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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:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
RED ROBIN GOURMET BURGERS, 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):

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.

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RED ROBIN GOURMET BURGERS, INC.
6312 South Fiddler’s Green Circle, Suite 200N
Greenwood Village, CO 80111
(303) 846-6000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 19, 2022
When: 8:00 a.m. MDT, on Thursday May 19, 2022
Where: Red Robin’s Yummm U, located at 10000 East Geddes Avenue, Unit 500, Englewood, Colorado 80112 for the following purposes:
Items of Business:

Proposal 1: To elect Anthony S. Ackil, Thomas G. Conforti, Cambria W. Dunaway, G.J. Hart, Kalen F. Holmes, Steven K. Lumpkin, Paul J.B. Murphy III, David A. Pace, Allison Page, and Anddria Varnado as directors of the Company for one-year terms;

Proposal 2: To approve, on an advisory basis, the compensation of our named executive officers;

Proposal 3: To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 25, 2022; and

To transact such other business as may properly come before the meeting.
We intend to hold our annual meeting in person again this year. As always, we encourage you to vote your shares prior to the annual meeting.
Record Date: Stockholders as of March 22, 2022 are entitled to vote
Annual Report: Red Robin Gourmet Burgers, Inc. (“we” or the “Company”) filed with the U.S. Securities and Exchange Commission (the “SEC”) an annual report on Form 10-K on March 10, 2022 for the fiscal year ended December 26, 2021. A copy of the annual report on Form 10-K has been made available concurrently with this proxy statement to all of our stockholders entitled to notice of and to vote at the annual meeting. In addition, you may obtain a copy of the annual report on Form 10-K, without charge, by writing to Red Robin Gourmet Burgers, Inc., Attn: Stockholder Services, 6312 South Fiddler’s Green Circle, Suite 200N, Greenwood Village, Colorado 80111.
Who Can Attend: All stockholders as of the record date, or their duly appointed proxies, may attend the meeting.
Date of Mailing: This Notice of Annual Meeting of Stockholders and related proxy materials are being distributed or made available to stockholders beginning on or about April 8, 2022.
 

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YOUR VOTE IS IMPORTANT
Whether or not you plan to attend, it is important that your shares be voted at the meeting.
Please refer to your proxy card or Notice Regarding the Availability of Proxy Materials for more information on how to vote your shares at the meeting and return your voting instructions as promptly as possible. Thank you for your continued support of Red Robin.
By Order of the Board of Directors,
[MISSING IMAGE: sg_michaelkaplan-bw.jpg]
Michael L. Kaplan
Secretary
Greenwood Village, Colorado
April 4, 2022
Neither the Securities and Exchange Commission nor any state securities regulatory agency has passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.
 

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PROXY SUMMARY
MEETING AGENDA, VOTING MATTERS, AND BOARD VOTING RECOMMENDATIONS
Proposal
Board’s Voting
Recommendation
Page Reference
(for more detail)
1
Election of Directors
FOR All nominees
10
2
Advisory Vote to Approve Executive Compensation
FOR
59
3
Ratification of Independent Auditor
FOR
60
 

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ELECTION OF DIRECTORS
The following provides summary information about each director nominee. Our director nominees possess a range of diverse skills, backgrounds, experience, and viewpoints that we believe are integral to an effective board. Detailed information about each individual’s qualifications, experience, skills, and expertise can be found starting on page 11.
Director Nominee
Age
Director
Since
Principal Occupation
Independent
Committee
Assignments
Anthony S. Ackil
47
2020
Chief Executive Officer of
Streetlight Ventures
AC, NGC
Thomas G. Conforti
63
2019
Former Senior Advisor, Executive Vice President and Chief Financial Officer, Wyndham Worldwide
*FC, AC
Cambria W. Dunaway
59
2014
Chief Marketing Officer, Duolingo
*NGC
G.J. Hart
64
2019
Former Chief Executive Officer, Torchy’s
Tacos
CC, FC
Kalen F. Holmes
55
2016
Former Executive Vice President (Human Resources), Starbucks
*CC
Steven K. Lumpkin
67
2016
Consultant, Former Executive Vice President, Chief Financial Officer and director, Applebee’s
*AC, FC
Paul J.B. Murphy III
67
2019
President and Chief Executive Officer, Red Robin
David A. Pace
63
2019
Co-Chief Executive Officer,
Tastemaker
Acquisition Corporation
(C), CC
Allison Page
37
2020
Co-Founder and President, SevenRooms
FC, NGC
Anddria Varnado
36
2021
GM and Head of the Consumer Business, Kohler Company
CC, NGC
AC
Audit Committee
(C)
Denotes Chair of the Board
CC
Compensation Committee
*
Denotes Chair of the Committee
NGC
Nominating and Governance Committee
FC
Finance Committee
DIRECTOR NOMINEE STATISTICS
90%
40%
10%
50%
56
3.5
Independence
Gender Diversity
Racial/Ethnic Diversity
Board
committees
chaired by
women
years
Average Age
years
Average Tenure
 
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BOARD LEADERSHIP SKILLS
Experience / Skills
David A.
Pace
(Chairman)
Paul J.B.
Murphy III
(CEO)
Anthony S.
Ackil
Thomas G.
Conforti
Cambria W.
Dunaway
G. J.
Hart
Kalen F.
Holmes
Steven K.
Lumpkin
Allison
Page
Anddria
Varnado
Public C-Suite Experience
Restaurant / Hospitality Executive Leadership
Accounting / Financial Expertise
Business Transformation
Technology Strategy
Marketing / Consumer Insights
M&A Experience
Gender/Ethnic Diversity
Governance
CORPORATE GOVERNANCE HIGHLIGHTS

Declassified board of directors

Independent chair of the board of directors

All directors and director nominees are independent other than our CEO

All committee members are independent

Majority voting standard for uncontested director elections

Plurality voting standard for contested director elections

Board members have diverse backgrounds, expertise, and skills

Robust board, committee, and director evaluation process completed annually instead of age or term limits

Board of directors and each committee regularly meet in executive session without members of management

Frequent engagement with institutional investors

Added a finance committee in 2019 to provide guidance on long-range planning, budget and capital allocation, and stockholder engagement

Annual review of our succession plan and talent development plan

Directors receive regular governance updates to stay well-informed and evaluate governance trends

Limits on outside board service for board members

Formal policy prohibiting hedging and pledging of Company securities by executive officers and directors

Directors regularly engage in in-boardroom and outside director education

Increased focus on environmental stewardship
STOCKHOLDER INTERESTS AND RIGHTS

Ability for stockholders to call special meeting

Input from stockholder outreach incorporated in decision-making process

Pay for performance focused executive compensation structure aligned with shareholders

Prohibition of hedging and pledging of our common stock
 
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STOCKHOLDER ENGAGEMENT
We believe that strong corporate governance includes engagement with our stockholders and considering their views. In the last 12 months, we held meetings and discussions with stockholders representing more than 50% of our outstanding shares. We greatly value the feedback received from our stockholders. This engagement provides valuable insight that informs the work of both management and the board.
RRGB Participants
Types of Engagement
Topics Covered

Executive management

Nominating and governance committee chair

Stockholders (portfolio managers and corporate governance departments)

Investor conferences

Earnings conference calls

Proxy advisory firms

Prospective stockholders

Virtual director / investor meetings

Key value drivers and competitive differentiators

Capital structure and capital allocation priorities

Key strategic initiatives and opportunities

Financial performance and goals

Digital strategy

Board composition: qualifications, diversity, skills, and leadership structure

ESG risks and opportunities

Human capital management

Risk management

Executive compensation

COVID-19 response
Engagement with our stockholders informed our actions in the topic areas covered above, particularly our changes to board composition, ESG strategy, human capital management disclosures, and executive compensation during 2021.
 
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COMPANY HIGHLIGHTS
Our long-term business strategy was developed using Guest and Team Member insights to align our efforts with our unique brand position in the industry. Our Guests are every-day people seeking connection with friends and family across a diverse, and multi-generational demographic with a large majority falling into the Gen X, Millennial, and Centennial generations. We believe our broad demographic appeal and distinct Red Robin brand equities position us well for future growth.
While the COVID-19 pandemic brought forth complex challenges, it also enabled us to intensely focus on improving our operating and financial model. The material improvements made to our business will enable us to execute our business strategy in an even stronger position. Our business strategy focuses on the following pillars:
People:Be the Employer of Choice in the Industry.
We champion a culture of diversity and inclusion where our people are developed, recognized and celebratedand can always “come as they are.” We empower the people who make Red Robin possible and offer a compelling Team Member value proposition.
Food:Deliver a Variety of Gourmet Burgers and Mainstream Favorites that Guests Love.
We offer a wide variety of gourmet burgers, with a creative take on traditional. We understand our Guests’ preferences and provide high-quality burgers with sustainable alternatives, including the ImpossibleTM burger and our Veggie burger. We also offer other mainstream favorites, like shareable pizza, wings, milkshakes, and beer. We continue to focus on meaningful menu innovation that is compelling to Guests and easy for our Operations teams to execute.
Guest Experience: Create Relevant, Personalized and Memorable Guest Experiences.
We leverage our Total Guest Experience (“TGX”) hospitality model to deliver fun and playful service that is tailored and customized to our Guests’ time and occasion, while delivering exceptional value through our commitment to bottomless steak fries® and drinks. We employ both off-premises and restaurant technology enhancements to present our Guests with a seamless and frictionless experience.
Foundation:Execute Profitable Growth Platforms.
Essential to our business model and related capital allocation, we have developed several platforms designed to drive consistent and profitable growth. We are continuing to invest in these platforms that include our digital ecosystem and Donatos®, and support growing multiple channels of business including dine-in, off-premises and catering. We are also in the early stages of reestablishing our new restaurant development program.
Despite the continued challenges of the COVID-19 pandemic, and associated staffing and supply chain headwinds, we made significant progress on executing our business strategy during fiscal year 2021. Our accomplishments in 2021 include the following:

Sustained off-premises sales of more than double pre-pandemic levels, with off-premises sales mix of 31.4% for the fourth quarter of 2021, compared to approximately 14.0% in the fourth quarter of 2019. Off-premises sales comprised $84.7 million, $85.1 million and $36.7 million of comparable restaurant revenue for the fourth quarters of 2021, 2020, and 2019, respectively;

Continued Donatos® roll-out to 120 Company-owned restaurants, bringing the total number of restaurants with Donatos® to 198 restaurants as of December 26, 2021. Restaurants that have been serving Donatos® pizza prior to 2021 are continuing to benefit from growing incremental sales beyond their first year as operations mature and brand affinity grows, with comparable restaurant revenue up 6.5% compared to 2019 in restaurants without supply chain issues;
 
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Improved manager staffing levels at our restaurants. At the end of 2021, we were 93% staffed at the salaried manager positions, and 96% staffed in the General Manager role;

Launched integrated and seamless digital ecosystem for our Guests, including mobile applications on both iOS and Android platforms, an improved and more relevant digital Guest experience consisting of a new and improved website, and the integration of a new loyalty program;

Initiated the process to enter into a new five-year credit agreement to give the Company long-term flexibility to strategically invest in our business and create value for our shareholders, which was concluded in early 2022; and

Completed our lease renegotiation and restructuring initiative that we began in 2020 as a result of the COVID-19 pandemic, resulting in 3% to 4% occupancy savings over the remaining lease terms on restructured leases.
 
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SUSTAINABILITY
Red Robin’s Better for Being Here mentality represents our commitment as the Company evolves its approach to sustainability. Red Robin is a company that cares; we have always strived to make the world a better place for our Team Members, our community, and our planet. We are undertaking a more formal and robust sustainability journey with meaningful goals and a commitment to align with sustainability standards, such as those put forward by the Sustainability Accounting Standards Board (the “SASB”).
Corporate Responsibility: Environmental, Social, and Governance (ESG)
We believe it is imperative that our ESG strategy is part of and aligned with our Company vision and overall corporate strategy. With recent changes to our board and executive leadership teams and learnings from the ongoing pandemic, we are incorporating ESG initiatives into our long-range strategic planning. We have been engaging with our stakeholders to discuss the ESG topics most important to them. We are also evaluating meaningful metrics and targets for our ESG priority areas for the near term and the future.
ESG is a board-level priority. The Board, acting directly and through its committees, is responsible for the oversight of Red Robin’s ESG strategy. The nominating and governance committee generally oversees Red Robin’s ESG goals and objectives and supports implementation of the Company’s ESG priorities. However, the full board retains overall ESG oversight responsibility because we believe full board oversight is important to ensure ESG is part of, and aligned with, our overall Company strategy. Management reports directly to the nominating and governance committee on a quarterly basis and to the full board at least twice per year regarding key recommendations, progress, and outcomes related to implementation of our ESG strategy.
Execution of Red Robin’s ESG strategy is overseen by our executive team. The Company’s ESG Committee, including senior leaders from our business and functional teams, are responsible for setting direction and driving accountability as we address priority issues, work with key stakeholders, and measure and report our progress.
Our ESG practices are focused across three pillars: People, Product, and Place.

People. We strive to ensure our employees, whom we refer to as Team Members, are Better for Being Here through our core B.U.R.G.E.R values: Bottomless Fun, Unwavering Integrity, Relentless Focus on Improvement, Genuine Spirit of Service, Extraordinary People, and Recognized Burger Authority. Each of these values work to empower and develop our Team Members and has created a Company culture that we collectively take pride in every day. We reward and incentivize our Team Members with competitive pay, recognition and rewards, and benefit programs. We also provide our Team Members the opportunity to grow and develop, promote health and safety, and value diversity and engagement. 2021 highlights include:

COVID-19 Response. We operate with the health, safety, and well-being of Red Robin’s Team Members, Guests, and communities in mind, as well as federal, state and local regulatory requirements. We have traditionally been a leader in health and safety and have implemented new practices during the COVID-19 pandemic consistent with that leadership position. In response to the COVID-19 pandemic, we have provided personal protective equipment for our restaurant Team Members. We also provided COVID-19 testing coverage for our restaurant Team Members through our benefit plans before it was required. Additionally, we immediately instituted telecommuting policies at the restaurant support center to support working from home. As a result of the success of that approach, we have implemented a dispersed workforce policy that permits many of our Restaurant Support Center Team Members to continue working remotely and we expect that to continue on a go-forward basis.

Diversity, Equity, and Inclusion. At Red Robin, we value diversity and inclusion. We have a successful Women’s Excellence program, a Company-wide resource group to support and inspire Team Members through development, networking, leadership, and other resources while fueling a culture of opportunity and diversity, and we continue to partner
 
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with the Women’s Foodservice Forum, which has been instrumental in providing valuable resources and insights to help the advancement of our female leaders. We are progressing with an initiative with the assistance of a diversity consultant to identify areas of opportunity for expanded diversity and inclusion practices in our Company and to support the development and execution of a comprehensive long-term diversity, equity, and inclusion strategy for Red Robin. In late 2021, all Team Members at the director-level and above in Operations and Restaurant Support Center leadership positions completed unconscious bias training. We intend to provide similar training to our restaurant General Managers in 2022.

Please see our annual report on Form 10-K filed with the SEC on March 10, 2022 for a full discussion of our approach to human capital management.

Product. Red Robin believes in offering high quality ingredients and maintains high food quality and safety standards. Our high-quality ingredients include:

All-natural, domestic, USDA-inspected 100%. Our Finest and Gourmet Burgers are made with all-natural, domestic, 100% USDA-inspected beef, free of preservatives, artificial and added ingredients.

Chicken with no hormones and no steroids. 100% of our chicken comes from family- owned farms, where they are fed a vegetarian diet and are raised cage free.

Pork that is 100% raised domestically with 33% raised in group housing of sows and away from the use of gestation crates.

We are committed to farm animal welfare and support suppliers with the highest industry standards for humane farming. Examples of our support of the humane treatment of farm animals in our supply chain include cage-free eggs (approximately 20% of our egg purchases), broiler chicken welfare, humanely raised pork, and we offer plant-based protein alternatives on our menu.

We require all of our suppliers to participate in third-party audits to ensure the humane treatment of animals in our supply chain.

Red Robin has high quality standards for our suppliers and our growers to help maintain the sustainability and integrity of our supply chain. We recognize and celebrate our suppliers for their sustainability progress.

Place. Red Robin has taken steps to reduce climate risk, including the following actions: (i) switched to energy-efficient LED lighting in all restaurants, (ii) piloted the use of solar panels in select restaurants, (iii) actively managed energy and water usage, and (iv) expanded our recycling and waste reduction efforts.

Off-Premise Packaging Optimization. We are currently working to optimize our off-premise packaging, which we expect will result in the removal of 2.5 million pounds of plastics from our system annually. In 2021, we removed all expanded polystyrene foam packaging from our corporate-owned restaurants, replacing them with fiber alternatives, resulting in the removal of approximately 200,000 pounds of styrofoam packaging.

Beverage Packaging Plastic Reduction. We transitioned to a new beverage packaging provider in 2021 that we expect will reduce the number of plastic packaging bottles we use by over 200,000 bottles.
We highlight our activities in these areas in the “Environmental, Social and Governance” section of our corporate website at https://ir.redrobin.com/esg. We look forward to providing more information regarding our ESG strategy in our forthcoming 2021 Sustainability Report.
 
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EXECUTIVE COMPENSATION PRACTICES

Pay for performance-focused executive compensation structure, with a significant portion of pay “at-risk”

Independent compensation committee approves executive compensation structure and performance goals

Independent compensation consultant advises the compensation committee

Payouts under our annual and long-term incentive compensation plans are capped

Long-term incentives feature multiple components; performance is measured over multi-year periods with value dependent on share price as compared to a group of key competitors; payouts are capped if total stockholder return (TSR) is negative

Double trigger required for cash severance and equity vesting upon change in control (other than certain performance awards)

Meaningful stock ownership guidelines for executives and board members

Formal policy prohibiting hedging and pledging of Company securities by executive officers and directors

Clawback policy for the return of certain cash and equity executive incentive compensation in the event of a financial restatement

No excessive perks

No incentivizing of short-term results to the detriment of long-term goals and results

Compensation practices are appropriately structured to avoid incentivizing excessive risk taking

No excise tax gross ups for change in control related situations

No repricing of underwater options without stockholder approval
 
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PROXY STATEMENT
The Board of Directors (“board” or “board of directors”) of Red Robin Gourmet Burgers, Inc. (“Red Robin” or the “Company”) is first providing this proxy statement on or about April 8, 2022 to stockholders in connection with the solicitation of proxies on its behalf to be voted at the annual meeting of stockholders. The meeting will be held on Thursday, May 19, 2022, beginning at 8:00 a.m. MDT, at Red Robin’s Yummm U, located at 10000 East Geddes Avenue, Unit 500, Englewood, Colorado 80112. The proxies may be voted at any time and date to which the annual meeting may be properly adjourned or postponed.
This proxy statement, including the proxy statement summary included herein, includes several website addresses and references to additional materials found on those websites. These websites and materials are not incorporated by reference herein.
PROPOSAL 1:
ELECTION OF DIRECTORS
HOW OUR DIRECTORS ARE SELECTED, QUALIFIED, AND ELECTED
Our board of directors is highly engaged and committed to effective governance as reflected in the following actions:

frequent and detailed communications regarding the Company’s and board’s response to the challenges posed by the COVID-19 pandemic

effective management of a recent CEO succession processone of the most important and difficult tasks any board faces

design and oversight of compensation plans that emphasize internal and external pay parity and that align our executives’ interests with those of stockholders

creation and maintenance of good governance principles and practices that get high scores from leading governance third parties

steady refreshment of their own membershipalso a difficult practice for many boards

addition of a finance committee in 2019 to provide guidance on long-range planning, budget and capital allocation, and extraordinary stockholder engagement, among other matters
Currently, 90% of our board is independent. Our board of directors consists of ten directors, all of whom are independent except our CEO. All of our directors are standing for re-election. Accordingly, following the annual meeting, if all director nominees are elected, all of our directors will be independent except for our CEO.
All of our directors are elected on an annual basis for a one-year term. The directors elected at this annual meeting will serve in office until our 2023 annual meeting of stockholders or until their successors are duly elected and qualified. Each of our nominees has consented to serve if elected and we expect each of them will be able to serve if elected. If any of our nominees should become unavailable to serve as a director, our board of directors can name a substitute nominee, and the persons named as proxies in the proxy card, or their nominees or substitutes, will vote your shares for such substitute nominee unless an instruction to the contrary is written on your proxy card.
The board recommends that you vote FOR all of the board’s nominees to serve as directors of the Company.
 
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Selecting Nominees for Director
Our board has delegated to the nominating and governance committee the responsibility for reviewing and recommending nominees for director. The board determines which candidates to nominate or appoint, as appropriate, after considering the recommendation of the committee.
In evaluating a director candidate, the nominating and governance committee considers the candidate’s independence; character; corporate governance skills and abilities; business experience; industry specific experience; training and education; commitment to performing the duties of a director; and other skills, abilities, or attributes that fill specific needs of the board or its committees. Our board is committed to diversity and the nominating and governance committee considers diversity in business experience, professional expertise, gender, and ethnic background, along with various other factors when evaluating director nominees. The nominating and governance committee will use the same criteria in evaluating candidates suggested by stockholders.
The nominating and governance committee is authorized under its charter to retain, at our expense, outside search firms and any other professional advisors it deems appropriate to assist in identifying or evaluating potential nominees for director.
Director Nominees
Below, you can find the principal occupation and other information about each of our director nominees standing for election at the annual meeting. Information related to each of our director nominee’s key attributes, experience, and skills, as well as their recent public company board service is included with each director’s biographical information. Our board is comprised of a highly diverse array of leaders with relevant experience and leadership in each of the key areas of greatest importance to our financial and more general sustainability. These attributes are core to our ability to be nimble and take advantage of opportunities as they arise. In 2022, all ten of our current directors are standing for re-election.
Anthony S. Ackil, 47
Director Since: March 2020
Current Committees:

Audit

Nominating and Governance
Other Board Service:
B.Good (2004-present)
Project Bread (2018-present)

Currently serves as CEO of Streetlight Ventures, a restaurant management platform that supports, manages, acquires, and invests in small to mid-sized restaurant brands, having founded the company in 2019.

From 2004 to 2018, served as CEO of B.Good, a healthy fast casual brand that grew to over 80 locations under his leadership.

Earlier in his career, he worked as a consultant for IBM, focusing on internet strategy and corporate structure, and as a consultant at PricewaterhouseCoopers.

Brings to the board of directors more than 15 years of executive experience in the restaurant industry, among other skills and qualifications.

Holds a B.A. in government from Harvard University.

Based on the foregoing, our board of directors has concluded Mr. Ackil should continue as a member of our board.
Thomas G. Conforti, 63
Director Since: August 2019
Current Committees:

Finance (Chair)

Audit
Other Board Service:
Vista Life Innovations (2020-present)
American School for the Deaf (2020-present)

From 2017 to 2018, served as Senior Advisor to Wyndham Worldwide, where he advised on strategic transactions.

From 2009 to 2017, served as Executive Vice President and Chief Financial Officer for Wyndham Worldwide, during which time the company’s total stockholder return (TSR) significantly outperformed the market and where Mr. Conforti had direct responsibility for finance, technology, real estate, and purchasing functions.

From 2002 to 2008, served as the Chief Financial Officer for IHOP / Dinequity.

Earlier in his career, he held leadership positions at PepsiCo, Inc., KB Home, and The Walt Disney Company, among others.

Served as a Senior Fellow at Harvard’s Advanced Leadership Initiative.

Brings to the board of directors more than 30 years of experience in financial, strategic, and operational roles across multiple industries, including restaurant, retail, consumer, and hospitality, among other skills and qualifications.

Based on the foregoing, our board of directors has concluded Mr. Conforti should continue as a member of our board.
 
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Cambria W. Dunaway, 59
Director Since: June 2014
Current Committees:

Nominating and Governance (Chair)
Other Public Company Board Service:
Planet Fitness Inc. (2017-present)
Other Board Service:
Go Health (2017-present)
Recent Past Public Company Board Service:
Nordstrom FSB (2014-2017)
Marketo (2015-2016)
Brunswick Corporation (2006-2014)

Since 2018, has served as Chief Marketing Officer for Duolingo, a language education platform.

Since 2017, has served as a Director of Planet Fitness.

Previously was a private consultant supporting organizations with strategic initiatives to accelerate growth and innovation, and coached leaders on how to achieve maximum results, impact, and enjoyment.

From 2010 to 2014, served as the U.S. President and Global Chief Marketing Officer of KidZania, an international location-based entertainment concept focused on children’s role-playing activities.

From 2007 to 2010, served as Executive Vice President for Nintendo, with oversight of all sales and marketing activities for the company in the United States, Canada, and Latin America.

From 2003 to 2007, was Chief Marketing Officer for Yahoo!

Previously at Frito-Lay for 13 years in various leadership roles in sales and marketing, including serving as the company’s Chief Customer Officer and as Vice President of Kids and Teens Marketing.

Holds a B.S. in business administration from the University of Richmond and an M.B.A. from Harvard Business School.

Brings to the board of directors more than 20 years of experience as a senior marketing and general management executive, launching and growing consumer businesses in entertainment, media, consumer electronics, and packaged goods, including experience in marketing strategy, communications, data analytics, loyalty, digital transformation, and governance including service as the Nominating and Governance Chair at Planet Fitness, Inc., among other skills and qualifications.

Based on the foregoing, our board of directors has concluded Ms. Dunaway should continue as a member of our board.
G.J. Hart, 64
Director Since: August 2019
Current Committees:

Compensation

Finance
Other Board Service:
Make A Wish Foundation (2012-present)
Portillo’s (2014-present)
James Madison University of Business
(2005-Present)
The Hart School (2006-present)
Recent Past Public Company Board Service:
Texas Roadhouse (2004-2011)

Served as Chief Executive Officer for Torchy’s Tacos, a privately-held fast-casual restaurant concept, from 2018 until his retirement in December 2021.

From 2011 to 2018, served as Executive Chairman and Chief Executive Officer of California Pizza Kitchen.

From 2000 to 2011, served as President of Texas Roadhouse Holdings, LLC, and as Chief Executive Officer and member of the board from 2004 to 2011, during which time the company’s TSR outperformed the market and the company increased revenues from $63 million to over $1 billion.

Earlier in his career, held leadership positions at TriFoods International, New Zealand Lamb Company, and Shenandoah Valley Poultry, among others.

Brings to the board of directors more than 35 years of experience in the food and beverage industry driving growth and innovation, among other skills and qualifications.

Based on the foregoing, our board of directors has concluded Mr. Hart should continue as a member of our board.
Kalen F. Holmes, 55
Director Since: August 2016
Current Committees:

Compensation (Chair)
Other Public Company Board Service:
Zumiez Inc. (2014-present)
1Life Healthcare, Inc. (2017-present)
Other Board Service:
Pacific Northwest Ballet, Advisory Board (2019 -present)

Since 2017, has served as a Director of 1Life Healthcare, during which time the company has significantly grown its revenues, members, and launched its Initial Public Offering.

From 2009 until retirement in 2013, served as Executive Vice President of Partner Resources (Human Resources) at Starbucks Corporation.

From 2003 to 2009, held a variety of leadership roles with human resources responsibilities for Microsoft Corporation.

Previously held leadership roles in a variety of industries, including high-tech, energy, pharmaceuticals, and global consumer sales.

Holds a B.A. in Psychology from the University of Texas and a M.A. and Ph.D. in Industrial/Organization Psychology from the University of Houston.

Brings to the board of directors more than 20 years of experience as a senior human resources executive, experience with management of executive and compensation programs, and management across multiple industries including retail, technology, and consumer products, among other skills and qualifications.

Based on the foregoing, our board of directors has concluded Ms. Holmes should continue as a member of our board.
 
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Steven K. Lumpkin, 67
Director Since: August 2016
Current Committees:

Audit (Chair)

Finance
Other Board Service:
Hodgdon Powder Company (2015-present)
Trading Company Holdings, LLC (2015-present)
Fiorella Jack’s Stack Restaurant Group
(2009-present)
Recent Past Public Company Board Service:
Applebee’s International, Inc. (2004-2007)

Currently serves as Principal of Rolling Hills Capital Partners, a consulting firm.

From 1995 until retirement in 2007, served in various executive positions at Applebee’s International, Inc., including as Chief Financial Officer and Treasurer from 2002 to 2007, during which time the company’s TSR outperformed the market, and Director from 2004 to 2007.

Previously served as Executive Vice President and Director at Kimberly Quality Care, Inc.

Holds a B.S. in Accounting from the University of Missouri-Columbia and is a CPA.

Brings to the board of directors more than 30 years of experience in the management consulting, health care, and restaurant industries, among other skills and qualifications.

Has extensive M&A and management experience for franchise operations and an accounting and finance background.

Based on the foregoing, our board of directors has concluded Mr. Lumpkin should continue as a member of our board.
Paul J.B. Murphy III, 67
Director Since: October 2019
Recent Past Public Company Board Service:
Noodles & Company (2017-2019)
Del Taco Restaurants, Inc. (2014-2017)

Since October 2019, has served as our President, Chief Executive Officer, and Director.

From 2017 to 2019, served as Executive Chairman of Noodles & Company where he was responsible for 459 restaurants across 29 states and led a business turnaround that delivered 4 consecutive quarters of positive comparable restaurant sales growth on revenues of $457 million.

From 2009 to 2017, served as CEO and a member of the board of directors of Del Taco Restaurants, Inc., where he was responsible for 543 company- operated and franchised restaurants with revenues of $470 million and led a successful brand repositioning that resulted in 17 consecutive quarters of company-operated comparable restaurant sales growth and 11 consecutive quarters of system-wide comparable restaurant sales growth.

From 1996 to 2008, held various roles with Einstein Noah Restaurant Group, Inc.; joined as Senior Vice President, Operations and was promoted to Executive Vice President, Operations in 1998, and to Chief Operating Officer in 2002. In 2003, he was appointed President and CEO and a member of the board of directors.

Has significant experience in both operational and executive leadership in the restaurant industry, including leading companies through successful business transformations.

Brings to the board of directors over 20 years of experience in operational and executive leadership in the restaurant industry, including proven business transformation experience, among other skills and qualifications.

Based on the foregoing, our board of directors has concluded Mr. Murphy should continue as a member of our board.
David A. Pace, 63
Director Since: August 2019 (Board Chair since November 2019)
Current Committee:

Compensation
Other Public Company Board Service:
Tastemaker Acquisition Corporation
(2020-present)
Other Board Service:
Dallas Stars Ownership Advisory Board (2017-present)
Recent Past Public Company Board Service:
Jamba Juice (2012-2018)

Since October 2020, has served as Co-Chief Executive Officer of Tastemaker Acquisition Corporation, a special purpose acquisition company focusing on the restaurant, hospitality, and related technology and service sectors.

From 2012 to 2018, served as Director of Jamba Juice and as CEO from 2016 to 2018, during which the company delivered 8 consecutive quarters of comparable store sales growth that exceeded the industry benchmark, exited non-core and underperforming business units, and successfully merged with Focus Brands.

From 2014 to 2016, served as President of Carrabba’s Italian Grill, and as Executive Vice President and Chief Resource Officer of Bloomin’ Brands from 2010 to 2014.

Previously held executive positions with Starbucks Coffee Company, PepsiCo, Inc., and Yum! Brands, Inc.

Brings to the board of directors more than 30 years of leadership and turnaround experience in a range of industries including food and beverage retail, consumer products, entertainment, and ecommerce, among other skills and qualifications.

Based on the foregoing, our board of directors has concluded Mr. Pace should continue as a member of our board.
 
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Allison Page, 37
Director Since: February 2020
Current Committees:

Nominating and Governance

Finance
Other Board Service:
SevenRooms, Inc. (2011-present)
Pillsbury Institute for Hospitality Entrepreneurship at Cornell University
(2018-present)

Co-Founder and President of SevenRooms, a data-driven operations, marketing, and guest engagement platform that empowers hospitality operators to maximize revenue, build brand loyalty, and enable personalized experiences across the guest journey.

Since SevenRooms’ founding in 2011, has been responsible for driving product innovation; defining the company’s product roadmap, vision, and strategic positioning; growing the company to over 150 employees across 4 global offices; and scaling the platform to over 250 cities worldwide.

From 2009 to 2011, served as an Associate at Hodes Weill & Associates, and was a founding member of the independent real estate and advisory business.

Began career in investment banking at Credit Suisse.

Holds a B.S. in Finance and Real Estate from The Wharton School, University of Pennsylvania.

Brings to the board of directors more than 10 years of leadership experience as an entrepreneur in the hospitality industry and in launching, building, and commercializing high-growth technology platforms at scale across global restaurant, hotel, and entertainment brands, among other skills and qualifications.

Brings extensive knowledge in the areas of technology, guest experience, guest engagement, CRM, marketing, loyalty, data analytics, and consumer trends; was named one of Hospitality Technology’s 2019 “Top Women in Restaurant Technology.”

Based on the foregoing, our board of directors has concluded Ms. Page should continue as a member of our board.
Anddria Varnado, 36
Director Since: March 2021
Current Committees:

Nominating and Governance

Compensation
Other Public Company Board Service:
Umpqua Holdings Corporation (2018-present)

Since December 2020, has served as GM and Head of the Consumer Business at Kohler Company, a global leader in home products, hospitality destinations, and systems where she is responsible for consumer channels and ecommerce sales.

From 2019 to 2020, served as Vice President and Head of Strategy and Business Development at Macy’s where she was responsible for the strategic evaluation of the future of the store and consumer.

From 2016 to 2019, served as Vice President and Head of Strategy and Business Development at Williams-Sonoma.

Prior roles include Management Consultant at ZS Associates and leadership roles at New York Life Insurance Company.

Began career as a corporate banking analyst at Citigroup.

Holds a B.A. in Business Administration from Clark Atlanta University and an M.B.A. from Harvard Business School.

Brings to the board of directors deep expertise in the areas of consumer insights and innovation, consumer engagement, and strategic planning and development, among other skills and qualifications.

Based on the foregoing, our board of directors has concluded Ms. Varnado should continue as a member of our board.
Vote Required
Proposal No. 1 requires the approval of a majority of the votes cast for each director. Abstentions and broker non-votes are not considered votes cast and therefore will have no effect on the outcome of the vote.
Board Recommendation
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” ALL OF THE DIRECTOR NOMINEES.
 
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CORPORATE GOVERNANCE AND BOARD MATTERS
GOVERNANCE PRINCIPLES
The board of directors has created and oversees corporate governance guidelines which can be viewed on the Governance section of our website at: https://ir.redrobin.com/esg/governance-documents.
Executive Development and Management Succession
Under the Company’s corporate governance guidelines, the board maintains a policy and plan for the development and succession of the CEO and senior management that includes:

criteria that reflect the Company’s ongoing business strategies;

identification and development of potential internal candidates;

formal assessment processes to evaluate such potential internal candidates and their development; and

an emergency succession component to address the unforeseen loss of the CEO or other key executives.
The nominating and governance committee:

works closely with the board and management to ensure development and succession are anticipated, planned for, and addressed in a timely manner;

works closely with our CEO and each of the other executive officers to conduct annual succession planning activities;

this process includes annual performance reviews, evaluations, and development plans of the CEO and executive officers, who also conduct evaluations and development of their direct reports; and

at least annually, and when otherwise necessary, reviews, makes recommendations for, and reports to the board on programs that have been implemented by management for executive and leadership team development and succession planning.
Mr. Murphy regularly meets with the full board on his performance, and the CEO’s annual performance evaluation is conducted under the oversight of the compensation committee. Our CEO conducts annual and interim performance and development evaluations of the other senior executives and reviews these evaluations with the compensation committee or full board.
Stockholder Communication with our Board
The board and management believe the Company’s relationships with our stockholders and other stakeholders are an important part of our corporate governance responsibility and recognize the value of continuing communications. In the last 12 months, we held meetings and discussions with stockholders representing more than 50% of our outstanding shares.
This approach has resulted in our receiving important input and perspectives that have informed our decision making and resulted in action including the addition of new independent directors and enhanced human capital management and ESG disclosures. Throughout the year, we proactively engage with our stockholders directly, through individual meetings, attendance at investor conferences, issuance of press releases, and quarterly conference calls, as well as other stockholder communications. We discuss topics of importance to both our Company and stockholders, including value creation, strategy and performance, board refreshment and leadership changes, capital structure and allocation, and governance matters.
 
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The board values stockholder communication and provides many means for it to occur, including attending the annual meeting, voting, engaging, and writing, by sending a letter to the chair, the board of directors, or a committee addressed to: Board of Directors, 6312 South Fiddler’s Green Circle, Suite 200N, Greenwood Village, CO 80111, or by sending an e-mail to the board’s dedicated email address: Board@redrobin.com. Our finance committee and full board is involved in overseeing stockholder engagement.
With respect to issues arising under the Company’s Code of Ethics, you may also communicate directly with the chair of the audit committee, director of internal audit, or the compliance officer in the manner provided in the Code of Ethics and the Company’s Problem Resolution and Whistleblower Policy and Reporting Procedures. Both the Code of Ethics and the Problem Resolution and Whistleblower Policy and Reporting Procedures may be found on the Governance section of our website at: https://ir.redrobin.com/esg/governance-documents.
Red Robin follows the Investor Stewardship Group’s (ISG)
Corporate Governance Framework for U.S. Listed Companies
ISG Principle
Red Robin Practice
Principle 1:
Boards are accountable to stockholders

Declassified board structure with all directors standing for election annually

Majority voting in uncontested director elections, plurality voting in contested elections, and directors not receiving majority support must tender their resignation for consideration by the board
Principle 2:
Stockholders should be entitled to voting rights in proportion to their economic interest

No dual class structure; each stockholder gets one vote per share
Principle 3:
Boards should be responsive to stockholders and be proactive in order to understand their perspectives

Management and board members engaged directly with investors owning more than 50% of shares outstanding in the last 12 months

Engagement topics included value creation, Company strategy and performance, board refreshment and leadership changes, capital structure and allocation, executive compensation, ESG, and governance
Principle 4:
Boards should have a strong, independent leadership structure

Strong independent board chair

Board considers appropriateness of its leadership structure at least annually

Strong independent committee chairs

Proxy discloses why board believes current leadership structure is appropriate
Principle 5:
Boards should adopt structures and practices that enhance their effectiveness

Board members have diverse backgrounds, expertise, and skills

Currently, 90% of board members are independent

Robust board annual evaluation process and regular board education instead of arbitrary age or term limits

Active board refreshment plan; six new independent board members through refreshment in 2019-2021

Directors attended over 84% of combined total board and applicable committee meetings in 2021

Limits on outside board service for board members

Independent directors meet regularly in board and committee executive session without members of management present

Annual review of succession plan and talent development plan

Formal policy prohibiting hedging and pledging of Company securities by executive officers and directors
Principle 6:
Boards should develop management incentive structures that are aligned with the long-term strategy of the company

Executive compensation program received approximately 93.9% stockholder support in 2021

Compensation committee annually reviews and approves incentive program design, goals, and objectives for alignment with compensation and business strategies

Annual and long-term incentive programs are designed to reward financial and operational performance that furthers short- and long-term strategic objectives
 
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Board Leadership Structure
The board recognizes one of its key responsibilities is to evaluate and determine the optimal leadership structure to provide independent oversight of management. At this time, we believe it is appropriate for our board to maintain the separation of the roles of board chair and chief executive officer. David Pace currently serves as chair of the board because of his significant leadership experience, especially in the food and beverage retail industry.
The separation of the roles of board chair and chief executive officer allows our chief executive officer to focus on managing the Company’s business and operations, and allows Mr. Pace to focus on board matters, which we believe is especially important in light of the high level of regulation and scrutiny of public company boards. Further, we believe the separation of these roles ensures the independence of the board in its oversight role of evaluating and assessing the chief executive officer and management generally.
Board Role in Risk Oversight
Our executive officers have the primary responsibility for enterprise risk management within our Company. Our board actively oversees the Company’s risk management and regularly engages in discussions of the most significant risks the Company faces and how these risks are being managed.
The full board receives regular reports on enterprise risk areas from senior officers of the Company, including regarding COVID-19 related risks, human capital management, food safety, and cyber security.
The board delegates certain risk oversight functions to the audit committee. Under its charter, the audit committee is responsible for oversight of the enterprise risk assessment and management process and ensures the board or a designated committee is monitoring the identification, assessment, and mitigation of all significant enterprise risks. Robust discussion of enterprise risk management (ERM) is held at the full board level. The audit committee oversees policies and guidelines that govern the process by which major financial and accounting risk assessment and management may be undertaken by the Company. The audit committee also oversees our cybersecurity, ethics and compliance programs, and the internal audit function. With respect to cybersecurity, the audit committee monitors the Company’s cybersecurity risk profile, receives periodic updates from management on all matters related to cybersecurity, and reports out to the full board. Through its regular meetings with management, including the accounting, finance, legal, information technology, and internal audit functions, our Audit Committee reviews and discusses the risks related to its areas of oversight and reports to the board with regard to its review.
In addition, the other board committees receive reports and evaluate risks related to their areas of focus. The finance committee actively oversees the company’s risks related to capital structure and liquidity. The nominating and governance committee oversees ESG related risks and risks associated with board structure and other corporate governance policies and practices. The compensation committee oversees compensation-related risk management. The committees regularly report to the full board on the assessment and management of risks that fall under their purview.
The board believes the work undertaken by its committees, the full board, and the senior officers of the Company, enables the board to effectively oversee the Company’s risk management.
The Board’s Role in Management Succession Planning
The board, led by its nominating and governance committee, is actively engaged in succession planning and talent development, with a focus on the CEO and senior management of the Company. The board and the nominating and governance committee consider talent development programs and succession candidates through the lens of Company strategy and anticipated future opportunities and challenges. At its meetings throughout the year, the board and nominating and governance committee review progress of talent development and succession programs and discuss internal and external succession candidates, including their capabilities, accomplishments, goals, and development plans. The full board also reviews and discusses talent strategy and
 
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evaluations of potential succession candidates. In addition, potential leaders are given exposure to the board, which enables the board to select successors for the senior executive positions when appropriate.
Selection of Nominees for the Board
A key role of the board is to ensure that it has the skills, expertise, and attributes needed in light of the Company’s strategy, challenges, and opportunities. The board believes that there are skill sets, qualities, and attributes that should be represented on the board as a whole but do not necessarily need to be possessed by each director. The nominating and governance committee thus considers the qualifications and attributes of incumbent directors and director candidates both individually and in the aggregate in light of the current and future needs of the Company. The nominating and governance committee assists the board in identifying and evaluating persons for nomination or renomination for board service or to fill a vacancy on the board. The nominating and governance committee’s evaluation process does not vary based on whether a candidate is recommended by a stockholder, a board member, a member of management, or self-nomination. Once a person is identified as a potential director candidate, the committee may review publicly available information to assess whether the candidate should be further considered. If so, a nominating and governance committee member or designated representative for the nominating and governance committee will contact the person. If the person is willing to be considered for nomination, the person is asked to provide additional information regarding their background; their specific skills, experience, and qualifications for board service; and any direct or indirect relationships with the Company. In addition, one or more interviews may be conducted with nominating and governance committee and board members and nominating and governance committee members may contact one or more references provided by the candidate or others who would have first-hand knowledge of the candidate’s qualifications and attributes.
In evaluating the qualifications and attributes of each potential candidate (including incumbent directors) for nomination or re-nomination or appointment to fill a vacancy, the committee considers:

the candidate’s qualifications, consisting of his/her knowledge (including relevant industry knowledge), understanding of the Company’s businesses and the environment within which the Company operates, experience, skills, substantive areas of expertise, financial literacy, innovative thinking, business judgment, achievements, and other factors required to be considered under applicable laws, rules, or regulations;

the candidate’s attributes, comprising independence, personal and professional integrity, character, reputation, ability to represent the interests of all stockholders, time availability in light of other commitments, dedication, absence of conflicts of interest, diversity, appreciation of multiple cultures, commitment to deal responsibly with environmental and social issues and stakeholder concerns, and other factors that the committee considers appropriate in the context of the needs of the board;

familiarity with and respect for corporate governance requirements and practices;

with respect to incumbent directors, the evaluation of the individual director, their current qualifications, and his or her contributions to the board;

the current composition of the board and its committees; and

intangible qualities of the candidate, including the ability to ask difficult questions and, simultaneously, to work constructively with members of the board, as well as to work effectively with management.
The board considers the recommendations of the nominating and governance committee and then makes the final decision whether to renominate incumbent directors and whether to approve and extend an invitation to a candidate to join the board upon appointment or election, subject to any approvals required by law, rule, or regulation.
Board Membership and Director Independence
Our board of directors has determined that each of our directors, except our CEO, Mr. Murphy, qualifies as an independent director under the rules promulgated by the SEC and The Nasdaq Stock Market® (“Nasdaq”) listing standards. Therefore, 90% of our current directors are independent. Following the annual
 
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meeting, if all directors are elected, all of our continuing directors will be independent, except our CEO. Pursuant to SEC and Nasdaq rules and standards, only independent directors may serve on the board’s audit committee, compensation committee, and nominating and governance committee. All members of all board committees are independent in accordance with SEC rules and Nasdaq listing standards. There are no family relationships among any of our executive officers, directors, or nominees for directors.
Our board is committed to diversity and as such includes directors with gender and ethnic diversity and a diverse set of backgrounds, experience, and skills, including:

Executive leadership

Business transformation

Technology strategy

Marketing and consumer insights

Governance

Accounting

Talent, human capital, and organizational development

Finance, investor relations, strategic transactions, and M&A

Restaurant executive leadership

Value creation
Board Diversity Matrix as of April 4, 2022
Total Number of Directors
10
Female
Male
Part I: Gender Identity
Directors
4
6
Part II: Demographic Background
African American or Black
1
0
White
3
6
Director Attendance
The board of directors held 6 meetings in 2021. Each of our current directors who served in 2021 attended at least 84% of the aggregate total of meetings of the board of directors and committees during their period of service in 2021. The non-management directors of the Company meet at least quarterly throughout the year and as necessary or appropriate in executive sessions at which members of management are not present.
The board of directors strongly encourages each of the directors to attend the annual meeting of stockholders. All eleven of our directors serving at the time attended our 2021 annual meeting.
Committees of the Board
Our board of directors currently has four standing committees: an audit committee, a compensation committee, a finance committee, and a nominating and governance committee. The board added a finance committee in 2019 to provide guidance on long-range planning, budget and capital allocation, and extraordinary stockholder engagement, among other matters. Each standing committee generally meets at least once each quarter. In addition, other regular and special meetings are scheduled as necessary and appropriate depending on the responsibilities of the particular committee. Each committee regularly meets in executive session without management present. Each board committee operates pursuant to a written charter. The charter for each committee is available on the Corporate Governance section of our website at https://ir.redrobin.com/esg/governance-documents. Committee charters are reviewed at least annually by the respective committee to revise and update its duties and responsibilities as necessary.
 
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Name of Committee and Principal Functions
Current Members and Number
of Meetings in 2021
Audit Committee

Oversees our financial reporting activities, including our annual report and the accounting standards and principles followed

Reviews earnings releases and annual and quarterly reports, including use of any non-GAAP disclosures

Oversees the disclosure process, including understanding and monitoring of the Company’s disclosure committee

Selects and retains the independent auditor

Participates in the process to rotate and select the lead audit partner at least every five years

Reviews scope and results of audit to be conducted by the independent auditor

Evaluates performance and monitors independence, commitment to objectivity, and skepticism of selected independent auditor

Approves the budget for fees to be paid to the independent auditor for audit services and non-audit services; evaluates fees for reasonableness and fairness based on benchmarking

Oversees the Company’s internal audit function, scope and plan, and the Company’s disclosure and internal controls

Oversees the Company’s ethical and regulatory compliance

Provides oversight of the Company’s enterprise risk management

Regularly meets with independent auditor in executive session

Participates in the evaluation of independent auditor and lead audit partner
Committee Members:
Steven K. Lumpkin  [MISSING IMAGE: tm2025328d62-icon_chairbw.jpg][MISSING IMAGE: tm2025328d62-icon_calcubw.jpg]
Thomas G. Conforti [MISSING IMAGE: tm2025328d62-icon_calcubw.jpg]
Anthony A. Ackil
[MISSING IMAGE: tm2025328d62-icon_chairbw.jpg] Chairperson
[MISSING IMAGE: tm2025328d62-icon_calcubw.jpg] Determined by the board to be an audit committee financial expert as defined under SEC rules and be sophisticated under Nasdaq listed company rules
Number of Meetings in 2021:
The audit committee held eight meetings in 2021.
Compensation Committee

Develops and performs an annual performance evaluation of our CEO

Approves salary, short-term, and long-term incentive compensation programs for the CEO and all executive officers

Reviews and adopts employee benefit plans

Oversees compensation and benefits related ESG areas

Reviews and approves compensation for directors

May engage its own compensation consulting firms or other professional advisors to assist in discharging its responsibilities, as necessary
Committee Members:
Kalen F. Holmes  [MISSING IMAGE: tm2025328d62-icon_chairbw.jpg]
G.J. Hart David A. Pace
Anddria Varnado
[MISSING IMAGE: tm2025328d62-icon_chairbw.jpg] Chairperson
Number of Meetings in 2021:
The compensation committee held six meetings in 2021.
 
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Name of Committee and Principal Functions
Current Members and Number
of Meetings in 2021
Nominating and Governance Committee

Identifies, evaluates, and recommends to the board of directors, candidates for appointment or election to the board and their independence

Determines whether to recommend to the board to include the nomination of incumbent directors in the proxy statement

Considers candidates to fill any vacancies that may occur

At least once a year, considers whether the number of directors and skill sets is appropriate for the Company’s needs and recommends to the board any changes in the composition of the board

Evaluates and recommends to the board committee structure and membership

Develops and oversees the Company’s corporate governance policies

Oversees governance related ESG areas

Oversees the Company’s litigation and insurance coverage

Oversees the process to assess the performance of the board and its committees
Committee Members:
Cambria W. Dunaway   [MISSING IMAGE: tm2025328d62-icon_chairbw.jpg]
Anthony Ackil
Allison Page
Anddria Varnado
[MISSING IMAGE: tm2025328d62-icon_chairbw.jpg] Chairperson
Number of Meetings in 2021:
The nominating and governance committee held six meetings in 2021.
Finance Committee

Participates in and provides guidance to the board of directors and management on:

material acquisitions and dispositions

long range planning

annual budget

capital allocation (including share repurchase programs and 10b5-1 plan)

adjustments to capital structure

extraordinary stockholder engagement
Committee Members:
Thomas G. Conforti  [MISSING IMAGE: tm2025328d62-icon_chairbw.jpg]
G.J. Hart
Steven K. Lumpkin
Allison Page
[MISSING IMAGE: tm2025328d62-icon_chairbw.jpg] Chairperson
Number of Meetings in 2021:
The finance committee held five meetings in 2021.
 
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Board Evaluations
The board recognizes that a robust and constructive board evaluation process is essential to its effectiveness. As such, the board and each committee conduct annual evaluations to determine whether it and its committees are functioning effectively. As part of the evaluation process, each director also evaluates their own performance and periodically completes peer evaluations of the other directors, designed to assess individual director performance. The evaluation process is overseen by the nominating and governance committee, in consultation with the board chair. Outcomes of the evaluation process have been used to inform board succession planning, committee memberships, chair service, and enhancements to board effectiveness.
Review of Evaluation
Process & Assessment Guides
Assessment Guides &
Evaluation Forms
One-on-One Discussions
Evaluation Results

Nominating and Governance Committee reviews process and assessment guide forms

Drive robust discussion and valuable feedback

Focus on efficiency and effectiveness, board and committee composition, quality of board discussions, quality of materials and information provided, and board culture

One-on-one discussions between each member of the board and either the nominating and governance committee chair, board chair, or both, regarding evaluation results

Final evaluation results discussed with each committee and the full board in executive session
Indemnification of Directors
The Company has entered into agreements to indemnify its directors, executive officers, and certain other key employees. Under these agreements, the Company is obligated to indemnify its directors and officers to the fullest extent permitted under the Delaware General Corporation Law for expenses, including attorneys’ fees, judgments, fines, and settlement amounts incurred by them in any action or proceeding arising out of their services as a director or officer. The Company believes these agreements are necessary in attracting and retaining qualified directors and officers.
Limits on Outside Board Service
As provided in our corporate governance guidelines, without specific approval from our board, no director of the Company may serve on more than four public company boards (including the Company’s board) and no member of the audit committee may serve on more than three public company audit committees (including the Company’s audit committee). Any audit committee member’s service on more than three public company audit committees will be subject to the board’s determination that the member is able to effectively serve on the Company’s audit committee.
Stockholder Submission of Director Nominees
A stockholder may submit the name of a director candidate for consideration by the nominating and governance committee by writing to: Nominating and Governance Committee of the Board of Directors, Red Robin Gourmet Burgers, Inc., 6312 South Fiddler’s Green Circle, Suite 200N, Greenwood Village, CO 80111.
The stockholder must submit the following information in support of the candidate: (a) all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such person’s written consent to serve as a director if elected; and (b) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Company’s books, and of such beneficial owner,
 
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(ii) the class and number of shares of the Company that are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a description of any agreement, arrangement, or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of such stockholder’s notice by, or on behalf of, such stockholder and such beneficial owner, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of the Company, the effect or intent of which is to mitigate loss to, manage risk of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner, with respect to shares of stock of the Company, and (iv) whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of the Company’s voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Company’s voting shares to elect such nominee or nominees.
Certain Relationships and Related Transactions
For 2021, we had no material related party transactions that were required to be disclosed in accordance with SEC regulations.
The board of directors recognizes transactions between the Company and related parties present a heightened risk of conflicts of interest. To ensure the Company acts in the best interest of our stockholders, the board has delegated the review and approval of related party transactions to the audit committee. Pursuant to our Code of Ethics and the audit committee charter, any related party transaction required to be disclosed in accordance with applicable SEC regulations must be reviewed and approved by the audit committee. In reviewing a proposed transaction, the audit committee must:

satisfy itself that it has been fully informed as to the related party’s relationship and interest, and as to the material facts of the proposed transaction; and

consider all the relevant facts and circumstances available to the committee.
After its review, the audit committee will only approve or ratify transactions that are fair to the Company and not inconsistent with the best interests of the Company and our stockholders.
Compensation Committee Interlocks and Insider Participation
During the last completed fiscal year, Cambria W. Dunaway, G.J. Hart, Kalen F. Holmes, David A. Pace, and Anddria Varnado each served as members of the Company’s compensation committee for all or a portion of such period. None of the members of the compensation committee is, or at any time has been, an officer or employee of the Company. None of our current executive officers serves as a director of another entity that has an executive officer who serves on our board.
 
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DIRECTOR COMPENSATION
The compensation program for our directors is set forth in the table below. The director compensation program is evaluated annually by the compensation committee’s independent consultant to assess the program’s alignment with the market. As a result of the analysis, no changes to the compensation program were made in 2021.
Annual Retainer
Each non-employee director of the Company receives an annual cash retainer of $70,000, payable in substantially equal quarterly installments. In addition, the chair of the board and each board committee chair receive annual retainers in substantially equal quarterly installments:
Chair of the board
$
85,000
Chair of audit committee
$
15,000
Chair of compensation committee
$
12,500
Chair of nominating and governance committee
$
10,000
Chair of finance committee
$
10,000
Equity Awards
Each non-employee director receives an annual grant of restricted stock units with a grant date value of approximately $110,000 and a vesting term of one year or the date of the next annual meeting of stockholders, whichever is earlier. The vesting term is consistent with the Company’s declassification of its board of directors with annual elections for one-year terms (until the next annual meeting) in accordance with governance best practices.
2021 Director Compensation
The following table sets forth a summary of the compensation earned by our non-employee directors in fiscal 2021.
Name
Fees Earned
or Paid
in Cash
($)
Stock
Awards
($)(1)
All Other
Compensation
($)(2)
Total
($)
Current Directors
Anthony S. Ackil.
70,000
113,411
183,411
Thomas G. Conforti
80,000
113,411
193,411
Cambria W. Dunaway
80,000
113,411
193,411
G.J. Hart
70,000
113,411
183,411
Kalen F. Holmes
82,500
113,411
195,911
Steven K. Lumpkin
85,000
113,411
198,411
David A. Pace
155,000
113,411
268,411
Allison Page.
70,000
113,411
183,411
Anddria Varnado(3)
54,034
132,296
186,330
Former Directors
Glenn B. Kaufman(4)
70,000
113,411
183,411
(1)
Each director was awarded 3,201 restricted stock units in May 2021. The fair value of such restricted stock units was computed in accordance with the guidance for accounting for stock compensation at $35.43 per share for all directors. All such restricted stock units are subject to vesting in full one year from the date of grant, or the date of the next annual meeting of stockholders, whichever is earlier.
(2)
The aggregate amount of all other compensation paid to each director in fiscal year 2021 did not exceed $2,500 per director.
(3)
Ms. Varnado joined the board in March 2021. The 2021 restricted stock unit award for Ms. Varnado of 3,734 shares included an additional pro-rated amount for her partial service prior to May 2021.
 
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(4)
Mr. Kaufman retired and concluded his board service on December 31, 2021, on which date his 2021 restricted stock unit award was cancelled for no consideration.
As of the end of the fiscal year 2021, the aggregate number of options and restricted stock units outstanding for each non-employee director is set forth below. Options are considered outstanding until exercised and restricted stock units are considered outstanding until vested and paid.
Directors
Options
Restricted
Stock Units
Anthony S. Ackil
3,201
Thomas G. Conforti
3,201
Cambria W. Dunaway
5,000
3,201
G.J. Hart
3,201
Kalen F. Holmes
5,000
3,201
Steven K. Lumpkin
5,000
3,201
David A. Pace
3,201
Allison Page
3,201
Anddria Varnado
3,734
Former Director
Glenn B. Kaufman
3,201
Director Stock Ownership Guidelines
The compensation committee has stock ownership guidelines in place for non-employee directors which require non-employee directors to own Company securities with a cumulative cost basis of at least five times the director’s annual retainer. Based on the current annual retainer for non-employee directors, that dollar amount is $350,000. The value of each director’s holdings is based on the value of securities held, which is calculated using the 30-day average share price of the Company’s common stock. Equity owned of record or beneficially, including restricted stock units and vested in-the-money options, are credited toward the guidelines. New non-employee directors have five years from the time the director joins the board to reach the minimum ownership threshold. Non-employee directors may not sell, transfer, or otherwise dispose of common stock that would decrease such director’s cumulative cost basis below the ownership guideline amount. All of our directors are currently in compliance or on track to be in compliance with the guidelines at this time. In addition, a majority of directors have not sold any of their awarded shares.
 
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COMPENSATION DISCUSSION AND ANALYSIS
NAMED EXECUTIVE OFFICERS
In this Compensation Discussion and Analysis, we provide an analysis and explanation of our executive compensation program and the compensation derived from this program by our executive officers, including our “named executive officers.” For 2021, our named executive officers were:

Paul J.B. Murphy III, President and Chief Executive Officer

Lynn S. Schweinfurth, Executive Vice President and Chief Financial Officer

Jonathan A. Muhtar, Executive Vice President and Chief Concept Officer

Michael L. Kaplan, Executive Vice President, Chief Legal Officer, and Secretary

Darla Morse, Executive Vice President and Chief Information Officer
EXECUTIVE SUMMARY
Red Robin is committed to building long-term stockholder value. Our executive compensation program is designed to pay for performance and link incentives to current and long-term sustained achievement of Company strategic and financial goals. This executive summary provides an overview of our fiscal 2021 performance, compensation actions, and compensation outcomes based on pay for performance alignment. References to “2021” herein are to the Company’s fiscal year ended December 26, 2021.
2021 COMPANY OPERATIONAL AND PERFORMANCE HIGHLIGHTS
The COVID-19 pandemic continues to create unprecedented challenges for our industry, including government mandated restrictions, changing consumer behavior, labor and supply chain challenges, and widespread inflationary costs. Even as government restrictions were lifted, and dining rooms returned to full capacity, the surge in the Delta and Omicron variants continued to highlight the critical importance of providing a safe environment for our Team Members and Guests.
In response to these COVID-19 challenges, the Company limited dining hours and seating capacity to preserve the consistent quality experience our Guests expect from us. Our disciplined Guest focus is delivered through our TGX hospitality model, off-premises enhancements, and our management labor model.
Our ability to attract and retain Team Members has become more challenging in the current
competitive job market. Staffing is our number one priority; we have supported our staffing efforts through technology enhancements to the application and hiring process, improving our wage policies, holding national hiring days, and deploying internal and external resources to augment recruiting, hiring, and training efforts. The challenges in hiring and retention and global supply chain disruptions have affected many of our vendor partners, resulting in intermittent product and distribution shortages.
We remain focused on proactively addressing these industry challenges, while delivering a great Guest experience and continuing to prioritize the satisfaction and retention of our Team Members.
Despite the continued challenges of the COVID-19 pandemic, and associated staffing and supply chain headwinds, we made significant progress on executing our strategic business model during 2021. Our accomplishments in 2021 include the following:

Sustained off-premises sales of more than double pre-pandemic levels, with off-premises sales mix of 31.4% for the fourth quarter of 2021, compared to approximately 14.0% in the fourth quarter of 2019. Off-premises sales comprised $84.7 million, $85.1 million and $36.7 million of comparable restaurant revenue for the fourth quarters of 2021, 2020 and 2019, respectively;

Continued Donatos® roll-out to 120 Company-owned restaurants, bringing the total number of restaurants with Donatos® to 198 restaurants as of December 26, 2021. Restaurants that have been serving Donatos® pizza prior to 2021 are continuing to benefit from growing incremental sales
 
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beyond their first year as operations mature and brand affinity grows, with comparable restaurant revenue up 6.5% compared to 2019 in restaurants without supply chain issues;

At the end of 2021, we were 93% staffed at the salaried manager positions, and 96% staffed in the General Manager role;

Strengthened our executive team with the addition of G. Wayne Davis as our new Chief People Officer, a respected human resources executive who brings robust experience from multiple industries to Red Robin;

Launched integrated and seamless digital ecosystem for our Guests, including mobile applications on both iOS and Android platforms, an improved and more relevant digital Guest experience consisting of a new and improved website, and the integration of a new loyalty program;

Initiated the process to enter into a new five-year credit agreement to give the Company long-term flexibility to strategically invest in our business and create value for our shareholders, which was concluded in early 2022; and

Completed our lease renegotiation and restructuring initiative that we began in 2020 as a result of the COVID-19 pandemic, resulting in 3% to 4% occupancy savings over remaining lease terms on restructured leases and the highest number of total followers.
 
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2021 COMPENSATION ACTIONS
Our incentive programs demonstrate our commitment to a pay for performance compensation philosophy. The Company made multiple positive changes to its compensation program:

Included key strategic initiatives to support our strategy in the annual incentive plan for 2021 in addition to the Adjusted EBITDA goal.

Aligned our NEOs with shareholders with a long-term perspective on share price performance and increased the portion of “at risk” compensation with a long-term incentive program consisting of 50% weighted in performance stock units (PSUs), and 50% weighted in restricted stock units (RSUs) for the named executive officers.

Set the target for PSUs using a pre-established performance target for a three-year performance period, instead of setting targets annually over the three-year performance period.
The compensation committee set 2021 compensation for our named executive officers as follows:
Base Salary

Based on our total compensation philosophy and peer compensation levels as well as individual performance, the compensation committee approved a salary increase for the following named executive officers in May 2021:

Ms. Schweinfurth’s salary increased from $470,000 to $490,000.

Mr. Muhtar’s salary increased from $445,000 to $452,000.

Mr. Kaplan’s salary increased from $400,000 to $412,000.
Annual Performance-Based Incentive

The basic structure and primary metric (Adjusted EBITDA) of our annual performance-based cash incentive (STI) program remained the same in 2021 (80% weight). The 2021 bonus was also based on achieving strategic performance targets in 2021 including the rollout of Donatos® pizza to 110 locations (10% weight), and implementation of a new loyalty program platform (10% weight).

No changes were made to named executive officer performance-based cash incentive targets. The individual targets are based on market competitiveness, individual performance, and growth in roles, and serve to increase stockholder alignment, and place a portion of pay “at risk”.
 
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Long-Term Performance-Based Incentive

The structure of our long-term incentive (LTI) program opportunities in 2021 for our named executive officers and other executive officers consisted of PSUs (50% weight) and RSUs (50% weight). The long-term incentive program continued to use relative TSR as a pre-established performance target for a three-year cumulative performance period.

Individual targets are based on market competitiveness, individual performance, and growth in roles, and serve to increase stockholder alignment, increase the portion of “at risk” pay, and enhance retention. One of our named executive officers’ long-term incentive target as a percentage of salary was changed:

Ms. Schweinfurth’s annual LTI target as a percentage of salary was increased from 130% to 140% in May 2021.
2021 COMPENSATION OUTCOMES
The continuing COVID-19 pandemic and related labor shortage and supply chain disruption challenged the Company’s 2021 performance and, consequently, impacted our named executive officers’ compensation outcomes, consistent with our commitment to a pay for performance compensation philosophy. Based on 2021 performance, the compensation committee:

Approved a 34.5% payout of the annual incentive program based on achievement of above target for one financial goal (Adjusted EBITDA performance for the first fiscal quarter of 2021) and achievement of two major strategic performance goals: continued expansion of Donatos® pizza to an additional 110 restaurant locations, and implementation of our new loyalty program platform.

Made no adjustments to in-progress and outstanding long-term incentive awards, despite the negative consequences of the COVID-19 pandemic on the projected payouts of these awards and the temporary reduction of salaries.

Approved a payout of 4.49% of target for the PSU awards granted in 2019 (for the 2019-2021 performance period).
See “Compensation Discussion and AnalysisKey Components of our Executive Compensation ProgramIncentive-Based Compensation” for further information on the annual corporate incentive and long-term incentive program.
 
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COMPENSATION PHILOSOPHY
COMPENSATION PHILOSOPHY
Our executive compensation program is designed to pay for performance and link incentives to current and long-term sustained achievement of Company strategic and financial goals. It encourages our executive officers to think and act like owners, because they are owners and as such are compensated in significant part based on the performance of the Company.
PAY OBJECTIVES
Our compensation objectives are designed to link incentives and rewards with current and long-term sustained achievement of these goals:

Attracting, retaining, and motivating the best possible executive talent with the experience and leadership skills capable of driving performance and top- and bottom-line growth in sales and profitability;

Creating value for our stockholders by linking executive compensation to the achievement of measurable corporate objectives; and

Paying for superior results through a program that incentivizes and rewards achievement of both short-term and long-term organizational and functional objectives with a mix of compensation elements that place a significant portion of cash and equity compensation at risk.
PAY FOR PERFORMANCE ALIGNMENT
Our compensation program is designed to pay for performance and is comprised of performance- based short-term and long-term incentive awards. Such compensation varies in value and is at-risk of forfeiture or reduced payout if performance goals are not achieved or our stock price declines. Performance metrics used for the annual and long-term incentive programs are reviewed and approved by the compensation committee. Restricted stock units and stock options vest ratably over multiple years, the value of which is dependent, in whole or in part, on an increase in the Company’s stock price.
COMPENSATION DECISION PROCESSES
OVERVIEW

Executive compensation decisions are made by our compensation committee, which is comprised solely of independent directors.

When making compensation decisions, our compensation committee receives input from its independent compensation consultant and recommendations from our CEO for the CEO’s direct reports. Our compensation committee reviews benchmarking data of a peer group of restaurant companies as one input into the pay decision process. Other factors that influence pay decisions include, but are not limited to Company performance, individual performance, succession planning, and retention.
COMPENSATION SETTING
The compensation committee approves target total direct compensation levels for named executive officers by establishing base salaries and setting annual and long-term incentive compensation targets. The Company makes pay decisions based on a variety of factors, including:

Company performance

Company strategy and alignment of incentives

Benchmarking data for our restaurant peer group for target total direct compensation (base salaries, short-term incentives, and long-term incentives), based on disclosure in peer proxy statements and other applicable survey data

Individual performance and areas of responsibility relative to the market data
 
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Compensation relative to other executive officers in the Company

Advice from the committee’s independent compensation consultant

The CEO’s recommendations with respect to the compensation of the executives who report directly to the CEO, including the other named executive officers

Whether our compensation program encourages unnecessary or excessive risk taking

Results of the Company’s say-on-pay advisory votes in prior years

Management succession planning and retention
CONSIDERATION OF PRIOR SAY-ON-PAY VOTES
At our 2021 annual meeting of stockholders, 93.9% of votes were cast to approve the advisory “say on pay” vote on the 2020 compensation of our named executive officers. This is the third consecutive year of over 90% support for our “say on pay” proposal, with 96.9% of stockholders voting to approve our “say on pay” proposal in 2020 and 90.7% in 2019.
We believe the level of support we received from stockholders for the last three years was driven in part by our commitment to a pay for performance philosophy and our linking incentives to current and long-term sustained achievement of Company strategic goals. The compensation committee considered the results of the advisory vote when setting executive compensation for 2021 and will continue to do so in future executive compensation policies and decisions. We regularly engage with our stockholders and this engagement provides valuable insight that informs the work of both management and the board, including in the areas of executive compensation. In the last 12 months, we held meetings and discussions with stockholders representing more than 50% of our outstanding shares. See “Proxy SummaryStockholder Engagement” for more discussion about our engagement with our stockholders, including Company participants and topics covered.
BENCHMARKING
Restaurant Peer Group
Restaurant peer group companies were selected and approved by the compensation committee upon the recommendation of management and the committee’s independent compensation consultant and are based on their similarity to us with respect to several criteria, including revenue size, business model, and scope. The peer group used for 2021 compensation benchmarking consists of the 19 restaurant companies identified in the chart below.
In 2021, the compensation committee evaluated and updated its peers to the “New Peer Group” identified in the chart below. The Company’s compensation consultant recommended adding two restaurant companies to the peer group and the removal of one based upon factors such as revenue size, business model, and focus on domestic vs. international sales. As a result, Del Taco Restaurants and El Pollo Loco were added to the peer group. In addition, Domino’s Pizza, Inc. was removed from the Company’s peer group. No other changes were made to the Company’s peer group in 2021. The New Peer Group will be used for setting 2022 compensation.
2021 Peer Group
2022 New Peer Group
Biglari Holdings, Inc. Biglari Holdings, Inc.
BJ’s Restaurants, Inc. BJ’s Restaurants, Inc.
Brinker International, Inc. Brinker International, Inc.
Carrols Restaurant Group, Inc. Carrols Restaurant Group, Inc.
The Cheesecake Factory, Inc. The Cheesecake Factory, Inc.
Chuy’s Holdings, Inc. Chuy’s Holdings, Inc.
Cracker Barrel Old Country Store, Inc. Cracker Barrel Old Country Store, Inc.
Dave & Buster’s Entertainment, Inc. Dave & Buster’s Entertainment, Inc.
Denny’s Corporation Del Taco Restaurants, Inc.
Dine Brands Global, Inc. Denny’s Corporation
 
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2021 Peer Group
2022 New Peer Group
Domino’s Pizza, Inc. Dine Brands Global, Inc.
Fiesta Restaurant Group, Inc. El Pollo Loco Holdings, Inc.
Jack in the Box, Inc. Fiesta Restaurant Group, Inc.
Noodles & Company Jack in the Box, Inc.
Papa John’s International, Inc. Noodles & Company
Ruth’s Hospitality Group, Inc. Papa John’s International, Inc.
Texas Roadhouse, Inc. Ruth’s Hospitality Group, Inc.
The Wendy’s Company Texas Roadhouse, Inc.
The Wendy’s Company
The compensation committee uses competitive compensation data from the annual total compensation study of peer and other restaurant companies and other relevant survey sources to inform its decisions about overall compensation opportunities and specific compensation elements. Additionally, the compensation committee uses multiple reference points when establishing targeted compensation levels. The committee applies judgment and discretion in establishing targeted pay levels, considering not only competitive market data, but also factors such as company, business unit, and individual performance, scope of responsibility, critical needs and skill sets, leadership potential, and succession planning.
INDEPENDENT COMPENSATION CONSULTANT
In 2021, Meridian Compensation Partners, LLC (“Meridian”) again served as the compensation committee’s independent compensation consultant. The independent compensation consultant assists with the compensation committee’s annual review of our executive compensation program, cash and equity compensation practices, ongoing development of our executive compensation philosophy, and acts as an advisor to the compensation committee on compensation matters as they arise. The compensation consultant also advises the compensation committee on compensation for the board of directors. The compensation committee evaluated Meridian’s independence as its compensation consultant by considering each of the independence factors adopted by Nasdaq and the SEC. Based on such evaluation, the compensation committee believes no conflict of interest exists that would prevent Meridian from independently representing the compensation committee.
RISK MITIGATION
The compensation committee considers, in establishing and reviewing our executive compensation program, whether the program encourages unnecessary or excessive risk taking. The factors considered by the committee include:

the general design philosophy of our compensation policies and practices for employees whose behavior would be most affected by the incentives established by our compensation policies and practices, as such policies and practices relate to or affect risk taking by employees on our behalf, and the manner of their implementation;

our risk assessment and incentive considerations in structuring our compensation policies and practices or in awarding and paying compensation;

how our compensation policies and practices relate to the realization of risks resulting from the actions of employees in both the short term and the long term;

our policies regarding adjustments to our compensation programs and practices to address changes in our risk profile; and

material adjustments we have made to our compensation policies and practices as a result of changes in our risk profile.
The compensation committee believes it has mitigated unnecessary risk taking in both the design of the compensation plans and the controls placed upon them because:

payouts under our annual and long-term incentive compensation plans are capped;
 
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payouts under PSUs with relative TSR performance metric are capped at the target grant amount if Company TSR is negative;

long-term incentives feature multiple components; performance is measured over multi-year periods with value dependent on share price as compared to a group of key competitors;

the compensation committee has the ability to reduce payouts under our incentive compensation plans in its discretion;

executives are subject to robust stock ownership guidelines;

executives are subject to anti-hedging and anti-pledging policies with respect to our common stock;

the performance goals under our incentive programs relate directly to the business plan approved by the board of directors; and

there is an appropriate balance between our annual operating achievements and longer-term value creation, with a particular emphasis on longer-term value creation for our executives.
The compensation committee completes this evaluation annually. Accordingly, based upon the foregoing, the Company believes the risks arising from its compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
 
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2021 EXECUTIVE COMPENSATION
OVERVIEW
Our 2021 executive compensation program was comprised of three primary elements: (i) base salaries, (ii) annual performance-based cash incentives (STI), and (iii) long-term incentives (LTI) that include performance stock units (PSUs) based on a three-year performance period, and restricted stock units (RSUs). We believe the metrics used for both the annual performance-based cash incentive and long-term incentive grants drive stockholder value. The goals for our incentive plans are linked to the Company’s financial and strategic business plans.
By design, “at-risk” pay (incentive pay subject to forfeiture or partial or complete loss of value) comprised 82% of total target compensation for the CEO, Paul J.B. Murphy III, and 67% of total target compensation for the other named executive officers who were employed at the end of the year as a group. The charts below reflect the portion of our named executive officers’ 2021 total target compensation that is considered at-risk.
CEO
[MISSING IMAGE: tm223383d1-pc_ceobw.jpg]
Our pay for performance compensation is further demonstrated in actual 2021 CEO compensation:

Based upon 2021 performance, our CEO in 2021 earned a 34.5% payout of STI and no payout was earned for LTI.

No adjustments were made to in-progress and outstanding STI and LTI awards, despite the negative consequences of the COVID-19 pandemic on the projected payouts of these awards.

The CEO’s 2021 LTI compensation award links a substantial portion of his pay directly to shareholder return with 50% comprised of PSUs that are based on relative TSR and completely at-risk and subject to a capped payout if Company TSR is negative.
 
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Other Named Executive Officers
[MISSING IMAGE: tm223383d1-pc_neobw.jpg]
KEY COMPONENTS OF OUR EXECUTIVE COMPENSATION PROGRAM
Base Salary
Base salary provides a minimum level of remuneration to our named executive officers for their efforts. The compensation committee sets base salaries for our executives to reflect the scope of each executive’s responsibilities, experience, and performance. The compensation committee reviews base salaries annually as part of the benchmarking process and adjusts them from time to time to account for relevant factors such as market changes. The compensation committee also considers the CEO’s evaluation of each executive’s performance and reviews the CEO’s salary recommendations for our executives.
Incentive-Based Compensation
Annual Performance-Based Incentive. Annual performance-based cash incentives are intended to reward achievement of annual financial performance and strategic goals that drive long-term, sustained creation of stockholder value. Our annual incentive goals are established with reference to the annual portion of our multi-year strategic plan. The annual performance metrics are financial-based measures and strategic goals that the compensation committee believes are aligned with our strategy. The compensation committee continually evaluates the measures against which we gauge our performance and may incorporate additional or alternative metrics to incentivize executives to achieve appropriate performance targets and respond to industry changes or market forces.
Each of our executives participates in the annual incentive plan under which the compensation committee uses earnings before interest, taxes, depreciation, and amortization, or EBITDA, as the primary metric. EBITDA may be further adjusted under the 2017 Plan to remove the effect of any one or more of the following: equity compensation expense under ASC 718; accelerated amortization of acquired technology and intangibles; asset write-downs; litigation or claim judgments or settlements; changes in or provisions under tax law, accounting principles or other such laws or provisions affecting reported results; accruals for reorganization and restructuring programs; discontinued operations; restaurant closure costs; executive transition costs; acquisition and dispositions; a material change in planned capital expenditures; and any items that are unusual in nature, non-recurring, or infrequent in occurrence, except where such action would result in the loss of the otherwise available exemption of the Award under Code Section 162(m), if applicable, and is referred to herein as “Adjusted EBITDA.”
The Adjusted EBITDA (80% weight) measure was selected because we believe it best captures our operating results without reflecting the impact of decisions related to our growth, non-operating factors, and other matters. In addition, in 2021, the annual performance-based incentive plan included two strategic goals: rollout of Donatos® pizza to 110 locations (10% weight), and system implementation of the new loyalty program platform (10% weight) to incentivize and reward improvements in these strategically important areas.
 
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The Company grants annual performance-based incentive awards and cash incentive awards, if any, under the 2017 Plan. The compensation committee approves any payouts earned under the annual incentive program following review of actual results at the end of the year. The corresponding dollar payout value varies up or down depending on the actual performance level versus threshold, target, and maximum goals that are set at the beginning of the year. The compensation committee sets the payout ranges each year based on performance expectations and other factors. We believe our performance goals require “stretch” performance and encourage superior performance.
No payouts are earned if the threshold goals are not achieved. The compensation committee may also use various factors to exercise negative discretion when evaluating performance for purposes of awarding annual incentive compensation.
Long-Term Performance-Based Incentives. The compensation committee determines the long-term incentive grants for the executive officers, including the named executive officers, by reviewing peer group market data analysis from its compensation consultant, impact of share usage and affordability, internal equity, and recommendations from the CEO, among other factors. The compensation committee believes the current mix of performance and service-based incentives aligns the interests of executive officers with our stockholders and was appropriate for 2021.
The 2021 long-term incentive grants for named executive officers consisted of a mix of equity awards in the form of a long-term performance-based incentive component payable in PSUs (50%), and RSUs (50%). These awards are designed to focus management on our strategy of driving consistent, sustainable, achievement of long-term goals, both incrementally and over long performance periods. The annual granting of multi-year performance compensation is designed to ensure the execution of our evolving strategic plan, consider appropriate risks and returns, and allow for initiatives that span several fiscal years. The PSUs granted as part of the long-term incentive grants in 2021 have relative TSR as the performance metric and a three-year performance period. If the Company’s TSR is negative for the performance period, the maximum payout will be capped at the target grant amount regardless of relative outperformance to the peer group.
 
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2021 Long-Term Incentive Grants
[MISSING IMAGE: tm223383d1-pc_longtermbw.jpg]
Beginning in 2017 and continuing through 2019, the long-term performance-based incentive component became payable if annual targets selected by the committee are achieved for that tranche within the three-year performance period. When the performance measure has been met and approved by the compensation committee for a particular tranche during the three-year period of the award, that portion of units is determined but remains subject to a service-vesting requirement until the three-year period has concluded. That determined portion of units is considered “earned,” but is not considered vested and will not be delivered until the applicable three-year period has concluded subject to continued employment on such date. The annual metrics are independent of each other. For the second and third tranches of the 2019 long-term incentive grant, the compensation committee selected Adjusted EBITDA. For the first tranche of the 2019 grant, the compensation committee selected an earnings metric (Adjusted EBITDA) and a cash return on investment capital metric (CROIC) in the design to achieve a balance between earnings and return on investment and to effectively reward both. Beginning in 2020, the committee returned to setting long term performance goals measured over a multi-year performance period and selected a relative TSR metric. Like the goals in our annual performance-based plan, the goals used in our long-term performance-based incentive component are intended to be “stretch” goals, or challenging targets, and are meant to encourage superior performance.
The temporary transition to annual goals measured and assessed over a three-year period reflected the challenges of multi-year forecasting in a volatile restaurant operating environment, which continues to be impacted by changes in traditional consumer dining behavior, including a shift from traditional dine-in consumption to increased off-premise dining activity and the use of technology-based food ordering systems. Beginning in 2020, the compensation committee returned to setting goals over a multi-year period.
The 2017 Plan permits the compensation committee to make adjustments, in its discretion, for non-cash, non-recurring, or unusual items. In 2021, all long-term performance-based incentive awards were granted under the 2017 Plan.
 
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Employee Benefits
We also provide certain other customary retirement and health and welfare benefits and other ancillary compensation to executives, which are in line with those offered to other groups of our employees, and which comprise a modest portion of our named executive officer compensation.
Modest Perquisites
We offer a limited number of modest perquisites to our named executive officers, which include a car allowance, phone allowance, and in-restaurant meal discounts. In addition, where appropriate, we offer usual and customary relocation expense reimbursements including related tax reimbursements on relocation. We review the perquisites we offer to our executives and compare them to those offered by our competitors from time to time.
SUMMARY OF 2021 COMPENSATION ACTIVITY
Base Salary
Named executive officer salaries for 2021, along with any corresponding increases from their 2020 salaries, are set forth below. The compensation committee considers various factors when setting base salaries including peer compensation practices, market competitiveness, the Company’s performance, individual contributions, growth in roles, retention, CEO recommendations for the CEO’s direct reports, and other relevant matters. Amounts below are annualized for those that served in role for partial year.
Named Executive Officer
2020 Salary
2021 Salary
% Change
Paul J.B. Murphy III
$
900,000
$
900,000
Lynn S. Schweinfurth
$
470,000
$
490,000
4.3%
Jonathan A. Muhtar
$
445,000
$
452,000
1.5%
Michael L. Kaplan
$
400,000
$
412,000
3.0%
Darla Morse(1)
$
390,000
(1)
Ms. Morse commenced employment with the Company during fiscal year 2021. The 2021 amount above is annualized.
 
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Incentive-Based Compensation
2021 Annual Performance-Based Cash Incentives. The 2021 annual performance-based cash incentive program was based on two financial performance targets: (1) Adjusted EBITDA for the first fiscal quarter of 2021, and (2) Adjusted EBITDA for the balance of fiscal 2021 (Q2—Q4). Due to the uncertainty of the COVID-19 business environment and the challenge setting credible goals at the beginning of 2021, the compensation committee determined that using two performance periods was appropriate. The actual payouts for these financial targets were determined by comparing the Company’s first fiscal quarter Adjusted EBITDA to a target level of Adjusted EBITDA established by our compensation committee (8% weight) and the Adjusted EBITDA for the balance of the fiscal year to a target level of Adjusted EBITDA (72% weight). Potential payout amounts ranged from 0% to 200% of the executive’s target opportunity based on achievement of Adjusted EBITDA for the applicable period ranging from 85% to 115% of the target level of Adjusted EBITDA for the applicable period. The committee believes the 2021 EBITDA goals were rigorous and demonstrated our commitment to a pay for performance philosophy.
Adjusted EBITDA Target and Preliminary Annual Incentive %
Proportion of Adjusted EBITDA
Target Achieved
Payout as a
% of Target
Minimum
85%
25%
Target
100%
100%
Maximum
115%
200%
The 2021 annual performance-based cash incentive program was further based on two strategic performance targets: rollout of Donatos® pizza to 110 locations (10% weight), and system implementation of a new loyalty program platform (10% weight). Each initiative is measured independently, and the target bonus is earned for each strategic initiative only if the project target is achieved. The strategic components of the annual performance-based cash incentive were selected to align with updated 2021 strategic priorities which were focused on initiatives intended to drive future revenue growth and our digital capabilities.
Strategic Target
Payout Opportunity %
Donatos® rollout (110 locations)
10%
Loyalty program platform implementation
10%
In 2021, the Adjusted EBITDA financial target for the first fiscal quarter and the two strategic performance targets were met and resulted in a payout. The Adjusted EBITDA financial target for the balance of the fiscal year were not met and did not result in a payout. Based on actual performance during 2021, the total annual corporate bonus earned by our NEOs was 34.5%.
2021 Annual Performance-Based Cash Incentive Goal, Achievement, and Payout
Bonus Component—Financial
Target
Performance
(dollars in
thousands)
Actual
Performance
(dollars in
thousands)
Achievement
Percentage
Payout
Achieved
(before
weighting)
Weighting %
Actual
Bonus
Percentage
Earned
Q1 Adjusted EBITDA
$
23,900
$
26,825
112.2%
181.6%
8%
15.4%
Q2—Q4 Adjusted EBITDA
$
69,900
$
35,433
50.7%
0.00%
72%
0.00%
Bonus Component—Strategic
Weighting%
Actual
Bonus
Percentage
Earned
Donatos Rollout
110 locations
120 locations
109.1%
100.0%
10%
10.0%
New Loyalty Platform
Implemented
Implemented
100.0%
100.0%
10%
10.0%
Total
100%
34.5%
Each of our named executive officers has a target annual incentive opportunity expressed as a percentage of the executive’s salary and is set based on, among other factors, market and peer comparisons,
 
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and internal equity. The target and actual amounts of our annual performance-based cash incentives paid to our named executive officers in March 2022 for 2021 performance are as follows:
Named Executive Officer
2021
Annualized
Salary
Target
(% of
Actual
Salary)
$ Amount
at Target
2021
Actual
Payout
P. Murphy III
$
900,000
120%
$
1,080,000
$
372,924
L. Schweinfurth
$
490,000
75%
$
367,500
$
126,898
J. Muhtar
$
452,000
75%
$
339,000
$
117,057
M. Kaplan
$
412,000
70%
$
288,400
$
99,585
D. Morse
$
390,000
75%
$
208,114(1)
$
71,862
(1)
Target bonus amount was pro-rated based on hire date of April 12, 2021.
2021 Long-Term Incentive Program. The 2021 annual LTI grants made to our named executive officers consisted of 50% payable in performance stock units and 50% payable in restricted stock units.
2021 Long-Term Incentive Grants. In May 2021, the Company made the following annual grants to our named executive officers for the 2021-2023 long term incentive program:
Named Executive Officer
Total Long-Term
Incentive
Target Value ($)
Long-Term
Incentive
PSUs ($)
Time-Based
Restricted
Stock Units ($)
Paul J.B. Murphy III
3,135,000
1,567,500
1,567,500
Lynn S. Schweinfurth
759,500
379,750
379,750
Jonathan A. Muhtar
723,200
361,600
361,600
Michael L. Kaplan
515,000
257,500
257,500
Darla Morse
273,000
136,500
136,500
The amounts listed in the table above represent the target intended value of the grant and amounts may differ from the accounting values provided in the Summary Compensation Table below. The fair value of the restricted stock units and performance stock units in the table above is based on the grant date market value of the common shares. The market value of our common stock on May 19, 2021, the date of grant, was $35.37.
Long-Term Performance-Based PSUs. For the 2021-2023 long-term incentive grants, 50% was comprised of equity grants in the form of PSUs, as follows:
Named Executive Officer
Long-Term
Incentive PSUs
Granted
Grant Date
Market
Value
($)(1)
Paul J.B. Murphy III
45,779
1,567,473
Lynn S. Schweinfurth
11,090
379,722
Jonathan A. Muhtar
10,560
361,574
Michael L. Kaplan
7,520
257,485
Darla Morse
3,986
136,481
(1)
Target PSUs are rounded down to the nearest whole share and therefore may differ slightly from the target award value. The market value of the performance stock units in the table above is based on the grant date market value of the common shares. The market value of our common stock on May 19, 2021, the date of grant, was $35.37.
 
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The PSUs granted as part of the 2021-2023 long-term incentive grants have relative TSR as the performance metric and a three-year performance period. If the Company’s TSR is negative for the performance period, the maximum payout will be capped at the target grant amount regardless of relative outperformance to the peer group.
For the 2021 tranche of the 2019-2021 long-term incentive program, the performance-based incentive metric for the PSUs was Adjusted EBITDA. No PSUs could be earned if minimum threshold performance targets are not met and up to 200% of the target number of PSUs could be earned if maximum performance targets are achieved. From 2019 to 2021, the long-term performance-based incentive targets for each tranche were set annually.
For purposes of the 2021 tranche of awards under our long-term performance-based incentive, potential payout amounts ranged from 0% to 200% of the executive’s target opportunity based on achievement of Adjusted EBITDA ranging from 85% to 115% of the target level of Adjusted EBITDA for the year.
2021 Tranche Payout Scale: Adjusted EBITDA & Target and Preliminary Payout %
Target Achieved
Payout as a
% of Target
Below Minimum
<85%
0%
Minimum
85%
25%
Target
100%
100%
Maximum
115%
200%
For 2021, the long-term performance-based incentive percentage was below the minimum threshold and no amount was earned in respect of the 2021 tranche of outstanding long-term performance-based incentive awards.
2021 Tranche Long-Term Incentive Performance-based Incentive Goal, Achievement, and Payout
LTI Component
Target
Performance
Goal
(in thousands)
Actual
Performance
(in thousands)
Achievement
Percentage
Payout
Achieved
(before
weighting)
Weighting %
Actual
Bonus
Percentage
Earned
Adjusted EBITDA
$
116,000
$
62,259
53.7%
0.00%
100%
0.00%
Total
100%
0.00%
2019-2021 Long-Term Performance-Based Incentives. At the end of 2021, the Company completed a three-year performance cycle for the long-term incentive portion of the LTI plan. The performance period covered fiscal years 2019 through 2021, with targets set annually. Based on Adjusted EBITDA and CROIC performance in 2019, and Adjusted EBITDA performance in 2020 and 2021, our named executive officers earned a minimal payout for performance in fiscal year 2019 and no payout for 2020 and 2021, as reflected in the table below.
2019-2021 Cumulative Long-Term Incentive Performance Achievement
Tranche
Weight
Metrics /​
Weighting
Award
(% of Target)
Tranche #1 (Fiscal 2019)
33.33%
Adjusted EBITDA (50%)
CROIC (50%)
13.46%
Tranche #2 (Fiscal 2020)
33.33%
Adjusted EBITDA (100%)
0%
Tranche #3 (Fiscal 2021)
33.33%
Adjusted EBITDA (100%)
0%
Total
100.00%
4.49%
Adjusted EBITDA has been a steady and key metric to measure management performance and create stockholder value. We believe this chosen metric supports our management team’s alignment with stockholders. Further, we believe the below target payouts demonstrate our strong commitment to a pay for performance philosophy.
 
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Restricted Stock Units. The restricted stock units granted in 2021 vest ratably over three years on each anniversary date of the grant, which is designed to align incentives with longer-term value creation for stockholders.
Deductibility of Executive Compensation
The compensation committee considers the tax impacts of material elements of our executive compensation program. These factors alone do not drive our compensation decisions, but rather they are considered along with other factors such as the cash and non-cash impact of the program, and whether the program is consistent with our compensation objectives.
Historically, the compensation committee had generally structured our executive compensation in a manner designed to qualify for deductibility under the performance-based compensation exception from the limitation otherwise applicable under Section 162(m) of the Internal Revenue Code. The performance-based compensation exception has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our named executive officers in excess of $1 million is generally not deductible.
Due to ambiguities and uncertainties in the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of potential transition relief under the legislation repealing Section 162(m)’s exemption from the deduction limit, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) in fact will. Further, while we consider deductibility as one factor in determining executive compensation, in some cases we may decide it is either not possible or desirable to satisfy all of the conditions of Section 162(m) for deductibility and still meet our compensation needs. Accordingly, we may pay compensation that is not deductible under Section 162(m) from time to time.
2022 COMPENSATION PROGRAM
The Company continually assesses our compensation program to ensure it supports our business strategy and situation. For 2022, the annual incentive plan includes performance targets related to major strategic initiatives in addition to a significant portion based on the Adjusted EBITDA goal and will be measured based on the full fiscal year. The long-term incentive program mix consists of 50% weighted in PSUs and 50% weighted in RSUs for the named executive officers, which maintains a significant portion of executive compensation based on stockholder return. The 2022 long-term incentive program includes the setting of pre-established performance target goals for a multi-year performance period. The compensation committee selected relative TSR as the metric to be measured over the three-year performance period for PSU awards. If the Company’s TSR is negative for the performance period, the maximum payout will be capped at the target grant amount regardless of performance greater than the median of the peer group.
GOVERNANCE OF EXECUTIVE COMPENSATION

Pay for performance-focused executive compensation structure, with a significant portion of pay “at-risk”

Independent compensation committee approves executive compensation structure and performance goals

Independent compensation consultant advises the compensation committee

Payouts under our annual and long-term incentive compensation plans are capped

Long-term incentives feature multiple components; performance is measured over multi-year periods with value dependent on share price as compared to a group of key competitors; payouts are capped if TSR is negative

Double trigger required for cash severance and equity vesting upon change in control (other than certain performance awards)
 
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Meaningful stock ownership guidelines for executives and board members

Formal policy prohibiting hedging and pledging of Company securities by executive officers and directors

Clawback policy for the return of certain cash and equity executive incentive compensation in the event of a financial restatement

No excessive perks

No incentivizing of short-term results to the detriment of long-term goals and results

Compensation practices are appropriately structured to avoid incentivizing excessive risk taking

No excise tax gross ups for change in control related situations

No repricing of underwater options without stockholder approval
Executive Stock Ownership Guidelines
Stock ownership guidelines have been in effect for the Company’s executive officers and directors since March 2009. The compensation committee believes that executive stock ownership requirements increase alignment of executive interests with those of stockholders with respect to long-term ownership risk. The guidelines require executive officers to achieve during the term of the executive’s employment a dollar value of Company’s securities based on a multiple of base salary. The current ownership guidelines require our CEO to own five times base salary, three times base salary for executive vice presidents, and two times base salary for senior vice presidents. Pursuant to the guidelines, the value of the executive’s holdings is based on the value of Company securities held, which is calculated using the 30-day average share price of the Company’s common stock. Equity owned of record or beneficially, including restricted stock units, earned but unvested PSUs, and vested in-the-money options, are credited toward the guidelines. The executive officers have five years to achieve the guidelines from their effective date of employment or promotion date. An executive officer may receive additional time to achieve their minimum requirement if the officer’s requirement is increased, calculated based on the additional incremental amount, and the committee may otherwise exercise discretion in extending the time for compliance in other circumstances. All of our executive officers are currently in compliance or on track to be in compliance with their current guidelines.
Compensation Clawback Policy
The Company’s board of directors maintains a compensation clawback policy for its executive officers that provides for the recoupment by the Company of certain excess incentive compensation paid to the officers under certain circumstances. In the event of a restatement of the Company’s previously issued financial statements as a result of either (i) material non-compliance with financial reporting requirements under the securities law or (ii) intentional misconduct by an executive, the Company may recover, to the extent permitted by law, certain incentive compensation, including equity and cash awards, received by the executive that was in excess of what would have been paid in the absence of the incorrect financial statements. If additional clawback rules are approved by the SEC, the Company will review and revise its clawback policy to comply with the new rules.
Pledging and Hedging Transactions in Company Securities
The board has a policy prohibiting hedging and pledging of Company securities by executive officers and directors.
Anti-Hedging Policy
Hedging transactions may permit an executive officer or director to continue to own the Company’s securities obtained through an employee benefit plan or otherwise, but without the full risks and rewards of
 
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ownership. When this occurs, the executive officer or director may no longer have the same objectives as the Company’s other stockholders. Therefore, executive officers and directors are prohibited from engaging in any hedging transactions with respect to the Company’s securities, including, without limitation, through the use of financial instruments, such as prepaid variable forward contracts, equity swaps, collars, and exchange funds.
Anti-Pledging Policy
Pledging of Company securities by an executive officer or director as collateral for a loan or holding such securities in a margin account may result in the executive officer or director having interests that are no longer aligned with the long-term interests of the Company’s other stockholders because of such executive officer or director potentially being immune to the economic exposure to the pledged securities. Additionally, if pledged securities were forced to be sold, potentially without the consent of an executive officer or director due to a failure to meet a margin call or the default on a loan, there may be a violation of the Company’s Insider Trading Policy if the foreclosure or margin sale happens at a time that the executive officer or director is aware of material non-public information or otherwise prohibited from trading. Also, any such sale may result in a possible violation of Section 16 of the Exchange Act, as amended, as well as subject the Company to negative publicity. Accordingly, executive officers and directors are prohibited from making pledges of Company securities as collateral for a loan, or otherwise holding Company securities in a margin account.
Executive Employment Agreements
Each of Mr. Murphy, Ms. Schweinfurth, Mr. Muhtar, and Mr. Kaplan has an employment agreement with the Company, described below under “Executive Employment Agreements.” Except for Mr. Murphy’s, the employment agreements have indefinite terms, terminating on discontinuance of employment in accordance with the terms of the agreements. The agreements provide for severance payments upon certain terminations of employment. The compensation committee believes the terms of these agreements together with the Change in Control Plan (as defined below) are in line with market standards and are an important means to allow management to continue to focus on running the business of the Company in the event of a pending or actual change in control event or other event potentially affecting their employment. More detailed information concerning these severance payments appears below under the caption “Potential Payments upon Termination or Change in Control.”
COMPENSATION COMMITTEE REPORT
The compensation committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with the Company’s management. Based on this review and discussion, the compensation committee recommended to the Company’s board of directors that the Compensation Discussion and Analysis be included in this proxy statement.
THE COMPENSATION COMMITTEE
Kalen F. Holmes, Chair
G.J. Hart
David A. Pace
Anddria Varnado
 
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2021 EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
The following table sets forth summary information concerning compensation awarded to, earned by, or accrued for services rendered to the Company in all capacities by our principal executive officer, principal financial officer, and each of our three other most highly compensated executive officers who were serving as executive officers at the end of fiscal year 2021 (collectively, the named executive officers), for fiscal years 2019 through 2021:
Name and Principal Position
Year
Salary
($)(4)
Bonus
($)(5)
Stock
Awards
($)(6)
Option
Awards
($)(7)
Non-Equity
Incentive
Plan
Compensation
($)(8)
All Other
Compensation
($)(9)
Total
($)
Paul J.B. Murphy III(1)
2021
900,001
4,067,922
372,924
18,937
5,359,784
President and Chief
2020
806,539
387,000
3,047,621
749,997
108,000
17,976
5,117,133
Executive Officer
2019
180,000
275,000
1,599,996
8,162
2,063,158
Lynn S. Schweinfurth(2)
2021
483,077
985,457
126,898
19,735
1,615,167
Executive Vice President
2020
416,578
52,875
620,679
152,747
35,250
102,027
1,380,156
and Chief Financial Officer
2019
398,077
311,000
939,934
110,570
1,759,581
Jonathan A. Muhtar
2021
449,577
938,361
117,057
20,588
1,525,583
Executive Vice President
2020
394,174
50,063
655,472
161,309
33,375
23,071
1,317,464
and Chief Concept Officer
2019
425,000
200,000
594,968
170,424
24,610
1,415,002
Michael L. Kaplan
2021
407,847
668,227
99,585
14,651
1,190,310
Executive Vice President
2020
358,462
42,000
446,978
109,996
28,000
13,620
999,056
and Chief Legal Officer
2019
387,885
200,000
328,486
128,531
13,274
1,058,176
Darla Morse(3)
2021
277,500
100,000
486,832
71,862
111,610
1,047,804
Executive Vice President
and Chief Information Officer
(1)
Mr. Murphy joined the Company in October 2019. The base salary reported for Mr. Murphy in 2019 is prorated for the period of time he provided services to us in 2019. Mr. Murphy’s annual base salary in 2019 was $900,000.
(2)
Ms. Schweinfurth joined the Company in January 2019. The base salary reported for Ms. Schweinfurth in 2019 is prorated for the period of time she provided services to us in 2019. Ms. Schweinfurth’s annual base salary in 2019 was $450,000.
(3)
Ms. Morse joined the Company in April 2021. The base salary reported for Ms. Morse in 2021 is prorated for the period of time she provided services to us in 2021. Ms. Morse’s annual base salary in 2021 was $390,000. The annual bonus reported under Non-Equity Incentive Plan Compensation in 2021 is prorated for the time she provided services to us in 2021.
(4)
Amounts shown are not reduced to reflect the named executive officers’ elections, if any, to defer receipt of salary into the Deferred Compensation Plan.
(5)
Amounts under Bonus represent one-time sign-on bonuses received by Mr. Murphy in 2019 and 2020 and by Ms. Schweinfurth in 2019, in connection with their initial appointments with the Company pursuant to their employment agreements. In addition, the amount for Ms. Schweinfurth includes her guaranteed minimum bonus of $211,000 for fiscal year 2019, her first year at the Company, pursuant to her employment agreement. In 2019, amounts for each of Messrs. Muhtar and Kaplan represent one-time cash retention awards of $200,000 and $200,000, respectively. In 2020, amounts for each of Mr. Murphy, Ms. Schweinfurth, Mr. Muhtar, and Mr. Kaplan represent one-time cash recognition awards of $162,000, $52,875, $50,063, and $42,000, respectively.
 
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(6)
Amounts under Stock Awards represent the aggregate grant date fair value of restricted stock units and performance stock units awarded, computed in accordance with the accounting guidance for accounting for stock compensation. See Note 14 to our financial statements included in our annual report on Form 10-K for the fiscal year ended December 26, 2021 for descriptions of the methodologies and assumptions we used to value restricted stock units and PSUs. See “Outstanding Equity Awards at 2021 Fiscal Year-End” below for a listing of restricted stock unit and PSU awards outstanding for each named executive officer as of December 26, 2021.