. Schweinfurth
|
|
Senior Vice President, CFO
& Treasurer
|
|
|
20.0
|
%
|
|
|
60.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
20.0
|
%
|
|
|
100.0
|
%
|
Joseph A. Zirkman
|
|
Senior Vice President, GC &
Secretary
|
|
|
20.0
|
%
|
|
|
60.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
20.0
|
%
|
|
|
100.0
|
%
|
John Todd
|
|
Former Group Vice President, Chief
Development Officer
|
|
|
20.0
|
%
|
|
|
60.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
20.0
|
%
|
|
|
100.0
|
%
|
Joseph Brink
|
|
Chief Procurement Officer
|
|
|
20.0
|
%
|
|
|
60.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
20.0
|
%
|
|
|
100.0
|
%
|
Todd Coerver
|
|
Former COO, Taco Cabana
|
|
|
2.5
|
%
|
|
|
7.5
|
%
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
24.5
|
%
|
|
|
45.5
|
%
|
|
|
20.0
|
%
|
|
|
100.0
|
%
|
(1)
|
The target weighting applicable to each measure in the table above with respect to Mr. Meisenheimer reflects his role as Chief
Operating Officer, Pollo Tropical from January 4, 2016 until September 29, 2016. Upon assuming the position of Interim Chief Executive
Officer and President beginning October 1, 2016 through January 1, 2017, the target weightings applicable to each measure are
as follows: FRGI Consolidated SRS 2 0.0%, Fiesta Consolidated Adjusted EBT 60.0%; Pollo Tropical SRS 0.0%, Pollo Tropical Adjusted
EBT 0.0%; Taco Cabana SRS 0.0%, Taco Cabana Adjusted EBT 0.0% and Individual MBO 20.0%, totaling 100% of Target.
|
The following table
sets forth the (a) threshold award opportunity amount, target award opportunity amount, the maximum award opportunity amount
with respect to SRS and Adjusted EBT for FRGI Consolidated, Pollo Tropical, and Taco Cabana, (b) actual SRS and Adjusted
EBT amounts achieved in 2016 for FRGI Consolidated, Pollo Tropical, and Taco Cabana, and (c) achievement percentage of actual
SRS and Adjusted EBT amounts achieved in 2016 for FRGI Consolidated, Pollo Tropical, and Taco Cabana relative to the target award
opportunity amount:
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual
|
|
|
Achievement
Percentage
|
|
FRGI Consolidated SRS
|
|
|
2.7
|
%
|
|
|
3.0
|
%
|
|
|
3.3
|
%
|
|
|
(2.0
|
)%
|
|
|
(66.7
|
)%
|
Pollo Tropical SRS(1)
|
|
|
2.3
|
%
|
|
|
2.6
|
%
|
|
|
2.9
|
%
|
|
|
(1.6
|
)%
|
|
|
(61.5
|
)%
|
Taco Cabana SRS(2)
|
|
|
3.2
|
%
|
|
|
3.5
|
%
|
|
|
3.9
|
%
|
|
|
(2.5
|
)%
|
|
|
(71.4
|
)%
|
|
|
Threshold
$ millions
|
|
|
Target
$ millions
|
|
|
Maximum
$ millions
|
|
|
Actual
$ millions
|
|
|
Achievement
Percentage
|
|
FRGI Consolidated Adjusted EBT
|
|
$
|
61.7
|
|
|
$
|
68.6
|
|
|
$
|
75.5
|
|
|
$
|
27.5
|
|
|
|
40.1
|
%
|
Pollo Tropical Adjusted EBT(1)
|
|
$
|
35.3
|
|
|
$
|
39.2
|
|
|
$
|
43.1
|
|
|
$
|
6.2
|
|
|
|
15.8
|
%
|
Taco Cabana Adjusted EBT(2)
|
|
$
|
26.5
|
|
|
$
|
29.4
|
|
|
$
|
32.3
|
|
|
$
|
21.3
|
|
|
|
72.3
|
%
|
|
(1)
|
The
SRS and Adjusted EBT amounts for our Pollo Tropical brand are only applicable to Mr.
Meisenheimer.
|
|
(2)
|
The
SRS and Adjusted EBT amounts for our Taco Cabana brand are only applicable to Mr. Coerver.
The minimum achievement percentage of 90% would result in a payment of 50% of target
while an achievement percentage of 110% or greater would result in a maximum payment
of 150% for each of SRS and Adjusted EBT and multiplied by the target weighting. Straight
line interpolation between threshold and target achievement and between target and maximum
achievement will be used in the payout calculation.
|
In
2016, Adjusted EBT was adjusted to exclude $1.6 million of financial and legal fees primarily related to a review of strategic
alternatives, $0.5 million of office restructuring and relocation costs and $0.3 in legal settlement costs associated with a class
action litigation, partially offset by benefits related to litigation matters. Adjusted EPS was adjusted $0.06 to exclude the
same items. In 2015, Adjusted EBT was adjusted to exclude $1.7 million of fees and other costs related to a class action lawsuit
settlement plus legal and other fees incurred in defending the action, and $0.1 million of costs related to legal and tax accounting
professional fees associated with the review of strategic alternatives for the Company’s Taco Cabana brand. In 2015, Adjusted
EPS was adjusted $0.04 to exclude the same items. No adjustments were made to Adjusted EBT in 2014.
The
following table sets forth the target short-term incentive opportunity for each NEO for 2016, as well as the actual 2016 short-term
incentive earned based on results:
Executive
|
|
Position Title
|
|
Base Salary
|
|
|
Target Short-
Term
Incentive
% Salary
|
|
|
Target Short-
Term
Incentive
$ Value
|
|
|
Actual Short-
Term
Incentive
% Target
|
|
|
Actual
Short-
Term
Incentive
$ Value
|
|
Timothy P. Taft
|
|
Former Chief Executive Officer & President
|
|
$
|
550,000
|
|
|
|
90.0
|
%
|
|
$
|
495,000
|
|
|
|
0.0
|
%
|
|
$
|
0
|
|
Danny K. Meisenheimer
|
|
Senior Vice President and Chief Operating Officer, Former Interim Chief Executive Officer & President (1)
|
|
$
|
295,333
|
|
|
|
60.0
|
%
|
|
$
|
177,200
|
|
|
|
0.0
|
%
|
|
$
|
0
|
|
Lynn S. Schweinfurth
|
|
Senior Vice President, Chief Financial Officer & Treasurer
|
|
$
|
352,000
|
|
|
|
60.0
|
%
|
|
$
|
211,200
|
|
|
|
0.0
|
%
|
|
$
|
0
|
|
Joseph A. Zirkman
|
|
Senior Vice President, General Counsel & Secretary
|
|
$
|
326,700
|
|
|
|
60.0
|
%
|
|
$
|
196,020
|
|
|
|
0.0
|
%
|
|
$
|
0
|
|
John Todd
|
|
Former Group Vice President, Chief Development Officer
|
|
$
|
330,000
|
|
|
|
60.0
|
%
|
|
$
|
198,000
|
|
|
|
0.0
|
%
|
|
$
|
0
|
|
Joseph Brink
|
|
Chief Procurement Officer
|
|
$
|
200,232
|
|
|
|
40.0
|
%
|
|
$
|
80,093
|
|
|
|
0.0
|
%
|
|
$
|
0
|
|
Todd Coerver
|
|
Former Chief Operating Officer, Taco Cabana
|
|
$
|
288,400
|
|
|
|
60.0
|
%
|
|
$
|
173,040
|
|
|
|
0.0
|
%
|
|
$
|
0
|
|
|
(1)
|
The
Base Salary and Target Short-term Incentive $ Value amounts in the table above with respect
to Mr. Meisenheimer were prorated based on Mr. Meisenheimer’s role as Chief Operating
Officer, Pollo Tropical from January 4, 2016 until September 29, 2016 and as Interim
Chief Executive Officer and President from October 1, 2016 until January 1, 2017.
|
The
consolidated and brand SRS and Adjusted EBT results were formulaic calculations based on actual performance in 2016 relative to
budgeted target amounts. The individual MBO results were based on an assessment of each individual’s accomplishments relative
to pre-determined goals for the year. The Compensation Committee assessed the individual performance of each NEO. The determination
of whether MBO goals and objectives were met by each NEO was not entirely formulaic, objective, or quantifiable; rather, the individual
performance considerations included some factors (among others) that were subjective judgments in connection with the compensation
decision.
SRS
and Adjusted EBT were negatively impacted by factors that include impairment and other lease charges, challenging market conditions
impacting the restaurant industry, sales cannibalization from new Company-owned restaurants on existing Company-owned restaurants
at Pollo Tropical, and Company-owned Pollo Tropical restaurant performance in emerging markets. As a result, there were no short-term
cash incentive payouts given the Company’s performance relative to budget for SRS and Adjusted EBT.
Long-Term
Incentive
The
Company has adopted a long-term incentive program that provides the opportunity for annual equity grants to the NEOs pursuant
to the Plan. The purpose of the long-term incentive program is to align long-term pay with long-term performance goals by providing
stock-based compensation that will reward executives for creating sustainable shareholder value. The following sets forth the
target long-term incentive grant date value (based on the closing price of the common stock on the date of grant) for each NEO
for 2016:
Executive
|
|
Position
Title
|
|
Target
Long-Term
Incentive
$ Value
|
|
Timothy P. Taft
|
|
Former Chief Executive Officer & President
|
|
$
|
950,000
|
|
Danny K. Meisenheimer
|
|
Senior Vice President and Chief Operating Officer, Former Interim Chief Executive Officer & President
|
|
$
|
275,000
|
|
Lynn S. Schweinfurth
|
|
Senior Vice President, Chief Financial Officer & Treasurer
|
|
$
|
450,000
|
|
Joseph A. Zirkman
|
|
Senior Vice President, General Counsel & Secretary
|
|
$
|
225,000
|
|
John Todd
|
|
Former Group Vice President, Chief Development Officer
|
|
$
|
200,000
|
|
Joseph Brink
|
|
Chief Procurement Officer
|
|
$
|
100,000
|
|
Todd Coerver
|
|
Former Chief Operating Officer, Taco Cabana
|
|
$
|
175,000
|
|
The
Compensation Committee has established a policy to provide that restricted stock and performance stock unit grants to employees,
including the NEOs, which are determined pursuant to the target long-term incentive grant date value, will be granted annually
in February or March on a grant date which is five business days following the announcement of the Company’s financial results
for the prior fiscal year with annual vesting dates linked to the grant date. Accordingly, the measurement of the value of any
restricted stock grant or performance stock unit grant would be based upon the price of our common stock at the close of business
on such grant date. Because the Compensation Committee’s policy is to grant restricted stock and performance stock units
on a fixed date, the Compensation Committee may have previously, or may in the future grant restricted stock at a time when it,
as well as the senior management, may be aware of material non-public information that, once made public, could either have a
positive or negative effect on the price of our common stock.
Restricted
Stock
The
use of restricted stock creates stock ownership opportunities and retention strength. The 2016 restricted stock
grants represented 50% of each NEO’s annual equity target opportunity. The 2016 restricted stock awards vest 25% on
each anniversary date over four years if the minimum performance condition for vesting is met each year. This
performance condition requires the Company to achieve at least 75% of its EBT target each year in order for the restricted
stock to vest at the time the service condition is satisfied. This performance condition prevents shares from vesting at the
vesting date if the Company did not achieve at least 75% of its EBT target for the preceding year. The Company did not
achieve at least 75% of its EBT target for 2016 and, accordingly, the first 25% of the 2016 restricted stock awards and the
second 25% of the 2015 restricted stock awards to the NEOs did not vest and were forfeited in February and March 2017 as
follows: Mr. Meisenheimer – 1,505 shares, Ms. Schweinfurth – 2,462 shares, Mr. Zirkman – 1,231 shares, Mr.
Todd – 1,095 shares and Mr. Brink – 355 shares.
Performance
Stock Units
The
use of performance stock units creates alignment between long-term pay and long-term company performance. The 2016 performance
stock unit grants represented 50% of each NEO’s total annual equity target opportunity. The performance criterion for the
performance stock units is three-year cumulative Adjusted EPS. A three-year cumulative Adjusted
EPS goal of $5.80 was approved by the Compensation Committee. The potential payout
under the 2016 grant of performance stock units will be in 2019 based on the Company’s financial results for the three year
period including 2016, 2017, and 2018.
Payouts
(consisting of shares of common stock issued under the Plan) ranging from 50%-200% are earned based on a sliding scale of performance
between 90%-120% of the Adjusted EPS goal. Performance below 90% of goal results in no payout.
The
potential payout under the 2016 grant of performance stock units will be in 2019 based on the Company’s financial results
for the three year period including 2016, 2017, and 2018.
The
following table sets forth the threshold, target, and maximum performance stock unit grant levels for each NEO for 2016, with
the Target # of Shares being the actual grant of performance stock units for 2016:
Executive
|
|
Position Title
|
|
Threshold
# of Shares
|
|
|
Target
# of Shares
|
|
|
Maximum
# of Shares
|
|
Timothy P. Taft
|
|
Former Chief Executive Officer & President
|
|
|
6,738
|
|
|
|
13,476
|
|
|
|
26,952
|
|
Danny K. Meisenheimer
|
|
Senior Vice President and Chief Operating Officer, Former Interim Chief Executive Officer & President
|
|
|
1,951
|
|
|
|
3,901
|
|
|
|
7,802
|
|
Lynn S. Schweinfurth
|
|
Senior Vice President, Chief Financial Officer & Treasurer
|
|
|
3,192
|
|
|
|
6,383
|
|
|
|
12,766
|
|
Joseph A. Zirkman
|
|
Senior Vice President, General Counsel & Secretary
|
|
|
1,596
|
|
|
|
3,192
|
|
|
|
6,384
|
|
John Todd
|
|
Former Group Vice President, Chief Development Officer
|
|
|
1,419
|
|
|
|
2,837
|
|
|
|
5,674
|
|
Joseph Brink
|
|
Chief Procurement Officer
|
|
|
710
|
|
|
|
1,419
|
|
|
|
2,838
|
|
Todd Coerver
|
|
Former Chief Operating Officer, Taco Cabana
|
|
|
1,242
|
|
|
|
2,483
|
|
|
|
4,966
|
|
For
the above table, the number of shares was calculated using the grant date stock price of $35.25.
The
following table sets forth the threshold, target, and maximum three-year Adjusted EPS benchmarks established by the Compensation
Committee for the 2016 awards of performance stock units as well as the potential payout of shares that are determined by the
actual, cumulative Adjusted EPS achieved by the Company.
|
|
Cumulative 3-Year Adjusted EPS
|
|
|
% Adjusted Target Achieved
|
|
|
% Payout of Target Performance Stock Units
|
|
Threshold
|
|
$
|
5.06
|
|
|
|
90
|
%
|
|
|
50
|
%
|
Target
|
|
$
|
5.62
|
|
|
|
100
|
%
|
|
|
100
|
%
|
Maximum
|
|
$
|
6.74
|
|
|
|
120
|
%
|
|
|
200
|
%
|
Retention
Bonus
In
November 2016, the Company entered into agreements with certain key employees including several of our NEO’s
that provided for retention bonuses and (except in the case of Mr. Brink) severance
arrangements. The purpose of the such agreements was to ensure continuity in our senior management team by increasing the
likelihood that such key senior executives would remain employed with the Company while the Company was engaged in searching
for a new Chief Executive Officer and after a new Chief Executive Officer was appointed.
The
Company entered into an agreement, which we refer to as the “
Schweinfurth Agreement
”, with Ms.
Schweinfurth on November 4, 2016 which are further described on pages 39 and 47 of this Proxy Statement. Pursuant to the
Schweinfurth Agreement, Ms. Schweinfurth was entitled to a retention bonus payment of $150,000 which was paid in February
2017 subject to the provisions of the Schweinfurth Agreement.
The
Company entered into an agreement, which we refer to as the “
Meisenheimer Agreement
” with Mr.
Meisenheimer on November 4, 2016 which is further described on pages 40 and 46 of this Proxy Statement. Pursuant to the
Meisenheimer Agreement, Mr. Meisenheimer was entitled to a retention bonus payment of $175,000 which was paid in February
2017 subject to the provisions of the Meisenheimer Agreement.
The
Company entered into an agreement, which we refer to as the “
Zirkman Agreement
” with Mr. Zirkman
on November 4, 2016 which is further described on pages 40 and 48 of this Proxy Statement. Pursuant to the Zirkman Agreement,
Mr. Zirkman was entitled to a retention bonus payment of $100,000 which was paid in February 2017 subject to the provisions
of the Zirkman Agreement.
The
Company entered into a Retention Bonus Agreement, which we refer to as the “
Brink Agreement
” with Mr. Brink
on November 9, 2016 which is further described on page 41 of this Proxy Statement. Pursuant to the Brink Agreement, Mr. Brink
was entitled to a retention bonus payment of $40,000 which was paid in February 2017 subject to the provisions of the Brink Agreement.
Additional
Compensation Policies and Practices
Executive
Stock Ownership Guidelines
Executives
of the Company are expected to acquire and continue to hold shares of the Company’s common stock having an aggregate market
value which equals or exceeds a multiple of base salary as outlined below within five years of being named an Executive.
The
following sets forth the minimum stock ownership level for each NEO:
Executive
|
|
Position Title
|
|
Salary Multiple
|
Timothy P. Taft
|
|
Former Chief Executive Officer & President
|
|
3x
|
Danny K. Meisenheimer
|
|
Senior Vice President and Chief Operating Officer, Former Interim Chief Executive Officer & President
|
|
1x
|
Lynn S. Schweinfurth
|
|
Senior Vice President, Chief Financial Officer & Treasurer
|
|
1x
|
Joseph A. Zirkman
|
|
Senior Vice President, General Counsel & Secretary
|
|
1x
|
John Todd
|
|
Former Group Vice President, Chief Development Officer
|
|
1x
|
Joseph Brink
|
|
Chief Procurement Officer
|
|
1x
|
Todd Coerver
|
|
Former Chief Operating Officer, Taco Cabana
|
|
1x
|
Only
actual shares owned by each executive, including direct and indirect ownership as reported to the SEC, count toward compliance
with these guidelines.
Compensation
Clawback Policy
The
Company has adopted a compensation clawback policy. The NEOs are covered by the policy, which enables the board of directors to
seek repayment of incentive compensation that was paid based on financial results that are subsequently restated whereby the amount
of incentive compensation that would have been awarded or earned based on the restated financial results is lower than what was
paid based on the original financial results. This policy will be reviewed from time to time to ensure that it is compliant with
any SEC requirements.
Compensation
Governance Practices
The
Compensation Committee believes that the Company has strong governance practices in place with respect to executive compensation,
as evidenced by the following:
|
●
|
Fully
independent Compensation Committee;
|
|
●
|
Fully
independent compensation advisor reporting directly to the Compensation Committee;
|
|
●
|
Compensation
Clawback Policy in the event of a financial restatement;
|
|
●
|
Executive
and Outside Director stock ownership requirements;
|
|
●
|
Prohibition
on hedging and pledging Company stock; and
|
|
●
|
No
perquisites provided to our NEOs.
|
Executive
Compensation Roles and Responsibilities
Compensation
Committee
The
Compensation Committee establishes the overall compensation philosophy and strategy for the NEOs, determines the Chief Executive
Officer’s compensation, and reviews and approves compensation levels, plan designs, policies, and practices that it believes
are aligned with this philosophy and strategy and that are in the best interests of the Company and its shareholders. Although
the Compensation Committee receives input from the Chief Executive Officer (particularly with respect to the other NEOs), executive
leadership, and its independent compensation advisor, the Compensation Committee makes its own independent determinations regarding
executive compensation.
Chief
Executive Officer
The Chief Executive
Officer attends portions or all of certain Compensation Committee meetings and makes specific recommendations to the Compensation
Committee with respect to each NEO’s compensation other than his own. This information is reviewed and considered by the
Compensation Committee along with all other relevant factors and circumstances. The Chief Executive Officer is never present when
the Compensation Committee meets in executive sessions to discuss the compensation of the NEOs.
Executive
Leadership
Various
members of executive leadership provide information from time to time either to the Chief Executive Officer or to the Compensation
Committee directly. For example, the Chief Financial Officer provides information regarding financial performance and payouts
under the short-term incentive program and the General Counsel provides information regarding executive compensation policies
and practices such as stock ownership requirements. No members of executive leadership, other than the Chief Executive Officer,
generally attend Compensation Committee meetings.
Independent
Compensation Advisor
The
Compensation Committee has the authority to retain a compensation advisor. Since 2012, the Compensation Committee has annually
chosen to retain Pearl Meyer as its compensation advisor. In selecting Pearl Meyer, the Compensation Committee considered the
SEC’s independence criteria and concluded that Pearl Meyer is independent per the criteria and that the work of Pearl Meyer
did not raise any conflicts of interest. Pearl Meyer reports directly to the Compensation Committee, and provides no other services
to the Company. Pearl Meyer’s services to the Compensation Committee include providing periodic data and information regarding
market pay practices and trends, as well as assisting in the development of appropriate compensation program designs and policies,
and the preparation of the CD&A. The Compensation Committee has been satisfied with Pearl Meyer’s services.
Change
of Control Agreements
During
2016, the Company did not have change of control agreements with any of its NEOs.
Richard
Stockinger was appointed Chief Executive Officer and President of the Company effective February 28, 2017. On February 24, 2017,
the Company entered into an Executive Employment Agreement, which we refer to as the “
Stockinger Employment Agreement
”,
with Mr. Stockinger and which is further described on page 41 of this Proxy Statement. The Stockinger Employment Agreement provides
for certain potential enhanced benefits upon a termination of employment following a change of control of the Company.
The
Plan and individual award agreements for awards of restricted stock and performance stock units contain a change of control provision.
Under the Plan and individual award agreements for restricted stock, in the event of a change of control of the Company, the vesting
provisions on all outstanding unvested restricted shares shall be accelerated and such shares will become fully vested and free
of all restrictions. With regard to performance stock units, in the event of a change of control, if the performance stock unit
awards (i) are not continued by the Compensation Committee, or not assumed or replaced in an equitable manner to the holder by
the successor entity or company after a change in control, then a portion of such performance stock unit award that would have
vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period
shall immediately vest, and (ii) are continued by the Compensation Committee, or are assumed or replaced in an equitable manner
to the holder by the successor entity or company after a change of control and if the holder of such performance stock unit award
is terminated by the Company for reasons other than cause (as defined under the Plan) or the result of a voluntary termination
by the holder, or employment is terminated by the holder for good reason (as defined under the Plan) within one year of the date
of the change of control, a portion of such performance stock unit award that would have vested as of the scheduled vesting date
if the Company were to achieve the target performance level for the performance period shall immediately vest.
The
Role of Benchmarking
The
Compensation Committee periodically requests data and information regarding the pay practices and program designs of other, similar
companies. However, the Compensation Committee does not benchmark or target a specified pay level or percentile, nor does it follow
the practices of similar companies. Instead, the Compensation Committee considers this information along with all other relevant
facts and circumstances facing the Company and the executives. Such factors include Company performance, individual executive
performance, internal equity, succession planning, affordability, return on investment, accounting expense, tax deductibility
and shareholder dilution. During 2016, the Compensation Committee did not request such data and information.
Retirement
Benefits
The
Company provides and maintains a 401(k) Savings Plan, which we refer to as the “
401(k) Plan
”, and a Deferred
Compensation Plan, which we refer to as the “
Deferred Compensation Plan
”, which are intended to provide the
Company’s team members with a competitive tax-deferred long-term savings vehicle. The 401(k) Plan is a qualified 401(k)
plan and the Deferred Compensation Plan is a non-qualified deferred compensation plan. The NEOs are not eligible to participate
in a qualified 401(k) plan once they have been excluded as “highly compensated” employees (as defined under the
Code). Under the Deferred Compensation Plan, eligible employees may elect to voluntarily defer portions of their base salary and
annual bonus. An eligible employee may elect, with a deferral agreement, to defer all or a specified amount or percentage of base
salary and, if applicable, all or a specified amount or percentage of cash bonuses. All amounts deferred by the participants earn
interest at 8% per annum. The Company does not provide any matching contributions to the Deferred Compensation Plan.
Executive
Perquisites
We
did not provide any perquisites to our NEOs in 2016.
Tax
Implications
The
Compensation Committee has considered the impact of Section 162(m) of the Code. This section disallows a tax deduction for
any publicly-held corporation for individual compensation to certain executives of such corporation exceeding $1,000,000 in any
taxable year, unless compensation is performance-based. It is the intent of the Company and the Compensation Committee to maximize
the deductibility of our executives’ compensation whenever possible. However, the Compensation Committee does not believe
that compensation decisions should be based solely upon the amount of compensation that is deductible for federal income tax purposes.
Accordingly, the Compensation Committee reserves the right to award compensation that is or could become non-deductible when it
believes that such compensation is consistent with our strategic goals and in our best interests.
Report
of the Compensation Committee
The
Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b)
of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the
Company’s board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Respectfully
submitted,
COMPENSATION
COMMITTEE
STACEY
RAUCH (Chairman)
BRIAN
P. FRIEDMAN
JACK
A. SMITH
PAUL
E. TWOHIG
Compensation
Committee Interlocks and Insider Participation
The members of the
Compensation Committee for the fiscal year ended January 1, 2017 were Stacey Rauch, Brian P. Friedman, and Jack A. Smith. None
of the members of the Compensation Committee were, during such year, an officer of us or any of our subsidiaries or had any relationship
with us other than serving as a director. In addition, no executive officer served as a director or a member of the compensation
committee of any other entity, other than any subsidiary of ours, one of whose executive officers served as a director or on our
Compensation Committee. None of the members of our Compensation Committee had any relationship required to be disclosed under this
caption under the rules of the SEC.
Summary
Compensation Table
The following table
summarizes historical compensation awarded, paid to or earned by the NEOs for the fiscal year ended January 1, 2017, January 3,
2016, and December 28, 2014.
Name and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards (1)($)
|
|
|
Option
Awards
($)
|
|
|
Non-
Equity Incentive Plan Compensation (2)($)
|
|
|
Nonqualified
Deferred Compensation Earnings
(3)($)
|
|
|
All
Other Compensation (4)($)
|
|
|
Total
($)
|
|
Timothy P. Taft
|
|
|
2016
|
|
|
$
|
454,808
|
(6)
|
|
|
—
|
|
|
$
|
950,058
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
31,063
|
|
|
|
—
|
|
|
$
|
1,435,929
|
|
Chief Executive Officer
|
|
|
2015
|
|
|
$
|
550,000
|
|
|
|
—
|
|
|
$
|
950,056
|
|
|
|
—
|
|
|
$
|
99,000
|
|
|
$
|
20,197
|
|
|
|
—
|
|
|
$
|
1,619,253
|
|
and President (5)
|
|
|
2014
|
|
|
$
|
525,000
|
|
|
|
—
|
|
|
$
|
750,006
|
|
|
|
—
|
|
|
$
|
499,800
|
|
|
$
|
6,108
|
|
|
|
—
|
|
|
$
|
1,780,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Danny K. Meisenheimer
|
|
|
2016
|
|
|
$
|
295,333
|
|
|
|
—
|
|
|
$
|
275,021
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
6,247
|
|
|
$
|
80,709
|
|
|
$
|
657,310
|
|
Chief Operating
|
|
|
2015
|
|
|
$
|
288,400
|
|
|
|
—
|
|
|
$
|
275,122
|
|
|
|
—
|
|
|
$
|
34,608
|
|
|
$
|
6,668
|
|
|
|
—
|
|
|
$
|
604,798
|
|
Officer, Pollo Tropical (7)
|
|
|
2014
|
|
|
$
|
280,000
|
|
|
|
—
|
|
|
$
|
245,018
|
|
|
|
—
|
|
|
$
|
189,512
|
|
|
$
|
3,373
|
|
|
|
—
|
|
|
$
|
717,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lynn S. Schweinfurth
|
|
|
2016
|
|
|
$
|
352,000
|
|
|
|
—
|
|
|
$
|
450,002
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
11,221
|
|
|
|
—
|
|
|
$
|
813,223
|
|
Sr. Vice President,
|
|
|
2015
|
|
|
$
|
352,004
|
|
|
|
—
|
|
|
$
|
450,129
|
|
|
|
—
|
|
|
$
|
42,240
|
|
|
$
|
8,277
|
|
|
|
—
|
|
|
$
|
852,650
|
|
Chief Financial
Officer and Treasurer
|
|
|
2014
|
|
|
$
|
320,004
|
|
|
|
—
|
|
|
$
|
385,002
|
|
|
|
—
|
|
|
$
|
228,480
|
|
|
$
|
3,437
|
|
|
|
—
|
|
|
$
|
936,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph A. Zirkman
|
|
|
2016
|
|
|
$
|
326,700
|
|
|
|
—
|
|
|
$
|
225,036
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
8,077
|
|
|
|
—
|
|
|
$
|
559,813
|
|
Sr. Vice President,
|
|
|
2015
|
|
|
$
|
326,700
|
|
|
|
—
|
|
|
$
|
225,065
|
|
|
|
—
|
|
|
$
|
39,204
|
|
|
$
|
5,781
|
|
|
|
|
|
|
$
|
596,750
|
|
General Counsel and Secretary
|
|
|
2014
|
|
|
$
|
297,000
|
|
|
|
—
|
|
|
$
|
285,013
|
|
|
|
—
|
|
|
$
|
212,058
|
|
|
$
|
2,972
|
|
|
$
|
85,951
|
|
|
$
|
882,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A Todd
|
|
|
2016
|
|
|
$
|
330,000
|
|
|
|
—
|
|
|
$
|
200,009
|
|
|
|
—
|
|
|
$
|
3,454
|
|
|
$
|
310
|
|
|
|
—
|
|
|
$
|
533,773
|
|
Chief Operating Officer,
Pollo Tropical (8)
|
|
|
2015
|
|
|
$
|
330,000
|
|
|
|
—
|
|
|
$
|
200,101
|
|
|
|
—
|
|
|
$
|
39,600
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
569,701
|
|
|
|
|
2014
|
|
|
$
|
300,000
|
|
|
|
—
|
|
|
$
|
195,023
|
|
|
|
—
|
|
|
$
|
178,500
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
673,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph W Brink
|
|
|
2016
|
|
|
$
|
200,232
|
|
|
|
—
|
|
|
$
|
100,040
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
300,272
|
|
Chief Procurement Officer
|
|
|
2015
|
|
|
$
|
185,400
|
|
|
|
—
|
|
|
$
|
100,025
|
|
|
|
—
|
|
|
$
|
40,046
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
325,471
|
|
|
|
|
2014
|
|
|
$
|
180,000
|
|
|
|
—
|
|
|
$
|
155,028
|
|
|
|
—
|
|
|
$
|
85,680
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
420,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd Coerver
|
|
|
2016
|
|
|
$
|
231,805
|
(10)
|
|
|
—
|
|
|
$
|
175,052
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
3,074
|
|
|
|
—
|
|
|
$
|
409,931
|
|
Chief Operating Officer,
|
|
|
2015
|
|
|
$
|
288,400
|
|
|
|
—
|
|
|
$
|
175,007
|
|
|
|
—
|
|
|
$
|
173,559
|
|
|
$
|
2,142
|
|
|
|
—
|
|
|
$
|
639,108
|
|
Taco Cabana(9)
|
|
|
2014
|
|
|
$
|
280,000
|
|
|
|
—
|
|
|
$
|
150,028
|
|
|
|
—
|
|
|
$
|
178,500
|
|
|
$
|
1,818
|
|
|
|
—
|
|
|
$
|
610,346
|
|
|
(1)
|
These
amounts represent the aggregate grant date fair value of restricted stock and performance stock units granted and approved
by the Compensation Committee in each of the fiscal years presented and are consistent with the grant date fair value of
the award computed in accordance with FASB ASC Topic 718. There were the following forfeitures in 2016: Timothy Taft,
41,002 shares and Todd Coerver, 10,445 shares. There were no other forfeitures by any other NEO in 2016. These amounts
reflect the grant date fair value for these awards and do not correspond to the actual value that will be recognized by
the NEOs. The actual value, if any, that an NEO may realize will depend on the stock price at the date of vesting. These
grants are included and discussed further in the tables below under “Outstanding Equity Awards at Fiscal
Year-End”. Awards granted in 2016 were comprised of 50% restricted stock and 50% performance stock units. The
maximum award payment value (at 200%) for the performance stock units granted in 2016 would be: Mr. Taft - $950,058; Mr.
Meisenheimer - $275,021; Ms. Schweinfurth - $450,002; Mr. Zirkman - $225,036; Mr. Todd - $200,009; Mr. Brink - $100,040
and Mr. Coerver - $175,052.
|
|
(2)
|
We provide short term cash incentive bonus compensation to our NEOs based on the achievement of certain financial performance goals on a consolidated basis and at the brand level, and an individual’s achievement of certain specified objectives. See “Compensation Discussion and Analysis” above for a discussion of our Short Term Incentive Program for the bonus amounts earned in fiscal year 2016. Amounts include any cash bonuses paid in fiscal year 2017, 2016, and 2015 with respect to services rendered in fiscal year 2016, 2015, and 2014, respectively.
|
|
(3)
|
These
amounts represent the above-market portion of earnings on compensation deferred by the
NEOs under our nonqualified Deferred Compensation Plan. Earnings on deferred compensation
are considered to be above-market to the extent that the rate of interest exceeds 120%
of the applicable federal long-term rate. At January 2, 2017, January 3, 2016, and December 28,
2014, 120% of the federal long-term rate was 3.26%, 3.14%, and 3.24%, per annum,
respectively, and the interest rate paid to participants was 8% per annum.
|
|
(4)
|
Represents
reimbursement of the following moving expenses: Mr. Zirkman’s relocation to Dallas,
Texas in August of 2014, of which $63,821 represents reimbursable costs and $22,130 represents
the “gross-up” on amounts to cover the taxes payable to Mr. Zirkman on such
reimbursement and Mr. Meisenheimer’s relocation to Dallas, Texas in June 2016,
of which $59,599 represents reimbursable costs and $21,110 represents the “gross-up”
on amounts to cover the taxes payable to Mr. Meisenheimer on such reimbursement.
|
|
(5)
|
Mr.
Taft retired as Chief Executive Officer and President of the Company effective September
30, 2016.
|
|
(6)
|
Represents
total base salary paid to Mr. Taft through September 30, 2016.
|
|
(7)
|
Mr.
Meisenheimer served as Interim Chief Executive Officer and President of the Company from
October 1, 2016 until February 28, 2017 and as Chief Operating Officer, Pollo Tropical
until February 28, 2017. Mr. Meisenheimer has served as Senior Vice President and Chief
Operating Officer of the Company since February 28, 2017.
|
|
(8)
|
Mr.
Todd served as Group Vice President, Chief Development Officer until January 1, 2017.
|
|
(9)
|
Mr.
Coerver resigned as Chief Operating Officer, Taco Cabana effective October 20, 2016.
|
|
(10)
|
Represents
total base salary paid to Mr. Coerver through October 20, 2016.
|
Taft
Letter Agreement, Employment Agreement and Agreement
Carrols
Restaurant Group, Inc. and Mr. Taft entered into an offer letter, which we refer to as the “
Taft Letter Agreement
”,
on July 19, 2011, which was assigned to the Company in connection with the spin-off. On February 20, 2014, the Company
and Mr. Taft entered into an Executive Employment Agreement, which we refer to as the “
Taft Employment Agreement
”,
which replaced and superseded the Taft Letter Agreement. The term of the Taft Employment Agreement was from February 20,
2014 until December 31, 2014 and automatically renewed for successive one year terms unless the Taft Employment Agreement
was not renewed by Mr. Taft or us or was terminated according to its terms. The Taft Employment Agreement was renewed for 2015
and 2016.
Pursuant to the Taft
Employment Agreement, Mr. Taft’s base salary was set at $525,000 for 2014, subject to annual increases, as approved
by our Compensation Committee. Pursuant to the Taft Employment Agreement, Mr. Taft was eligible to (i) receive a short term
incentive bonus, intended to qualify as performance-based compensation under Section 162(m) of the Code, with a target of
80% of Mr. Taft’s then base salary based upon attainment of objectives to be established by our Compensation Committee,
which the Compensation Committee increased to 90% for 2015, (ii) participate in any long-term incentive bonus plan of ours intended
to qualify as performance-based compensation under Section 162(m) of the Code existing from time to time for its executives,
and (iii) receive an annual equity grant of $750,000, which the Compensation Committee increased as of 2015 to $950,000.
The Taft Employment
Agreement also provided that if Mr. Taft’s employment with us was terminated by us in connection with a non-renewal
of the Taft Employment Agreement without Cause (as defined in the Taft Employment Agreement) or for reasons other than Cause, death
or “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code) or was voluntarily terminated
by Mr. Taft for Good Reason (as defined in the Taft Employment Agreement), he was entitled to receive (i) one year of
his then base salary, (ii) a pro rata portion of any annual cash bonus that Mr. Taft would have been entitled to receive
with respect to the fiscal year of termination had his employment not been terminated, (iii) the payment by us of premium
payments for a period of up to twelve months if Mr. Taft and his dependents elect coverage under our health insurance plan
pursuant to the Consolidated Omnibus Budget Reconciliation Act, and (iv) executive outplacement services in an amount not
to exceed $25,000 to be incurred no later than the end of the second year following the year of termination.
If
Mr. Taft’s employment with us was terminated by us for Cause or if his employment with us ended due to death, permanent
and total disability or due to a voluntary non-renewal of the Taft Employment Agreement or voluntary termination of employment
by Mr. Taft without Good Reason, he was entitled to receive any earned but unpaid compensation as well as any other amounts
or benefits owing to Mr. Taft under the terms of any employee benefit plan of ours.
Mr. Taft,
pursuant to the Taft Employment Agreement, agreed, for a period of one year following his termination of employment with us, not
to directly or indirectly solicit for employment or employ any person who is or was employed by us within six months prior to
his termination date.
Additionally,
under the Taft Employment Agreement, Mr. Taft agreed for a period of one year following his termination of employment with
us, not to be employed by, or associated with, as an employee, consultant, director or in any other capacity, any company operating
Tex-Mex or Mexican-themed quick service, quick casual or casual dining restaurants which competes with our Taco Cabana concept,
or any company operating Hispanic-themed quick-service, quick-casual, fast-casual or casual dining restaurants which feature grilled
chicken as the primary or central menu item and also competes with our Pollo Tropical concept.
In
connection with Mr. Taft’s retirement as our Chief Executive Officer and President effective September 30, 2016, on September
27, 2016, we and Mr. Taft entered into an agreement, which we refer to as the “
Taft Agreement
”, whereby we
agreed to accelerate the time based vesting of 21,898 restricted shares of our Common Stock previously issued to Mr. Taft under
our Plan. Pursuant to the Taft Agreement, Mr. Taft agreed to extend the period of his covenant to not compete under
the Taft Employment Agreement dated as of February 20, 2014 to two years from one year.
Schweinfurth
Letter Agreement and Schweinfurth Agreement
Pursuant
to the terms of an offer letter between Fiesta Restaurant Group and Ms. Schweinfurth entered into on June 29, 2012,
which we refer to as the “
Schweinfurth Letter Agreement
”, Ms. Schweinfurth earned an annual base salary
of $320,000 beginning in 2012 and became eligible for annual merit increases beginning in 2014 based upon recommendations of our
Chief Executive Officer and Compensation Committee. The Schweinfurth Letter Agreement also provided that Ms. Schweinfurth would
participate in the executive bonus program, as established by our Compensation Committee.
Pursuant
to the Schweinfurth Letter Agreement, within 30 days of July 16, 2012, the date of Ms. Schweinfurth’s commencement
of employment with the Company, Ms. Schweinfurth received a one-time sign on grant of 50,000 shares of restricted common
stock of the Company in connection with her appointment as our Vice President, Chief Financial Officer and Treasurer. The restricted
shares of the Company’s common stock granted to Ms. Schweinfurth vested over four years at the rate of 25% per
annum beginning on the first anniversary of the date of grant and are subject to provisions of the Plan.
The
Schweinfurth Letter Agreement also provided that in the event Ms. Schweinfurth is terminated without Cause (as defined in
the Schweinfurth Letter Agreement), she was entitled to receive a severance payment equal to her twelve months base salary and
the pro-rated portion of her bonus payable, provided that a bonus would have been payable.
On November 4, 2016,
the Company and Ms. Schweinfurth entered into the Schweinfurth Agreement pursuant to which Ms. Schweinfurth is entitled to a retention
bonus payment of (a) $150,000, which we refer to as the “
Schweinfurth 2016 Bonus
”, which was paid in February
2017; provided that if Ms. Schweinfurth (i) voluntarily resigns as an employee of the Company other than for Good Reason (as defined
in the Schweinfurth Agreement) or gives notice of such resignation any time during the twelve month period following the payment
date of the Schweinfurth 2016 Bonus or (ii) if Ms. Schweinfurth voluntarily resigns as an employee of the Company other than for
Good Reason any time prior to December 31, 2017 and fails to provide at least six months prior written notice of such voluntary
resignation, Ms. Schweinfurth shall repay the Schweinfurth 2016 Bonus to the Company, and (b) $150,000 less any amount related
to short term incentive compensation received by Ms. Schweinfurth under the Company’s Executive Bonus Plan (as defined in
the Schweinfurth Agreement), which we refer to as the “
Schweinfurth 2017 Bonus
”, payable in February 2018, provided
that Ms. Schweinfurth remains employed with the Company through the payment date of the Schweinfurth 2017 Bonus. The Schweinfurth
Agreement also modifies and supersedes the severance bonus arrangements contained in the Schweinfurth Letter Agreement, and provides
that upon a termination of Ms. Schweinfurth’s employment by the Company without Cause (as defined in the Schweinfurth Agreement)
or termination of Ms. Schweinfurth’s employment by Ms. Schweinfurth with Good Reason, Ms. Schweinfurth is entitled to (i)
an amount equal to one times Ms. Schweinfurt’s highest annual base salary in effect prior to the date Ms. Schweinfurth’s
employment is terminated and (ii) an amount equal to a pro rata portion of the aggregate bonus under the Company’s Executive
Bonus Plan for the year in which Ms. Schweinfurth’s employment is terminated (plus any earned and unpaid bonus amounts under
the Company’s Executive Bonus Plan for the year prior to the year in which Ms. Schweinfurth’s employment is terminated).
The Schweinfurth Agreement terminates (other than the severance bonus provisions which shall survive any such termination, consistent
with the terms of the Schweinfurth Letter Agreement) on December 31, 2018 and if renewed by the Company upon 90 days written notice
prior to the expiration of the initial term, on December 31, 2019, unless terminated sooner in accordance with the terms of the
Schweinfurth Agreement.
Zirkman
Agreement
On November 4, 2016,
the Company and Mr. Zirkman entered into the Zirkman Agreement pursuant to which Mr. Zirkman is entitled to a retention bonus payment
of (a) $100,000, which we refer to as the “
Zirkman 2016 Bonus
”, which was paid in February 2017; provided that
if Mr. Zirkman (i) voluntarily resigns as an employee of the Company other than for Good Reason (as defined in the Zirkman Agreement)
or gives notice of such resignation any time during the twelve month period following the payment date of the Zirkman 2016 Bonus
or (ii) if Mr. Zirkman voluntarily resigns as an employee of the Company other than for Good Reason any time prior to December
31, 2017 and fails to provide at least six months prior written notice of such voluntary resignation, Mr. Zirkman shall repay the
Zirkman 2016 Bonus to the Company, and (b) $100,000 less any amount related to short term incentive compensation received by Mr.
Zirkman under the Company’s Executive Bonus Plan (as defined in the Zirkman Agreement), which we refer to as the “
Zirkman
2017 Bonus
”, payable in February 2018, provided that Mr. Zirkman remains employed with the Company through the payment
date of the Zirkman 2017 Bonus. The Zirkman Agreement also provides that upon a termination of Mr. Zirkman’s employment by
the Company without Cause (as defined in the Zirkman Agreement) or termination of Mr. Zirkman’s employment by Mr. Zirkman
with Good Reason, Mr. Zirkman is entitled to (i) an amount equal to one times Mr. Zirkman ‘s highest annual base salary in
effect prior to the date Mr. Zirkman’s employment is terminated and (ii) an amount equal to a pro rata portion of the aggregate
bonus under the Company’s Executive Bonus Plan (as defined in the Zirkman Agreement) for the year in which Mr. Zirkman’s
employment is terminated (plus any earned and unpaid bonus amounts under the Company’s Executive Bonus Plan for the year
prior to the year in which Mr. Zirkman’s employment is terminated). The Zirkman Agreement terminates on December 31, 2018
and if renewed by the Company upon 90 days written notice prior to the expiration of the initial term, on December 31, 2019, unless
terminated sooner in accordance with the terms of the Zirkman Agreement.
Meisenheimer
Agreement
On November 4, 2016,
the Company and Mr. Meisenheimer entered into the Meisenheimer Agreement pursuant to which Mr. Meisenheimer is entitled to a retention
bonus payment of (a) $175,000, which we refer to as the “
Meisenheimer 2016 Bonus
”, which was paid in February
2017; provided that if Mr. Meisenheimer (i) voluntarily resigns as an employee of the Company other than for Good Reason (as defined
in the Meisenheimer Agreement) or gives notice of such resignation any time during the twelve month period following the payment
date of the Meisenheimer 2016 Bonus or (ii) if Mr. Meisenheimer voluntarily resigns as an employee of the Company other than for
Good Reason any time prior to December 31, 2017 and fails to provide at least six months prior written notice of such voluntary
resignation, Mr. Meisenheimer shall repay the Meisenheimer 2016 Bonus to the Company, and (b) $175,000 less any amount related
to short term incentive compensation received by Mr. Meisenheimer under the Company’s Executive Bonus Plan (as defined in
the Meisenheimer Agreement), which we refer to as the “
Meisenheimer 2017 Bonus
”, payable in February 2018, provided
that Mr. Meisenheimer remains employed with the Company through the payment date of the Meisenheimer 2017 Bonus. The Meisenheimer
Agreement also provides that upon a termination of Mr. Meisenheimer’s employment by the Company without Cause (as defined
in the Meisenheimer Agreement), termination of Mr. Meisenheimer’s employment by Mr. Meisenheimer with Good Reason (other
than in the case of a material diminution of Mr. Meisenheimer’s authority, duties or responsibilities) and termination of
Mr. Meisenheimer’s employment by Mr. Meisenheimer for any reason during the period that is between six months and twelve
months following the commencement date of employment of a new Chief Executive Officer of the Company, Mr. Meisenheimer is entitled
to (i) an amount equal to two times Mr. Meisenheimer’ s highest annual base salary in effect prior to the date Mr. Meisenheimer’s
employment is terminated and (ii) an amount equal to a pro rata portion of the aggregate bonus under the Company’s Executive
Bonus Plan (as defined in the Meisenheimer Agreement) for the year in which Mr. Meisenheimer’s employment is terminated (plus
earned and unpaid bonus amounts under the Company’s Executive Bonus Plan for the year prior to the year in which Mr. Meisenheimer’s
employment is terminated). The Meisenheimer Agreement terminates on December 31, 2018 and if renewed by the Company upon 90 days
written notice prior to the expiration of the initial term, on December 31, 2019 unless terminated sooner in accordance with the
terms of the Meisenheimer Agreement.
Brink
Agreement
On November 9, 2016,
the Company and Mr. Brink entered into the Brink Agreement pursuant to which Mr. Brink is entitled to a retention bonus payment
of (a) $40,000, which we refer to as the “
Brink 2016 Bonus
”, which was paid in February 2017; provided that
if Mr. Brink (i) voluntarily resigns as an employee of the Company, gives notice of such resignation or is terminated for Cause
(as defined in the Brink Agreement) any time during the twelve month period following the payment date of the Brink 2016 Bonus,
Mr. Brink shall repay the Brink 2016 Bonus to the Company, and (b) $40,000 less any amount related to short term incentive compensation
received by Mr. Brink under the Company’s Employee Bonus Plan (as defined in the Brink Agreement), which we refer to as the
“
Brink 2017 Bonus
”, payable in February 2018, provided that Mr. Brink remains employed with the Company through
the payment date of the Brink 2017 Bonus.
Stockinger
Employment Agreement
Mr. Stockinger was
appointed Chief Executive Officer and President of the Company effective February 28, 2017. On February 24, 2017, the Company entered
into the Stockinger Employment Agreement pursuant to which Mr. Stockinger will earn a base salary of $550,000 per year which can
be increased at the sole discretion of the Compensation Committee. Pursuant to the Stockinger Employment Agreement, Mr. Stockinger
will (i) be eligible to receive a short term cash incentive bonus equal to at least 100% of Mr. Stockinger’s then base salary
based upon attainment of objectives to be established by the Compensation Committee, (ii) receive a grant of restricted common
stock of the Company on March 6, 2017 pursuant to the Plan with a value of $3,000,000 (based on the closing price of the Company’s
common stock on such date) which will consist of 50% time-based restricted stock of the Company vesting 25% on each anniversary
date over four years and 50% performance-based restricted stock units of the Company vesting 25% on each anniversary date over
four years if the performance conditions and metrics, which are to be determined by the Compensation Committee, are achieved, and
(iii) commencing with our 2021 fiscal year (or such earlier time as may be determined by the Compensation Committee in its sole
discretion), will be entitled to receive additional annual long-term incentive awards as may be determined by the Compensation
Committee.
The
Stockinger Employment Agreement provides that if Mr. Stockinger’s employment with the Company is terminated by the Company
for Cause (as defined in the Stockinger Employment Agreement) or if his employment with the Company ends due to death or “permanent
and total disability” (within the meaning of Section 22(e)(3) of the Code) or voluntary termination of employment by Mr.
Stockinger without Good Reason (as defined in the Stockinger Employment Agreement), he shall be entitled to receive (i) any earned
but unpaid compensation, (ii) solely with respect to Mr. Stockinger’s termination for death or “permanent and total
disability”, any earned but unpaid bonus for any completed year prior to the date of termination and (iii) any other amounts
or benefits owing to Mr. Stockinger under the terms of any employee benefit plan of the Company or, in the case of equity-based
compensation awards, under the terms of the equity award plan or applicable award agreement, which we refer to as the “
Accrued
Benefits
”.
The
Stockinger Employment Agreement also provides that if Mr. Stockinger’s employment with the Company is terminated by the
Company without Cause or for reasons other than death or “permanent and total disability” or is voluntarily terminated
by Mr. Stockinger for Good Reason, he shall be entitled to receive (i) 1.5 times his then base salary, to be paid at least monthly,
(ii) any earned but unpaid bonus for any completed year prior to the date of termination plus a pro rata portion of any annual
bonus that Mr. Stockinger would have been entitled to receive with respect to the fiscal year of termination had his employment
not been terminated, (iii) the payment by the Company of premium payments for a period of up to twelve months if Mr. Stockinger
and his dependents elect coverage under the Company’s health insurance plan pursuant to the Consolidated Omnibus Budget
Reconciliation Act, which we refer to as “
COBRA
”, (iv) executive outplacement services in an amount not to
exceed $25,000 to be incurred no later than the end of the second year following the year of termination and (v) the Accrued Benefits.
If
within one year after the occurrence of a Change of Control (as defined in the Stockinger Employment Agreement), Mr. Stockinger’s
employment with the Company is terminated by the Company without Cause and for reasons other than death or “permanent and
total disability” or is voluntarily terminated by Mr. Stockinger for Good Reason, then Mr. Stockinger shall be entitled
to (i) 2.0 times his then base salary, payable in a lump sum (ii) any earned but unpaid bonus for any completed year prior to
the date of termination plus a pro rata portion of any annual bonus that Mr. Stockinger would have been entitled to receive with
respect to the fiscal year of termination had his employment not been terminated, (iii) the acceleration of the vesting provisions
of Mr. Stockinger’s outstanding unvested time-based restricted stock awards, (iv) the acceleration of the vesting provisions
of a portion of Mr. Stockinger’s outstanding performance-based restricted stock unit awards that would have vested as of
the scheduled vesting date if the Company were to have achieved the target performance level for the performance period, if (x)
such awards are not continued by the Committee or not assumed or replaced in an equitable manner by the successor entity after
a Change of Control or (y) such awards are continued by the Committee, or are assumed or replaced in an equitable manner by the
successor entity after a Change of Control and, within one year after the date of Change of Control, Mr. Stockinger’s employment
is terminated without Cause and for reasons other than death or “permanent disability” or voluntarily terminated by
Mr. Stockinger for Good Reason, (v) the payment by the Company of premium payments for a period of up to twelve months if Mr.
Stockinger and his dependents elect coverage under the Company’s health insurance plan pursuant to COBRA, (vi) executive
outplacement services in an amount not to exceed $25,000 to be incurred no later than the end of the second year following the
year of termination and (vii) the Accrued Benefits.
Mr. Stockinger,
pursuant to the Stockinger Employment Agreement, agreed, for a period of two years following his termination of employment with
the Company, not to directly or indirectly solicit for employment or employ any person who is or was employed by the Company within
six months prior to his termination date.
Additionally,
under the Stockinger Employment Agreement, Mr. Stockinger agreed for a period of eighteen months following his termination
of employment with the Company, not to be employed by or associated with as employee, consultant, director, or in any other equivalent
capacity, any company operating Tex−Mex or Mexican−themed quick-service, quick-casual, fast-casual or casual dining
restaurants, or any company operating Caribbean or Hispanic−themed quick-service, quick-casual, fast-casual or casual dining
restaurants which feature grilled chicken as the primary or central menu item.
Grants
of Plan-Based Rewards
The
following table provides certain historical information regarding grants of plan-based awards made to the NEOs during the fiscal
year ended January 1, 2017:
|
|
Grant
|
|
Approval
|
|
Estimated Payouts Under Non-Equity Incentive Plan
|
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards(#)
|
|
|
All Other Stock Awards: Number of Shares or Units
|
|
|
Grant Date Fair Value of Stock
|
|
Name
|
|
Date
|
|
Date (1)
|
|
Awards
|
|
|
Threshold
|
|
|
Target (2)
|
|
|
Maximum
|
|
|
(#)(3)
|
|
|
Awards (4)
|
|
Timothy P. Taft
|
|
3/2/2016
|
|
2/16/2016
|
|
$
|
-
|
|
|
|
6,738
|
|
|
|
13,476
|
|
|
|
26,952
|
|
|
|
13,476
|
|
|
$
|
950,058
|
|
Danny K. Meisenheimer
|
|
3/2/2016
|
|
2/16/2016
|
|
$
|
-
|
|
|
|
1,951
|
|
|
|
3,901
|
|
|
|
7,802
|
|
|
|
3,901
|
|
|
$
|
275,021
|
|
Lynn S. Schweinfurth
|
|
3/2/2016
|
|
2/16/2016
|
|
$
|
-
|
|
|
|
3,192
|
|
|
|
6,383
|
|
|
|
12,766
|
|
|
|
6,383
|
|
|
$
|
450,002
|
|
Joseph A. Zirkman
|
|
3/2/2016
|
|
2/16/2016
|
|
$
|
-
|
|
|
|
1,596
|
|
|
|
3,192
|
|
|
|
6,384
|
|
|
|
3,192
|
|
|
$
|
225,036
|
|
John A Todd
|
|
3/2/2016
|
|
2/16/2016
|
|
$
|
-
|
|
|
|
1,419
|
|
|
|
2,837
|
|
|
|
5,674
|
|
|
|
2,837
|
|
|
$
|
200,009
|
|
Joseph W Brink
|
|
3/2/2016
|
|
2/16/2016
|
|
$
|
-
|
|
|
|
710
|
|
|
|
1,419
|
|
|
|
2,838
|
|
|
|
1,419
|
|
|
$
|
100,040
|
|
Todd Coerver
|
|
3/2/2016
|
|
2/16/2016
|
|
$
|
-
|
|
|
|
1,242
|
|
|
|
2,483
|
|
|
|
4,966
|
|
|
|
2,483
|
|
|
$
|
175,052
|
|
|
(1)
|
The
grants of plan-based awards in this table above were approved by our Compensation Committee
on February 16, 2016.
|
|
(2)
|
Amounts
shown in this column reflect the target number of performance stock units granted to
each NEO pursuant to the Plan during 2016. Vesting of the 2016 performance award on March
2, 2019 is based on cumulative achievement of predetermined performance metrics in each
of three consecutive fiscal years that comprise the performance period for which the
award is made.
|
|
(3)
|
Amounts
shown in this column reflect the number of restricted stock awards granted to each NEO pursuant to the Plan during 2016. The
2016 restricted stock vests 25% on each anniversary date over four years, however, in each year, awards vest only if we
achieve at least 75% of budgeted EBT. If we fail to achieve at least 75% of budgeted EBT, the shares of restricted stock
for that vesting period are forfeited by each NEO. The Company did not achieve over 75% of its EBT target for 2016 and,
accordingly, the first 25% of the 2016 and the second 25% of the 2015 restricted stock awards to the NEOs did not vest
and were forfeited. The following restricted stock awards were forfeited by the NEOs in February and March 2017: Mr.
Meisenheimer – 1,505 shares, Ms. Schweinfurth – 2,462 shares, Mr. Zirkman – 1,231 shares, Mr. Todd
1,095 shares and Mr. Brink – 355 shares.
|
|
(4)
|
The
value of the restricted stock and performance stock units granted in 2016 is calculated
by multiplying the number of shares of restricted stock awarded and the target number
of performance stock units granted by the market closing price of our common stock on
the grant date. The grant date fair value for the March 2, 2016 grant was $35.25 per
share.
|
2012
Stock Incentive Plan
. The Plan provides for the grant of stock options and stock appreciation rights,
stock awards, performance awards, outside director stock options, and outside director stock awards. Any officer, employee, associate,
director and any consultant or advisor providing services to us are eligible to participate in the Plan.
The
Plan is administered by the Compensation Committee which approves awards and may base its considerations on recommendations by
our Chief Executive Officer. The Compensation Committee has the authority to (1) approve plan participants, (2) approve
whether and to what extent stock options, stock appreciation rights, stock awards, and performance awards are to be granted and
the number of shares of stock to be covered by each award (other than an outside director award), (3) approve forms of agreement
for use under the Plan, (4) determine terms and conditions of awards (including, but not limited to, the option price, any
vesting restriction or limitation, any vesting acceleration or waiver or forfeiture, and any right of repurchase, right of first
refusal or other transfer restriction regarding any award), (5) modify, amend or adjust the terms and conditions of any award,
(6) determine the fair market value, and (7) determine the type and amount of consideration to be received by us for
any stock award issued.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth certain information with respect to the value of all equity awards that were not vested at the January
1, 2017 fiscal year end for each of the NEOs.
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of Securities Underlying Options (#) Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable
|
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
|
|
Option
Exercise Price ($)
|
|
|
Option
Expiration Date
|
|
|
Number
of Shares of Stock That Have Not Vested (#)
|
|
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)(2)
|
|
|
Equity
Incentive Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
|
|
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
|
|
Timothy P. Taft (1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Danny K. Meisenheimer
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,459
|
(3)
|
|
$
|
43,551
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,665
|
(4)
|
|
$
|
49,700
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,109
|
(7)
|
|
$
|
62,954
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,587
|
(5)
|
|
$
|
47,372
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,901
|
(9)
|
|
$
|
116,445
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,116
|
(6)
|
|
$
|
63,163
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,901
|
(8)
|
|
$
|
116,445
|
|
Lynn S. Schweinfurth
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,042
|
(3)
|
|
$
|
90,804
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,775
|
(4)
|
|
$
|
82,834
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,997
|
(7)
|
|
$
|
89,460
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,596
|
(5)
|
|
$
|
77,491
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,383
|
(9)
|
|
$
|
190,533
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,462
|
(6)
|
|
$
|
103,341
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,383
|
(8)
|
|
$
|
190,533
|
|
Joseph A. Zirkman
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,825
|
(3)
|
|
$
|
54,476
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,665
|
(4)
|
|
$
|
49,700
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,997
|
(7)
|
|
$
|
89,460
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,298
|
(5)
|
|
$
|
38,745
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,192
|
(9)
|
|
$
|
95,281
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,731
|
(6)
|
|
$
|
51,670
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,192
|
(8)
|
|
$
|
95,281
|
|
John A. Todd
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,154
|
(5)
|
|
$
|
34,447
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,837
|
(9)
|
|
$
|
84,684
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,539
|
(6)
|
|
$
|
45,939
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,837
|
(8)
|
|
$
|
84,684
|
|
Joseph W. Brink
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
607
|
(3)
|
|
$
|
18,119
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,109
|
(4)
|
|
$
|
33,104
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,221
|
(7)
|
|
$
|
36,447
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,419
|
(9)
|
|
$
|
42,357
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,209
|
(10)
|
|
$
|
36,089
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,419
|
(8)
|
|
$
|
42,357
|
|
Todd Coerver(11)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
In
connection with Mr. Taft’s retirement as our Chief Executive Officer and President
effective September 30, 2016, on September 27, 2016, pursuant to the Taft Agreement,
we agreed to accelerate the time based vesting of 21,898 restricted shares of our Common
Stock previously issued to Mr. Taft under our Plan; provided that Mr. Taft remained an
employee of the Company or continued to provide services to us through September 30,
2016. All other unvested restricted shares of Common Stock held by Mr. Taft were forfeited
to the Company.
|
|
(2)
|
The
market value of the restricted stock awards was determined based on the closing price
of our common stock on the last trading day of the fiscal year, December 30, 2016,
which was $29.85.
|
|
(3)
|
Represents
restricted shares of Common Stock that vest 100% on February 14, 2017.
|
|
(4)
|
Represents
restricted shares of Common Stock that vest 50% on each of February 19, 2017 and February
19, 2018.
|
|
(5)
|
Represents
restricted shares of Common Stock that vest in increments of one-third on each of February
27, 2017, February 27, 2018 and February 27, 2019, each subject to the achievement of
certain performance criteria. This performance criteria requires the Company to achieve
75% of its EBT target each year in order for the restricted stock to vest at
the time the service condition is satisfied. This performance condition prevents shares
from vesting at the vesting date if the Company did not achieve at least 75% of its EBT
target for the preceding year. The Company did not achieve over 75% of its EBT target
for 2016 and, accordingly, the second 25% of the 2015 restricted stock awards did not
vest and were forfeited. The following restricted stock awards were forfeited by the
NEOs in February 2017: Mr. Meisenheimer – 529 shares, Ms. Schweinfurth –
866 shares, Mr. Zirkman – 433 shares and Mr. Todd – 385 shares.
|
|
(6)
|
Represents
performance stock units that vest on February 27, 2018, subject to the achievement of
certain performance criteria.
|
|
(7)
|
Represents
restricted shares of Common Stock that vest 100% on February 19, 2018.
|
|
(8)
|
Represents
performance stock units that vest on March 2, 2019, subject to the achievement of certain
performance criteria.
|
|
(9)
|
Represents
restricted shares of Common Stock that vest in increments of one-fourth on each of March
2, 2017, March 2, 2018, March 2, 2019 and March 2, 2020, each subject to certain performance
criteria. This performance criteria requires the Company to achieve at least 75% of its
EBT target each year in order for the restricted stock to vest at the time the service
condition is satisfied. This performance condition prevents shares from vesting at the
vesting date if the Company did not achieve 75% of its EBT target for the preceding
year. The Company did not achieve over 75% of its EBT target for 2016 and, accordingly,
the first 25% of the 2016 restricted stock awards did not vest and were forfeited. The
following restricted stock awards were forfeited by the NEOs in March 2017: Mr. Meisenheimer
– 976 shares, Ms. Schweinfurth – 1,596 shares, Mr. Zirkman – 798 shares,
Mr. Todd – 710 shares and Mr. Brink – 355 shares.
|
|
(10)
|
Represents
restricted shares of Common Stock that vest in increments of one-third on each of February
17, 2017, February 17, 2018 and February 17, 2019.
|
|
(11)
|
Mr.
Coerver resigned as Chief Operating Officer, Taco Cabana effective October 20, 2016. All unvested restricted shares of Common
Stock held by Mr. Coerver were forfeited to the Company.
|
Options
Exercised and Stock Vested
The
following table provides summary information about options exercised by our NEOs and shares of restricted stock that vested during
the fiscal year ended January 1, 2017.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares Acquired
on Exercise
(#)
|
|
|
Value Realized
on Exercise
($)
|
|
|
Number of
Shares Acquired
on Vesting
(#)
|
|
|
Value Realized
on Vesting
($)(1)
|
|
Timothy P. Taft
|
|
|
—
|
|
|
|
—
|
|
|
|
84,114
|
|
|
$
|
2,278,291
|
|
Danny K. Meisenheimer
|
|
|
—
|
|
|
|
—
|
|
|
|
5,323
|
|
|
$
|
152,853
|
|
Lynn S. Schweinfurth
|
|
|
—
|
|
|
|
—
|
|
|
|
17,797
|
|
|
$
|
488,472
|
|
Joseph A. Zirkman
|
|
|
—
|
|
|
|
—
|
|
|
|
5,342
|
|
|
$
|
156,813
|
|
John Todd
|
|
|
—
|
|
|
|
—
|
|
|
|
10,063
|
|
|
$
|
289,362
|
|
Joseph Brink
|
|
|
—
|
|
|
|
—
|
|
|
|
3,943
|
|
|
$
|
107,279
|
|
Todd Coerver
|
|
|
—
|
|
|
|
—
|
|
|
|
3,381
|
|
|
$
|
107,986
|
|
|
(1)
|
Based
on the closing price of our common stock on the date of vesting.
|
Non-Qualified
Deferred Compensation
We
have adopted a Deferred Compensation Plan for employees not eligible to participate in our Retirement Savings Plan, which we refer
to as the “
Retirement Plan
”, because they have been excluded as “highly compensated” employees
(as so defined in the Retirement Plan), to voluntarily defer portions of their base salary and annual bonus. An eligible employee
may elect, on a deferral agreement, to defer all or a specified percentage of base salary and, if applicable, all or a specified
percentage of cash bonuses. All amounts deferred by the participants earn interest at 8% per annum. We do not match any portion
of the funds.
The
following table describes contributions, earnings and balances at January 1, 2017 under our Deferred Compensation Plan.
Name
|
|
Executive
Contributions
in Last FY
($)
|
|
|
Registrant
Contributions
in Last FY
($)
|
|
|
Aggregate
Earnings
in Last FY
($) (1)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate
Balance at
Last FYE
($)(2)
|
|
Timothy P. Taft
|
|
$
|
117,000
|
|
|
|
—
|
|
|
$
|
51,133
|
|
|
|
—
|
|
|
$
|
717,382
|
|
Danny K. Meisenheimer
|
|
$
|
8,652
|
|
|
|
—
|
|
|
$
|
10,284
|
|
|
$
|
(38,938
|
)
|
|
$
|
140,660
|
|
Lynn S. Schweinfurth
|
|
$
|
14,784
|
|
|
|
—
|
|
|
$
|
18,471
|
|
|
|
—
|
|
|
$
|
252,475
|
|
Joseph A. Zirkman
|
|
$
|
22,869
|
|
|
|
—
|
|
|
$
|
13,295
|
|
|
|
—
|
|
|
$
|
190,208
|
|
John Todd
|
|
$
|
12,000
|
|
|
|
—
|
|
|
$
|
510
|
|
|
|
—
|
|
|
$
|
12,510
|
|
Joseph Brink
|
|
$
|
0
|
|
|
|
—
|
|
|
$
|
0
|
|
|
|
—
|
|
|
$
|
0
|
|
Todd Coerver
|
|
$
|
5,000
|
|
|
|
—
|
|
|
$
|
5,061
|
|
|
|
|
|
|
$
|
69,376
|
|
|
(1)
|
Earnings
represent the interest earned on amounts deferred at 8.0% per annum.
|
|
(2)
|
Amounts
reported in this column include contributions made by the NEO prior to 2016.
|
Potential
Payments upon Termination or Change-of-Control
Taft
Employment Agreement
The Taft
Employment Agreement provided that if Mr. Taft’s employment with us was terminated by us in connection with a
non-renewal of the Taft Employment Agreement without Cause (as defined in the Taft Employment Agreement) or for reasons other
than Cause, death or “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code)
or was voluntarily terminated by Mr. Taft for Good Reason (as defined in the Taft Employment Agreement), he was entitled
to receive (i) one year of his then base salary, (ii) a pro rata portion of any annual bonus that Mr. Taft
would have been entitled to receive with respect to the fiscal year of termination had his employment not been terminated,
(iii) the payment by us of premium payments for a period of up to twelve months if Mr. Taft and his dependents
elect coverage under our health insurance plan pursuant to COBRA and (iv) executive outplacement services in an amount
not to exceed $25,000 to be incurred no later than the end of the second year following the year of termination.
If
Mr. Taft’s employment with us was terminated by us for Cause or if his employment with us ended due to death, “permanent
and total disability” or due to a voluntary non-renewal of the Taft Employment Agreement or voluntary termination of employment
by Mr. Taft without Good Reason, he was entitled to receive any earned but unpaid compensation as well as any other amounts
or benefits owing to Mr. Taft under the terms of any employee benefit plan of ours.
In
connection with Mr. Taft's retirement as our Chief Executive Officer and President effective September 30, 2016, on September
27, 2016, we and Mr. Taft entered into the Taft Agreement, whereby we agreed to accelerate the time based vesting of 21,898 restricted
shares of our Common Stock previously issued to Mr. Taft under our Plan. Pursuant to the Taft Agreement, Mr. Taft also agreed
to extend the period of his covenant to not compete under the Taft Employment Agreement to two years from one year.
The
following table summarizes benefits payable to Mr. Taft upon his voluntary termination of employment effective September
30, 2016.
|
|
Voluntary Termination By Employee
($)
|
|
Severance
|
|
$
|
—
|
|
Bonus
|
|
|
—
|
|
Accrued Vacation (1)
|
|
|
31,731
|
|
Welfare Benefits
|
|
|
—
|
|
Deferred Compensation Plan (2)
|
|
|
717,382
|
|
Equity (3)
|
|
|
525,552
|
|
Outplacement Services
|
|
|
—
|
|
|
|
|
|
|
Total
|
|
$
|
1,274,665
|
|
|
(1)
|
Amount
represents three weeks of accrued but unpaid vacation based on the annual salary of $550,000.
|
|
(2)
|
Reflects
a cash lump sum payment in the amount value of the Deferred Compensation Plan.
|
|
(3)
|
Represents
the value of the 21,898 shares of common stock that vested on September 30, 2016 based
on the closing price of our common stock on that date of $24.00.
|
Meisenheimer Agreement
The Meisenheimer Agreement provides
that upon a termination of Mr. Meisenheimer's employment by the Company without Cause (as defined in the Meisenheimer Agreement),
termination of Mr. Meisenheimer's employment by Mr. Meisenheimer with Good Reason (other than in the case of a material diminution
of Mr. Meisenheimer's authority, duties or responsibilities) and termination of Mr. Meisenheimer's employment by Mr. Meisenheimer
for any reason during the period that is between six months and twelve months following the commencement date of employment of
a new Chief Executive Officer of the Company, Mr. Meisenheimer is entitled to (i) an amount equal to two times Mr. Meisenheimer'
s highest annual base salary in effect prior to the date Mr. Meisenheimer's employment is terminated and (ii) an amount equal to
a pro rata portion of the aggregate bonus under the Company's Executive Bonus Plan (as defined in the Meisenheimer Agreement) for
the year in which Mr. Meisenheimer's employment is terminated (plus earned and unpaid bonus amounts under the Company's Executive
Bonus Plan for the year prior to the year in which Mr. Meisenheimer's employment is terminated).
The following table summarizes estimated
benefits that would have been payable to Mr. Meisenheimer (a) if his employment had been terminated on January 1, 2017
(i) by us without Cause or by Mr. Meisenheimer for Good Reason, (ii) upon disability, (iii) upon death, or (b) upon
a change of control of Fiesta Restaurant Group.
|
|
Terminated Without Cause or By Employee for Good Reason
|
|
|
Disability
|
|
|
Death
|
|
|
Change of
Control
|
|
Severance
|
|
$
|
660,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Bonus (1)
|
|
|
175,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accrued Vacation (2)
|
|
|
19,038
|
|
|
|
19,038
|
|
|
|
19,038
|
|
|
|
19,038
|
|
Deferred Compensation Plan (3)
|
|
|
140,660
|
|
|
|
140,660
|
|
|
|
140,660
|
|
|
|
140,660
|
|
Equity (4)
|
|
|
156,205
|
|
|
|
499,629
|
|
|
|
499,629
|
|
|
|
499,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,150,903
|
|
|
$
|
659,327
|
|
|
$
|
659,327
|
|
|
$
|
659,327
|
|
(1)
|
Reflects an amount equal to the aggregate bonus payment for the year in which the NEO incurs a termination of employment to which he would otherwise have been entitled had his employment not terminated under the Short Term Incentive Program in effect at January 1, 2017. Such payment would be made no later than March 15th of the calendar year following the calendar year the NEO’s employment is terminated.
|
(2)
|
Amount represents three weeks of accrued but unpaid vacation as of January 1, 2017 based on the annual salary of $330,000 in effect at January 1, 2017.
|
(3)
|
Reflects a cash lump sum payment in the amount value of the Deferred Compensation Plan on January 1, 2017.
|
(4)
|
For restricted stock grants prior to 2015, all unvested shares of restricted stock held by the NEO will automatically vest under the terms of the Plan and the applicable award agreement upon a termination by us without cause (as defined under the Plan and the applicable award agreement) or by the NEO for good reason (as defined under the applicable award agreement). For the restricted stock grant in 2015 and 2016 and for performance stock unit awards, in the event the NEO is terminated by the Company without cause (as defined under the Plan and the applicable award agreement) or the NEO terminates his or her employment for good reason (as defined under the applicable award agreement), the unvested portion of the restricted stock award and performance stock unit awards shall continue to vest on the scheduled vesting dates, provided that the performance criteria set forth in the award agreement is met with regard to each vesting period. For restricted stock grants, all unvested shares of restricted stock held by the NEO will automatically vest under the terms of the Plan and the applicable award agreement upon a termination for death or disability. For performance stock unit awards, upon the NEO's death or disability, a prorated portion of such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest. With respect to a change of control of Fiesta Restaurant Group, (i) all unvested shares of restricted stock will automatically vest under the terms of the Plan and the applicable award agreement and (ii) if the performance stock unit awards (a) are not continued by the Compensation Committee, or not assumed or replaced in an equitable manner to the holder by the successor entity or company after a change in control, then such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest and (b) are continued by the Compensation Committee, or are assumed or replaced in an equitable manner to the holder by the successor entity or company after a change of control and if the holder of such performance stock unit award is terminated by the Company for reasons other than cause (as defined under the Plan and the applicable award agreement) or the result of a voluntary termination by the holder, or employment is terminated by the holder for good reason (as defined under the applicable award agreement) within one year of the date of the change of control, such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest. For purposes of the table above under the column, "Change of Control" it is assumed that the performance stock unit awards have vested at the target performance level. The amount is based on the unvested shares held by the NEO at January 1, 2017 and the closing price of our common stock on December 30, 2016 of $29.85 (the last trading day of fiscal 2016).
|
Schweinfurth Agreement
The Schweinfurth Letter Agreement
provides that upon a termination of Ms. Schweinfurth's employment by the Company without Cause (as defined in the Schweinfurth
Agreement) or termination of Ms. Schweinfurth's employment by Ms. Schweinfurth with Good Reason (as defined in the Schweinfurth
Agreement), Ms. Schweinfurth is entitled to (i) an amount equal to one times Ms. Schweinfurth's highest annual base salary in effect
prior to the date Ms. Schweinfurth's employment is terminated and (ii) an amount equal to a pro rata portion of the aggregate bonus
under the Company's Executive Bonus Plan (as defined in the Schweinfurth Agreement) for the year in which Ms. Schweinfurth's employment
is terminated (plus any earned and unpaid bonus amounts under the Company's Executive Bonus Plan for the year prior to the year
in which Ms. Schweinfurth's employment is terminated).
The following table summarizes estimated
benefits that would have been payable to Ms. Schweinfurth (a) if her employment had been terminated on January 1, 2017
(i) by us without Cause or by Ms. Schweinfurth for Good Reason, (ii) upon disability, (iii) upon death, or (b) upon
a change of control of Fiesta Restaurant Group.
|
|
Terminated
Without
Cause or by Employee for Good Reason
|
|
|
Disability
|
|
|
Death
|
|
|
Change of
Control
|
|
Severance
|
|
$
|
352,000
(1)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Bonus (2)
|
|
|
150,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accrued Vacation (3)
|
|
|
20,308
|
|
|
|
20,308
|
|
|
|
20,308
|
|
|
|
20,308
|
|
Deferred Compensation Plan (4)
|
|
|
252,475
|
|
|
|
252,475
|
|
|
|
252,475
|
|
|
|
252,475
|
|
Equity (5)
|
|
|
263,098
|
|
|
|
824,994
|
|
|
|
824,994
|
|
|
|
824,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,037,881
|
|
|
$
|
1,097,777
|
|
|
$
|
1,097,777
|
|
|
$
|
1,097,777
|
|
(1)
|
Reflects a cash lump sum payment in the amount equal to one year of base salary in effect at January 1, 2017.
|
(2)
|
Reflects an amount equal to the aggregate bonus payment for the year in which the NEO incurs a termination of employment to which she would otherwise have been entitled had her employment not terminated under the Short Term Incentive Program in effect at January 1, 2017. Such payment would be made no later than March 15th of the calendar year following the calendar year the NEO’s employment is terminated.
|
(3)
|
Amount represents three weeks of accrued but unpaid vacation as of January 1, 2017 based on the annual salary of $352,000 in effect at January 1, 2017.
|
(4)
|
Reflects a cash lump sum payment in the amount value of the Deferred Compensation Plan on January 1, 2017.
|
(5)
|
For restricted stock grants prior to 2015, all unvested shares of restricted stock held by the NEO will automatically vest under the terms of the Plan and the applicable award agreement upon a termination by us without cause (as defined under the Plan and the applicable award agreement) or by the NEO for good reason (as defined under the applicable award agreement). For the restricted stock grant in 2015 and 2016 and for performance stock unit awards, in the event the NEO is terminated by the Company without cause (as defined under the Plan and the applicable award agreement) or the NEO terminates his or her employment for good reason (as defined under the applicable award agreement), the unvested portion of the restricted stock award and performance stock unit awards shall continue to vest on the scheduled vesting dates, provided that the performance criteria set forth in the award agreement is met with regard to each vesting period. For restricted stock grants, all unvested shares of restricted stock held by the NEO will automatically vest under the terms of the Plan and the applicable award agreement upon a termination for death or disability. For performance stock unit awards, upon the NEO's death or disability, a prorated portion of such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest. With respect to a change of control of Fiesta Restaurant Group, (i) all unvested shares of restricted stock will automatically vest under the terms of the Plan and the applicable award agreement and (ii) if the performance stock unit awards (a) are not continued by the Compensation Committee, or not assumed or replaced in an equitable manner to the holder by the successor entity or company after a change in control, then such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest and (b) are continued by the Compensation Committee, or are assumed or replaced in an equitable manner to the holder by the successor entity or company after a change of control and if the holder of such performance stock unit award is terminated by the Company for reasons other than cause (as defined under the Plan and the applicable award agreement) or the result of a voluntary termination by the holder, or employment is terminated by the holder for good reason (as defined under the applicable award agreement) within one year of the date of the change of control, such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest. For purposes of the table above under the column, "Change of Control" it is assumed that the performance stock unit awards have vested at the target performance level. The amount is based on the unvested shares held by the NEO at January 1, 2017 and the closing price of our common stock on December 30, 2016 of $29.85 (the last trading day of fiscal 2016).
|
Other Named Executive Officers
Zirkman Agreement
The Zirkman Agreement provides that
upon a termination of Mr. Zirkman's employment by the Company without Cause (as defined in the Zirkman Agreement) or termination
of Mr. Zirkman's employment by Mr. Zirkman with Good Reason (as defined in the Zirkman Agreement), Mr. Zirkman is entitled to (i)
an amount equal to one times Mr. Zirkman 's highest annual base salary in effect prior to the date Mr. Zirkman's employment is
terminated and (ii) an amount equal to a pro rata portion of the aggregate bonus under the Company's Executive Bonus Plan (as defined
in the Zirkman Agreement) for the year in which Mr. Zirkman's employment is terminated (plus any earned and unpaid bonus amounts
under the Company's Executive Bonus Plan for the year prior to the year in which Mr. Zirkman's employment is terminated).
The following table summarizes estimated benefits that would
have been payable to Mr. Zirkman (a) if his employment had been terminated on January 1, 2017 (i) by us without Cause
or by Mr. Zirkman for Good Reason, (ii) upon disability, (iii) upon death, or (b) upon a change of control of Fiesta
Restaurant Group.
|
|
Terminated Without Cause or By Employee for Good Reason
|
|
|
Disability
|
|
|
Death
|
|
|
Change of
Control
|
|
Severance
|
|
$
|
326,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Bonus (1)
|
|
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accrued Vacation (2)
|
|
|
25,131
|
|
|
|
25,131
|
|
|
|
25,131
|
|
|
|
25,131
|
|
Deferred Compensation Plan (3)
|
|
|
252,475
|
|
|
|
252,475
|
|
|
|
252,475
|
|
|
|
252,475
|
|
Equity (4)
|
|
|
193,637
|
|
|
|
474,615
|
|
|
|
474,615
|
|
|
|
474,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
723,943
|
|
|
$
|
752,221
|
|
|
$
|
752,221
|
|
|
$
|
752,221
|
|
(1)
|
Reflects an amount equal to the aggregate bonus payment for the year in which the NEO incurs a termination of employment to which he would otherwise have been entitled had his employment not terminated under the Short Term Incentive Program in effect at January 1, 2017. Such payment would be made no later than March 15th of the calendar year following the calendar year the NEO’s employment is terminated.
|
(2)
|
Amount represents four weeks of accrued but unpaid vacation as of January 1, 2017 based on the annual salary of $326,700 in effect at January 1, 2017.
|
(3)
|
Reflects a cash lump sum payment in the amount value of the Deferred Compensation Plan on January 1, 2017.
|
(4)
|
For restricted stock grants prior to 2015, all unvested shares of restricted stock held by the NEO will automatically vest under the terms of the Plan and the applicable award agreement upon a termination by us without cause (as defined under the Plan and the applicable award agreement) or by the NEO for good reason (as defined under the applicable award agreement). For the restricted stock grant in 2015 and 2016 and for performance stock unit awards, in the event the NEO is terminated by the Company without cause (as defined under the Plan and the applicable award agreement) or the NEO terminates his or her employment for good reason (as defined under the applicable award agreement), the unvested portion of the restricted stock award and performance stock unit awards shall continue to vest on the scheduled vesting dates, provided that the performance criteria set forth in the award agreement is met with regard to each vesting period. For restricted stock grants, all unvested shares of restricted stock held by the NEO will automatically vest under the terms of the Plan and the applicable award agreement upon a termination for death or disability. For performance stock unit awards, upon the NEO's death or disability, a prorated portion of such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest. With respect to a change of control of Fiesta Restaurant Group, (i) all unvested shares of restricted stock will automatically vest under the terms of the Plan and the applicable award agreement and (ii) if the performance stock unit awards (a) are not continued by the Compensation Committee, or not assumed or replaced in an equitable manner to the holder by the successor entity or company after a change in control, then such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest and (b) are continued by the Compensation Committee, or are assumed or replaced in an equitable manner to the holder by the successor entity or company after a change of control and if the holder of such performance stock unit award is terminated by the Company for reasons other than cause (as defined under the Plan and the applicable award agreement) or the result of a voluntary termination by the holder, or employment is terminated by the holder for good reason (as defined under the applicable award agreement) within one year of the date of the change of control, such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest. For purposes of the table above under the column, "Change of Control" it is assumed that the performance stock unit awards have vested at the target performance level. The amount is based on the unvested shares held by the NEO at January 1, 2017 and the closing price of our common stock on December 30, 2016 of $29.85 (the last trading day of fiscal 2016).
|
The
following table summarizes benefits payable to Mr. Todd upon his voluntary termination from employment on January 1, 2017.
|
|
Voluntary Termination By Employee
|
|
Severance
|
|
$
|
110,000
|
|
Bonus (1)
|
|
|
3,454
|
|
Accrued Vacation (2)
|
|
|
19,039
|
|
Deferred Compensation Plan (3)
|
|
|
12,510
|
|
Equity (4)
|
|
|
133,191
|
|
Total
|
|
$
|
278,194
|
|
|
(1)
|
Reflects
an amount equal to the aggregate bonus payment for the year in which the NEO incurred
the termination of employment to which he would otherwise have been entitled had his
employment not terminated under the Short Term Incentive Program in effect at January
1, 2017.
|
|
(2)
|
Amount
represents three weeks of accrued but unpaid vacation as of January 1, 2017 based on
the annual salary of $330,000.
|
|
(3)
|
Reflects
a cash lump sum payment in the amount value of the Deferred Compensation Plan on January
1, 2017.
|
|
(4)
|
Represents
the value of the 4,462 shares of common stock that vested on January 1, 2017 based on
the closing price of our common stock on December 30, 2016 of $29.85 (the last trading
day of fiscal 2016). For the restricted stock grants in 2015 and 2016 and for performance
stock unit awards, the unvested portion of the restricted stock award and performance
stock unit awards shall continue to vest on the scheduled vesting dates, provided that
the performance criteria set forth in the award agreement is met with regard to each
vesting period.
|
The
following table summarizes estimated benefits that would have been payable to Mr. Brink (a) if his employment had been
terminated on January 1, 2017 (i) by us without Cause or by Mr. Brink for Good Reason, (ii) upon disability, (iii) upon
death, or (b) upon a change of control of Fiesta Restaurant Group.
|
|
Terminated Without Cause or By Employee for Good Reason
|
|
|
Disability
|
|
|
Death
|
|
|
Change of
Control
|
|
Severance
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Bonus (1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Accrued Vacation (2)
|
|
|
11,552
|
|
|
|
11,552
|
|
|
|
11,552
|
|
|
|
11,552
|
|
Deferred Compensation Plan (3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Equity (4)
|
|
|
123,758
|
|
|
|
208,472
|
|
|
|
208,472
|
|
|
|
208,472
|
|
Total
|
|
$
|
135,310
|
|
|
$
|
220,024
|
|
|
$
|
220,024
|
|
|
$
|
220,024
|
|
|
(1)
|
Reflects
an amount equal to the aggregate bonus payment for the year in which the NEO incurs a
termination of employment to which he would otherwise have been entitled had his employment
not terminated under the Short Term Incentive Program in effect at January 1, 2017. Such
payment would be made no later than March 15th of the calendar year following the
calendar year the NEO’s employment is terminated.
|
|
(2)
|
Amount
represents three weeks of accrued but unpaid vacation as of January 1, 2017 based on
the annual salary of $200,232 in effect at January 1, 2017.
|
|
(3)
|
Reflects
a cash lump sum payment in the amount value of the Deferred Compensation Plan on January
1, 2017.
|
|
(4)
|
For
restricted stock grants prior to 2016, all unvested shares of restricted stock held by
the NEO will automatically vest under the terms of the Plan and the applicable award
agreement upon a termination by us without cause (as defined under the Plan and the applicable
award agreement) or by the NEO for good reason (as defined under the applicable award
agreement). For the restricted stock grant in 2016 and for performance stock unit awards,
in the event the NEO is terminated by the Company without cause (as defined under the
Plan and the applicable award agreement) or the NEO terminates his or her employment
for good reason (as defined under the applicable award agreement), the unvested portion
of the restricted stock award and performance stock unit awards shall continue to vest
on the scheduled vesting dates, provided that the performance criteria set forth in the
award agreement is met with regard to each vesting period. For restricted stock grants,
all unvested shares of restricted stock held by the NEO will automatically vest under
the terms of the Plan and the applicable award agreement upon a termination for death
or disability. For performance stock unit awards, upon the NEO's death or disability,
a prorated portion of such performance stock unit award that would have vested as of
the scheduled vesting date if the Company were to achieve the target performance level
for the performance period shall immediately vest. With respect to a change of control
of Fiesta Restaurant Group, (i) all unvested shares of restricted stock will automatically
vest under the terms of the Plan and the applicable award agreement and (ii) if the performance
stock unit awards (a) are not continued by the Compensation Committee, or not assumed
or replaced in an equitable manner to the holder by the successor entity or company after
a change in control, then such performance stock unit award that would have vested as
of the scheduled vesting date if the Company were to achieve the target performance level
for the performance period shall immediately vest and (b) are continued by the Compensation
Committee, or are assumed or replaced in an equitable manner to the holder by the successor
entity or company after a change of control and if the holder of such performance stock
unit award is terminated by the Company for reasons other than cause (as defined under
the Plan and the applicable award agreement) or the result of a voluntary termination
by the holder, or employment is terminated by the holder for good reason (as defined
under the applicable award agreement) within one year of the date of the change of control,
such performance stock unit award that would have vested as of the scheduled vesting
date if the Company were to achieve the target performance level for the performance
period shall immediately vest. For purposes of the table above under the column, "Change
of Control" it is assumed that the performance stock unit awards have vested at
the target performance level. The amount is based on the unvested shares held by the
NEO at January 1, 2017 and the closing price of our common stock on December 30, 2016
of $29.85 (the last trading day of fiscal 2016).
|
Mr.
Coerver resigned as Chief Operating Officer, Taco Cabana effective October 20, 2016. The following table summarizes benefits payable
to Mr. Coerver upon his voluntary termination of employment effective October 20, 2016.
|
|
Upon Voluntary Termination By Employee
|
|
Severance
|
|
$
|
—
|
|
Bonus
|
|
|
—
|
|
Accrued Vacation
|
|
|
—
|
|
Deferred Compensation Plan
|
|
|
69,376
|
|
Equity
|
|
|
—
|
|
Total
|
|
$
|
69,376
|
|
DIRECTOR
COMPENSATION
The following table summarizes the
compensation we paid to our non-employee directors during the fiscal year ended January 1, 2017. Compensation information for Timothy
P. Taft, who served as Chief Executive Officer and President until September 30, 2016, is set forth in the Summary Compensation
Table above.
Name
|
|
Fees Earned
or Paid in
Cash (1)
($)
|
|
|
Stock
Award (2)
($)
|
|
|
Option
Award
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total ($)
|
|
Stacey Rauch
|
|
$
|
77,500
|
|
|
$
|
75,027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
152,527
|
|
Barry J. Alperin
|
|
$
|
66,876
|
|
|
$
|
75,027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
141,902
|
|
Nicholas Daraviras
|
|
$
|
58,750
|
|
|
$
|
75,027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
133,777
|
|
Stephen P. Elker
|
|
$
|
71,250
|
|
|
$
|
75,027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
146,277
|
|
Brian P. Friedman
|
|
$
|
57,500
|
|
|
$
|
75,027
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
132,527
|
|
Jack A. Smith
|
|
$
|
88,125
|
|
|
$
|
95,028
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
183,153
|
|
(1)
|
The amounts listed in this column include the payment of director fees.
|
(2)
|
On April 28, 2016, Ms. Rauch, Mr. Friedman, Mr. Elker, Mr. Daraviras, and Mr. Alperin were each granted 2,247 restricted shares of common stock valued at $33.39 per share under the Plan. On April 28, 2016, Mr. Smith was granted 2,846 restricted shares of common stock valued at $33.39 per share under the Plan. The restricted common stock granted to Ms. Rauch, Mr. Friedman, Mr. Elker, Mr. Daraviras, Mr. Alperin and Mr. Smith fully vests on the first anniversary of the grant date. The amounts shown in this column represent the fair value of restricted common stock granted and approved by the Compensation Committee and is consistent with the grant date fair value of the award computed in accordance with FASB ASC Topic 718. There were no forfeitures in 2016 by these individuals.
|
We use a combination of cash and
stock-based compensation to attract and retain qualified non-employee directors to serve on our board of directors. The members
of our board of directors, except for any member who is an executive officer or employee, each will receive a fee for serving on
our board or board committees. Non-employee directors will receive compensation for board service as follows:
|
●
|
Our board members each receive an annual retainer of $50,000 for serving as a director, except that the Chairman of our board of directors receives an annual retainer of $65,000.
|
|
●
|
The Chairman of our Audit Committee receives an additional fee of $15,000 per year and each other member of our Audit Committee receives an additional fee of $7,500 per year.
|
|
●
|
The Chairman of our Compensation Committee receives an additional fee of $10,000 per year and each other member of our Compensation Committee receives an additional fee of $5,000 per year.
|
|
●
|
The Chairman of our Corporate Governance and Nominating Committee receives an additional fee of $5,000 per year and each other member of our Corporate Governance and Nominating Committee receives an additional fee of $2,500.
|
|
●
|
The Chairman of our Finance Committee receives an additional fee of $5,000 per year and each other member of our Finance Committee receives an additional fee of $2,500.
|
|
●
|
On the date of our 2016 Annual Meeting of Shareholders each non-executive member of our board of directors received a number of shares of our restricted common stock having an aggregate fair market value (as such term is defined in the Plan) of $75,027 on the date of grant, which will fully vest on the first anniversary of the date of grant, other than the Chairman of our board of directors who received a number of shares of our restricted common stock having an aggregate fair market value (as such term is defined in the Plan) of $95,028.
|
|
●
|
Members of our board of directors do not receive separate attendance fees for attending meetings. All directors are reimbursed for all reasonable expenses they incur while acting as directors, including as members of any committee of our board of directors.
|
|
●
|
If any Special Committees are created during the year, the chairman of such committee receives a retainer of $7,500 per annum (prorated for the time that the committee is active), and each non-executive member of the board serving on such Special Committee receives a retainer of $2,500 per annum (prorated for the time that the committee is active).
|
|
●
|
Pursuant to the Plan, upon becoming a director, any future director will receive a number of shares of our restricted common stock having an aggregate fair market value (as defined in the Plan) of $100,000 which will vest in equal installments over five years.
|
Board of Directors Stock Ownership Guidelines
Members of our board of directors are expected to acquire and continue
to hold shares of our Common Stock having an aggregate market value which equals or exceeds three times the annual retainer paid
to a director within five years of being named a director. Only actual shares owned by each director including direct and indirect
ownership as reported to the SEC, count toward compliance with these guidelines.
PROPOSAL
2—ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THIS PROXY STATEMENT
UNDER “EXECUTIVE COMPENSATION
We
are providing our shareholders an opportunity to cast a vote to approve, on an advisory (non-binding) basis, the compensation
of our Named Executive Officers as described in this Proxy Statement under “Executive Compensation”.
The
Compensation Committee continually reviews the compensation programs for our Named Executive Officers to ensure they achieve the
desired goals of encouraging and rewarding executives to contribute to the achievement of the Company’s business objectives
and to attract, retain and motivate talented executives to perform at the highest level and contribute significantly to the Company’s
success. The program is intended to align the interests of the Named Executive Officers with those of shareholders, provide an
appropriate and balanced mix of short-term and long-term compensation elements, and reward the achievement of performance measures
that are directly related to the Company’s financial goals.
The
Compensation Committee believes that the amounts of 2016 actual total compensation for the Named Executive Officers are consistent
with these objectives. The compensation of the Named Executive Officers is described in the Compensation Discussion and Analysis,
the compensation tables and the accompanying narrative on pages 14 to 28 of this Proxy Statement. The Compensation Discussion
and Analysis section and the accompanying tables and narrative provide a comprehensive review of the Company’s executive
compensation program and its elements, objectives and rationale. Shareholders are urged to read this disclosure before voting
on this proposal.
We
are asking our shareholders to indicate their support for our Named Executive Officers’ compensation as described in this
Proxy Statement under “Executive Compensation”. This proposal, commonly known as a “say-on-pay” proposal,
gives our shareholders the opportunity to express their views on our Named Executive Officers’ compensation. This vote is
not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers
and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we will ask our shareholders to vote
“FOR” the following non-binding resolution at the 2017 Annual Meeting. For the reasons stated above, the board is
requesting approval of the following non-binding resolution:
RESOLVED,
that the shareholders of Fiesta Restaurant Group, Inc. (the “
Company
”) approve, on an advisory basis, the compensation
of the Company’s Named Executive Officers as disclosed in the Compensation Discussion and Analysis, the Summary Compensation
Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2017 Annual Meeting
of Shareholders.
This
advisory resolution will be considered approved if it receives an affirmative vote of the majority of the shares present at the
2017 Annual Meeting and entitled to vote on the subject matter. The shareholder vote on this proposal will be non-binding on the
Company and the board and will not be construed as overruling a decision by the Company or the board. However, the board and the
Compensation Committee value the opinions that shareholders express in their votes and will consider the outcome of the vote when
making future executive compensation decisions as they deem appropriate.
The
board of directors recommends a vote FOR the approval of the non-binding resolution on the compensation of the Company’s
Named Executive Officers as described in this Proxy Statement under “Executive Compensation”. Proxies received in
response to this solicitation will be voted FOR the approval of the non-binding resolution on the compensation of the Company’s
Named Executive Officers as described in this Proxy Statement under “Executive Compensation” unless otherwise specified
in the proxy.
PROPOSAL
3 —THE APPROVAL OF THE FIESTA RESTAURANT GROUP, INC. 2012 STOCK INCENTIVE PLAN, AS AMENDED, FOR PURPOSES OF COMPLYING WITH
SECTION 162(M) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
General
We are asking our shareholders
to approve the 2012 Stock Incentive Plan, as amended, such that certain awards under the Plan to our chief executive officer or
one of our three other most highly paid executive officers (other than our chief financial officer) qualify as “performance-based
compensation” under Section 162(m) of the Code and are therefore exempt from the $1.0 million cap on our tax deduction
for executive compensation imposed by Section 162(m) of the Code.
The
affirmative vote of a majority of the shares present at the 2017 Annual Meeting and entitled to vote on the subject matter is
required to approve the Plan for purposes of complying with Section 162(m) of the Code. Our executive officers and directors
have an interest in this proposal by virtue of their being eligible to receive awards under the Plan. Abstentions will have the
same effect as negative votes. Broker non-votes will not be counted for any purpose in determining whether this matter has been
approved.
The
principal features of the Plan are summarized below; however the summary is qualified in its entirety by reference to the Plan
itself, which is attached to this Proxy Statement as
Appendix B
. We encourage you to please read the Plan carefully.
Background
The Plan was originally adopted
by our board of directors and our sole shareholder effective as of May 7, 2012, and will expire on May 7, 2022 or such earlier
time as our board of directors may determine.
Purpose
The
purpose of the Plan is to attract and retain persons eligible to participate in the Plan, such as our officers, employees, associates,
directors and any consultants or advisors providing services to us, to motivate these individuals to achieve our long-term goals,
and to further align the interests of these individuals with the interests of our shareholders.
Administration
The
Plan is administered by the Compensation Committee. Our board of directors can also administer the Plan if a Compensation Committee
or other committee has not been appointed or is not eligible to act. The Compensation Committee has the authority to (1) select
Plan participants, (2) determine whether and to what extent stock options, stock appreciation rights and stock awards are
to be granted and the number of shares of stock to be covered by each award, (3) approve forms of agreement for use under
the Plan, (4) determine terms and conditions of awards (including, but not limited to, the option price, any vesting restriction
or limitation, any vesting acceleration or waiver or forfeiture, and any right of repurchase, right of first refusal or other
transfer restriction regarding any award), (5) modify, amend or adjust the terms and conditions of any award, (6) determine
the fair market value of our Common Stock, and (7) determine the type and amount of consideration to be received by us for
any stock award issued. Any determination with respect to any award will be made in the sole discretion of the Compensation Committee.
Eligibility
Any
employee, officer, director, associate, advisor or consultant to us or any of our affiliates is generally eligible to participate
in the Plan. In each case, the Compensation Committee selects the actual grantees. As of April 10, 2017, there were approximately
329 employees, including officers and consultants, eligible for awards under the Plan. As of the same date, there were seven outside
directors eligible for awards (other than cash awards) under the Plan.
Awards
The
Plan provides for the grant of stock options and stock appreciation rights, which we refer to as “SARs”, stock awards,
performance awards and outside director stock awards. No award may be granted under the Plan on or after May 7, 2022 or such earlier
time as our board of directors may determine.
Shares
Subject to the Plan
Subject
to adjustment as provided below, the aggregate number of shares of our Common Stock that may be delivered pursuant to awards granted
under the Plan will be 3,300,000 shares. The closing price of our Common Stock on April 10, 2017 was $23.70. Subject to adjustment
as discussed below, the maximum number of shares that may be covered by stock options, SARs and stock awards, in the aggregate,
granted to any one participant during any calendar year is 300,000 shares and in the case of an employee covered by Section 162(m)
of the Code, if any such awards are cancelled, the number of shares subject to such award shall continue to count against the
foregoing limit of 300,000 shares. Based on the closing price of our Common Stock of $23.70 on April 10, 2017, this limit translates
to a value of $7,110,000. Any award settled in cash will be based on the fair market value of the shares of stock subject to such
award. If an award granted under the Plan terminates, lapses or is forfeited without the delivery of shares or any shares of restricted
stock granted under the Plan are forfeited, then the shares covered by the terminated, lapsed or forfeited award or the forfeited
restricted stock, as applicable, will again be available for grant.
In
the event of any change affecting the outstanding shares of our Common Stock by reason of, among other things, a stock dividend,
special cash dividend, stock split, combination or exchange of shares, recapitalization or other change in our capital structure,
our corporate separation or division (including, but not limited to, a split-up, spin-off, split-off or other distribution to
our shareholders, other than a normal cash dividend), sale by us of all or a substantial portion of our assets (measured on either
a stand-alone or consolidated basis), reorganization, rights offering, partial or complete liquidation, merger or consolidation
in which we are the surviving corporation or any event similar to the foregoing, the Compensation Committee, in its discretion,
may generally make such substitution or adjustment as it deems equitable as to (1) the number or kind of shares that may
be delivered under the Plan and/or the number or kind of shares subject to outstanding awards, (2) the exercise price of
outstanding options, outside director options and SARs and/or (3) other affected terms of the awards.
Options
and Stock Appreciation Rights
Under the Plan, the Compensation
Committee may grant both options intended to constitute “incentive stock options” within the meaning of Section 422
of the Code and non-qualified stock options. The exercise price for options will be determined by the Compensation Committee,
but the exercise price cannot be less than 100% of the fair market value of our Common Stock on the grant date. In the case of
incentive stock options granted to an employee who, immediately before the grant of an option, owns stock representing more than
10% of the voting power of all classes of our stock or the stock of any of our subsidiaries, the exercise price cannot be less
than 110% of the fair market value of a share of our Common Stock on the grant date and the incentive stock option will terminate
on a date not later than the fifth anniversary of the date on which such incentive stock option was granted. A maximum of 1,500,000
shares of Common Stock may be subject to grants of incentive stock options.
The
Compensation Committee determines when, and upon what terms and conditions, options granted under the Plan will be exercisable,
except that no option will be exercisable more than 10 years after the date on which it is granted. The Compensation Committee
determines the vesting of stock options at the time of grant, except that no stock option shall become vested earlier than the
first anniversary of, or later than the seventh anniversary of, the date of grant of such stock option, and the participant must
remain in active employment or service with us or an affiliate until the applicable vesting date. The exercise price may generally
be paid (1) with cash, (2) unrestricted and vested shares of our Common Stock owned by the optionee, (3) unless
otherwise prohibited by law for either us or the optionee, by irrevocably authorizing a third party to sell shares (or a sufficient
portion of the shares) of our Common Stock acquired upon the exercise of the stock option and remit to us a sufficient portion
of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise, or (4) a combination
of the above methods.
The
Compensation Committee may only grant SARs under the Plan as a standalone award. The Compensation Committee determines the term
of a SAR at the time of grant, except that no SAR will be exercisable more than 10 years after the date on which it is granted.
The Compensation Committee determines the vesting of a SAR at the time of grant, except that no SAR shall become vested earlier
than the first anniversary of the date of, or later than the seventh anniversary of, the date of grant of such SAR, and the participant
must remain in active employment or service with us or an affiliate until the applicable vesting date. When a SAR recipient exercises
his or her SAR with respect to a share, the recipient is entitled to an amount equal to the difference between the fair market
value of a share of our Common Stock on the SAR’s grant date compared to the fair market value of such a share on the date
the SAR is exercised. The amount will be paid in the form of either cash or our Common Stock, depending on the terms of the applicable
award agreement.
Unless
otherwise provided in the applicable award agreement, stock options or SARs granted under the Plan will have the following terms:
|
●
|
If
a participant’s employment or provision of services terminates by reason of death
or Disability (as defined in the Plan), all stock options or SARs held by such participant
will become fully vested and exercisable and may be exercised until the earlier of the
one year anniversary of such death or termination of employment or services, as applicable,
and the expiration of the stock option’s or SAR’s term.
|
|
●
|
If
a participant’s employment or provision of services is terminated and the participant
is age 65 or older and has completed at least five years of service for us, which we
refer to as “
Retirement
”, any stock option or SAR held by such participant
may thereafter be exercised, to the extent it was exercisable at the time of termination,
until the earlier of the twelve months anniversary in the case of a stock option and
six month anniversary in the case of a SAR of such termination of employment or provision
of services, and the expiration of such stock option’s or SAR’s term. Any
stock option or SAR that is unvested or unexercisable on the date of termination shall
immediately terminate.
|
|
●
|
If
a participant’s employment or provision of services terminates involuntarily without
Cause (as defined in the Plan), any stock option or SAR held by such participant may
thereafter be exercised, to the extent it was exercisable at the time of termination,
until the earlier of the three month anniversary of such termination of employment or
provision of services, and the expiration of such stock option’s or SAR’s
term. Any stock option or SAR that is unvested or unexercisable on the date of termination
shall immediately terminate.
|
|
●
|
If
a participant’s employment or provision of services terminates involuntarily for
Cause, all outstanding stock options or SARs held by such participant (whether vested
or unvested) shall immediately terminate.
|
|
●
|
If
a participant’s employment or provision of services is terminated by the participant
for any reason other than death, Disability, Retirement, involuntary termination without
Cause or involuntary termination for Cause, any stock option or SAR held by such participant
may thereafter be exercised, to the extent it was exercisable at the time of termination,
until the earlier of the one month anniversary of such termination of employment or provision
of services, and the expiration of such stock option’s or SAR’s term. Any
stock option or SAR that is unvested or unexercisable at the date of termination shall
immediately terminate.
|
Stock
Awards
The
Compensation Committee may grant awards of shares, restricted shares and restricted stock units upon the terms, conditions, performance
requirements, restrictions, forfeiture provisions, contingencies and limitations as it determines. The Compensation Committee
determines the vesting of stock awards at the time of grant, except that no stock award shall become vested earlier than the first
anniversary of, or later than the seventh anniversary of, the date of grant of such stock award, unless otherwise provided in
the Plan, and the participant must remain in active employment or service with us or an affiliate until the applicable vesting
date.
Except
as otherwise provided in the applicable award agreement, if a participant’s employment or provision of services is (1) terminated
by death, Disability or by us for any reason other than Cause, all stock underlying a stock award will become fully vested and
non-forfeitable, and (2) terminated by us for Cause or by the participant for any reason other than death or Disability,
all stock underlying a stock award, to the extent unvested at the time of termination, will be forfeited.
Performance
Awards
The right of a participant
to exercise or receive a grant or settlement of any award, and its timing, may be subject to performance conditions specified
by the Compensation Committee at the time of grant. Performance awards under the Plan may be in the form of stock options, SARs,
stock awards and cash awards. The Compensation Committee may use business criteria and other measures of performance it deems
appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase amounts payable
under any award subject to performance conditions, except as limited under the Plan in the case of a performance award intended
to qualify as performance-based compensation under Section 162(m) of the Code.
If
our shareholders approve the Plan, it will continue to provide us with the potential benefit to take tax deductions associated
with certain types of executive equity compensation.
Awards
granted under the Plan may be designed to qualify as “performance-based compensation” within the meaning of Section 162(m)
of the Code. Pursuant to Section 162(m) of the Code, we generally may not deduct for federal income tax purposes compensation
paid to our chief executive officer or our three other highest paid executive officers (other than our chief financial officer)
to the extent that any of these persons receive more than $1 million in compensation in any single year. However, if the
compensation qualifies as “performance-based” for Section 162(m) purposes, we can deduct for federal income tax
purposes the compensation paid even if such compensation exceeds $1 million in a single year. For certain awards granted
under the Plan to qualify as fully deductible “performance-based compensation” under Section 162(m) of the Code,
among other things, our shareholders must approve the Plan at this Meeting. For any performance award that is a cash award, the
maximum cash award that may be paid to any participant referred to above with respect to the calendar year to which the performance
award relates shall be equal to the fair market value of 300,000 shares of our Common Stock reduced by the amount of any outstanding
awards.
The
performance goals for performance awards intended to qualify as performance-based compensation under Section 162(m) of the
Code shall be based on one or more of the following business criteria:
|
●
|
Earnings before any or all of interest, tax, depreciation or amortization (actual and adjusted and either in the aggregate or on a per-share basis);
|
|
|
|
|
●
|
Earnings (either in the aggregate or on a per-share basis);
|
|
|
|
|
●
|
Net income or loss (either in the aggregate or on a per-share basis);
|
|
|
|
|
●
|
Operating profit;
|
|
|
|
|
●
|
Cash flow (either in the aggregate or on a per-share basis);
|
|
|
|
|
●
|
Free cash flow (either in the aggregate on a per-share basis);
|
|
●
|
Non-interest expense;
|
|
|
|
|
●
|
Costs;
|
|
|
|
|
●
|
Gross revenues;
|
|
|
|
|
●
|
Reductions in expense levels;
|
|
|
|
|
●
|
Operating and maintenance cost management and employee productivity;
|
|
|
|
|
●
|
Share price or total shareholder return (including growth measures and total shareholder return or attainment by the shares of a specified value for a specified period of time);
|
|
|
|
|
●
|
Net economic value;
|
|
|
|
|
●
|
Economic value added or economic value added momentum;
|
|
|
|
|
●
|
Strategic business criteria, consisting of one or more objectives based on meeting specified revenue, sales, market share, market penetration, geographic business expansion goals, objectively identified project milestones, production volume levels, cost targets and goals relating to acquisitions or divestitures;
|
|
|
|
|
●
|
Return on average assets or average equity;
|
|
|
|
|
●
|
Achievement of objectives relating to diversity, employee turnover or other human capital metrics;
|
|
|
|
|
●
|
Results of customer satisfaction surveys or other objective measures of customer experience; and/or
|
|
|
|
|
●
|
Debt ratings, debt leverage, debt service, financings and refinancings.
|
The
Compensation Committee may, on the grant date of an award intended to qualify as “performance-based compensation,”
provide that the formula for such award may include or exclude items to measure specific objectives, such as losses from discontinued
operations, extraordinary gains or losses, the cumulative effect of accounting changes, acquisitions or divestitures, foreign
exchange impacts and any unusual, non-recurring gain or loss.
The
levels of performance required with respect to any performance goals may be expressed in absolute or relative levels and may be
based upon a set increase, set positive result, maintenance of the status quo, set decrease or set negative result. The Compensation
Committee shall specify the weighting (which may be the same or different for multiple performance goals) to be given to each
performance goal for purposes of determining the final amount payable with respect to any performance award. Any one or more of
the performance goals or the business criteria on which they are based may apply to the participant, a department, unit, division
or function within the Company (except for total shareholder return or earnings per share criteria) or any one or more subsidiaries,
and may apply either alone or relative to the performance of other businesses or individuals (including industry or general market
indices).
Settlement
of performance awards may be in cash or our Common Stock, or other awards, or other property, in the discretion of the Compensation
Committee. Any cash-settled performance award will be based on the fair market value of the shares of our Common Stock subject
to the performance award at the time of settlement. The Compensation Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with a performance award, but may not exercise discretion to increase any such amount
payable in respect of a performance award intended to constitute “performance-based compensation” for Section 162(m)
of the Code. Subject to the requirements of Section 162(m) of the Code, the Compensation Committee shall specify the circumstances
in which a performance award shall be forfeited or paid in the event of a termination of employment at least six months prior
to the end of a performance period or settlement of a performance award, and other terms relating to such performance award.
Outside
Director Stock Options
The Compensation Committee
can grant outside director stock options to outside directors in its discretion. The term of an outside director stock option
cannot be greater than seven years. An outside director stock option shall vest and become exercisable in installments over five
years with options for one-fifth of the shares underlying the outside director stock option vesting and becoming exercisable on
the first anniversary of the date of grant of the outside director stock option and options for an additional one-fifth of the
underlying shares vesting and becoming exercisable on each subsequent anniversary of the date of grant, provided that such outside
director continuously remained a director through the applicable vesting date. Any unvested outside director stock option terminates
immediately upon the outside director ceasing to be a director.
Outside
Director Stock Awards
Each
outside director appointed to the board of directors shall receive as of the date of such appointment, stock awards of an aggregate
fair market value of $100,000 on the date of grant.
On
the date of each annual meeting of the Company, outside directors receive a number of shares of restricted Common Stock in an
amount determined by the Compensation Committee.
With
respect to outside director stock awards granted annually on the date of each annual meeting of shareholders, an outside director
stock award will vest and become exercisable in the discretion of the Compensation Committee, provided that the outside director
continuously remains a director through the applicable vesting date. Any unvested shares underlying an outside director stock
award will be immediately forfeited upon the outside director ceasing to be a director.
Change
of Control
In the event of a Change in Control (as defined in the Plan), (i) outstanding and unvested stock options, outside
director stock options and SARs will be fully vested and exercisable, (ii) restrictions on outstanding stock awards and outside
director stock awards will lapse and the shares relating to such awards will become fully vested and transferable, and (iii) provided
it would not trigger adverse tax consequences under Section 409A of the Code, outstanding awards will be subject to any agreement
of acquisition, merger or reorganization that effects such Change in Control and that provides for the continuation of outstanding
awards by us, assumption of outstanding awards, substitution of equivalent awards for the outstanding awards or settlement of
each share of stock subject to an outstanding award for the change in control price (as defined in the Plan).
New
Plan Benefits
The number of awards (if any)
that an eligible participant may receive under the Plan is in the discretion of the Compensation Committee and therefore cannot
be determined in advance. The following table sets forth (a) the aggregate number of shares issued pursuant to awards of
restricted stock under the Plan during the fiscal year ended January 1, 2017, and (b) the dollar value of such shares based
on $29.85 per share, the closing market price of our Common Stock on December 30, 2016 (the last trading day of fiscal 2016).
Name of Individual or Group
|
|
Number of Options Granted
|
|
|
Average Per Share Exercise Price
|
|
|
Number of
Restricted Stock and Restricted Stock Units
|
|
|
Dollar Value of
Restricted Stock and Restricted Stock Units
|
|
Timothy P. Taft
|
|
|
—
|
|
|
|
—
|
|
|
|
26,952
|
|
|
$
|
804,517
|
|
Danny K. Meisenheimer
|
|
|
—
|
|
|
|
—
|
|
|
|
7,802
|
|
|
$
|
232,890
|
|
Lynn Schweinfurth
|
|
|
—
|
|
|
|
—
|
|
|
|
12,766
|
|
|
$
|
381,065
|
|
Joseph A. Zirkman
|
|
|
—
|
|
|
|
—
|
|
|
|
6,384
|
|
|
$
|
190,562
|
|
Joseph Brink
|
|
|
—
|
|
|
|
—
|
|
|
|
2,838
|
|
|
$
|
84,714
|
|
John Todd
|
|
|
—
|
|
|
|
—
|
|
|
|
5,674
|
|
|
$
|
169,369
|
|
Todd Coerver
|
|
|
—
|
|
|
|
—
|
|
|
|
4,966
|
|
|
$
|
148,235
|
|
All executive officers, as a group
|
|
|
—
|
|
|
|
—
|
|
|
|
67,382
|
|
|
$
|
2,011,353
|
|
All directors who are not executive officers, as a group
|
|
|
—
|
|
|
|
—
|
|
|
|
14,081
|
|
|
$
|
420,318
|
|
All employees who are not executive officers, as a group
|
|
|
—
|
|
|
|
—
|
|
|
|
55,849
|
|
|
$
|
1,667,093
|
|
Benefits
Under the Plan
The amount of options received by the indicated
persons and groups under the Plan since its inception is as follows:
Name of Individual or Group
|
|
Number of Options
Granted
|
|
Timothy P. Taft
|
|
|
0
|
|
Danny K. Meisenheimer
|
|
|
0
|
|
Lynn Schweinfurth
|
|
|
0
|
|
Joseph A. Zirkman
|
|
|
0
|
|
Joseph Brink
|
|
|
0
|
|
John Todd
|
|
|
0
|
|
Todd Coerver
|
|
|
0
|
|
Associates of all directors, executive officers or nominees
|
|
|
0
|
|
All executive officers, as a group
|
|
|
0
|
|
All directors who are not executive officers, as a group
|
|
|
0
|
|
All employees who are not executive officers, as a group
|
|
|
0
|
|
Equity
Compensation Plans
The following table summarizes
the equity compensation plans under which our Common Stock may be issued as of January 1, 2017. Our shareholders approved all
plans.
|
|
Number
of securities to be
issued upon exercise of
outstanding options,
warrants, and rights
|
|
|
Weighted-
average
Exercise price of outstanding
options
|
|
|
Number
of securities
remaining available for
future issuance under
equity compensation plans
|
|
Equity compensation plans approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
2,169,321
|
|
Equity compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
—
|
|
|
|
—
|
|
|
|
2,169,321
|
|
U.S.
Federal Income Tax Consequences
The following is a summary of the principal U.S. federal income tax consequences of transactions under the Plan, based on
current U.S. federal income tax laws, which are subject to change. This summary is not intended to be exhaustive, does not constitute
tax advice and, among other things, does not describe state, local or foreign tax consequences. Accordingly, participants are
urged to consult their own tax advisors concerning the tax consequences to them of their participation in the Plan.
Non-Qualified
Stock Options
Since
the exercise price of a non-qualified stock option under the Plan cannot be less than 100% of the fair market value of our Common
Stock on the grant date, no income will be recognized by a participant at the time a non-qualified stock option is granted. Ordinary
(compensation) income will be recognized by a participant at the time a non-qualified stock option is exercised, and the amount
of such income will be equal to the excess of the fair market value on the exercise date of the shares issued to the participant
over the exercise price for such shares. In the case of a participant who is our employee or an employee of any of our subsidiaries,
this ordinary income will also constitute wages subject to the withholding of income tax and the participant will be required
to make arrangements satisfactory to us regarding the payment of any amounts required to be withheld.
Capital
gain or loss on a subsequent sale or other disposition of the shares of Common Stock acquired upon exercise of a non-qualified
stock option will be measured by the difference between the amount realized on the disposition and the tax basis of such shares.
The tax basis of a share acquired upon the exercise of the non-qualified stock option will be equal to the sum of the exercise
price of an option and the amount recognized and included in income with respect to the share upon exercise of the option.
If
a participant makes payment of the exercise price by delivering shares of Common Stock, he or she generally will not recognize
any gain with respect to such shares as a result of such delivery, but the amount of gain, if any, which is not so recognized
will be excluded from his or her basis in the new shares received.
We
generally will be entitled to a deduction for federal income tax purposes at such time, and in the same amount as the amount included
in ordinary income by the participant upon exercise of his or her non-qualified stock option, subject to the usual rules as to
reasonableness of compensation and provided that we timely comply with the applicable information reporting requirements.
Incentive
Stock Options
In
general, neither the grant nor the exercise of an incentive stock option will result in taxable income to a participant or a deduction
to us. However, generally, for purposes of the alternative minimum tax, the excess of the fair market value on the exercise date
of the shares issued to the participant over the exercise price for such shares will be considered as part of the participant’s
income for the year in which the incentive stock option is exercised. In addition, a participant generally must be our employee
(or of our subsidiary) at all times between the date of grant and the date three months before exercise of the option or the option
will be treated as a non-qualified stock option when exercised.
The
subsequent sale of the shares of Common Stock received pursuant to the exercise of an incentive stock option which satisfies the
holding period rule will generally result in long-term capital gain to a participant and will not result in a tax deduction to
us. To satisfy the holding period rule as to the shares acquired upon exercise of an incentive stock option, a participant must
neither dispose of such shares within two years after the option is granted nor within one year after the exercise of the option.
If
the holding period rule is not satisfied, the portion of any gain recognized on the disposition of the shares acquired upon the
exercise of the option that is equal to the lesser of (1) the excess of the fair market value on the exercise date of the shares
issued to the participant over the exercise price for such shares, or (2) the amount realized on the disposition minus the exercise
price for such shares, will be treated as ordinary (compensation) income, with any remaining gain being treated as capital gain.
We will generally be entitled to a deduction equal to the amount of the ordinary income.
If
a participant makes payment of the exercise price by delivering shares of Common Stock, he or she generally will not recognize
any gain with respect to such shares as a result of such delivery, but the amount of gain, if any, which is not so recognized
will be excluded from his or her basis in the new shares received. However, the use by a participant of shares previously acquired
pursuant to the exercise of an incentive stock option before the holding period rule is satisfied will be treated as a taxable
disposition.
Stock
Appreciation Rights
Since the exercise price of a SAR under the Plan cannot be less than 100% of the fair market value of our Common Stock on
the grant date, the grant of a SAR will create no tax consequences for the participant or us. Upon the exercise of a SAR, the
participant will recognize ordinary (compensation) income, in an amount equal to the fair market value of the Common Stock received
from the exercise for a stock-settled SAR or the cash received for a cash-settled SAR. The participant’s tax basis in the
shares of Common Stock received in the exercise of the SAR will be equal to the ordinary income recognized with respect to the
Common Stock. The participant’s holding period for capital gains purposes for shares acquired after the exercise of a SAR
generally begins on the exercise date. The ordinary income attributable to the participant’s exercise of a SAR constitutes
wages subject to withholding by us and the participant will be required to make arrangements satisfactory to us regarding the
payment of any amounts required to be withheld. Upon the exercise of a SAR, we generally will be entitled to a deduction in the
amount of the compensation income recognized by the participant.
Restricted
Stock
In
general, no income will be recognized by a participant at the time shares of restricted stock, which we refer to as “
Restricted
Shares
”, are allocated to him or her. Ordinary (compensation) income will be recognized by a participant at the time
his or her Restricted Shares “vest” (i.e., at the time the stock restrictions terminate with respect to such Restricted
Shares and the participant is no longer obligated to redeliver such Restricted Shares to us in the event of his or her termination
of employment with us and our subsidiaries). The amount of such ordinary income with respect to each Restricted Share will equal
the excess, if any, of the fair market value of a share of the Common Stock on the date the Restricted Shares vest, over the price
paid by the participant for the Restricted Shares, if any. This ordinary (compensation) income will also constitute wages subject
to withholding by us and the participant will be required to make arrangements satisfactory to us regarding the payment of any
amounts required to be withheld. Any subsequent realized gain or loss will be a capital gain or loss with the participant’s
holding period measured from the date the Restricted Shares vested and with the participant’s basis in each share being
equal to the price paid by the participant per share of Restricted Shares, if any, plus the amount of ordinary income, if any,
recognized with respect to such Restricted Share.
Notwithstanding
the foregoing, a participant may, within 30 days after Restricted Shares are allocated to him or her under the Plan, elect under
Section 83(b) of the Code, which we refer as a “
Section 83(b) Election
”, to include in income as of the date
of such allocation the excess, if any, of the fair market value of a share of the Common Stock on the date the Restricted Shares
are allocated over the price paid by the participant for the Restricted Shares, if any. Such income will be ordinary (compensation)
income which will also constitute wages subject to withholding by us and the participant will be required to make arrangements
satisfactory to us regarding the payment of any amounts required to be withheld. If a participant subsequently vests in Restricted
Shares as to which a Section 83(b) Election has been made, such vesting will not result in a taxable event to the participant.
If a participant makes a Section 83(b) Election, and subsequently is required under the Plan to forfeit and redeliver Restricted
Shares with respect to which the Section 83(b) Election was made, the participant will not be entitled to a deduction or have
a capital loss as a result of such forfeiture. If a Participant vests in Restricted Shares as to which the participant has made
a Section 83(b) Election, any subsequent realized gain or loss will be a capital gain or loss with the participant’s holding
period measured from the date of allocation and with the participant’s basis in each Restricted Share being equal to the
price paid by the participant for such share, if any, plus the amount of ordinary income, if any, recognized with respect to such
share on the grant date.
We
generally will be entitled to a deduction for federal income tax purposes at such time as the participant recognizes ordinary
income with respect to the Restricted Shares. Such deduction will be in an amount equal to the amount included in ordinary income
by the participant.
Other
Awards
Other
awards under the Plan, including performance awards, generally will result in ordinary (compensation) income to the participant
at the later of the time of delivery of cash, shares of our Common Stock, or other property, or in the case of previously delivered
shares or other property and in absence of an appropriate Section 83(b) Election, the time that either the risk of forfeiture
or restriction on transferability lapses. We generally would be entitled to a deduction equal to the amount recognized as ordinary
income by the participant in connection with an award.
Requirements
Regarding “Deferred Compensation”
Section 409A of the Code regulates the federal income tax treatment of all amounts that constitute non-qualified deferred
compensation. If a deferred compensation arrangement does not meet the requirements of Section 409A of the Code, the timing of
taxation for these amounts could be accelerated, meaning that these amounts could become immediately taxable to the recipient
of the deferred compensation even if it has not yet been paid. In addition, the IRS may impose substantial tax penalties and interest
on the recipient. It is intended that all awards under the Plan shall comply with Section 409A of the Code and the Plan and all
awards shall be interpreted accordingly.
Effect
of Section 162(m) of the Internal Revenue Code
Section 162(m) of the Code imposes a $1,000,000 limit on the amount of compensation that may be deducted by us in any tax
year with respect to our chief executive officer and each of the next three most highly paid executive officers (other than our
chief financial officer). Compensation that is “qualifying performance-based compensation” is not taken into account
in determining whether the limit has been exceeded. Certain awards under the Plan, such as stock options and SARs granted at fair
market value, are treated as qualifying performance-based compensation. As such, any applicable deduction by us related to the
exercise of such awards may not be subject to the deductibility limit imposed by Section 162(m) of the Code.
All
other awards made under the Plan would not be treated as qualifying performance-based compensation, except for performance awards
designed to qualify as “performance-based compensation” (as described above), with respect to which the applicable
performance measures are attained.
Effect
of Section 280G of the Internal Revenue Code
Section
280G of the Code limits the deductibility of certain payments made to certain individuals that are contingent upon a change of
control if the total amount of such payments equals or exceeds three times a participant’s average annual compensation for
the past five years. If payment or settlement of an award is accelerated upon a change of control, a portion of such payment attributable
to the value of the acceleration is considered a payment that is contingent upon a change of control. Amounts that are not deductible
under Section 280G of the Code also lower the Section 162(m) $1,000,000 deductible compensation cap. In addition, the person receiving
the payments we cannot deduct must pay an excise tax (in addition to any income tax) equal to 20% of such payments. Unless a participant’s
award agreement or another agreement with us provides otherwise, if any amounts payable from the Plan would not be deductible
for us because of Section 280G of the Code and subject such participant to a 20% excise tax, such amounts shall be reduced to
the extent necessary to allow us to deduct them and prevent imposition of such tax. However, this reduction will not apply if
the participant would receive a greater amount after paying the 20% excise tax than such participant would if this reduction did
apply.
The
board of directors recommends a vote FOR the approval of the Plan for purposes of complying with Section 162(m) of the Code.
Proxies received in response to this solicitation
will be voted FOR the approval of the
Plan for purposes of complying with Section 162(m)
of the Code
unless otherwise specified in the proxy.
PROPOSAL
4 – APPROVAL OF AMENDMENT TO THE COMPANY’S RESTATED CERTIFICATE OF INCORPORATION TO IMPLEMENT A MAJORITY VOTING STANDARD
IN UNCONTESTED DIRECTOR ELECTIONS
Our
Corporate Governance and Nominating Committee and our board of directors voted unanimously to approve, and our shareholders are
being asked to approve, an amendment to the Company’s Restated Certificate of Incorporation to implement a majority voting
standard in uncontested elections of directors.
The
affirmative vote of at least 66⅔% of the outstanding shares of Common Stock is required to approve the amendment to our
Certificate of Incorporation to implement a majority voting standard in uncontested elections of directors.
However, if
the proposal receives the support of a majority of the votes cast but less than 66 2/3% of the outstanding shares of our common
stock, then the board will adopt a policy whereby, if a director nominee is elected but receives more votes withholding support
than votes FOR, the director must offer his or her resignation to the board.
Our
Restated Certificate of Incorporation currently provides that our directors are elected by a plurality vote of all votes cast
at an annual meeting of shareholders. Under this plurality vote standard, the director nominees who receive the highest number
of affirmative votes cast are elected as directors. Accordingly, a director nominee may be elected regardless of the percentage
of votes cast for his or her election, even if the number of “withheld” votes exceeds the number of “for”
votes.
The
proposed amendment to our Certificate of Incorporation would eliminate the plurality vote standard in an uncontested election
of directors and would require that a director nominee be elected by the affirmative vote of a majority of the votes cast with
respect to such nominee at any meeting for the election of directors at which a quorum is present. Accordingly, a nominee for
director would be elected if the nominee obtains more “for” than “against” votes. Abstentions would not
be counted as votes cast for or against a candidate. If, however, the number of nominees exceeds the number of directors to be
elected (a "contested election"), the proposed amendment provides that directors shall be elected by a plurality of
the votes of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors
and nominees receiving the greatest number of votes will be elected.
Shareholders
of many public companies have recently urged that directors be required to receive a majority of the votes cast in favor of their
election, rather than be elected under the plurality voting standard. Such shareholders believe that a majority vote standard
will increase the accountability of the board of directors to shareholders and provide shareholders with a more meaningful role
in director elections. In response, a number of public companies have adopted charter and/or bylaw provisions requiring a majority
vote standard, or a bylaw or policy requiring a director who does not receive such a majority to submit his or her resignation
from the board. A majority vote standard allows shareholders to register dissent by voting “against” director nominees
in uncontested elections. In such elections, a nominee will not be elected or re-elected if the votes “against” his
or her election exceeds the votes “for” his or her election.
After
evaluation of a majority vote standard in uncontested elections, and in order to be responsive to our shareholders, our Corporate
Governance and Nominating Committee and our board of directors determined that it is in the best interests of our Company and
our shareholders to implement a majority vote standard in uncontested elections of directors. Our Corporate Governance and Nominating
Committee and our board of directors believes, however, that the plurality vote should continue to apply in contested elections
of directors.
The
implementation of the majority vote standard requires an amendment to our Certificate of Incorporation. This amendment consists
of replacing certain language in Section (A) of Article NINTH of our Certificate of Incorporation, which refers to plurality
voting, and substituting alternative language that provides for a majority vote standard in uncontested director elections. The
text of the proposed amendment to our Certificate of Incorporation is attached as
Appendix C
to this Proxy Statement. If
approved by our shareholders, this amendment will become effective upon the filing of such certificate of amendment to our Certificate
of Incorporation with the Secretary of State of the State of Delaware (which is expected to occur promptly following the 2017
Annual Meeting of Shareholders).
Our
Corporate Governance and Nominating Committee and our board of directors also approved an amendment to our Bylaws to provide for
a majority standard in uncontested director elections. However, as noted above, a plurality standard will continue to apply in
the event of a contested election of directors. The amendment to the Bylaws would also require, in an uncontested election, that
an incumbent director who does not receive a majority of votes cast for his or her election promptly tender his or her resignation
to the board of directors. Within 90 days of the date of certification of the election results, the board of directors must decide
whether to accept the tendered resignation, or whether other action should be taken.
The
amendment to our Bylaws will be effective upon the amendment of our Certificate of Incorporation. The new majority vote standard
would then be applicable to the election of directors beginning at our 2018 Annual Meeting of Shareholders (if uncontested).
If
our shareholders do not approve the amendment to our Restated Certificate of Incorporation to implement a majority vote standard
in uncontested director elections, the corresponding amendment to our Bylaws discussed above will not be implemented.
Our board
of directors recommends that you vote FOR the approval of the amendment to the Restated Certificate of Incorporation to implement
a majority voting standard in uncontested director elections. Proxies received in response to this solicitation will be voted
FOR the approval of the amendment to the Certificate of Incorporation to implement a majority voting standard in uncontested director
elections unless otherwise specified in the proxy.
PROPOSAL
5—RATIFICATION OF APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee has selected Deloitte & Touche LLP as the independent registered public accounting firm to audit and
report upon the consolidated financial statements of the Company for the fiscal year ending December 31, 2017. Although shareholder
ratification of the board’s action in this respect is not required, the board considers it desirable for shareholders to
pass upon the selection of auditors and, if the shareholders disapprove of the selection, intends to reconsider the selection
of the independent registered public accounting firm for the fiscal year ending December 31, 2017.
A
representative of Deloitte & Touche LLP is expected to be present at the 2017 Annual Meeting and will have the opportunity
to make a statement if so desired and is expected to be available to respond to appropriate questions from shareholders.
The
majority of the shares present at the 2017 Annual Meeting and entitled to vote on the subject matter is required to ratify the
appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2017.
The
board of directors recommends a vote FOR the ratification of the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm for the fiscal year ending December 31, 2017. Proxies received in response to this solicitation
will be voted FOR the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2017 unless otherwise specified in the proxy.
Fees
for Professional Services
The
following table sets forth the aggregate fees billed to us for the fiscal years ended January 1, 2017 and January 3, 2016 by our
independent registered public accounting firm, Deloitte & Touche LLP:
|
|
Fiscal Year Ended,
|
|
|
|
January 1,
2017
|
|
|
January 3,
2016
|
|
|
|
(Amount in the thousands)
|
|
Audit Fees (1)
|
|
$
|
756
|
|
|
$
|
708
|
|
Audit-Related Fees (2)
|
|
|
-
|
|
|
|
-
|
|
Total Audit and Audit Related Fees
|
|
|
756
|
|
|
|
708
|
|
Tax Fees (3)
|
|
|
29
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
785
|
|
|
$
|
750
|
|
(1)
|
Audit
fees represents the aggregate fees billed or to be billed for professional services rendered for the audit of our annual consolidated
financial statements, review of interim quarterly financial statements included in our quarterly reports on Form 10-Q, and
for the effectiveness of our internal controls over financial reporting.
|
(2)
|
Audit-related
fees shown include fees for assurance and related services that are traditionally performed by independent auditors.
|
(3)
|
The
aggregate tax fees billed for professional services rendered for tax consulting in connection with determining the tax basis
in our Taco Cabana brand.
|
Policy
on Audit Committee Pre-Approval of Services Provided by Deloitte & Touche LLP
The
Audit Committee has established policies and procedures regarding pre-approval of all services provided by the independent registered
public accounting firm. The Audit Committee preapproves all audit and non-audit services provided by the independent registered
public accounting firm, other than de minimis non-audit services, and shall not engage the independent registered public accounting
firm to perform the specific non-audit services proscribed by law or regulation. The Audit Committee may form one or more subcommittees,
each of which shall take such actions as shall be delegated by the Audit Committee; provided, however, the decisions of any Audit
Committee member to whom pre-approval authority is delegated must be presented to the full Audit Committee at its next scheduled
meeting.
Incorporation
by Reference
A
copy of the our Annual Report on Form 10-K and all of the exhibits attached for the fiscal year ended January 1, 2017, as filed
with the SEC, may be obtained from
www.proxyvote.com
or the SEC’s website at
www.sec.gov
. In addition, upon
written request, we will send a complete copy of the Annual Report on Form 10-K as instructed on the Notice or below under “Other
Matters.”
Other
Matters
Shareholder
proposals intended for inclusion in our proxy statement relating to the Annual Meeting of Shareholders in 2018 must be received
by us no later than [●]. Any such proposal must comply with Rule 14a-8 of Regulation 14A of the proxy rules of the SEC.
The proxy or proxies designated by us will have discretionary authority to vote on any matter properly presented by a shareholder
for consideration at the 2018 Annual Meeting of Shareholders but not submitted for inclusion in the proxy materials for such meeting
unless notice of the matter is received by us on or prior to [●] and certain other conditions of the applicable rules of
the SEC are satisfied. Under our Bylaws, proposals of shareholders not intended for inclusion in the proxy statement, but intended
to be raised at our regularly scheduled Annual Meeting of Shareholders to be held in 2018, including nominations for election
as directors of persons other than nominees of the board of directors, must be received by us not more than the 120 days prior
to the 2018 Annual Meeting of Shareholders and no later than the later of (i) the close of business on the 90
th
day prior to the 2018 Annual Meeting of Shareholders, and (ii) the 10
th
day following the day on which public
announcement of the date of the 2018 Annual Meeting of Shareholders is first made by us. Such proposals must comply with the procedures
outlined in our Bylaws, which may be found on our website
www.frgi.com
or a copy of which is available upon request from
the Secretary of the Company, 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254.
We
will bear the cost of preparing, assembling, and mailing the form of proxy, this Proxy Statement and other material which may
be sent to shareholders in connection with this solicitation and all costs associated with delivering our proxy materials to shareholders.
In addition to solicitation of proxies by use of the Internet, telephone, and mail, our directors, officers, and employees (who
will receive no compensation therefore in addition to their regular remuneration) may solicit the return of proxies by telephone,
telegram, or personal interview.
We
will request banks, brokerage houses, and other custodians, nominees, and fiduciaries to forward copies of the proxy materials
to their principals and to request instructions for voting the proxies. We may reimburse such banks, brokerage houses, and other
custodians, nominees, and fiduciaries for their expenses in connection therewith.
COPIES
OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 1, 2017, TOGETHER WITH FINANCIAL STATEMENTS AND SCHEDULES,
AS FILED WITH THE SEC ARE AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST ADDRESSED TO JOSEPH A. ZIRKMAN, SENIOR
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, FIESTA RESTAURANT GROUP, INC., 14800 LANDMARK BOULEVARD, SUITE 500, DALLAS, TEXAS
75254, OR ORAL REQUEST TO MR. ZIRKMAN AT 972-702-9300, EXT. 1004.
Our
board of directors does not intend to present, and does not have any reason to believe that others intend to present, any matter
of business at the 2017 Annual Meeting other than those set forth in this proxy statement. However, if other matters properly
come before the 2017 Annual Meeting, it is the intention of the persons named in the enclosed form of proxy to vote any proxies
in accordance with their judgment.
WE
ENCOURAGE YOU TO AUTHORIZE YOUR PROXY ELECTRONICALLY BY GOING TO THE WEBSITE WWW.FRGI.COM OR BY CALLING THE TOLL-FREE NUMBER (FOR
RESIDENTS OF THE UNITED STATES AND CANADA) LISTED ON YOUR PROXY CARD. PLEASE HAVE YOUR WHITE PROXY CARD IN HAND WHEN GOING ONLINE
OR CALLING. IF YOU AUTHORIZE YOUR PROXY ELECTRONICALLY OVER THE INTERNET OR BY CALLING THE TOLL-FREE NUMBER, YOU DO NOT NEED TO
RETURN YOUR WHITE PROXY CARD. IF YOU CHOOSE TO AUTHORIZE YOUR PROXY BY MAIL, SIMPLY MARK YOUR WHITE PROXY CARD, AND THEN DATE,
SIGN AND RETURN IT IN THE POSTAGE-PAID ENVELOPE PROVIDED.
|
By
order of the Board of Directors,
|
|
|
|
|
|
JOSEPH
A. ZIRKMAN
|
|
Senior
Vice President, General Counsel and Secretary
|
14800
Landmark Boulevard, Suite 500
Dallas,
Texas 75254
[●],
2017
Appendix
A
ADDITIONAL
INFORMATION REGARDING
PARTICIPANTS IN THE SOLICITATION
Under
applicable SEC rules and regulations, members of the board, the board’s nominees, and certain officers and other employees
of the Company are “participants” with respect to the Company’s solicitation of proxies in connection with the
2017 Annual Meeting. The following sets forth certain information about such persons (the “Participants”).
Directors
and Nominees
The
names, ages, and principal occupations of our directors and nominees, each a Participant, are set forth in the section entitled
“Proposal 1
—
Election of Directors” under the heading “Director Nominees’ Principal Occupations,
Business Experience, Qualifications and Directorships” of this Proxy Statement. The business address for the Company’s
director nominee Brian P Friedman is c/o Leucadia National Corporation, 520 Madison Avenue, 11th Floor, New York, New York 10022.
The business address for the Company’s director nominees Stephen P. Elker and Barry J. Alperin is c/o Fiesta Restaurant
Group, Inc., 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254. The business address for the Company’s current directors
is c/o Fiesta Restaurant Group, Inc., 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254.
Officers
and Employees
Executive
officers and employees of the Company who are Participants are Richard C. Stockinger, Lynn Schweinfurth, Danny K. Meisenheimer,,
Joseph A. Zirkman and Joseph Brink. The business address for each is c/o Fiesta Restaurant Group, Inc., 14800 Landmark Boulevard,
Suite 500, Dallas, Texas 75254. Their principal occupations are stated under the section entitled “Executive Compensation”
in this Proxy Statement.
Information
Regarding Ownership of the Company’s Securities by Participants
The
number of the Company’s securities beneficially owned by directors and named executive officers as of [●], 2017 is
set forth in the section entitled “Security Ownership of Certain Beneficial Owners and Management” in this Proxy Statement.
Information
Regarding Transactions in the Company’s Securities by Participants
The
following table sets forth information regarding purchases and sales of the Company’s securities by each Participant within
the past two years. No part of the purchase price or market value of these securities is represented by funds borrowed or otherwise
obtained for the purpose of acquiring or holding such securities.
Name
|
|
Date
|
|
|
Title of Security
|
|
Number of
Shares
|
|
|
Transaction
|
|
Barry J. Alperin
|
|
|
4/28/2016
|
|
|
Common Stock
|
|
|
2,247
|
|
|
|
Acquisition
|
|
|
|
|
4/28/2015
|
|
|
Common Stock
|
|
|
1,388
|
|
|
|
Acquisition
|
|
Joseph Brink
|
|
|
3/6/2017
|
|
|
Common Stock
|
|
|
2,410
|
|
|
|
Acquisition
|
|
|
|
|
2
/27/2017
|
|
|
Common Stock
|
|
|
355
|
|
|
|
Disposition
|
|
|
|
|
2/19/2017
|
|
|
Common Stock
|
|
|
184
|
|
|
|
Disposition
|
|
|
|
|
2/17/2017
|
|
|
Common Stock
|
|
|
134
|
|
|
|
Disposition
|
|
|
|
|
2/14/2017
|
|
|
Common Stock
|
|
|
201
|
|
|
|
Disposition
|
|
|
|
|
3/2/2016
|
|
|
Common Stock
|
|
|
1,419
|
|
|
|
Acquisition
|
|
|
|
|
3/2/2016
|
|
|
Common Stock
|
|
|
1,419
|
|
|
|
Acquisition
|
|
|
|
|
2/19/2016
|
|
|
Common Stock
|
|
|
184
|
|
|
|
Disposition
|
|
|
|
|
2/17/2016
|
|
|
Common Stock
|
|
|
134
|
|
|
|
Disposition
|
|
|
|
|
2/14/2016
|
|
|
Common Stock
|
|
|
201
|
|
|
|
Disposition
|
|
|
|
|
8/3/2015
|
|
|
Common Stock
|
|
|
651
|
|
|
|
Disposition
|
|
Nicholas Daraviras
|
|
|
5/31/2016
|
|
|
Common Stock
|
|
|
3,900
|
|
|
|
Disposition
|
|
|
|
|
5/31/2016
|
|
|
Common Stock
|
|
|
100
|
|
|
|
Disposition
|
|
|
|
|
4/28/2016
|
|
|
Common Stock
|
|
|
2,247
|
|
|
|
Acquisition
|
|
|
|
|
4/28/2015
|
|
|
Common Stock
|
|
|
1,388
|
|
|
|
Acquisition
|
|
Stephen P. Elker
|
|
|
4/28/2016
|
|
|
Common Stock
|
|
|
2,247
|
|
|
|
Acquisition
|
|
|
|
|
4/28/2015
|
|
|
Common Stock
|
|
|
1,388
|
|
|
|
Acquisition
|
|
Brian P. Friedman
|
|
|
3/8/2017
|
|
|
Common Stock
|
|
|
133,842
|
|
|
|
Acquisition
|
|
|
|
|
3/7/2017
|
|
|
Common Stock
|
|
|
88,158
|
|
|
|
Acquisition
|
|
|
|
|
3/6/2017
|
|
|
Common Stock
|
|
|
125,000
|
|
|
|
Acquisition
|
|
|
|
|
3/3/2017
|
|
|
Common Stock
|
|
|
60,000
|
|
|
|
Acquisition
|
|
|
|
|
3/2/2017
|
|
|
Common Stock
|
|
|
195,646
|
|
|
|
Acquisition
|
|
|
|
|
3/1/2017
|
|
|
Common Stock
|
|
|
404,354
|
|
|
|
Acquisition
|
|
|
|
|
4/28/2016
|
|
|
Common Stock
|
|
|
2,247
|
|
|
|
Acquisition
|
|
|
|
|
4/28/2015
|
|
|
Common Stock
|
|
|
1,388
|
|
|
|
Acquisition
|
|
Name
|
|
Date
|
|
|
Title of Security
|
|
Number of
Shares
|
|
|
Transaction
|
|
Danny K. Meisenheimer
|
|
|
3/6/2017
|
|
|
Common Stock
|
|
|
6,627
|
|
|
|
Acquisition
|
|
|
|
|
2/27/2017
|
|
|
Common Stock
|
|
|
1,505
|
|
|
|
Disposition
|
|
|
|
|
5/11/2016
|
|
|
Common Stock
|
|
|
200
|
|
|
|
Acquisition
|
|
|
|
|
5/11/2016
|
|
|
Common Stock
|
|
|
200
|
|
|
|
Acquisition
|
|
|
|
|
5/11/2016
|
|
|
Common Stock
|
|
|
2,600
|
|
|
|
Acquisition
|
|
|
|
|
3/2/2016
|
|
|
Common Stock
|
|
|
3,901
|
|
|
|
Acquisition
|
|
|
|
|
8/3/2015
|
|
|
Common Stock
|
|
|
685
|
|
|
|
Disposition
|
|
Stacey Rauch
|
|
|
4/28/16
|
|
|
Common Stock
|
|
|
2,247
|
|
|
|
Acquisition
|
|
|
|
|
4/28/15
|
|
|
Common Stock
|
|
|
1,388
|
|
|
|
Acquisition
|
|
Lynn Schweinfurth
|
|
|
3/6/2017
|
|
|
Common Stock
|
|
|
10,844
|
|
|
|
Acquisition
|
|
|
|
|
2/27/2017
|
|
|
Common Stock
|
|
|
2,462
|
|
|
|
Disposition
|
|
|
|
|
3/2/2016
|
|
|
Common Stock
|
|
|
6,383
|
|
|
|
Acquisition
|
|
Jack A. Smith
|
|
|
4/28/16
|
|
|
Common Stock
|
|
|
2,846
|
|
|
|
Acquisition
|
|
|
|
|
4/28/15
|
|
|
Common Stock
|
|
|
1,758
|
|
|
|
Acquisition
|
|
Richard C. Stockinger
|
|
|
3/14/2017
|
|
|
Common Stock
|
|
|
6,945
|
|
|
|
Acquisition
|
|
|
|
|
3/6/2017
|
|
|
Common Stock
|
|
|
72,290
|
|
|
|
Acquisition
|
|
Paul. E. Twohig
|
|
|
3/14/2017
|
|
|
Common Stock
|
|
|
2,000
|
|
|
|
Acquisition
|
|
|
|
|
3/13/2017
|
|
|
Common Stock
|
|
|
3,000
|
|
|
|
Acquisition
|
|
|
|
|
3/6/2017
|
|
|
Common Stock
|
|
|
4,820
|
|
|
|
Acquisition
|
|
Joseph A. Zirkman
|
|
|
3/6/2017
|
|
|
Common Stock
|
|
|
5,422
|
|
|
|
Acquisition
|
|
|
|
|
2/27/2017
|
|
|
Common Stock
|
|
|
1,231
|
|
|
|
Disposition
|
|
|
|
|
5/25/2016
|
|
|
Common Stock
|
|
|
3,000
|
|
|
|
Disposition
|
|
|
|
|
3/2/2016
|
|
|
Common Stock
|
|
|
3,192
|
|
|
|
Acquisition
|
|
|
|
|
6/12/2015
|
|
|
Common Stock
|
|
|
500
|
|
|
|
Disposition
|
|
|
|
|
6/12/2015
|
|
|
Common Stock
|
|
|
64
|
|
|
|
Disposition
|
|
|
|
|
6/12/2015
|
|
|
Common Stock
|
|
|
436
|
|
|
|
Disposition
|
|
|
|
|
6/11/2015
|
|
|
Common Stock
|
|
|
1,500
|
|
|
|
Disposition
|
|
Miscellaneous
Information Concerning Participants
Other
than as set forth in this Exhibit A or elsewhere in this Proxy Statement and based on the information provided by each Participant,
none of the Participants or their associates (i) beneficially owns, directly or indirectly, or owns of record but not beneficially,
any shares of common stock or other securities of the Company or any of our subsidiaries or (ii) has any substantial interest,
direct or indirect, by security holdings or otherwise, in any matter to be acted upon at the 2017 Annual Meeting. In addition,
neither the Company nor any of the Participants listed above is now or has been within the past year a party to any contract,
arrangement or understanding with any person with respect to any of the Company’s securities, including, but not limited
to, joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses
or profits or the giving or withholding of proxies.
Other
than as set forth in this Exhibit A or elsewhere in this Proxy Statement and based on the information provided by each Participant,
neither the Company nor any of the Participants listed above or any of their associates have or will have (i) any arrangements
or understandings with any person with respect to any future employment by the Company or its affiliates or with respect to any
future transactions to which the Company or any of its affiliates will or may be a party or (ii) a direct or indirect material
interest in any transaction or series of similar transactions since the beginning of our last fiscal year or any currently proposed
transactions, or series of similar transactions, to which the Company or any of its subsidiaries was or is to be a party in which
the amount involved exceeds $120,000.
Appendix
B
Fiesta
Restaurant Group, Inc.
2012 Stock Incentive Plan, as amended
1.
ESTABLISHMENT
AND PURPOSE
.
The
Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan (the “
Plan
”) is established by Fiesta Restaurant Group,
Inc., a Delaware corporation (the “
Compan
y”), to attract and retain persons eligible to participate in the
Plan; motivate Participants to achieve long-term Company goals; and further align Participants’ interests with those of
the Company’s other stockholders. The Plan is adopted as of April 16, 2012, subject to approval by the Company’s
stockholders within 12 months after such adoption date. No Awards shall be granted hereunder prior to the approval of the Plan
by the Company’s stockholders. The Plan is effective as of May 7, 2012 (the “
Effective Date
”
)
as
a result of the distribution by Carrols on a pro rata basis to the holders of outstanding shares of common stock, par value $.01
per share, of Carrols of all of the outstanding shares of Stock of Fiesta in a spin-off transaction (the “
Distribution
”
)
on
May 7, 2012 (the “
Distribution Date
”). No Award shall be granted hereunder on or after the date 10 years
after the Effective Date or such earlier date as of which the Plan is discontinued by the Board as provided herein. The Plan shall
terminate on May 7, 2022 or such earlier time as the Board may determine. Certain terms used herein are defined as set forth
in
Section 12
.
2.
ADMINISTRATION;
ELIGIBILITY
.
The
Plan shall be administered by the Compensation Committee of the Board, or such other Committee, appointed by the Board consisting
of three (3) or more members of the Board all of whom are intended to be “non-employee directors” within the
meaning of Section 16 of the Exchange Act and the regulations promulgated thereunder and “outside directors”
within the contemplation of Section 162(m) of the Code;
provided
,
however
, that, if at any time no
Compensation Committee or other Committee has been appointed or is eligible to act in the circumstances, the Plan shall be administered
by the Board. As used herein, the term “
Administrator
” means the Board, the Compensation Committee or any of
the Board’s other Committees as shall be administering the Plan or any individual delegated authority to act as the Administrator
in accordance with this
Section 2
.
The
Administrator shall have plenary authority to grant Awards pursuant to the terms of the Plan to Eligible Individuals. Participation
shall be limited to such persons as are selected by the Administrator. Subject to Section 409A of the Code, Awards may be
granted as alternatives to, in exchange or substitution for, or replacement of, awards outstanding under the Plan or any other
plan or arrangement of the Company or a Subsidiary (including, subject to the requirements under the Plan, a plan or arrangement
of a business or entity, all or a portion of which is acquired by the Company or a Subsidiary). The provisions of Awards need
not be the same with respect to each Participant.
Among
other things, the Administrator shall have the authority, subject to the terms of the Plan:
|
(a)
|
to
select the Eligible Individuals to whom Awards may from time to time be granted,
provided that
Outside Directors
of the Company shall receive Outside Director Awards pursuant to
Sections 8 and 9
;
|
|
(b)
|
to
determine whether and to what extent Stock Options, Stock Appreciation Rights, Stock Awards or any combination thereof are
to be granted hereunder;
|
|
(c)
|
to
determine the number of shares of Stock to be covered by each Award granted hereunder;
|
|
(d)
|
to
approve forms of agreement for use under the Plan;
|
|
(e)
|
to
determine the terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder (including,
but not limited to, the option price, any vesting restriction or limitation, any vesting acceleration or waiver of forfeiture,
and any right of repurchase, right of first refusal or other transfer restriction regarding any Award and the shares of Stock
relating thereto, based on such factors or criteria as the Administrator shall determine);
|
|
(f)
|
subject
to
Sections 10(a) and 11(a)
, to modify, amend or adjust the terms and conditions of any Award, at any time or
from time to time, including, but not limited to, with respect to (i) performance goals and targets applicable to performance
based Awards pursuant to the terms of the Plan and (ii) extension of the post- termination exercisability period of Stock
Options;
|
|
(g)
|
to
determine the Fair Market Value; and
|
|
(h)
|
to
determine the type and amount of consideration to be received by the Company for any Stock Award issued under
Section 6
.
|
The
Administrator shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of the Plan and any Award issued
under the Plan (and any agreement relating thereto) and to otherwise supervise the administration of the Plan.
In
order to assure the viability of Awards granted to Participants employed in foreign countries who are not subject to U.S. tax
law, the Administrator may provide for such special terms as it may consider necessary or appropriate to accommodate differences
in local law, tax policy, or custom. Moreover, the Administrator may approve such supplements to, or amendments, restatements,
or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the
terms of the Plan as in effect for any other purpose;
provided
,
however
, that no such supplements, amendments,
restatements, or alternative versions shall increase the share limitations contained in
Section 3
of the
Plan.
Except
to the extent prohibited by applicable law, the Administrator may allocate all or any portion of its responsibilities and powers
to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person or
persons selected by it. Any such allocation or delegation may be revoked by the Administrator at any time. The Administrator may
authorize any one or more of their members or any officer of the Company to execute and deliver documents on behalf of the Administrator.
Any
determination made by the Administrator or pursuant to delegated authority pursuant to the provisions of the Plan with respect
to any Award shall be made in the sole discretion of the Administrator or such delegate at the time of the grant of the Award
or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Administrator or
any appropriately delegated officer pursuant to the provisions of the Plan shall be final and binding on all persons, including
the Company and Participants.
No
member of the Administrator, and no officer of the Company, shall be liable for any action taken or omitted to be taken by such
individual or by any other member of the Administrator or officer of the Company in connection with the performance of duties
under this Plan, except for such individual’s own willful misconduct or as expressly provided by law.
3.
STOCK
SUBJECT TO PLAN
.
Subject
to adjustment as provided in this
Section 3
, the aggregate number of shares of Stock which may be delivered under
the Plan shall not exceed 3,300,000 shares.
To
the extent any shares of Stock covered by an Award are not delivered to a Participant or beneficiary thereof because the Award
expires, is forfeited, lapses without exercise, canceled or otherwise terminated, any shares of Restricted Stock (as defined in
Section 6
and 9
) are forfeited, or shares of Stock are not delivered because the Award is settled in cash or are used to satisfy the
applicable tax withholding obligation, such shares shall not be deemed to have been delivered for purposes of determining the
maximum number of shares of Stock available for delivery under the Plan with respect to, and shall be available for, future grants
of Awards.
Subject
to adjustment as provided in this
Section 3
, (a) the maximum number of shares that may be covered by Stock
Options, Stock Appreciation Rights, and Stock Awards, in the aggregate, to any one Participant during any calendar year shall
be 300,000 shares and (b) in the case of a Covered Employee, if any such Awards are cancelled, the number of shares subject
to such Award shall continue to count against the foregoing limit of 300,000 shares. Any Award settled in cash will be based on
the Fair Market Value of the shares of Stock subject to such Award.
In
the event of any Company stock dividend, special cash dividend, stock split, combination or exchange of shares, recapitalization
or other change in the capital structure of the Company, corporate separation or division of the Company (including, but not limited
to, a split-up, spin- off, split-off or other distribution to Company stockholders, other than a normal
cash
dividend), sale by the Company of all or a substantial portion of its assets (measured on either a stand-alone or consolidated
basis), reorganization, rights offering, partial or complete liquidation, merger or consolidation in which the Company is the
surviving corporation, or any other corporate transaction, Company share offering or other event involving the Company and having
an effect similar to any of the foregoing, the Administrator may make such substitution or adjustments in the (a) number
and kind of shares that may be delivered under the Plan, (b) additional maximums imposed in the immediately preceding paragraph,
(c) number and kind of shares subject to outstanding Awards, (d) exercise price of outstanding Stock Options, Outside
Director Stock Options, and Stock Appreciation Rights and (e) other characteristics or terms of the Awards as it may determine
appropriate in its sole discretion to equitably reflect such corporate transaction, share offering or other event;
provided
,
however
,
that the number of shares subject to any Award shall always be a whole number and any fractional share resulting from an adjustment
or substitution provided for hereunder shall be rounded up to the nearest whole share.
In
the event of the dissolution or liquidation of the Company, or a merger, reorganization or consolidation in which the Company
is not the surviving corporation, then, except as otherwise provided herein and/or in the discretion of the Administrator, each
Stock Option and Outside Director Stock Option, to the extent not theretofore exercised, shall terminate forthwith.
Notwithstanding
the foregoing, no adjustment shall be made pursuant to this
Section 3
to the extent that such adjustment
would violate Section 409A of the Code.
4.
STOCK
OPTIONS
.
Stock
Options may be granted alone or in addition to other Awards granted under the Plan and may be of two types: Incentive Stock Options
and Non-Qualified Stock Options. Any Stock Option granted under the Plan shall be in such form as the Administrator may from time
to time approve.
The
Administrator shall have the authority to grant any Participant Incentive Stock Options, Non-Qualified Stock Options or both types
of Stock Options. Incentive Stock Options may be granted only to associates of the Company and its subsidiaries (within the meaning
of Section 424(f) of the Code). To the extent that any Stock Option is not designated as an Incentive Stock Option or, even if
so designated, does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. Incentive Stock
Options may be granted only within 10 years from the date the Plan is adopted or the date the Plan is approved by the Company’s
stockholders, whichever is earlier. A maximum of 1,500,000 shares of Stock may be subject to grants of Incentive Stock Options.
Stock
Options shall be evidenced by option agreements, each in a form approved by the Administrator. An option agreement shall indicate
on its face whether it is intended to be an agreement for an Incentive Stock Option or a Non-Qualified Stock Option. The grant
of a Stock Option shall occur as of the date the Administrator determines, subject to FASB Statement 123(R) and guidance thereunder.
Anything
in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify the Plan under Section 422
of the Code or, without the consent of the Optionee affected, to disqualify any Incentive Stock Option under Section 422
of the Code.
To
the extent that the aggregate Fair Market Value of Stock with respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year (under all plans of the Company and its subsidiaries within the meaning of
Section 424(f) of the Code) exceeds $100,000, such Stock Options shall be treated as Non-Qualified Stock Options.
Stock
Options granted under this
Section 4
shall be subject to the following terms and conditions and shall contain
such additional terms and conditions as the Administrator shall deem desirable:
|
(a)
|
Exercise
Price
. The exercise price per share of Stock purchasable under a Stock Option shall be determined by the Administrator
at the time of grant and set forth in the applicable option agreement;
provided
,
however
, that the
exercise price per share shall be not less than the Fair Market Value per share on the date the Stock Option is granted, or
in the case of an Incentive Stock Option granted to an individual who is a Ten Percent Holder, not less than 110% of such
Fair Market Value per share on the date the Stock Option is granted.
|
|
(b)
|
Option
Term
. The term of a Stock Option shall be determined by the Administrator at the time of grant and set forth in the applicable
option agreement,
provided
,
however
, that no Stock Option shall be exercisable more than 10 years
after the date that the Stock Option is granted (or more than five years after the date that the Stock Option is granted in
the case of an Incentive Stock Option granted to an individual who is a Ten Percent Holder).
|
|
(c)
|
Vesting.
A
Stock Option shall become vested and nonforfeitable as determined by the Administrator at the time of grant and set forth
in the applicable option agreement, and unless otherwise
provided
in the Plan or applicable option agreement,
no Stock Option shall become vested earlier than the first anniversary of the date of grant of such Stock Option or later
than the seventh anniversary of the date of grant of such Stock Option; and
provided
,
further,
that
the Participant shall have continuously remained in the active employment of the Company or an Affiliate until the applicable
vesting date.
|
|
(d)
|
Exercisability
.
Stock Options shall be exercisable to the extent vested;
provided that
the exercise of a Stock Option shall
be subject to such additional terms and conditions, performance requirements, restrictions, forfeiture provisions, contingencies
and limitations, if any, as shall be determined by the Administrator and listed in the applicable option agreement. If any
Stock Option is exercisable only in installments, the Administrator may at any time waive such installment exercise provisions,
in whole or in part, based on such factors as the Administrator may determine. In addition, the Administrator may at any time,
in whole or in part, accelerate the exercisability of any Stock Option.
|
|
(e)
|
Method
of Exercise
. Stock Options may be exercised, in whole or in part, by giving written notice of exercise to the Company
specifying the number of shares of Stock subject to the Stock Option to be purchased.
|
The
option price of any Stock Option shall be paid in full in cash (by certified or bank check or such other instrument as the Company
may accept) or, if permitted by the Administrator in its sole and absolute discretion, by one or more of the following: (i) in
the form of shares of unrestricted and vested Stock already owned by the Optionee, based on the Fair Market Value of the Stock
on the date the Stock Option is exercised; (ii) by certifying ownership of shares of Stock owned by the Optionee to the satisfaction
of the Administrator for later delivery to the Company as specified by the Company; (iii) unless otherwise prohibited by
law for either the Company or the Optionee, by irrevocably authorizing a third party to sell shares of Stock (or a sufficient
portion of the shares) acquired upon exercise of the Stock Option and remit to the Company a sufficient portion of the sale proceeds
to pay the entire exercise price and any tax withholding resulting from such exercise; or (iv) by any combination of cash
and/or any one or more of the methods specified in clauses (i), (ii) and (iii). Notwithstanding the foregoing, a form of
payment shall not be permitted to the extent it would cause the Company to recognize a compensation expense (or additional compensation
expense) with respect to the Stock Option for financial reporting purposes.
Unless
otherwise determined by the Administrator, if payment of the option exercise price of a Non-Qualified Stock Option is made in
whole or in part in the form of stock that is subject to restrictions on transfer and/or forfeiture provisions (“Restricted
Stock”), some or all of the Stock received upon such exercise shall be subject to the same restrictions as such Restricted
Stock. The number of shares of Stock received upon such exercise that shall be subject to such restrictions shall equal the number
of shares of Restricted Stock used for payment of the option exercise price.
No
shares of Stock shall be issued upon exercise of a Stock Option until full payment therefor has been made. Upon exercise of a
Stock Option (or a portion thereof), the Company shall have a reasonable time to issue the Stock for
which
the Stock Option has been exercised, and the Optionee shall not be treated as a stockholder for any purposes whatsoever prior
to such issuance. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date
such Stock is recorded as issued and transferred in the Company’s official stockholder records, except as otherwise provided
herein or in the applicable option agreement.
|
(f)
|
Transferability
of Stock Options
. Except as otherwise provided in the applicable option agreement, a Non-Qualified Stock Option (i) shall
be transferable by the Optionee to a Family Member of the Optionee,
provided that
(A) any such transfer
shall be by gift with no consideration and (B) no subsequent transfer of such Stock Option shall be permitted other than
by will or the laws of descent and distribution, and (ii) shall not otherwise be transferable except by will or the laws
of descent and distribution. An Incentive Stock Option shall not be transferable except by will or the laws of descent and
distribution. A Stock Option shall be exercisable, during the Optionee’s lifetime, only by the Optionee or by the guardian
or legal representative of the Optionee, it being understood that the terms “holder” and “
Optionee
”
include the guardian and legal representative of the Optionee named in the applicable option agreement and any person to whom
the Stock Option is transferred (X) pursuant to the first sentence of this
Section 4(f)
or pursuant
to the applicable option agreement or (Y) by will or the laws of descent and distribution. Notwithstanding the foregoing,
references herein to the termination of an Optionee’s employment or provision of services shall mean the termination
of employment or provision of services of the person to whom the Stock Option was originally granted.
|
|
(g)
|
Termination
by Death
. Except as otherwise provided in the applicable option agreement, if an Optionee’s employment or provision
of services terminates by reason of death, any Stock Option held by such Optionee shall be fully vested upon such death and
may thereafter be exercised for a period of one year from the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is shorter.
|
|
(h)
|
Termination
by Reason of Disability
. Except as otherwise provided in the applicable option agreement, if an Optionee’s employment
or provision of services terminates by reason of Disability, any Stock Option held by such Optionee shall be fully vested
upon such termination of employment or provision of services and may thereafter be exercised by the Optionee for a period
of one year from the date of such termination of employment or provision of services or until the expiration of the stated
term of such Stock Option, whichever period is shorter.
|
|
(i)
|
Termination
by Reason of Retirement
. Except as otherwise provided in the applicable option agreement, if an Optionee’s employment
or provision of services terminates by reason of Retirement, any Stock Option held by such
|
|
Optionee,
to the extent it was exercisable at the time of termination, may thereafter be exercised by the Optionee for a period of 12
months from the date of such termination of employment or provision of services or until the expiration of the stated term
of such Stock Option, whichever period is shorter, and any Stock Option that is unvested or unexercisable at the date of termination
shall thereupon terminate.
|
|
(j)
|
Involuntary
Termination Without Cause
. Except as otherwise provided in the applicable option agreement, if an Optionee’s employment
or provision of services terminates involuntarily without Cause, and for reasons other than death, Disability or Retirement,
any Stock Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination,
for a period of three months from the date of such termination of employment or provision of services or until the expiration
of the stated term of such Stock Option, whichever period is shorter, and any Stock Option that is unvested or unexercisable
at the date of termination shall thereupon terminate.
|
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(k)
|
Involuntary
Termination for Cause.
Except as otherwise provided in the applicable option agreement, if an Optionee’s employment
or provision of services terminates involuntarily for Cause, all Stock Options held by such Optionee, whether or not then
vested and exercisable, shall thereupon terminate.
|
|
(l)
|
Other
Termination.
Except as otherwise provided in the applicable option agreement, if an Optionee’s employment or
provision of services is terminated by the Optionee for any reason other than death, Disability, Retirement, involuntary termination
without Cause or involuntary termination for Cause any Stock Option held by such Optionee may thereafter be exercised, to
the extent it was exercisable at the time of termination, for a period of 1 month from the date of such termination of employment
or provision of services or until the expiration of the stated term of such Stock Option, whichever period is shorter, and
any Stock Option that is unvested or unexercisable at the date of termination shall thereupon terminate.
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|
(m)
|
Exception
to Termination
. If employment or provision of services by the Optionee to the Company or an Affiliate ceases as a result
of a transfer of such Optionee from the Company to an Affiliate, or from an Affiliate to the Company, or from one classification
of Eligible Individual to another classification of Eligible Individual, such transfer shall not be a termination of employment
or provision of services for purposes of this Plan, unless expressly determined otherwise by the Administrator. Unless expressly
determined otherwise by the Administrator, a termination of employment or provision of services shall occur for an Optionee
who is employed by, or provides services to, an Affiliate of the Company if the Affiliate shall cease to be an Affiliate and
the Optionee shall not immediately thereafter be employed by, or provide services to, the Company or an Affiliate
.
|
|
(n)
|
Notwithstanding
the foregoing, to the extent permitted under Section 409A of the Code, the exercise period following a termination described
in subsection (g), (h), (i), (j) or (l) above shall be tolled for any applicable window/blackout period restrictions
under the Company’s insider trading policy.
|
5.
STOCK
APPRECIATION RIGHTS
.
Stock
Appreciation Rights may be granted under the Plan on a stand-alone basis only. The Administrator shall have the authority to grant
Stock Appreciation Rights to any Participant. Except as otherwise provided herein, a Stock Appreciation Right shall terminate
and no longer be exercisable as determined by the Administrator.
Stock
Appreciation Rights shall be evidenced by stock appreciation right agreements, each in a form approved by the Administrator. The
grant of a Stock Appreciation Right shall occur as of the date the Administrator determines, subject to FASB Statement 123(R)
and guidance thereunder.
A
Stock Appreciation Right may be exercised by a Participant as determined by the Administrator in accordance with this
Section 5
.
Upon such exercise, the Participant shall be entitled to receive an amount determined in the manner prescribed in this
Section 5
.
Stock
Appreciation Rights shall be subject to such terms and conditions as shall be determined by the Administrator, including the following:
|
(a)
|
Stock
Appreciation Right Term. The term of a Stock Appreciation Right shall be determined by the Administrator at the time of grant
and set forth in the applicable stock appreciation right agreement,
provided
,
however
, that no Stock
Appreciation Right shall be exercisable more than 10 years after the date that the Stock Appreciation Right is granted.
|
|
(b)
|
Vesting.
A
Stock Appreciation Right shall become vested and nonforfeitable as determined by the Administrator at the time of grant and
set forth in the applicable stock appreciation right agreement, and unless otherwise
provided
in the Plan,
no Stock Appreciation Right shall become vested earlier than the first anniversary of the date of grant of such Stock Appreciation
Right or later than the seventh anniversary of the date of grant of such Stock Appreciation Right; and
provided
,
further,
that
the Participant shall have continuously remained in the active employment of the Company or an Affiliate until the applicable
vesting date.
|
|
(c)
|
Exercisability.
Stock
Appreciation Rights shall be exercisable to the extent vested;
provided that
the exercise of a Stock Appreciation
Right shall be subject to such additional terms and conditions, performance requirements,
|
|
restrictions,
forfeiture provisions, contingencies and limitations, if any, as shall be determined by the Administrator and listed in the
applicable stock appreciation rights agreement. If any Stock Appreciation Right is exercisable only in installments, the Administrator
may at any time waive such installment exercise provisions, in whole or in part, based on such factors as the Administrator
may determine. In addition, the Administrator may at any time, in whole or in part, accelerate the exercisability of any Stock
Appreciation Right.
|
|
(d)
|
Method
of Exercise.
Subject to the provisions of this
Section 5,
Stock Appreciation Rights may be
exercised, in whole or in part, by giving written notice of exercise to the Company specifying the number of shares with respect
to which the Stock Appreciation Right is being exercised.
|
|
(e)
|
Upon
the exercise of a Stock Appreciation Right, a Participant shall be entitled to receive an amount in cash or in shares of Stock,
as set forth in the grant agreement, which in the aggregate are equal in value to the excess of the Fair Market Value of one
share of Stock on the date of exercise over the Fair Market Value of one share of Stock on the date of grant, multiplied by
the number of shares in respect of which the Stock Appreciation Right shall have been exercised.
|
|
(f)
|
Transferability
of Stock Appreciation Rights
. Except as otherwise provided in the applicable stock appreciation rights agreement, a Stock
Appreciation Right (i) shall be transferable by the Participant to a Family Member of the Participant,
provided
that
(A) any such transfer shall be by gift with no consideration and (B) no subsequent transfer of such
Stock Appreciation Right shall be permitted other than by will or the laws of descent and distribution, and (ii) shall
not otherwise be transferable except by will or the laws of descent and distribution. A stock Appreciation Right shall be
exercisable, during the Participant’s lifetime, only by the Participant or by the guardian or legal representative of
the Participant, it being understood that the terms “holder” and “Participant” include the guardian
and legal representative of the Participant named in the applicable stock appreciation rights agreement and any person to
whom the Stock Appreciation Right is transferred (X) pursuant to the first sentence of this
Section 5(f)
or
pursuant to the applicable stock appreciation rights agreement or (Y) by will or the laws of descent and distribution.
Notwithstanding the foregoing, references herein to the termination of a Participant’s employment or provision of services
shall mean the termination of employment or provision of services of the person to whom the Stock Appreciation Right was originally
granted.
|
|
(g)
|
Termination
by Death
. Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s
employment or provision of
|
|
services
terminates by reason of death, any Stock Appreciation Right held by such Participant shall be fully vested upon such death
and may thereafter be exercised for a period of one year from the date of such death or until the expiration of the stated
term of such Stock Appreciation Right, whichever period is shorter.
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|
(h)
|
Termination
by Reason of Disability. Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s
employment or provision of services terminates by reason of Disability, any Stock Appreciation Right held by such Participant
shall be fully vested upon such termination of employment or provision of services and may thereafter be exercised by the
Participant for a period of one year from the date of such termination of employment or provision of services or until the
expiration of the stated term of such Stock Appreciation Right, whichever period is shorter.
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|
(i)
|
Termination
by Reason of Retirement
. Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s
employment or provision of services terminates by reason of Retirement, any Stock Appreciation Right held by such Participant,
to the extent it was exercisable at the time of termination, may thereafter be exercised by the Participant for a period of
six months from the date of such termination of employment or provision of services or until the expiration of the stated
term of such Stock Appreciation Right, whichever period is shorter and any Stock Appreciation Right that is unvested or unexercisable
at the date of termination shall thereupon terminate.
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|
(j)
|
Involuntary
Termination Without Cause
. Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s
employment or provision of services terminates involuntarily without Cause, and for reasons other than death, Disability or
Retirement, any Stock Appreciation Right held by such Participant may thereafter be exercised, to the extent it was exercisable
at the time of termination, for a period of three months from the date of such termination of employment or provision of services
or until the expiration of the stated term of such Stock Appreciation Right, whichever period is shorter, and any Stock Appreciation
Right that is unvested or unexercisable at the date of termination shall thereupon terminate.
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|
(k)
|
Involuntary
Termination for Cause.
Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s
employment or provision of services terminates involuntarily for Cause, Stock Appreciation Rights held by such Participant,
whether or not then vested and exercisable, shall thereupon terminate.
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|
(l)
|
Other
Termination.
Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s
employment or provision of services is terminated by the Participant for any reason other than death, Disability, Retirement,
involuntary termination without Cause or involuntary termination for Cause, any Stock Appreciation Right held by such Participant
may thereafter be exercised, to the extent it was exercisable at the time of termination, for a period of one month from the
date of such termination of employment or provision of services or until the expiration of the stated term of such Stock Appreciation
Right, whichever period is shorter, and any Stock Appreciation Right that is unvested or unexercisable at the date of termination
shall thereupon terminate.
|
|
(m)
|
Exception
to Termination
. If provision of services by the Participant to the Company or an Affiliate ceases as a result of a transfer
of such Participant from the Company or an Affiliate, or from an Affiliate to the Company, or from one classification of Eligible
Individual to another classification of Eligible Individual, such transfer shall not be a termination of employment or provision
of services for purposes of this Plan, unless expressly determined otherwise by the Administrator. Unless expressly determined
otherwise by the Administrator, termination of employment or provision of services shall occur for a Participant who is employed
by, or provides services to, an Affiliate of the Company if the Affiliate shall cease to be an Affiliate and the Participant
shall not immediately thereafter be employed by, or provide services to, the Company or an Affiliate
.
|
|
(n)
|
Notwithstanding
the foregoing, to the extent permitted under Section 409A of the Code, the exercise period following a termination described
in subsection (g), (h), (i), (j) or (l) above shall be tolled for any applicable window/blackout period restrictions
under the Company’s insider trading policy.
|
6.
STOCK
AWARDS
.
Stock
Awards may be directly issued under the Plan (without any intervening options), subject to such terms, conditions, performance
requirements, restrictions, forfeiture provisions, contingencies and limitations as shall be determined by the Administrator and
set forth in the applicable award agreement. Subject to the provisions of this
Section 6,
Stock Awards may
be issued which vest in one or more installments over the Participant’s period of employment and/or other service to the
Company or an Affiliate and/or upon the attainment of specified performance objectives, and/or the Company may issue Stock Awards
which entitle the Participant to receive a specified number of vested shares of Stock upon the attainment of one or more performance
goals and/or service requirements established by the Administrator. A Stock Award that is subject to restrictions on transfer
and/or forfeiture provisions may be referred to as an award of “Restricted Stock” or “Restricted Stock Units.”
A Stock Award shall become vested and nonforfeitable as determined by the Administrator at
the
time of grant and set forth in the applicable award agreement, and unless otherwise
provided
in the Plan, no
Stock Award shall become vested earlier than the first anniversary of the date of such Stock Award or later than the seventh anniversary
of the date of such Stock Award; and
provided
,
further
, that the Participant shall have continuously remained
in the active employment of the Company or an Affiliate until the applicable vesting date. The determination of whether the Participant
has continuously remained in the active employment of the Company or an Affiliate shall be made by the Administrator in its discretion,
including, when applicable pursuant to principle described in
Section 4(m).
Shares
representing a Stock Award shall be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration
or issuance of one or more certificates (which may bear appropriate legends referring to the terms, conditions and restrictions
applicable to such Award). The Administrator may require that any such certificates be held in custody by the Company until any
restrictions thereon shall have lapsed and that the Participant deliver a stock power, endorsed in blank, relating to the Stock
covered by such Award. Restricted Stock Units shall be evidenced by a book entry in a notional account maintained under the Participant’s
name in the Company’s books and records.
A
Stock Award may be issued in exchange for any consideration which the Administrator may deem appropriate in each individual instance,
including, without limitation:
|
(a)
|
cash
or cash equivalents;
|
|
(b)
|
past
services rendered to the Company or any Affiliate; or
|
|
(c)
|
future
services to be rendered to the Company or any Affiliate (
provided that
, in such case, the par value of the stock subject
to such Stock Award shall be paid in cash or cash equivalents, unless the Administrator provides otherwise).
|
With
respect to a Restricted Stock Award, a Participant, at his or her option, will be entitled to make the election permitted under
Section 83(b) of the Code, to include in gross income in the taxable year in which the Restricted Stock Award is transferred
to him or her, the fair market value of such shares at the time of transfer, notwithstanding that such shares are subject to a
substantial risk of forfeiture within the meaning of the Code, or he or she may elect to include in gross income the Fair Market
Value of the Restricted Stock Award as of the date or date on which such restrictions lapse. Notwithstanding the foregoing, the
Administrator shall adopt, from time to time, such rules with respect to the return of executed award agreements as it deems appropriate
and failure by a Participant to comply with such rules shall, without limitation, terminate the grant of such Restricted Stock
Award to such Participant and/or cause the forfeiture of any Restricted Stock Award as to which restrictions have not yet lapsed.
Notwithstanding
anything herein to the contrary and except as otherwise provided in the applicable award agreement, if a Participant’s employment
and provision of services is
terminated
(A) by the Company for any reason other than Cause or (B) by reason of the Participant’s death or Disability,
all Stock underlying a Stock Award, to the extent unvested at the time of termination, shall become fully vested and non-forfeitable.
Notwithstanding
anything herein to the contrary and except as otherwise provided in the applicable award agreement, if a Participant’s employment
or provision of services is terminated (A) by the Company for Cause or (B) by the Participant for any reason other than
death or Disability, all Stock underlying a Stock Award, to the extent unvested at the time of termination, shall be forfeited.
Unless
otherwise provided in an award agreement, until the expiration of all applicable restrictions, (i) the Restricted Stock shall
be treated as outstanding, (ii) the Participant holding shares of Restricted Stock may exercise full voting rights with respect
to such shares, and (iii) the Participant holding shares of Restricted Stock shall be entitled to receive all dividends and
other distributions paid with respect to such shares while they are so held. Unless otherwise provided by the Administrator, if
any such dividends or distributions are paid in shares of Stock, such shares shall be subject to the same restrictions as the
shares of Restricted Stock with respect to which they were paid. Notwithstanding anything to the contrary, at the discretion of
the Administrator, all such dividends and distributions may be held in escrow by the Company (subject to the same restrictions)
until all restrictions on the respective Restricted Stock have lapsed.
7.
PERFORMANCE
AWARDS
.
|
(a)
|
Performance
Conditions
. The right of a Participant to exercise or receive a grant or settlement of any Award, and its timing, may
be subject to performance conditions specified by the Administrator at the time of grant (except as provided in this
Section 7
).
The Administrator may use business criteria and other measures of performance it deems appropriate in establishing any performance
conditions, and may exercise its discretion to reduce or increase amounts payable under any Award subject to performance conditions,
except as limited under
Section 7(b)
hereof in the case of a Performance Award intended to qualify under
Section 162(m) of the Code.
|
|
(b)
|
Performance
Awards Granted to Designated Covered Employees
. If the Administrator determines that a Performance Award to be granted
to a person the Administrator regards as likely to be a Covered Employee should qualify as “performance-based compensation”
for purposes of Section 162(m) of the Code, the grant and/or settlement of such Performance Award shall comply with the
requirements set forth in this
Section 7(b)
.
|
|
(i)
|
Performance
Goals Generally
. The performance goals for such Performance Awards shall be based on one or more of the business criteria
set forth in
Section 7(b)(ii)
and a targeted level or levels of performance with respect to such criteria,
as specified by the
|
|
Administrator
consistent with this
Section 7(b)
. Performance goals shall be objective and shall otherwise meet the requirements
of Section 162(m) of the Code, including the requirement that the level or levels of performance targeted by the Administrator
result in the performance goals being “substantially uncertain.” The Administrator may determine that more than
one performance goal must be achieved as a condition to settlement of such Performance Awards.
|
|
(ii)
|
Business
Criteria.
Unless and until the Company proposes for stockholder vote, and stockholders approve, a change in the business
criteria set forth in this
Section 7(b)(ii)
, Awards (other than Stock Options and Stock Appreciation Rights)
designed to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code shall
be based on one or more of the following business criteria, which shall be set forth in the applicable Performance Award agreement:
|
|
(A)
|
Earnings
before any or all of interest, tax, depreciation or amortization (actual and adjusted and either in the aggregate or on a
per-share basis);
|
|
(B)
|
Earnings
(either in the aggregate or on a per-share basis);
|
|
(C)
|
Net
income or loss (either in the aggregate or on a per-share basis);
|
|
(E)
|
Cash
flow (either in the aggregate or on a per-share basis);
|
|
(F)
|
Free
cash flow (either in the aggregate on a per-share basis);
|
|
(G)
|
Non-interest
expense;
|
|
(J)
|
Reductions
in expense levels;
|
|
(K)
|
Operating
and maintenance cost management and employee productivity;
|
|
(L)
|
Share
price or total stockholder return (including growth measures and total stockholder return or attainment by the shares of a
specified value for a specified period of time);
|
|
(N)
|
Economic
value added or economic value added momentum;
|
|
(O)
|
Strategic
business criteria, consisting of one or more objectives based on meeting specified revenue, sales, market share, market penetration,
geographic business expansion goals, objectively identified project milestones, production volume levels, cost targets and
goals relating to acquisitions or divestitures;
|
|
(P)
|
Return
on average assets or average equity;
|
|
(Q)
|
Achievement
of objectives relating to diversity, employee turnover or other human capital metrics;
|
|
(R)
|
Results
of customer satisfaction surveys or other objective measures of customer experience; and/or
|
|
(S)
|
Debt
ratings, debt leverage, debt service, financings and refinancings;
|
|
|
|
|
|
provided,
however, that (I) the foregoing business criteria may be applied on a pre- or post-tax basis; and (II) the Administrator
may, on the grant date of an Award intended to qualify as “performance-based compensation,” provide that the formula
for such Award may include or exclude items to measure specific objectives, such as losses from discontinued operations, extraordinary
gains or losses, the cumulative effect of accounting changes, acquisitions or divestitures, foreign exchange impacts and any
unusual, non-recurring gain or loss.
|
|
(iii)
|
Performance
Period; Timing For Establishing Performance Goals
. Achievement of performance goals in respect of such Performance Awards
shall be measured over such periods of at least 12 months’ duration as may be specified by the Administrator. Performance
goals shall be established on or before the dates that are required or permitted for “performance-based compensation”
under Section 162(m) of the Code. The levels of performance required with respect to any performance goals may be expressed
in absolute or relative levels and may be based upon a set increase, set positive result, maintenance of the status quo, set
decrease or set negative result. Performance goals may differ for Awards to different Participants. The Administrator shall
specify the weighting (which may be the same or different for multiple performance goals) to be given to each performance
goal for purposes of determining the final amount payable with respect to any such Performance Award. Any one or more of the
performance goals or the business criteria on which they are based may apply to the Participant, a department, unit, division
or function within the Company (except for total stockholder return or earnings per share criteria) or any one or more Subsidiaries,
and may apply either alone or relative to the performance of other businesses or individuals (including industry or general
market indices).
|
|
(iv)
|
Settlement
of Performance Awards; Other Terms
. Settlement of Performance Awards may be in cash or Stock, or other Awards, or other
property, in the discretion of the Administrator. Any cash-settled Performance Award will be based on the Fair Market Value
of the shares of Stock subject to such Performance Award. The Administrator may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with such Performance Awards, but may not exercise discretion to increase any
such amount payable in respect of a Performance Award subject to this
Section 7(b)
. Subject to the requirements
of Section 162(m) of the Code, the Administrator shall specify the circumstances in which such Performance Awards shall
be forfeited or paid in the event of a termination of employment at least six months prior to the end of a performance period
or settlement of Performance Awards, and other terms relating to such Performance Awards. All determinations of the Administrator
as to the achievement of the performance goals applicable to a Performance Award subject to this
Section 7(b)
shall
be in writing prior to the payment of the Award.
|
8.
OUTSIDE
DIRECTOR STOCK OPTIONS
.
On
the date of the first annual meeting of stockholders of the Company following the Distribution Date, and on the date of the annual
meeting of Stockholders of the Company during each Company fiscal year thereafter, each Outside Director of the Company may, in
the discretion of the Administrator, be granted an Outside Director Stock Option to purchase such number of shares of Stock as
shall be determined by the Administrator.
Outside
Director Stock Options shall be evidenced by option agreements, each in a form approved by the Administrator.
Outside
Director Stock Options granted under this
Section 8
shall be subject to the following terms and conditions
and shall contain such additional terms and conditions as the Administrator shall deem desirable:
|
(a)
|
Exercise
Price
. The exercise price per share of Stock purchasable under an Outside Director Stock Option shall be the Fair Market
Value per share on the date the Outside Director Stock Option is granted.
|
|
(b)
|
Option
Term
. No Outside Director Stock Option shall be exercisable more than seven years after the date that the Outside Director
Stock Option is granted.
|
|
(c)
|
Vesting.
An
Outside Director Stock Option shall become vested and non- forfeitable with respect to one-fifth of the Stock underlying such
Outside Director Stock Option on the first anniversary of the date of grant, with an additional one- fifth of the Stock underlying
such Outside Director Stock Option becoming vested and non-forfeitable on each of the second, third, fourth and fifth anniversaries
of the date of grant;
provided
that
, in each case, the Outside Director shall have continuously remained
a Director of the Company. Any Outside Director Stock Option that is unvested at the date of termination of the Outside Director’s
provision of services shall be forfeited upon such termination.
|
|
(d)
|
Exercisability
.
Outside Director Stock Options shall be exercisable to the extent vested.
|
|
(e)
|
Method
of Exercise
. Outside Director Stock Options may be exercised, in whole or in part, by giving written notice of exercise
to the Company specifying the number of shares of Stock subject to the Outside Director Stock Option to be purchased.
|
|
|
|
|
|
The
option price of any Outside Director Stock Option shall be paid in full in cash (by certified or bank check or such other
instrument as the Company may accept) or, unless otherwise provided in the applicable option agreement, by one or more of
the following: (i) in the form of shares of unrestricted and vested Stock already owned by the Outside Director, based
on the Fair Market Value of the Stock on the date the Outside Director Stock Option is exercised; (ii) by certifying
ownership of shares of Stock owned by the Outside Director to the satisfaction of the Administrator for later delivery to
the Company as specified by the Company; (iii) unless otherwise prohibited by law for either the Company or the Outside
Director, by irrevocably authorizing a third party to sell shares of Stock (or a sufficient portion of the shares) acquired
upon exercise of the Outside Director Stock Option and remit to the Company a sufficient portion of the sale proceeds to pay
the entire exercise price and any tax withholding resulting from such exercise; or (iv) by any combination of cash and/or
any one or more of the methods specified in clauses (i), (ii) and (iii). Notwithstanding the foregoing, a form of payment
shall not be permitted to the extent it would cause the Company to recognize a compensation expense (or additional compensation
expense) with respect to the Outside Director Stock Option for financial reporting purposes.
|
|
|
|
|
|
If
payment of the option exercise price of an Outside Director Stock Option is made in whole or in part in the form of Restricted
Stock, some or all of the Stock received upon such exercise shall be subject to the same restrictions as such Restricted Stock.
The number of shares of Stock received upon such exercise that shall be subject to such restrictions shall equal the number
of shares of Restricted Stock used for payment of the option exercise price.
|
|
|
No
shares of Stock shall be issued upon exercise of an Outside Director Stock Option until full payment therefor has been made.
Upon exercise of an Outside Director Stock Option (or a portion thereof), the Company shall have a reasonable time to issue
the Stock for which the Outside Director Stock Option has been exercised, and the Outside Director shall not be treated as
a stockholder for any purposes whatsoever prior to such issuance. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date such Stock is recorded as issued and transferred in the Company’s
official stockholder records, except as otherwise provided herein or in the applicable option agreement.
|
|
|
|
|
(f)
|
Transferability
of Outside Director Stock Options
. An Outside Director Stock Option (i) shall be transferable by the Outside Director
to a Family Member of the Outside Director,
provided that
(A) any such transfer shall be by gift with
no consideration and (B) no subsequent transfer of such Outside Director Stock Option shall be permitted other than by
will or the laws of descent and distribution, and (ii) shall not otherwise be transferable except by will or the laws
of descent and distribution. An Outside Director Stock Option shall be exercisable, during the Outside Director’s lifetime,
only by the Outside Director or by the guardian or legal representative of the Outside Director, it being understood that
the terms “holder” and “
Outside Director
” include the guardian and legal representative of
the Outside Director named in the applicable option agreement and any person to whom the Outside Director Stock Option is
transferred (X) pursuant to the first sentence of this
Section 8(f)
or pursuant to the applicable
option agreement or (Y) by will or the laws of descent and distribution. Notwithstanding the foregoing, references herein
to the termination of an Outside Director’s provision of services shall mean the termination or cessation of the Outside
Director’s status as an Eligible Individual.
|
9.
OUTSIDE DIRECTOR STOCK AWARDS.
The
following Outside Director Stock Awards shall be granted pursuant to this
Section 9
:
|
(a)
|
Each
individual who is or becomes an Outside Director on or immediately following Distribution Time shall be granted, within forty-five
(45) days after the Distribution Date, a Stock Award comprised of a number of shares of Stock having an aggregate Fair
Market Value of $100,000 as of the date of grant.
|
|
(b)
|
Each
individual (other than any individual receiving a Stock Award under
Section 9 (a)
) who is appointed to the
Board as an Outside Director after the Distribution Date shall be granted, as of the date of such Outside Director’s
appointment to the Board, a Stock Award comprised of that number of shares of Stock having an aggregate Fair Market Value
of $100,000 on the date of grant.
|
|
(c)
|
On
the date of the first annual meeting of Stockholders of the Company following the Distribution Date, and on the date of each
annual meeting of Stockholders of the Company during each Company fiscal year thereafter, each Outside Director of the Company
shall be granted a Stock Award comprised of that number of shares of Stock having an aggregate Fair Market Value of $25,000
or such other amount as is otherwise determined by the Administrator.
|
|
(d)
|
Notwithstanding
anything to the contrary in this
Section 9,
within forty-five (45) days after the Distribution Date, (i)
Jack A. Smith, the Chairman of the board of directors and an Outside Director, shall be granted a Stock Award comprised of
that number of shares of Stock having an aggregate Fair Market Value of $25,000, (ii) Stephen P. Elker, an Outside Director,
shall be granted a Stock Award comprised of that number of shares of Stock having an aggregate Fair Market Value of $100,000,
(iii) Brian P. Friedman and Nicholas Daraviras, each an Outside Director, shall each be granted a Stock Award comprised of
that number of shares of Stock having an aggregate Fair Market Value of $100,000, provided that if either Mr. Friedman
or Mr. Daraviras resigns as a director of the Company, any person nominated or otherwise designated by Jefferies Capital Partners
IV L.P., Jefferies Employee Partners IV LLC, JCP Partners IV LLC (collectively, the “
JCP Group
”) or
their respective affiliates to the Company’s Board to replace Mr. Friedman, Mr. Daraviras or any other director of the
Company designated and nominated by the JCP Group or their affiliates, such person shall not receive a Stock Award pursuant
to
Section 9(b)
.
|
The
Stock subject to Outside Director Stock Awards granted under this
Section 9
shall vest and become nonforfeitable
based on the Outside Director’s provision of services as a Director, and is therefore an award of “
Restricted Stock
.”
Outside
Director Stock Awards may be directly issued under the Plan. Unless otherwise determined by the Administrator, and set forth in
the applicable award agreement, an Outside Director Stock Award granted pursuant to Section 9(a), Section 9(b), Section 9(d)(ii)
and Section 9(d)(iii) shall become vested and nonforfeitable as to one-fifth of the shares of Restricted Stock underlying such
Outside Director Stock Award on the first anniversary of the date of grant, with an additional one-fifth of the Restricted Stock
becoming vested and non-forfeitable on each of the second, third, fourth and fifth anniversaries of the date of grant;
provided
that
,
in each case, the Outside Director shall have continuously remained a Director of the Company. Unless otherwise determined by
the Administrator, and set forth in the applicable award agreement, an Outside Director Stock Award granted pursuant to Section
9(c) and Section 9(d)(i) shall become vested and nonforfeitable as to one-third of the shares of Restricted Stock underlying such
Outside Director Stock Award on the first anniversary of the date of grant, with an additional one-third of the Restricted Stock
becoming vested and non-forfeitable on each of the second and third anniversaries of the date of grant; provided that, in each
case, the Outside Director shall have continuously remained a Director of the Company. Any Outside Director Stock Award that is
unvested at the date of termination of the Outside Director’s provision of services shall be forfeited upon such termination.
The determination of whether the Participant has continuously remained a Director of the Company or an Affiliate shall be made
by the Administrator in its discretion, including, when applicable pursuant to principle described in Sections 5(m) and 6(m).
Shares
representing an Outside Director Stock Award shall be evidenced in such manner as the Administrator may deem appropriate, including
book-entry registration or issuance of one or more certificates (which may bear appropriate legends referring to the terms, conditions
and restrictions applicable to such Award). The Administrator may require that any such certificates be held in custody by the
Company until any restrictions thereon shall have lapsed and that the Outside Director deliver a stock power, endorsed in blank,
relating to the Stock covered by such Award.
Unless
otherwise provided in an award agreement, until the expiration of all applicable restrictions, (i) the Restricted Stock shall
be treated as outstanding, (ii) the Participant holding shares of Restricted Stock may exercise full voting rights with respect
to such shares, and (iii) the Participant holding shares of Restricted Stock shall be entitled to receive all dividends and
other distributions paid with respect to such shares while they are so held. Unless otherwise provided by the Administrator, if
any such dividends or distributions are paid in shares of Stock, such shares shall be subject to the same restrictions as the
shares of Restricted Stock with respect to which they were paid. Notwithstanding anything to the contrary, at the discretion of
the Administrator, all such dividends and distributions may be held in escrow by the Company (subject to the same restrictions)
until all restrictions on the respective Restricted Stock have lapsed.
With
respect to an Outside Director Stock Award, an Outside Director, at his or her option, will be entitled to make the election permitted
under Section 83(b) of the Code, to include in gross income in the taxable year in which the Outside Director Stock Award
is transferred to him or her, the fair market value of such shares at the time of transfer, notwithstanding that such shares are
subject to a substantial risk of forfeiture within the meaning of the Code, or he or she may elect to include in gross income
the Fair Market Value of the Outside Director Stock Award as of the date or date on which such restrictions lapse. Notwithstanding
the foregoing, the Administrator shall adopt, from time to time, such rules with respect to the return of executed award agreements
as it deems appropriate and failure by an Outside Director to comply with such rules shall, without limitation, terminate the
grant of such Outside Director Stock Award to such Outside Director and/or cause the forfeiture of any Outside Director Stock
Award (or any portion thereof) as to which restrictions have not yet lapsed.
10.
CHANGE
IN CONTROL PROVISIONS
.
|
(a)
|
Impact
of Event
. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change in Control:
|
|
(i)
|
The
vesting and exercisability of any Stock Options, Outside Director Stock Options and Stock Appreciation Rights outstanding
as of the date such Change in Control is determined to have occurred and not then vested and exercisable shall become fully
vested and exercisable;
|
|
(ii)
|
Any
restrictions applicable to any outstanding Stock Awards and Outside Director Stock Awards shall lapse and the Stock relating
to such Awards shall become free of all restrictions and fully vested and transferable; and
|
|
(iii)
|
Provided
that no material modification of the Award or any liability results under Section 409A of the Code, outstanding Awards
shall be subject to any agreement of acquisition, merger or reorganization that effects such Change in Control and that provides
for:
|
|
(A)
|
The
continuation of the outstanding Awards by the Company, if the Company is a surviving corporation;
|
|
(B)
|
The
assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary;
|
|
(C)
|
The
substitution by the surviving corporation or its parent or subsidiary of equivalent awards for the outstanding Awards; or
|
|
(D)
|
Settlement
of each share of Stock subject to an outstanding Award for the Change in Control Price (less, to the extent applicable, the
per share exercise price), or, if the per share exercise price equals or exceeds the Change in Control Price, the outstanding
Award shall terminate and be canceled.
|
|
(b)
|
Definition
of Change in Control
.
|
|
(i)
|
For
purposes of the Plan, a “
Change in Control
” shall occur or be deemed to have occurred only if any of the
following events occur:
|
|
(A)
|
The
acquisition, directly or indirectly, by any person or group (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d)
of the Exchange Act and the rules thereunder) of beneficial ownership (as determined pursuant to Rule 13d-3 under the Exchange
Act) of securities entitled to vote generally in the election of directors (voting securities) of the Company that represent
50%
or
more of the combined voting power of the Company’s then outstanding voting securities, other than:
|
|
(1)
|
An
acquisition by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by the Company; or
|
|
(2)
|
An
acquisition of voting securities by the Company or a corporation owned, directly or indirectly by all of the stockholders
of the Company in substantially the same proportions as their ownership of the stock of the Company.
|
|
|
|
|
|
Notwithstanding
the foregoing, the following event shall not constitute an acquisition by any person or group for purposes of this subsection
(a): an acquisition of the Company’s securities by the Company which causes the Company’s voting securities beneficially
owned by a person or group to represent 50% or more of the combined voting power of the Company’s then outstanding voting
securities;
provided
,
however
, that if a person or group shall become the beneficial owner of 50%
or more of the combined voting power of the Company’s then outstanding voting securities by reason of share acquisitions
by the
|
|
|
|
|
|
Company
as described above and shall, after such share acquisitions by the Company, become the beneficial owner of any additional
voting securities of the Company, then such acquisition shall constitute a Change in Control; or
|
|
(B)
|
Individuals
who, as of or immediately following Distribution Time, constitute the Board of Directors of the Company (as of the Distribution
Time, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board,
provided
that
any person becoming a director subsequent to the Distribution Date whose election, or nomination for election
by the Company’s stockholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of directors on the Board) shall be, for purposes of this Plan, considered
as though such person were a member of the Incumbent Board; or
|
|
(C)
|
The
consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more
intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) the acquisition of
assets or stock of another entity, in each case other than a transaction:
|
|
(1)
|
Which
results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either
by the remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of
the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of
the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “
Successor
Entity
”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s
outstanding voting securities immediately after the transaction; and
|
|
(2)
|
After
which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the
Successor Entity;
provided
,
however
, that no person or group shall be treated for purposes of this
clause (2) as beneficially owning 50% or more of combined voting power of the Successor
|
|
Entity
solely as a result of the voting power held in the Company prior to the consummation of the transaction; or
|
|
(D)
|
A
sale or disposition of all or substantially all of the Company’s assets; or
|
|
(E)
|
The
Company’s stockholders approve a liquidation or dissolution of the Company.
|
The
Committee shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a
Change in Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change
in Control and any incidental matters relating thereto. Notwithstanding anything herein to the contrary, the Distribution shall
not constitute a Change in Control.
|
(ii)
|
For
purposes of
Section 10(b)
, stock ownership is determined under Section 409A of the Code.
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(c)
|
Change
in Control Price
. For purposes of the Plan, “
Change in Control Price
” means the Fair Market Value (which
may be the amount of consideration per share of Stock received by the holder of Stock in connection with the Change in Control
transaction or, in the case of a tender or exchange offer, the highest price per share of Stock paid in such tender or exchange
offer, in each case, as determined by the Administrator in accordance with
Section 12(n)
hereunder)
of a share of Stock on the date of a Change in Control. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other non-cash consideration, the value of such securities or other
non-cash consideration shall be determined in the sole discretion of the Board. The Participant shall receive the same form
of consideration as holders of common stock, subject to the same restrictions and limitations and indemnification obligations
as the holders of common stock and will execute any and all documents required by the Administrator to evidence the same.
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11.
MISCELLANEOUS
.
|
(a)
|
Amendment.
The
Board may at any time terminate, amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall
be made which would adversely affect the rights of a Participant under an Award theretofore granted without the Participant’s
consent, except such an amendment (i) made to avoid an expense charge to the Company or an Affiliate under applicable
law or regulation, (ii) made to permit the Company or an Affiliate a deduction under the Code, or (iii) made to
avoid the violation of Section 409A of the Code. No such amendment or alteration shall be made without the approval of
a majority vote of the Company’s shareholders, present in person or by proxy
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at
any special or annual meeting of the shareholders to the extent such approval is required by law, agreement or the rules of
any stock exchange or market on which the Stock is listed.
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The
Administrator may amend the terms of any Stock Option or other Award theretofore granted, prospectively or retroactively,
but except as provided in
Section 3
hereof no such amendment shall adversely affect the rights of a
Participant without the Participant’s consent.
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(b)
|
Unfunded
Status of Plan.
It is intended that this Plan be an “unfunded” plan for incentive and deferred compensation.
The Administrator may authorize the creation of trusts or other arrangements to meet the obligations created under this Plan
to deliver Stock or make payments,
provided
that
, unless the Administrator otherwise determines, the
existence of such trusts or other arrangements is consistent with the “unfunded” status of this Plan.
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(i)
|
Unless
the shares to be issued in connection with an Award are registered prior to the issuance thereof under the Securities Act
of 1933, as amended, the Administrator may require each person purchasing or receiving shares pursuant to an Award to represent
to and agree with the Company in writing that such person is acquiring the shares for his or her own account as an investment
without a view to or for sale in connection with, the distribution thereof. The certificates for such shares may include any
legend which the Administrator deems appropriate to reflect any restrictions on transfer.
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All
certificates for shares of Stock or other securities delivered under the Plan shall be subject to such stock transfer orders
and other restrictions as the Administrator may deem advisable under the rules, regulations and other requirements of the
Commission, any stock exchange or market on which the Stock is then listed and any applicable Federal or state securities
law, and the Administrator may cause a legend or legends to be put on any such certificates to make appropriate reference
to such restrictions.
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(ii)
|
Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting other or additional compensation arrangements
for its employees.
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(iii)
|
The
adoption of the Plan shall not confer upon any employee, director, associate, consultant or advisor any right to continued
employment, directorship or service, nor shall it interfere in any way with the right of the Company or any Subsidiary or
Affiliate to terminate the employment or service of any employee, consultant or advisor at any time.
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(iv)
|
No
later than the date as of which an amount first becomes includible in the gross income of the Participant for Federal income
tax purposes with respect to any Award under the Plan, the Participant shall pay to the Company, or make arrangements satisfactory
to the Company regarding the payment of, any Federal, state, local or foreign taxes of any kind required by law to be withheld
with respect to such amount. Unless otherwise determined by the Administrator, withholding obligations may be settled with
Stock, including Stock that is part of the Award that gives rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditional on such payment or arrangements, and the Company, its Subsidiaries and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participant.
The Administrator may establish such procedures as it deems appropriate for the settlement of withholding obligations with
Stock.
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(v)
|
The
Administrator shall establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom
any amounts payable in the event of the Participant’s death are to be paid. In the event of the death of a Participant,
a condition of exercising any Award shall be the delivery to the Company of such tax waivers and other documents as the Administrator
shall determine.
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(vi)
|
Neither
any Participant nor his or her legal representatives, legatees or distributees shall be or be deemed to be the holder of any
share of Stock covered hereby unless and until a certificate for such share has been issued. Upon payment of the purchase
price thereof, a share shall be fully paid and non-assessable.
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(vii)
|
The
grant of an Award shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business
or assets, or issue bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock, or take any other
corporate act or proceeding whether of a similar character or otherwise.
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(viii)
|
If
any payment or right accruing to a Participant under this Plan (without the application of this
Section 11(c)(viii)
),
either alone or together with other payments or rights accruing to the Participant from the Company or an Affiliate (“
Total
Payments
”) would constitute a “parachute payment” (as defined in Section 280G of the Code and
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regulations
thereunder), such payment or right shall be reduced to the largest amount or greatest right that will result in no portion
of the amount payable or right accruing under this Plan being subject to an excise tax under Section 4999 of the Code
or being disallowed as a deduction under Section 280G of the Code;
provided
,
however
, that the
foregoing shall not apply to the extent provided otherwise in an Award or in the event the Participant is party to an agreement
with the Company or an Affiliate that explicitly provides for an alternate treatment of payments or rights that would constitute
“parachute payments.” The determination of whether any reduction in the rights or payments under this Plan is
to apply shall be made by the Administrator in good faith after consultation with the Participant, and such determination
shall be conclusive and binding on the Participant. The Participant shall cooperate in good faith with the Administrator in
making such determination and providing the necessary information for this purpose. The foregoing provisions of this
Section 11(c)(viii)
shall
apply with respect to any person only if, after reduction for any applicable Federal excise tax imposed by Section 4999
of the Code and Federal income tax imposed by the Code, the Total Payments accruing to such person would be less than the
amount of the Total Payments as reduced, if applicable, under the foregoing provisions of this Plan and after reduction for
only Federal income taxes.
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(ix)
|
To
the extent that the Administrator determines that the restrictions imposed by the Plan preclude the achievement of the material
purposes of the Awards in jurisdictions outside the United States, the Administrator in its discretion may modify those restrictions
as it determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside
of the United States.
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|
(x)
|
The
headings contained in this Plan are for reference purposes only and shall not affect the meaning or interpretation of this
Plan.
|
|
(xi)
|
If
any provision of this Plan shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability
shall not effect any other provision hereby, and this Plan shall be construed as if such invalid or unenforceable provision
were omitted.
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(xii)
|
This
Plan shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon
a Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal
representatives and successors.
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(xiii)
|
This
Plan and each agreement granting an Award constitute the entire agreement with respect to the subject matter hereof and thereof,
provided
that
in the event of any inconsistency between this Plan and such agreement, the terms and conditions of the Plan
shall control.
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(xiv)
|
In
the event there is an effective registration statement under the Securities Act pursuant to which shares of Stock shall be
offered for sale in an underwritten offering, a Participant shall not, during the period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of shares of Stock received, directly or indirectly,
as an Award or pursuant to the exercise or settlement of an Award.
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(xv)
|
None
of the Company, an Affiliate or the Administrator shall have any duty or obligation to disclose affirmatively to a record
or beneficial holder of Stock or an Award, and such holder shall have no right to be advised of, any material information
regarding the Company or any Affiliate at any time prior to, upon or in connection with receipt or the exercise of an Award
or the Company’s purchase of Stock or an Award from such holder in accordance with the terms hereof.
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(xvi)
|
This
Plan, and all Awards, agreements and actions hereunder, shall be governed by, and construed in accordance with, the laws of
the state of Delaware (other than its law respecting choice of law).
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(xvii)
|
No
Award granted pursuant to this Plan is intended to constitute “deferred compensation” as defined in Section 409A
of the Code, and the Plan and the terms of all Awards shall be interpreted accordingly. If any provision of the Plan or an
Award contravenes any regulations or Treasury guidance promulgated under Section 409A of the Code or could cause an Award
to be subject to the penalties and interest under Section 409A of the Code, such provision of the Plan or Award shall
be modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating
the provisions of Section 409A of the Code.
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12.
DEFINITIONS
.
For
purposes of this Plan, the following terms are defined as set forth below:
|
(a)
|
“Affiliate”
means
a corporation or other entity (i) controlled by the Company and which, in the case of grants of Stock Options, Outside
Director Stock Options and Stock Appreciation Rights would, together with the Company, be classified as the “service
recipient” (as defined in the regulations under Section 409A of the Code) with respect to an Eligible Individual,
and (ii) is designated by the Administrator as such.
|
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(b)
|
“Award”
means
a Stock Appreciation Right, Stock Option, Stock Award, Outside Director Stock Option or Outside Director Stock Award.
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(c)
|
“Board”
means
the Board of Directors of the Company.
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(d)
|
“Board
Meeting”
means meeting of the Board of Directors of the Company.
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(e)
|
“Cause”
means
(i) the commission by the Participant of any act or omission that would constitute a felony or any crime of moral turpitude
under Federal law or the law of the state or foreign law in which such action occurred, (ii) dishonesty, disloyalty,
fraud, embezzlement, theft, disclosure of trade secrets or confidential information or other acts or omissions that result
in a breach of fiduciary or other material duty to the Company and/or a Subsidiary, (iii) continued reporting to work
or working under the influence of alcohol, an illegal drug, an intoxicant or a controlled substance which renders Participant
incapable of performing his or her material duties to the satisfaction of the Company and/or its Subsidiaries, or (iv) the
Participant’s substantial disregard in the performance of the Participant’s duties and/or responsibilities with
respect to the Company and/or a Subsidiary, which disregard shall continue after notice to the Participant and a reasonable
opportunity to cure such behavior. Notwithstanding the foregoing, if the Participant and the Company or the Affiliate have
entered into an employment or services agreement which defines the term “
Cause
” (or a similar term), such
definition shall govern for purposes of determining whether such Participant has been terminated for Cause for purposes of
this Plan. The determination of Cause shall be made by the Administrator, in its sole discretion.
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(f)
|
“
Carrols
”
means Carrols Restaurant Group, Inc. and any and all of its Subsidiaries whether now existing or hereafter formed.
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(g)
|
“Code”
means
the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.
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|
(h)
|
“Commission”
means
the Securities and Exchange Commission or any successor agency.
|
|
(i)
|
“Committee”
means
a committee of Directors appointed by the Board to administer this Plan. Insofar as the Committee is responsible for granting
Awards to Participants hereunder, it shall consist solely of two or more directors, each of whom is a “non-employee
director” within the meaning of Rule 16b-3, an “outside director” under Section 162(m) of the Code,
an “independent director” as defined by the Sarbanes-Oxley Act of 2002, and “independent” as defined
by the rules of any stock exchange or market on which the Stock is listed.
|
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(j)
|
“Covered
Employee”
means a person who is a “covered employee” within the meaning of Section 162(m)
of the Code.
|
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(k)
|
“Director”
means
a member of the Company’s Board.
|
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(l)
|
“Disability”
means
mental or physical illness that entitles the Participant to receive benefits under the long-term disability plan of the Company
or an Affiliate, or if the Participant is not covered by such a plan or the Participant is not an employee of the Company
or an Affiliate, a mental or physical illness that renders a Participant totally and permanently incapable of performing the
Participant’s duties for the Company or an Affiliate;
provided
,
however
, that a Disability shall
not qualify under this Plan if it is the result of (i) a willfully self- inflicted injury or willfully self-induced sickness;
or (ii) an injury or disease contracted, suffered or incurred while participating in a criminal offense. Notwithstanding
the foregoing, if the Participant and the Company or an Affiliate have entered into an employment or services agreement which
defines the term “
Disability
” (or a similar term), such definition shall govern for purposes of determining
whether such Participant suffers a Disability for purposes of this Plan. The determination of Disability shall be made by
the Administrator, in its sole discretion. The determination of Disability for purposes of this Plan shall not be construed
to be an admission of disability for any other purpose.
|
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(m)
|
“Distribution”
has
the meaning set forth in Section 1 of the Plan
.
|
|
(n)
|
“Distribution
Date”
has the meaning set forth in Section 1 of the Plan
.
|
|
(o)
|
“Distribution
Time”
means the time at which the Distribution is effective.
|
|
(p)
|
“Effective
Date”
has the meaning set forth in Section 1 of the Plan
.
|
|
(q)
|
“Eligible
Individual”
means any (i) officer, employee, associate or director of the Company or a Subsidiary or Affiliate,
(ii) any consultant or advisor providing services to the Company or a Subsidiary or Affiliate, or (iii) employees
of (x) a corporation or other business enterprise which has been acquired by the Company or a Subsidiary, which, in the
case of grants of Stock Options and Stock Appreciation Rights would, together with the Company and, if applicable, the Subsidiary,
be classified as the “service recipient” (as defined in the regulations under Section 409A of the Code) with
respect to such employees and (y) who hold options with respect to the stock of such corporation which the Company has
agreed to assume.
|
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(r)
|
“Exchange
Act”
means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.
|
|
(s)
|
“Fair
Market Value”
means, as of any given date, the fair market value of the Stock, determined as follows: (i) if
the Stock is listed on any established stock exchange or a national market system, including without limitation, the NASDAQ
Global Market, its fair market value on such date shall be the reported closing selling price for the Stock on the principal
securities exchange or national market system on which the Stock is at such date listed for trading;
provided that
if
there are no sales of Stock on that date, then the reported closing selling price for the Stock on the next preceding date
shall be determinative of fair market value; or (ii) if the Stock is listed on the OTC Electronic Bulletin Board, its
fair market value on such date shall be the closing selling price on such date for the Stock as reported on the OTC Electronic
Bulletin Board;
provided that
if there are no sales of the Stock on that date, then the reported closing
selling price for the Stock on the next preceding date for which such closing selling price is quoted shall be determinative
of fair market value; or, (iii) if the Stock is not traded on the OTC Electronic Bulletin Board, an exchange, or a national
market system, or notwithstanding (i) and (ii) above, if a determination of Fair Market Value under (i) or
(ii) above would violate the rules under Section 409A of the Code and the regulations thereunder with respect to
the determination of fair market value, Fair Market Value of the Stock on such date shall be determined in good faith by the
Administrator in accordance with Section 409A of the Code and the regulations issued thereunder, and such determination
shall be conclusive and binding on all persons. In the event of a Change in Control, notwithstanding the foregoing provisions
of this
Section 12(o)
, Fair Market Value of the Stock in connection with such Change in Control transaction
shall be determined in good faith by the Administrator in accordance with Section 409A of the Code and the regulations
issued thereunder, and such determination shall be conclusive and binding on all persons.
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(t)
|
“Family
Member”
means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a Participant
(including adoptive relationships); any person sharing the Participant’s household (other than a tenant or employee);
any trust in which the Participant and any of these persons have all of the beneficial interest; any foundation in which the
Participant and any of these persons control the management of the assets; any corporation, partnership, limited liability
company or other entity in which the Participant and any of these other persons are the direct and beneficial owners of all
of the equity interests (
provided
the Participant and these other persons agree in writing to remain the direct
and beneficial owners of all such equity interests); and any personal representative of the Participant upon the Participant’s
death for purposes of administration of the Participant’s estate or upon the Participant’s incompetency for purposes
of the protection and management of the assets of the Participant.
|
|
(u)
|
“Incentive
Stock Option”
means any Stock Option intended to be and designated as an “incentive stock option”
within the meaning of Section 422 of the Code.
|
|
(v)
|
“Non-Qualified
Stock Option”
means any Stock Option that is not an Incentive Stock Option.
|
|
(w)
|
“Optionee”
means
a person who holds a Stock Option.
|
|
(x)
|
“Outside
Director”
means a person who is a “non-employee director” of the Company within the meaning of
Section 16 of the Exchange Act and the regulations promulgated thereunder (irrespective of whether Section 16 of
the Exchange Act is applicable to the Company or such Director).
|
|
(y)
|
“Outside
Director Award”
means an Outside Director Stock Option or Outside Director Stock Award.
|
|
(z)
|
“Outside
Director Stock Award”
means an Award, other than a Stock Option, Stock Appreciation Right, Stock Award or Outside
Director Stock Option, made in Stock or denominated in shares of Stock.
|
|
(aa)
|
“Outside
Director Stock Option”
means an Option granted under
Section 8
.
|
|
(bb)
|
“Participant”
means
a person granted an Award.
|
|
(cc)
|
“
Performance
Award
” means a right, granted to a Participant under
Section 7
, to receive Awards based upon performance
criteria specified by the Administrator.
|
|
(dd)
|
“Representative”
means
(i) the person or entity acting as the executor or administrator of a Participant’s estate pursuant to the last
will and testament of a Participant or pursuant to the laws of the jurisdiction in which the Participant had his or her primary
residence at the date of the Participant’s death; (ii) the person or entity acting as the guardian or temporary
guardian of a Participant; (iii) the person or entity which is the beneficiary of the Participant upon or following the
Participant’s death; or (iv) any person to whom a Stock Option has been transferred with the permission of the
Administrator or by operation of law;
provided that
only one of the foregoing shall be the Representative
at any point in time as determined under applicable law and recognized by the Administrator.
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|
(ee)
|
“Retirement”
means
termination of employment or provision of services without Cause, death or Disability on or after age 65 with 5 years of service
including in such calculation all periods of service with the Company, or Carrols, or both prior to the Distribution.
|
|
(ff)
|
“Stock”
means
the common stock, par value $.01 per share, of the Company.
|
|
(gg)
|
“Stock
Appreciation Right”
means a right granted under
Section 5
.
|
|
(hh)
|
“Stock
Award”
means an Award, other than a Stock Option, Outside Director Stock Option, Stock Appreciation Right or
Outside Director Stock Award, made in Stock or denominated in shares of Stock.
|
|
(ii)
|
“Stock
Option”
means an option granted under
Section 4
.
|
|
(jj)
|
“Subsidiary”
means
any company during any period in which it is a “subsidiary corporation” (as such term is defined in Section 424(f)
of the Code) with respect to the Company.
|
|
(kk)
|
“Ten
Percent Holder”
means an individual who owns, or is deemed to own, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any parent or subsidiary corporation of the Company, determined
pursuant to the rules applicable to Section 422(b)(6) of the Code.
|
In
addition, certain other terms used herein have the definitions given to them in the places they are first used.
AMENDMENT
TO
FIESTA
RESTAURANT GROUP, INC.
2012
STOCK INCENTIVE PLAN
AMENDMENT
(this “Amendment”) to the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan (the “Plan”). Capitalized
terms used herein but not defined herein shall have the meanings ascribed thereto in the Plan.
WHEREAS
,
the Board of Directors (the “Board”) of Fiesta Restaurant Group, Inc., a Delaware corporation (the “Company”),
previously adopted the Plan, which was approved by the stockholders of the Company;
WHEREAS
,
pursuant to Section 2 of the Plan, the Compensation Committee of the Board of Directors of the Company (the “Committee”),
acting as the Administrator of the Plan, has the authority to interpret the terms and provisions of the Plan;
WHEREAS
,
pursuant to Section 11 of the Plan, the Board has the authority to amend the Plan;
WHEREAS,
this Amendment revises the Plan to interpret and clarify certain provisions of the Plan to reflect the Board of Directors’
intent at the time the Plan was adopted and the Committee's interpretation of the Plan since that time; and
WHEREAS
,
all terms and conditions of the Plan, other than as specifically amended as set forth in this Amendment, shall remain in full
force and effect.
NOW
THEREFORE
, the Plan has been amended as follows:
1.
The definition of “Performance Award” in Section 12(cc) of the Plan is amended to include cash awards, and shall read
as follows:
“(cc)
“Performance Award”
means a right, granted to a Participant under Section 7, to receive Awards based upon performance
criteria specified by the Administrator and shall include Awards as defined in Section 12(b) and cash awards.”
2.
The definition of “Stock Awards” in Section 12(h)(h) of the Plan is amended to specifically include “Performance
Awards” and shall read as follows:
“(hh)
“Stock Award”
means an Award, other than a Stock Option, Outside Director Stock Option, Stock Appreciation Right
or Outside Director Stock Award, which can be made in Stock, cash or denominated in shares of Stock, and shall include Performance
Awards.”
3.
Section 7(b)(iv) is amended by adding the following sentence immediately following the second sentence:
“For
any Performance Award that is a cash award, the maximum cash award that may be paid to a Covered Employee shall be subject to
the maximum number of shares limitation for any one Participant during any one calendar year as set forth in Section 3 (i.e.,
300,000 shares). Thus, the maximum cash award that may be paid to a Covered Employee with respect to the calendar year to which
the Performance Award relates is equal to the Fair Market Value of 300,000 shares, reduced by the amount of any outstanding Awards
as defined in Section 12(b).”
IN
WITNESS WHEREOF
, the Secretary of the Company has executed this Amendment and certifies that the amendment to the Plan set
forth above accurately reflects the amendment to the Plan adopted by the Committee and the Board of Directors of the Company.
|
/s/
Joseph A. Zirkman
|
|
Joseph A. Zirkman,
Secretary
|
|
|
|
Dated: March 14, 2014
|
Appendix
C
Amendment
to Restated Certificate of Incorporation
Section
(A) of Article NINTH of the Certificate of Incorporation is hereby amended in its entirety by inserting the following in lieu
thereof:
"
(A)
The
business and affairs of the Corporation shall be managed by or under the direction of the Board which shall consist of not less
than three directors, the exact number of directors to be determined from time to time by resolution adopted by an affirmative
vote of a majority of the Board. The directors shall be divided into three classes designated Class I, Class II and Class III.
Each class shall consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board.
Class I directors shall be originally elected for a term expiring at the first annual meeting of stockholders occurring after
the Effective Time, Class II directors shall be originally elected for a term expiring at the second succeeding annual meeting
of stockholders, and Class III directors shall be originally elected for a term expiring at the third succeeding annual meeting
of stockholders. At each such succeeding annual meeting of stockholders, successors to the class of directors whose term expires
at that annual meeting shall be elected by affirmative vote of a majority of the votes cast with respect to such nominee at any
meeting for the election of directors at which a quorum is present, provided that if the number of nominees exceeds the number
of directors to be elected, the directors shall be elected by a plurality of the votes of the shares represented in person or
by proxy at any such meeting and entitled to vote on the election of directors. In an election of directors, a majority of the
votes cast means that the number of votes cast “for” a nominee must exceed 50% of the votes cast with respect to such
nominee (excluding abstentions). If the number of directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any
class elected to fill a newly created directorship resulting from an increase in such class shall hold office for a term that
shall coincide with the remaining term of that class, but in no case shall a decrease in the number of directors remove or shorten
the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his term expires
and until his successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification
or removal from office. Any newly created directorship on the Board that results from an increase in the number of directors or
any vacancies in the Board resulting from death, resignation, retirement, disqualification or removal from office or any other
cause shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining
director. Any director so elected to fill a vacancy in the Board resulting from death, resignation, disqualification or removal
from office or any other cause shall have the same remaining term as that of his predecessor. Directors may be removed only for
cause, and either by majority of the entire Board or the affirmative vote of the holders of at least sixty-six and two-thirds
percent (66 ⅔%) of the voting power of the outstanding Voting Stock, voting together as a single class."
PRELIMINARY
COPY SUBJECT TO COMPLETION — DATED APRIL 13, 2017
|
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future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive
or access proxy materials electronically in future years.
VOTE BY PHONE 1-866-894-0532
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postagepaid envelope we have provided.
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TO VOTE,
MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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E01914-P73363
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KEEP
THIS PORTION FOR YOUR RECORDS
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DETACH
AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY
WHEN SIGNED AND DATED.
FIESTA RESTAURANT GROUP, INC.
The Board of Directors recommends you vote FOR items
1, 2, 3, 4 and 5:
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual nominee(s),
mark “For All Except” and write the number(s) of the nominee(s) on the line below.
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1.
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To elect as Class II Directors of Fiesta
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☐
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☐
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Restaurant Group, Inc., the nominees below:
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Nominees:
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01) Brian P. Friedman
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02) Stephen P. Elker
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03) Barry J. Alperin
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For
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Against
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Abstain
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2.
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To adopt, on an advisory basis, a non-binding resolution
approving the compensation of the Company’s Named Executive Officers, as described in the Proxy Statement under “Executive
Compensation.”
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☐
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☐
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☐
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3.
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To approve the Fiesta Restaurant Group, Inc. 2012 Stock Incentive
Plan, as amended, for purposes of complying with Section 162(m) of the Internal Revenue Code of 1986, as amended.
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4.
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To approve an amendment to the Company’s Restated Certificate
of Incorporation to implement a majority voting standard in uncontested elections of directors.
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☐
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5.
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To ratify the appointment of Deloitte & Touche LLP as the
independent registered public accounting firm of Fiesta Restaurant Group, Inc. for the 2017 fiscal year.
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☐
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6.
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In their discretion, upon such other business that may properly
come before the meeting or any adjournment or adjournments thereof.
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NOTE:
The shares represented by this proxy,
when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s).
If no such direction
is made, this proxy will be voted FOR items 1, 2, 3, 4 and 5.
If any other matters properly come before the meeting, the
stockholder(s) named in this proxy will vote in their discretion.
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These items of business are more fully described in the Proxy
Statement. Only stockholders of record on , 2017
may vote at the meeting or any adjournment thereof.
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Signature (PLEASE SIGN)
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Date
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Signature (Joint Owners) Title
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Date
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Please sign exactly as your name(s) appear(s) hereon.
When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each
sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by
authorized officer.
PRELIMINARY COPY SUBJECT TO COMPLETION
— DATED APRIL 13, 2017
FIESTA
RESTAURANT GROUP, INC.
If you have questions or require any assistance with voting your shares,
please contact the Company’s proxy solicitor
listed below:
105 Madison Avenue
New York, New York 10016
Call Collect: (212) 929-5500
or
Toll-Free: (800) 322-2885
Email: proxy@mackenziepartners.com
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting:
The Proxy Statement and Form 10-K are available at [ ].
“PRELIMINARY PROXY CARD —
SUBJECT TO COMPLETION, DATED APRIL 13, 2017”
FIESTA RESTAURANT GROUP, INC.
PROXY FOR HOLDERS OF COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The stockholder(s) hereby appoint(s) Lynn S. Schweinfurth and
Joseph A. Zirkman, or either of them, as proxies, each with full power of substitution and revocation, and hereby
authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common
stock of FIESTA RESTAURANT GROUP, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders
to be held
at AM, on 2017,
at , and any adjournment or postponement thereof. Only stockholders of record on , 2017 may vote at the meeting of any
adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED
BY THE STOCKHOLDER(S). IF NO SUCH DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE
SIDE FOR THE BOARD OF DIRECTORS AND FOR PROPOSALS 2, 3, 4 AND 5.
Continued and to be signed on reverse side
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