UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A
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Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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Filed by the RegistrantxS
Filed by a Party other than the Registrant¨£
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| Definitive Proxy Statement | |
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| Soliciting Material under |
FIESTA RESTAURANT GROUP, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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20182021
Annual Meeting of Shareholders
Notice and Proxy Statement
May 2, 2018
April 28, 2021
10:00 A.M. (EDT)
9:00 A.M. (EST)Exclusively Live Via Webcast At
www.virtualshareholdermeeting.com/FRGI2021
Marriott Hotel, 255 Biscayne Boulevard WayMiami, Florida 33131
Chairman’s Letter
Fellow Shareholders:
We are pleased to present you with the 20182021 Proxy Statement of Fiesta Restaurant Group, Inc. (“Fiesta”) and cordially invite you to attend Fiesta’s 20182021 annual meeting of shareholders, which will be held at 9:10:00 a.m., localEastern time, on Wednesday, May 2, 2018April28, 2021. This meeting will be entirely virtual in response to the recommendations of public health officials during the COVID-19 pandemic. The virtual format will give more shareholders the opportunity to participate in the meeting, while ensuring everyone’s health and safety.
This past year presented unprecedented challenges for all of us. Here at the Marriott Hotel, 255 Biscayne Boulevard Way, Miami, Florida 33131.
2017 was a year of significant change for Fiesta. In February, we announced several leadership changes, including my appointment as Chairman of the Board and the appointment of our new Chief Executive Officer, Richard Stockinger (“Rich”), who is an experienced operator with a strong track record of successfully revitalizing restaurant companies. Within two months of his appointment, Rich, the Board and the rest of the management team worked together to establish a Strategic Renewal Plan and announced initial steps of this plan to drive long-term value creation. Priority initiatives include:
1. Revitalizing our Brands in Core Markets
2. Improving Capital Management and Financial Discipline
3. Establishing Platforms for Long-Term Growth
4. Optimizing our Restaurant Footprint
Over the remainder of the year, and while working through the impact and delays of two major hurricanes, Rich and the management team have been executing against this plan, which is their #1 priority. We still have much work to do but we are encouraged by the progress that has been made and are optimistic that successful execution of the Strategic Renewal Plan will drive substantial long-term shareholder value creation.
Shareholder Engagement: During 2017, independent members ofFiesta, our Board, of Directors and members oftogether with our management team, engagedfocused on a number core principles in the face of the COVID-19 global pandemic. We immediately instituted measures to ensure the safety of our guests and employees. Then, as a team, we assessed the volatile environment, met it head on and adjusted our business processes and strategic approach. While focusing on the operations of our core business during this time, we also endeavoured to maximize liquidity through a number of business initiatives designed to increase restaurant margins and enhance working capital efficiency. We made important investments in our digital platform and took advantage of the opportunity to grow off-premise sales channels, particularly through the drive-thru and technology enabled ordering and delivery platforms.
Despite the barriers posed by the pandemic, our management team continued to engage with shareholders representing more than 85% of our investor base. Thevirtually on a regular basis through available communications technology. We continue to utilize the valuable input received continues to be incorporated into our board’s deliberations and decisions, and we took several actions that were informed, in part, by the feedback we received. Key actions include:
• Corporate Governance: After being spun-offreceive from our former parent company,shareholders as we are entering our 6thyear as an independent publicly traded company. In line with shareholder feedbackdevelop the initiatives, actions and our evolution as a company, we are submitting at this annual meeting,strategy that will guide us through the current environment challenges and recommending that shareholders vote for, a proposal to approve an amendment to Fiesta’s Restated Certificate of Incorporation to declassify our board of directors and provide that all directors will be elected on an annual basis beginning at our 2019 annual meeting.into the future.
•Our current Board Refreshment:is made up of diverse individuals who hold a broad set of skills, experience, and expertise particularly appropriate for our business and the current environment. We are proud to have an active board refreshment program. Over the past year, we have welcomed two new independent directors to our board, in addition to our Chief Executive Officer. Our board also recently adopted a mandatory retirement policy, which provides that a person is not eligible for election as a director if he or she is older than 75 years of age. Our board members, including our twoadded four new independent board members andduring the past four years, many of whom, along with our Chief Executive Officer,executive team, bring significant restaurant and retail industry operating experience.
We appreciate the willingness of our shareholders to engage with us on these matters. We look forward to continuing to evolve our board, governance, compensation, and sustainability practices as part of the overall revitalization of Fiesta.
Sincerely,
Stacey Rauch
Chairman of the Board
Fiesta Restaurant Group, Inc.
FIESTA RESTAURANT GROUP, INC.
14800 Landmark Boulevard, Suite 500
Dallas, Texas 75254
__________________
You are invited to attend the 2021 Annual Meeting of Shareholders, which we refer to as the “2021 Annual Meeting”, of FIESTA RESTAURANT GROUP, INC., a Delaware corporation, which we refer to as “we”, “us”, “our”, the “Company”, “Fiesta Restaurant Group”, and “Fiesta”.
Date and Time:
Wednesday, April 28, 2021, at 10:00 A.M. (EDT)
Place:
Exclusively Via Live Webcast at www.virtualshareholdermeeting.com/FRGI2021
Record Date:
March 1, 2021
Notice and Voting:
Only shareholders of record as of the record date are entitled to receive notice of, and to vote at, the 2021 Annual Meeting, and at any adjournment or postponement thereof. You are entitled to one vote per proposal for each share of common stock held by you.
To Fiesta Restaurant Group Shareholders:
At the meeting, shareholders will be asked to consider and vote upon the following proposals:
(1) To elect the eight directors named in the Proxy Statement to serve until the next Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified;
(2) To adopt, on an advisory basis, a non-binding resolution approving the compensation of the Company’s Named Executive Officers, as described in the Proxy Statement under “Executive Compensation”;
(3) To approve the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan;
(4) To ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2021 fiscal year; and
(5) To consider and act upon such other matters as may properly come before the 2021 Annual Meeting.
A list of our shareholders as of the close of business on March 1, 2021 will be available for inspection during business hours for ten days prior to the 2021 Annual Meeting at our principal executive offices located at 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254. You may also examine our shareholder list during the 2021 Annual Meeting by following the instructions provided on the meeting website during the 2021 Annual Meeting.
Only shareholders of the Company or their duly authorized proxies may attend the 2021 Annual Meeting. Shareholders may attend the virtual annual meeting at www.virtualshareholdermeeting.com/FRGI2021. The meeting will only be conducted via webcast; there will be no physical meeting location. To participate in the virtual annual meeting, shareholders will need the 16-digit control number that appears on your proxy card or the instructions that accompanied the proxy materials. If you would like to attend the virtual meeting and you have your control number, please go to www.virtualshareholdermeeting.com/FRGI2021 prior to the start of the meeting to log in. Online access to the webcast will open approximately 15 minutes prior to the start of the 2021 Annual Meeting to allow time for our shareholders to log in and test their devices’ audio system.
We are taking advantage of the Securities and Exchange Commission rule that allows us to deliver our proxy materials (which include the Proxy Statement included with this notice, our 2020 annual report and form of proxy card) to shareholders via the Internet. As a result, our shareholders will receive a mailing containing only a notice of the meeting instead of paper copies of our proxy materials.
Your vote is important. Whether or not you plan to attend the virtual Annual Meeting via live webcast, please review our proxy materials and request a proxy card to sign, date and return or submit your proxy by telephone or through the Internet. If you attend the virtual Annual Meeting in person via live webcast, you may, if you desire, revoke your proxy and choose to vote in person at the virtual Annual Meeting via live webcast even if you had previously sent in your proxy card or voted by telephone or the Internet.
Very truly yours, | ||
Louis DiPietro | ||
Senior Vice President, Chief Legal and People Officer, General Counsel & Secretary |
Miami, Florida
March 19, 2021
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021 ANNUAL MEETING TO BE HELD ON APRIL28, 2021: THE PROXY STATEMENT FOR THE 2021 ANNUAL MEETING AND OUR 2020 ANNUAL REPORT ARE AVAILABLE FREE OF CHARGE AT WWW.PROXYVOTE.COM.
The approximate date on which the “Important Notice Regarding the Availability of Proxy Materials” was first sent or given to shareholders was on or about March 19, 2021.
EXECUTIVE SUMMARY
2021 Annual Meeting Information
Date | Time | Place | Record Date | |||
Wednesday, | 10:00 A.M. | Exclusively Via Live Webcast at | March 1, 2021 |
For additional information about our Annual Meeting, see the section titled “Questions and Answers About the 2021 Annual Meeting.”
Matters to be Voted on at Our 2021 Annual Meeting
BALLOT ITEMS | BOARD RECOMMENDATION | PAGE | ||
Proposal 1. Election of the eight directors named in the Proxy Statement to serve until the next Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified | FOR each director | 7 | ||
Proposal 2. Adoption, on an advisory basis, of a non-binding resolution approving the compensation of the Company’s Named Executive Officers, as described in the Proxy Statement under “Executive Compensation” | FOR | 50 | ||
Proposal 3. To approve the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan | FOR | 51 | ||
Proposal 4. Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2021 fiscal year | FOR | 59 | ||
Proposal 5. To consider and act upon such other matters as may properly come before the 2021 Annual Meeting |
How to Cast Your Vote
Shareholders of record can vote by any of the following methods:
Via Internet by visiting www.proxyvote.com. • Before the Annual Meeting — You may submit your proxy online via the Internet by following the instructions provided on the enclosed proxy card. Internet voting facilities will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on April 27, 2021. • During the Annual Meeting — You may attend the meeting via the Internet at www.virtualshareholdermeeting.com/FRGI2021 and vote during the meeting by following the instructions provided on the enclosed proxy card. | ||
Via telephone by calling 1-800-690-6903. | ||
Via mail (if you received your proxy materials by mail), you can vote by marking, dating, signing and timely returning the proxy card in the postage-paid envelope |
• If you hold your shares beneficially in “street name” through a broker, bank or other nominee, you may be able to complete your proxy and authorize your vote by proxy, by telephone or the Internet as well as by mail. You must follow the instructions provided by your broker or other nominee to vote your shares.
• If you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares of our common stock for you, your shares will not be voted with respect to Proposals 1, 2, 3 and 5, as we do not believe such proposals qualify for discretionary voting treatment by a broker.
• If you are a beneficial owner holding your shares in “street name” and you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares of our common stock for you, your shares of common stock will not be voted with respect to any proposal for which the shareholder of record does not have “discretionary” authority to vote.
FIESTA RESTAURANT GROUP, INC.
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PROPOSAL 1 | ||
7 | ||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 21 | |
24 | ||
25 | ||
26 | ||
35 | ||
36 | ||
40 | ||
41 | ||
42 | ||
42 | ||
42 | ||
48 | ||
PROPOSAL 2 | ||
50 | ||
PROPOSAL 3 | ||
TO APPROVE THE FIESTA RESTAURANT GROUP, INC. 2021 STOCK INCENTIVE PLAN | 51 | |
PROPOSAL 4 | ||
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 59 | |
60 | ||
64 |
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FIESTA RESTAURANT GROUP, INC.
14800 Landmark Boulevard, Suite 500
Dallas, Texas 75254
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL28, 2021
This Proxy Statement is furnished in connection with the solicitation of proxies by the board of directors of FIESTA RESTAURANT GROUP, INC., a Delaware corporation, to be used at the Annual Meeting of Shareholders, which we refer to as the “2021 Annual Meeting” or the “meeting”, of the Company which will be exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021 on Wednesday, April 28, 2021, at 10:00 A.M. (EDT), and at any adjournment or adjournments thereof. Only shareholders of record at the close of business on March 1, 2021, which we refer to as the “record date”, will be entitled to vote at the 2021 Annual Meeting. The approximate date on which the “Important Notice Regarding the Availability or Proxy Materials” was first sent or given to shareholders was on or about March 19, 2021.
Holders of our common stock at the close of business on March 1, 2021 will be entitled to vote at the 2021 Annual Meeting exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021. As of March 1, 2021, 26,282,446 shares of our common stock, $0.01 par value per share, were outstanding and each entitled to one vote. Shareholders are entitled to one vote for each share of common stock held. A majority, or 13,141,224 of these shares, present in person via live webcast or represented by proxy at the 2021 Annual Meeting, will constitute a quorum for the transaction of business.
This Proxy Statement and our 2020 Annual Report are also available at www.proxyvote.com.
All references in this Proxy Statement to “Fiesta Restaurant Group”, the “Company”, “we”, “us” and “our” refer to Fiesta Restaurant Group, Inc. References to the “board of directors” or “board” refer to the board of directors of Fiesta Restaurant Group.
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QUESTIONS AND ANSWERS ABOUT THE 2021 ANNUAL MEETING
Why did I receive an “Important Notice Regarding the Availability of Proxy Materials”?
Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission, which we refer to as the “SEC”, instead of mailing a printed proxy card or printed materials, we have elected to provide access to our proxy materials (which include this Proxy Statement, our 2020 annual report and form of proxy card) via the Internet. A Notice of Internet Availability of Proxy Materials, which we refer to as the “notice” will be mailed to our shareholders of record and beneficial owners (shareholders who own their stock through a nominee such as a bank or broker). The document will instruct shareholders on how to access the proxy materials on a secure website referred to in the notice or how to request printed copies.
In addition, by following the instructions in the notice, shareholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. Choosing to receive your future proxy materials by e-mail will save us the cost of printing and mailing documents to you. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.
What are the proposals that will be voted at the meeting?
At the 2021 Annual Meeting, the Company asks you to vote on five proposals:
Proposal 1: to elect the eight directors named in the Proxy Statement to serve until the next Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified;
Proposal 2: to adopt, on an advisory basis, a non-binding resolution approving the compensation of the Company’s Named Executive Officers, as described in the Proxy Statement under “Executive Compensation”;
Proposal 3: to approve the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan;
Proposal 4: to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2021 fiscal year; and
Proposal 5: to consider and act upon such other matters as may properly come before the 2021 Annual Meeting.
The board may also ask you to participate in the transaction of any other business that is properly brought before the 2021 Annual Meeting in accordance with the provisions of our Restated Certificate of Incorporation, as amended, which we refer to as the “Restated Certificate of Incorporation” and Amended and Restated Bylaws, as amended, which we refer to as the “Bylaws”.
THE BOARD UNANIMOUSLY RECOMMENDS VOTING
FOR THE ELECTION OF EACH OF THE BOARD’S NOMINEES ON PROPOSAL 1 AND FOR PROPOSALS2, 3 AND 4.
When will the 2021 Annual Meeting be held?
The 2021 Annual Meeting is scheduled to be held at 10:00 A.M. (EDT), on Wednesday, April 28, 2021 exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021.
How can I attend the 2021 Annual Meeting?
Only shareholders of the Company or their duly authorized proxies may attend the 2021 Annual Meeting. Shareholders may attend the virtual annual meeting at www.virtualshareholdermeeting.com/FRGI2021. The meeting will only be conducted via webcast; there will be no physical meeting location. To participate in the virtual annual meeting, shareholders will need the 16-digit control number that appears on your proxy card or the instructions that accompanied the proxy materials. If you would like to attend the virtual meeting and you have your control number,
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please go to www.virtualshareholdermeeting.com/FRGI2021 prior to the start of the meeting to log in. Online access to the webcast will open approximately 15 minutes prior to the start of the 2021 Annual Meeting to allow time for our shareholders to log in and test their devices’ audio system.
What if I am having technical difficulties?
If you are experiencing technical difficulties accessing the 2021 Annual Meeting, you may call the technical support numbers posted on the log-in page of the virtual meeting platform.
How can I submit a question at the 2021 Annual Meeting?
As part of the 2021 Annual Meeting, we will hold a live question and answer session during which we intend to answer all questions properly submitted during the 2021 Annual Meeting in accordance with the 2021 Annual Meeting Rules of Conduct that are pertinent to the Company and the 2021 Annual Meeting matters and as time permits. The 2021 Annual Meeting Rules of Conduct will be made available on the virtual meeting platform. Questions that we determine do not conform with the 2021 Annual Meeting Rules of Conduct, are not otherwise directly related to the business of the Company and are not pertinent to the 2021 Annual Meeting matters will not be answered. Each stockholder will be limited to one question so as to allow us to respond to as many stockholder questions as possible in the allotted time. We will address substantially similar questions, or questions that relate to the same topic, in a single response.
We ask that all stockholders provide their name and contact details when submitting a question through the virtual meeting platform so that we may address any individual concerns or follow up matters directly. If you have a question of personal interest that is not of general concern to all stockholders, or if a question posed at the 2021 Annual Meeting was not otherwise answered, we encourage you to contact us separately after the 2021 Annual Meeting by visiting https://www.frgi.com/investor-relations/investor-resources/investor-contacts/default.aspx.
Once you login to the virtual meeting platform at www.virtualshareholdermeeting.com/FRGI2021, you may select the “Q&A” button on the bottom right side of the virtual meeting platform interface and then type your question into the “Submit a Question” field and click “Submit”.
Please note that stockholders will need their valid 16-digit control number to ask questions at the 2021 Annual Meeting. See “How can I attend the 2021 Annual Meeting?” above for information on how to obtain your 16-digit control number. If you are a “beneficial owner,” also known as a “street name” holder, please see “How do I vote if my common shares are held in “street name”?’ below for more information.
Who is soliciting my vote?
In this Proxy Statement, the board is soliciting your vote.
How does the board recommend that I vote?
The board unanimously recommends that you vote by proxy using the proxy card with respect to the proposals, as follows:
• FOR the election of the eight named director nominees as directors;
• FOR on an advisory basis, the approval of the non-binding resolution on the compensation of the Company’s Named Executive Officers as described in the Proxy Statement under “Executive Compensation”;
• FOR the approval of the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan; and
• FOR the ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2021 fiscal year.
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Why is the board recommending FOR Proposals 1, 2, 3 and 4?
We describe all proposals and the board’s reasons for supporting Proposals 1, 2, 3 and 4 in detail beginning at page 7 of this Proxy Statement.
Who can vote?
Holders of our common stock at the close of business on March 1, 2021, the record date, may vote at the 2021 Annual Meeting.
As of March 1, 2021, there were 26,282,446 shares of our common stock outstanding, each entitled to one vote.
How do I vote if I am a record holder?
You can vote by attending the 2021 Annual Meeting and voting in person exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021, or you can vote by proxy. If you are the record holder of your stock, you can vote in the following three ways:
• By Internet: You may vote by submitting a proxy over the Internet. Please refer to the notice, proxy card or voting instruction form provided to you by your broker for instructions of how to vote by Internet.
• Before the Annual Meeting — You may submit your proxy online via the Internet by following the instructions provided on the enclosed proxy card. Internet voting facilities will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on April 27, 2021.
• During the Annual Meeting — You may attend the meeting via the Internet at www.virtualshareholdermeeting.com/FRGI2021 and vote during the meeting by following the instructions provided on the enclosed proxy card.
• By Telephone: Shareholders located in the United States may vote by submitting a proxy by telephone by calling the toll-free telephone number on the notice, proxy card or voting instruction form and following the instructions.
• By Mail: If you received proxy materials by mail, you can vote by submitting a proxy by mail by marking, dating, signing and returning the proxy card in the postage-paid envelope.
How do I vote if my common shares are held in “street name”?
If you hold your shares beneficially in street name through a nominee (such as a bank or broker), you may be able to complete your proxy and authorize your vote by proxy by telephone or the Internet as well as by mail. You should follow the instructions you receive from your nominee to vote these shares.
If you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares of our common stock for you, your shares will not be voted with respect to Proposals1,2, 3 and 5 as we do not believe such proposals qualify for discretionary voting treatment by a broker. We therefore encourage you to provide voting instructions on a proxy card or a provided voting instruction form to the bank, broker, trustee or other nominee that holds your shares by carefully following the instructions provided in their notice to you.
How many votes do I have?
Shareholders are entitled to one vote per proposal for each share of common stock held.
How will my shares of common stock be voted?
The shares of common stock represented by proxies will be voted in accordance with the directions you make thereon at the 2021 Annual Meeting, but if no direction is given and you do not revoke your proxy, your proxy will be voted: FOR the election of the eight named director nominees (Proposal 1); FOR, on an advisory basis, the approval of the non-binding resolution on the compensation of the Company’s Named Executive Officers as described in the
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Proxy Statement under “Executive Compensation,” (Proposal 2); FOR the approval of the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan (Proposal 3); and FOR the ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2021 fiscal year (Proposal 4).
What vote is required with respect to the proposals?
Proposal 1 will be decided by the affirmative vote of a majority of the shares of common stock voting with respect to such nominee. Proposals 2, 3, 4 and 5 will be decided by the affirmative vote of a majority of the votes present in person or represented by proxy. A shareholder over the Internet, by telephone, or by mail can vote “FOR,” “AGAINST” or “ABSTAIN” on Proposals 1, 2, 3, 4 and 5. Each of Proposals 1, 2, 3, 4 and 5 will pass if the total votes cast “for” a given proposal exceed the total number of votes cast “against” and “abstain” on such given proposal.
What is the effect of abstentions and broker non-votes on voting?
Abstentions and broker “non-votes” are included in the determination of the number of shares present at the 2021 Annual Meeting for quorum purposes. Abstentions count as a vote against the proposals. Broker “non-votes” are not counted in the tabulations of the votes cast or present at the 2021 Annual Meeting and entitled to vote on any of the proposals and therefore will have no effect on the outcome of the proposals. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner. We anticipate that only Proposal 4 presented at the 2021 Annual Meeting will allow nominees to exercise discretionary voting power.
If I have already voted by proxy against the proposals, can I still change my mind?
Yes. To change your vote by proxy, simply sign, date and return the proxy card or voting instruction form in the accompanying postage-paid envelope, or vote by proxy by telephone or via the Internet in accordance with the instructions in the notice, proxy card or voting instruction form. We strongly urge you to vote by proxy FOR Proposals 1, 2, 3 and 4. Only your latest dated proxy will count at the 2021 Annual Meeting.
Will my shares be voted if I do nothing?
If your shares of our common stock are registered in your name, you must sign and return a proxy card, vote over the Internet or by telephone or attend the 2021 Annual Meeting and vote in person exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021 in order for your shares to be voted.
If your shares of common stock are held in “street name,” that is, held for your account by a broker, bank or other nominee, and you do not instruct your broker or other nominee how to vote your shares, then, because Proposals 1, 2, 3 and 5 are “non-routine matters,” your broker or other nominee would not have discretionary authority to vote your shares on such proposals. If your shares of our common stock are held in “street name,” your broker, bank or nominee has enclosed a proxy card or voting instruction form with this Proxy Statement. We strongly encourage you to authorize your broker or other nominee to vote your shares by following the instructions provided on the proxy card or voting instruction form.
Please return your proxy card or voting instruction form to your broker or other nominee by proxy, simply sign, date and return the enclosed proxy card or voting instruction form in the accompanying postage-paid envelope, or vote by proxy by telephone or via the Internet in accordance with the instructions in the proxy card or voting instruction form. Please contact the person responsible for your account to ensure that a proxy card or voting instruction form is voted on your behalf.
We strongly urge you to vote by proxy FOR Proposals1,2, 3 and 4 by proxy over the Internet using the Internet address on the notice or proxy card, by telephone using the toll-free number on the notice or proxy card or by signing, dating and returning a proxy card by mail. If your shares are held in “street name,” you should follow the instructions on your proxy card or voting instruction form provided by your broker or other nominee and provide specific instructions to your broker or other nominee to vote as described above.
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What constitutes a quorum?
A majority of the outstanding shares of common stock, present in person or represented by proxy, will constitute a quorum for the transaction of business at the 2021 Annual Meeting. Votes withheld, abstentions and broker non-votes will be counted as present or represented for purposes of determining the presence or absence of a quorum for this meeting. In the absence of a quorum, the 2021 Annual Meeting may be adjourned by a majority of the votes entitled to be cast represented either in person or by proxy.
Whom should I call if I have questions about the 2021 Annual Meeting?
If you have any questions or you need additional copies of the proxy materials, please contact Louis DiPietro, Senior Vice President, Chief Legal and People Officer, General Counsel & Secretary by mail at 7255 Corporate Center Drive, Suite C, Miami, Florida 33126 or by telephone at (305) 671-1257.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021 ANNUAL MEETING TO BE HELD ON APRIL28, 2021: THE PROXY STATEMENT FOR THE 2021 ANNUAL MEETING AND OUR 2020 ANNUAL REPORT ARE AVAILABLE FREE OF CHARGE AT WWW.PROXYVOTE.COM.
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PROPOSAL 1 — ELECTION OF DIRECTORS
Our current directors are Stacey Rauch, Nicholas Daraviras, Stephen P. Elker, Brian P. Friedman, Sherrill Kaplan, Andrew V. Rechtschaffen, Nicholas P. Shepherd, Richard C. Stockinger and Paul E. Twohig. Eight directors will be elected at the 2021 Annual Meeting. Brian P. Friedman is not being renominated as a director at the 2021 Annual Meeting. Following the 2021 Annual Meeting, the size of the Company’s board of directors will be reduced to eight directors.
The election of a director requires the affirmative vote of a majority of the shares of common stock voting with respect to such nominee (excluding abstentions and non-votes). Each proxy received will be voted FOR the election of the eight directors named below unless otherwise specified in the proxy. Proxies cannot be voted for a greater number than the nominees named below.
On February 5, 2020, the Company entered into a Cooperation Agreement (the “Cooperation Agreement”) with AREX Capital Management, LP and certain of its affiliates (collectively, “AREX”). Pursuant to the Cooperation Agreement, the Company agreed to increase the size of the board of directors by one director seat and appointed Andrew Rechtschaffen (the “AREX Director”), an affiliate of AREX, to the board of directors and the Corporate Governance and Nominating Committee effective February 13, 2020. Pursuant to the Cooperation Agreement, Mr. Rechtschaffen will serve a term beginning February 13, 2020 and expiring at the 2020 Annual Meeting. We have further agreed to nominate Mr. Rechtschaffen for election at the 2021 Annual Meeting, with a term expiring at the 2022 annual meeting of stockholders (the “2021 Annual Meeting”). From the Appointment Date until the Termination Date (as defined below), upon the death or disability of the AREX Director, AREX Capital Management, LP shall have right to identify, and the board of directors shall appoint, a replacement director with relevant financial and business experience, who qualifies as independent under the SEC and NASDAQ rules and whose qualifications are substantially similar to Mr. Rechtschaffen.
With respect to each annual or special meeting of the Company’s stockholders, during the term of the Cooperation Agreement, AREX has agreed to vote the shares of the Company’s common stock then held by it in accordance with the board of directors’ recommendations on director election proposals and any other proposals submitted by the Company or a stockholder, except that AREX may vote in its discretion on Extraordinary Transactions (as defined in the Cooperation Agreement) and, other than with respect to director election or removal proposals, in accordance with the recommendations of Institutional Shareholder Services Inc. or Glass, Lewis & Co., LLC if either of them recommends differently from the board of directors.
AREX has also agreed to certain customary standstill provisions prohibiting it from, among other things, (i) making certain announcements regarding the Company’s transactions, (ii) soliciting proxies, (iii) acquiring, in the aggregate, beneficial ownership of more than 14.9% of the outstanding shares of the Company’s common stock, (iv) selling securities of the Company resulting in any third party owning more than 4.9% of the outstanding shares of the Company’s common stock (subject to certain exceptions set forth in the Cooperation Agreement), (v) taking actions to change or influence the board of directors, Company management or the direction of certain Company matters, and (vi) exercising certain stockholder rights.
Consistent with the terms of the Cooperation Agreement, in December 2020, the Company and AREX agreed to re-nominate Mr. Rechtschaffen for election at the 2021 Annual Meeting. As such, the term of the Cooperation Agreement was automatically extended until the date that is 30 days prior to the deadline under the Company’s amended and restated bylaws, as amended, for director nominations and stockholder proposals for the 2022 annual meeting of stockholders. Each of the Company and AREX has the right to terminate the Cooperation Agreement earlier if the other party commits a material breach of the Agreement and such breach is not cured within 15 days after notice or, if such breach is not curable within 15 days, the breaching party has not taken any substantive action to cure within such 15-day period.
At this time, our board of directors knows of no reason why the Company’s eight nominees would be unable to serve. There are no arrangements or understandings between any nominee and any other person pursuant to which such person was selected as a nominee.
Our Corporate Governance and Nominating Committee has reviewed the qualifications of the eight director nominees and has recommended the election of the eight directors recommended by the board.
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Director Nominees’ Principal Occupations, Business Experience, Qualifications and Directorships
Name of Nominee | Committee Membership | Principal Occupation | Age | Director Since | ||||
Stacey Rauch | Compensation, Corporate Governance and Nominating (Chair) | Chair of the Board of Directors of Fiesta Restaurant Group; Non-Executive director of Land Securities Group, PLC, and Heidrick & Struggles, Inc. | 62 | 2012 | ||||
Sherrill Kaplan | Audit | Global Marketing Advisor at Advent International; Director of Fiesta Restaurant Group | 43 | 2018 | ||||
Nicholas Daraviras | Corporate Governance and Nominating | Co-President of Leucadia Asset Management, a unit of Jefferies Financial Group Inc., Managing Director of Jefferies Financial Group Inc., and Director of Fiesta Restaurant Group | 47 | 2011 | ||||
Stephen P. Elker | Audit (Chair), Corporate Governance and Nominating | Director of Fiesta Restaurant Group; Director of various private-held companies in the finance and payments industries | 69 | 2012 | ||||
Nicholas P. Shepherd | Compensation, Audit | Board of Directors and a member of the Nominating & Corporate Governance Committee and the Compensation Committee of Spirit Realty Capital, Inc., Director of Fiesta Restaurant Group | 62 | 2017 | ||||
Paul E. Twohig | Compensation (Chair), Audit | Director of Fiesta Restaurant Group | 67 | 2017 | ||||
Andrew V. Rechtschaffen | Corporate Governance and Nominating | Director of Golden Arrow Merger Corp.; Director of JRC-NY, Inc.; Director of UJA Federation of New York; Director of Wharton Executive; Director of the Ramaz School; Director of Met Council; Director of Fiesta Restaurant Group | 43 | 2020 | ||||
Richard C. Stockinger | None | Chief Executive Officer, President and Director of Fiesta Restaurant Group | 62 | 2017 |
Stacey Rauch (Chair) | With her public company board experience and distinguished career working with retailers, wholesalers and manufacturers during her 24 years at McKinsey & Company, Inc., Ms. Rauch brings to our board substantial expertise in business strategy, marketing, merchandising and operations in the retail industry. | |
Committee Membership: | Biography: | |
• Compensation • Corporate Governance and Nominating (Chair) | Stacey Rauch has served as the non-executive Chairman of the board of directors of Fiesta Restaurant Group since February 2017 and as a director of Fiesta Restaurant Group since 2012. Ms. Rauch is a Director (Senior Partner) Emeritus of McKinsey & Company, Inc. from which she retired in September 2010. Ms. Rauch was a leader in McKinsey’s Retail and Consumer Goods Practices, served as the head of the North American Retail and Apparel Practice, and acted as the Global Retail Practice Convener. A 24-year veteran of McKinsey, Ms. Rauch led engagements for a wide range of retailers, apparel wholesalers, and consumer goods manufacturers in the United States and internationally. Ms. Rauch is also a non-Executive director of Land Securities Group, PLC, the UK’s largest commercial property company, where she sits on its Audit, Nomination and Remuneration Committees and Heidrick & Struggles, Inc., a premier provider of senior-level executive search and leadership consulting services, where she sits on the Audit and Finance Committee. |
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Nicholas Daraviras | Mr.Daraviras brings significant experience with the strategic, financial and operational issues of retail and consumer companies in connection with his service on the boards of a number of his firm’s portfolio companies over time. | |
Committee Membership: | Biography: | |
• Corporate Governance and Nominating | Nicholas Daraviras has served as a director of Fiesta Restaurant Group since April 2011. Mr. Daraviras has been a Managing Director of Jefferies Financial Group f/k/a Leucadia National Corporation (“Jefferies”) since 2014. From 1996 through 2014, Mr. Daraviras was employed with Jefferies Capital Partners LLC (“Jefferies Capital Partners”) or its predecessors. He was recently appointed Co-President of Leucadia Asset Management, a unit of Jefferies Financial Group Inc. He also serves on several boards of directors of private portfolio companies of Jefferies and he is also an officer of certain Jefferies related entities. | |
Stephen P. Elker | Mr.Elker, with over 36 years of experience with KPMG LLP, brings to our board of directors extensive knowledge of accounting and tax practices that strengthens our board of directors’ collective knowledge, capabilities and experience. | |
Committee Membership: | Biography: | |
• Audit (Chair) • Corporate Governance and Nominating | Stephen P. Elker has served as a director of Fiesta Restaurant Group since May 7, 2012. Until 2009, Mr. Elker spent over 36 years with KPMG LLP, the U.S. member firm of KPMG International, beginning in its Washington D.C. office, and then with offices in Rochester, New York and Orlando, Florida. In 1999, Mr. Elker was appointed as managing partner of the Orlando office and served as partner in charge of the Florida business tax practice from 2001 to 2009. Mr. Elker also served as a member of the Nominating Committee and Strategy Committee of KPMG. During his career with KPMG, Mr. Elker led engagements for several hospitality and retail clients including large, multi-unit restaurant companies. Mr. Elker is a certified public accountant and recently served as an independent director and Chairman of the Audit Committee of CNL Growth Properties, Inc., a public, non-traded real estate investment trust. Mr. Elker also serves on the board of directors of a privately held company in the payments industry. | |
Sherrill Kaplan | With her broad experience as a marketing executive at Zipcar and Dunkin’ Brands, Ms. Kaplan brings substantial retail and restaurant expertise in marketing and digital strategy, innovation, brand management and product development, particularly with respect to social media, loyalty management, CRM and mobile and digital payments, to our board of directors. | |
Committee Membership: | Biography: | |
• Audit • Corporate Governance and Nominating (served until February 2020) | Sherrill Kaplan has served as a director of Fiesta Restaurant Group since November 2018. Ms. Kaplan has served as the Global Marketing Advisor of Advent International since May 2020. Ms. Kaplan served as the Head of Marketing and Sales at Zipcar, Inc., a subsidiary of Avis Budget Group, Inc., from August 2018 to March 2020 and Vice President, Digital Marketing and Innovation at Dunkin’ Brands Group, Inc. from June 2011 to June 2018. Ms. Kaplan has also served as a member of the Consumer Advisory Board of American Express Company since March 2015. |
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Nicholas P. Shepherd | Mr.Shepherd, as former President and Chief Executive Officer of TGI Friday’s, Inc., brings significant leadership, management, operational, financial, marketing, franchising, brand management and public company board experience to the Board. | |
Committee Membership: | Biography: | |
• Compensation • Audit | Nicholas P. Shepherd has served as a director of Fiesta Restaurant Group since April 2017. Mr. Shepherd served as Chief Executive Officer and President of TGI Friday’s, Inc. (formerly known as Carlson Restaurants Worldwide Inc.) from 2009 until 2015. From 2008 until 2009, Mr. Shepherd served as Chief Executive Officer and Chairman of the Board of Directors of Sagittarius Brands, Inc., a private restaurant holding company, which owned and operated the Del Taco and Captain D’s restaurant brands. From 1995 until 2007, Mr. Shepherd served in several capacities at Blockbuster, Inc., including serving as Chief Operating Officer during 2007, President of Blockbuster North American from 2004 to 2007, Executive Vice President and Chief Marketing and Merchandising Officer from 2001 until 2004, Senior Vice President International from 1998 until 2001 and Vice President and General Manager from 1995 until 1999. Mr. Shepherd currently serves on the Board of Directors and as a member of the Nominating & Corporate Governance Committee and the Compensation Committee of Spirit Realty Capital, Inc., a publicly traded real estate investment trust. | |
Paul E. Twohig | With over 30 years of experience in the restaurant industry, Mr.Twohig brings to our board of directors significant leadership, management, operational, financial, marketing and franchising experience. | |
Committee Membership: | Biography: | |
• Audit • Compensation (Chair) | Paul E. Twohig has served as a director of Fiesta Restaurant Group since February 2017. Mr. Twohig is a global retail and food service senior executive with demonstrated success leading some of the world’s most prominent brands. Mr. Twohig served as President of MOD Super Fast Pizza Holdings, LLC (“MOD Pizza”) from October 2018 to January 2020 after previously serving as Chief Operating Officer of MOD Pizza from July 2017 until October 2018. From 2009 until 2017, Mr. Twohig served as President of Dunkin Donuts, U.S. and Canada. He was a member of the senior executive team that completed Dunkin Donuts’ initial public offering in 2011. Previously, Mr. Twohig held several senior executive roles with Starbucks Corporation, including Vice President and General Manager, U.K., and Senior Vice President, Eastern Division. Additionally, Mr. Twohig served as Chief Operating Officer and Executive Vice President at Panera Bread Company. His governance experience includes serving as a member of the Board of Directors for Dentistry for Children from 2011 to 2014, and for Solantic Urgent Care, Inc. from 2007 to 2011. | |
Andrew V. Rechtschaffen | With 20 years of experience in the investment industry, Mr.Rechtschaffen brings to our board of directors expertise in mergers and acquisitions, financial statement analysis, corporate governance, and corporate strategy. | |
Committee Membership: | Biography: | |
• Corporate Governance and Nominating | Andrew V. Rechtschaffen has served as a director of Fiesta Restaurant Group since February 2020. Mr. Rechtschaffen founded and has been the managing partner and portfolio manager of AREX Capital Management, LP, and its affiliated funds, a value-oriented investment firm since 2017. Prior to AREX Capital Management, LP, Mr. Rechtschaffen worked as |
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• | an analyst at Greenlight Capital (“Greenlight”) from 2011 through 2017, where he became a partner in January 2014. Earlier, he was the founder and portfolio manager of Obrem Capital from 2008 until 2010, a managing director in the Principal Strategies Group at Citadel Investment Group from 2005 until 2006, and with Greenlight from 2002 through 2005, where he became a Partner in 2005. Mr. Rechtschaffen has also served as a Director of Golden Arrow Merger Corp since March 2021. Golden Arrow Merger Corp. is a publicly traded special-purpose acquisition company initially focused on identifying a prospective target business in the healthcare or healthcare-related infrastructure industries in the United States and other developed countries. He has also served on the boards of JRC-NY, Inc., since July 2019, UJA Federation of New York since July 2014, Wharton Executive since July 2019, the Ramaz School since September 2014 and Met Council since January 2018. | |
Richard C. Stockinger | Mr.Stockinger, as Chief Executive Officer and President of Fiesta Restaurant Group, and with over three decades of experience as a senior executive officer and as a director of several restaurant companies, brings significant leadership, management, operational, financial, marketing, franchising, brand management and public company board experience to the Board. In particular, Mr.Stockinger brings valuable experience in brand revitalization and shareholder value creation. | |
Committee Membership: | Biography: | |
None | Richard “Rich” Stockinger has served as a director of Fiesta Restaurant Group since April 2017 and has been Chief Executive Officer and President of Fiesta Restaurant Group since February 2017. Previously, he served as President and Chief Executive Officer of Benihana, Inc. (“Benihana”) from 2009 until 2014, as a member of the Board of Directors of Benihana from 2008 until 2014, as a member of the Audit Committee of Benihana from 2008 until 2009, and as Chairman of the Board of Directors of Benihana from 2010 until 2012. Mr. Stockinger has significant experience in successful strategic turnarounds and shareholder value creation. During his tenure as President and CEO of Benihana, the stock of Benihana rose from $1.88 per share to $16.30 per share over a period of three years. Prior to joining Benihana, Mr. Stockinger spent more than two decades at The Patina Restaurant Group, LLC in New York and its predecessor, Restaurant Associates, Inc. (“RA”), during which time he served in various senior executive capacities, including as President from 2003 until 2008 and as a director from 1998 until 2006. In addition to his roles at Patina and RA, Mr. Stockinger was involved in the turnaround of several other successful restaurant companies including Au Bon Pain, California Pizza Kitchen, Acapulco Restaurants, El Torito Restaurants, Smith & Wollensky and Chevy’s. Most recently, Mr. Stockinger served as a consultant to Bruckmann, Rosser, Sherrill & Co., a private equity firm, from 2014 until 2017, and Not Your Average Joes, a private restaurant company where Mr. Stockinger also serves as a member of its board of directors. |
Your board unanimously recommends a vote FOR the election of our eight named director nominees to your board of directors, Stacey Rauch, Nicholas Daraviras, Stephen P. Elker, Sherrill Kaplan, Andrew V. Rechtschaffen, Nicholas P. Shepherd, Richard C. Stockinger and Paul E. Twohig. Proxies received in response to this solicitation will be voted FOR the election of the eight named director nominees to our board of directors unless otherwise specified in the proxy.
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Board Skills Assessment
The Board Skills assessment below illustrates the key skills that our board has identified as particularly valuable to the effective oversight of the Company and our strategy. This highlights the depth and breadth of skills possessed by current directors.
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Information Regarding Executive Officers
Name of Officer | Age | Position | ||
Richard Stockinger | 62 | Chief Executive Officer and President | ||
Dirk Montgomery | 57 | Senior Vice President, Chief Financial Officer and Treasurer | ||
Louis DiPietro | 49 | Senior Vice President, Chief Legal and People Officer, General Counsel and Secretary | ||
Hope Diaz | 44 | Senior Vice President and Chief Marketing Officer | ||
Patricia Lopez-Calleja | 50 | Senior Vice President and Chief Experience Officer | ||
Eladio (Willie) Romeo | 55 | Senior Vice President, Operations, Pollo Tropical | ||
Ulyses Camacho | 47 | Senior Vice President, Operations, Taco Cabana |
Richard C. Stockinger | Biography: | |
Chief Executive Officer and President | For biographical information regarding Richard C. Stockinger, please see page 11 of this Proxy Statement. | |
Dirk Montgomery | Biography: | |
Senior Vice President, Chief Financial Officer and Treasurer | Dirk Montgomery has been Senior Vice President, Chief Financial Officer and Treasurer of Fiesta Restaurant Group since September 9, 2019. Mr. Montgomery served as Chief Financial Officer of Hooters International from August 2016 until September 2019. Mr. Montgomery also served as Chief Financial Officer of European Wax Centers from April 2015 until July 2016, Chief Financial Officer of Health Insurance Innovations from September 2014 until March 2015, Executive Vice President and Chief Financial Officer of Ascena Retail Group, Inc. from January 2013 until August 2014 and Chief Financial Officer and Global Productivity Executive (2005-2011) and Chief Value Chain Officer (2012-2013) of Bloomin’ Brands, Inc. | |
Louis DiPietro | Biography: | |
Senior Vice President, Chief Legal and People Officer, General Counsel and Secretary | Louis DiPietro has served as Senior Vice President, Chief Legal Officer, General Counsel and Secretary of Fiesta Restaurant Group since December 2018 and Chief People Officer of Fiesta Restaurant Group since September 1, 2020. Mr. DiPietro served as Senior Vice President, General Counsel and Corporate Secretary of Panera Bread Company (“Panera”) from November 2014 until October 2018. Prior to serving as General Counsel, Mr. DiPietro served as VP, Deputy General Counsel from January 2008 to November 2014. During Mr. DiPietro’s 12-year career at Panera, he held several roles of increasing responsibility in the legal department. | |
Hope Diaz | Biography: | |
Senior Vice President and Chief Marketing Officer | Hope Diaz has served as Senior Vice President and Chief Marketing Officer of Fiesta Restaurant Group since September 16, 2019. Prior to joining Fiesta Restaurant Group, Ms. Diaz held a variety of leadership roles within the quick service restaurant industry from 2007 to 2019, including, but not limited to, serving as the Global Chief Marketing Officer at Popeyes from October 2017 to August 2019, Head of Global Innovation & Guest Understanding for Burger King from August 2014 to October 2017 and Head of Marketing Communications for Burger King North America from July 2013 to August 2014, along with other roles within Burger King marketing, beginning in October 2007. Prior to entering the Quick Service Restaurant industry, she held a variety of Research and Strategic Planning roles during her 9-year tenure at MTV and Nickelodeon Latin America. |
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Patricia Lopez-Calleja | Biography: | |
Senior Vice President, Chief Experience Officer | Patricia Lopez-Calleja has served as Senior Vice President and Chief Experience Officer of Fiesta Restaurant Group since April 1, 2020. Previously, Ms. Lopez-Calleja served as Senior Vice President, Guest Engagement of Fiesta Restaurant Group from September 2019 to March 2020, Vice President, Guest Engagement from August 2018 to August 2019, Director of Customer Relations of Pollo Tropical from September 2017 to July 2018 and Director of Guest Relations for Pollo Tropical from July 2016 to August 2017. During her tenure at Pollo Tropical, which began in November 1996, Ms. Lopez-Calleja held numerous positions within the organization with increased levels of responsibility that included building the catering infrastructure and guest engagement platforms. | |
Eladio (Willie) Romeo | Biography: | |
Senior Vice President, Operations, Pollo Tropical | Eladio Romeo has served as Senior Vice President, Operations, Pollo Tropical since March 2019. Previously, Mr. Romeo served as Vice President of Restaurant Operations from February 2018 to February 2019. Mr. Romeo served as Director of Off-Premise of Pollo Tropical from January 2016 to February 2018. From March 2014 to January 2016, Mr. Romeo served as Director of Franchise of Pollo Franchise, Inc., a subsidiary of Fiesta Restaurant Group. He also served as Senior Operating Manager of Dunkin Brands from September 2013 to March 2014. | |
Ulyses Camacho | Biography: | |
Senior Vice President, Operations, Taco Cabana | Ulyses Camacho has served as Senior Vice President, Operations, Taco Cabana since November 11, 2020. Previously, Mr. Camacho served as Vice President, Operations, Taco Cabana from September 2018 to November 2020. Mr. Camacho served as Regional Director of Taco Cabana from August 2016 to August 2018 and Sr. District Manager of Taco Cabana from August 2014 to July 2016. He also served as District Manager of Taco Cabana from July 2012 to July 2014. |
Information Regarding the Board of Directors and Committees
Director Attendance
During the fiscal year ended January 3, 2021, our board of directors met or acted by unanimous consent on 21 occasions. During the fiscal year ended January 3, 2021, each of the directors who were on the board attended more than 95% of the aggregate number of meetings of the board of directors and of any committees of the board of directors on which they served. We do not have a policy on attendance by directors at our Annual Meeting of Shareholders. All of our directors attended our 2020 Annual Meeting of Shareholders.
Independence of Directors
As required by the listing standards of NASDAQ, a majority of the members of our board of directors must qualify as “independent,” as affirmatively determined by our board of directors. Our board of directors determines director independence based on an analysis of such listing standards and all relevant securities and other laws and regulations regarding the definition of “independent.”
Consistent with these considerations, after review of all relevant transactions and relationships between each director, any of his or her family members, and us, our executive officers and our independent registered public accounting firm, the board of directors has affirmatively determined that, other than Mr. Stockinger, all of the members of our board of directors including as nominees for director at the Annual Meeting are independent pursuant to NASDAQ.
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Committees of the Board
The standing committees of our board of directors consist of an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee. Our board of directors may also establish from time to time any other committees that it deems necessary or advisable.
Audit Committee | Members: Elker, Twohig, Kaplan and Shepherd | |
Chair: | Key Responsibilities: | |
Stephen P. Elker | ||
• Reviews our annual and interim financial statements and reports to be filed with the SEC; | ||
• Monitors our financial reporting process and internal control system; | ||
• Appoints and replaces our independent outside auditors from time to time, determines their compensation and other terms of engagement and oversees their work; | ||
• Oversees the performance of our internal audit function; | ||
• Conducts a review of all related party transactions for potential conflicts of interest and approves all such related party transactions; | ||
• Establishes procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and the confidential anonymous submission by employees of concerns regarding questionable accounting or auditing matters; and | ||
• Oversees our compliance with legal, ethical and regulatory matters. |
All of the current members of the Audit Committee satisfy the independence requirements of Rule 10A-3 of the Exchange Act and Rule 5605 of the NASDAQ listing standards. Each member of our Audit Committee is financially literate. In addition, Mr. Elker serves as our Audit Committee “financial expert” within the meaning of Item 407 of Regulation S-K of the Securities Act and has the financial sophistication required under the NASDAQ listing standards.
The Audit Committee has the sole and direct responsibility for appointing, evaluating and retaining our independent registered public accounting firm and for overseeing their work. All audit services to be provided to us and all permissible non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm are approved in advance by our Audit Committee. During the fiscal year ended January 3, 2021, the Audit Committee met or acted by unanimous consent on five occasions. The Audit Committee has adopted a formal written Audit Committee charter that complies with the requirements of the Exchange Act and the NASDAQ listing standards. A copy of the Audit Committee charter is available on the investor relations section of our website at www.frgi.com.
Audit Committee Report
The Company’s management has the primary responsibility for the financial statements and the reporting process, including the Company’s system of internal controls and disclosure controls and procedures. The independent registered public accounting firm audits the Company’s financial statements and expresses an opinion on the financial statements based on their audit. The Audit Committee oversees on behalf of the board (i) the accounting, financial reporting, and internal control processes of the Company, and (ii) the audits of the financial statements and internal controls of the Company. The Audit Committee operates under a written charter adopted by the board.
The Audit Committee reviews and approves the internal audit plan once a year and receives periodic updates of internal audit activity in meetings held at least quarterly throughout the year. Updates include discussions of audit project results, as well as quarterly assessments of internal controls.
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The Audit Committee has met and held discussions with management and Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm. Management represented to the Audit Committee that the Company’s financial statements for the year ended January 3, 2021 were prepared in accordance with generally accepted accounting principles. The Audit Committee reviewed and discussed the financial statements with both management and Deloitte. The Audit Committee reviewed with Deloitte such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards including the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301 “Communication with Audit Committees”. In addition, the Audit Committee discussed with Deloitte the auditor’s independence from management and the Company including the matters in the written disclosures and the letter from the independent auditors required by applicable requirements of the PCAOB regarding independent accountant’s communication with the audit committee concerning independence.
The Audit Committee also discussed with Deloitte the overall scope and plans for the audit. The Audit Committee met with Deloitte both with and without management, to discuss the results of their examination, the evaluation of the Company’s internal controls and the overall quality of the Company’s financial reporting.
Management has completed its annual documentation, testing, and evaluation of the Company’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee continues to oversee the Company’s efforts related to its internal controls.
Based on the foregoing, we recommended to the board of directors that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended January 3, 2021, for filing with the Securities and Exchange Commission.
Audit Committee | ||
Stephen P. Elker, Chairman | ||
Paul Twohig | ||
Nicholas P. Shepherd | ||
Sherrill Kaplan |
Compensation Committee | Members: Rauch, Friedman (until October 19, 2020), Shepherd and Twohig | |
Chair: | Key Responsibilities: | |
Paul Twohig | ||
• Provides oversight on the development and implementation of the compensation programs for our executive officers and outside directors and disclosure relating to these matters; and | ||
• Reviews and approves the compensation of our Chief Executive Officer and our executive officers |
The processes and procedures by which the Compensation Committee considers and determines executive officer compensation and outside directors’ compensation are described in the Compensation Discussion and Analysis included in this Proxy Statement. During the 2020 fiscal year, the Compensation Committee again retained Pearl Meyer & Partners, LLC, which we refer to as “Pearl Meyer”, to review the Company’s compensation policies, plans, and amounts for the CEO and other executive officers, including the Named Executive Officers. The role of Pearl Meyer in determining or recommending the amount or form of executive and director compensation, the nature and scope of Pearl Meyer’s assignment and the material elements of the instructions or directions given to Pearl Meyer with respect to the performance of their duties under the engagement are described in the Compensation Discussion and Analysis included in this Proxy Statement. We believe that the use of an independent compensation consultant provides additional assurance that our compensation programs are reasonable and consistent with our goals and objectives. The Compensation Committee may form one or more subcommittees, each of which shall take such actions as shall be delegated by the Compensation Committee. All of the members of our Compensation Committee are “independent” as defined under Rule 5605 of the NASDAQ listing standards. The Compensation Committee has adopted a formal, written Compensation Committee charter that complies with SEC rules and regulations and the NASDAQ listing
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standards. During the fiscal year ended January 3, 2021, the Compensation Committee met or acted by unanimous consent on twelve occasions. A copy of the Compensation Committee charter is available on the investor relations section of our website at www.frgi.com.
Corporate Governance and Nominating Committee | Members: Rauch, Elker, Daraviras and Rechtschaffen | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chair: | Key Responsibilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12 Information Regarding Executive Officers
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Independence of Directors As required by the listing standards of NASDAQ, a majority of the members of our board of directors must qualify as “independent,” as affirmatively determined by our board of directors. Our board of directors determines director independence based on an analysis of such listing standards and all relevant securities and other laws and regulations regarding the definition of “independent.” Consistent with these considerations, after review of all relevant transactions and relationships between each director, any of his or her family members, and us, our executive officers and our independent registered public accounting firm, the board of directors has affirmatively determined that, other than Mr. Stockinger, all of the members of our board of directors including as nominees for director at the Annual Meeting are independent pursuant to NASDAQ. 14 Committees of the Board The standing committees of our board of directors consist of an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee. Our board of directors may also establish from time to time any other committees that it deems necessary or advisable.
All of the current members of the Audit Committee satisfy the independence requirements of Rule 10A-3 of the Exchange Act and Rule 5605 of the NASDAQ listing standards. Each member of our Audit Committee is financially literate. In addition, Mr. Elker serves as our Audit Committee “financial expert” within the meaning of Item 407 of Regulation S-K of the Securities Act and has the financial sophistication required under the NASDAQ listing standards. The Audit Committee has the sole and direct responsibility for appointing, evaluating and retaining our independent registered public accounting firm and for overseeing their work. All audit services to be provided to us and all permissible non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm are approved in advance by our Audit Committee. During the fiscal year ended January 3, 2021, the Audit Committee met or acted by unanimous consent on five occasions. The Audit Committee has adopted a formal written Audit Committee charter that complies with the requirements of the Exchange Act and the NASDAQ listing standards. A copy of the Audit Committee charter is available on the investor relations section of our website at www.frgi.com. Audit Committee Report The Company’s management has the primary responsibility for the financial statements and the reporting process, including the Company’s system of internal controls and disclosure controls and procedures. The independent registered public accounting firm audits the Company’s financial statements and expresses an opinion on the financial statements based on their audit. The Audit Committee oversees on behalf of the board (i) the accounting, financial reporting, and internal control processes of the Company, and (ii) the audits of the financial statements and internal controls of the Company. The Audit Committee operates under a written charter adopted by the board. The Audit Committee reviews and approves the internal audit plan once a year and receives periodic updates of internal audit activity in meetings held at least quarterly throughout the year. Updates include discussions of audit project results, as well as quarterly assessments of internal controls. 15 The Audit Committee has met and held discussions with management and Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm. Management represented to the Audit Committee that the Company’s financial statements for the year ended January 3, 2021 were prepared in accordance with generally accepted accounting principles. The Audit Committee reviewed and discussed the financial statements with both management and Deloitte. The Audit Committee reviewed with Deloitte such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards including the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301 “Communication with Audit Committees”. In addition, the Audit Committee discussed with Deloitte the auditor’s independence from management and the Company including the matters in the written disclosures and the letter from the independent auditors required by applicable requirements of the PCAOB regarding independent accountant’s communication with the audit committee concerning independence. The Audit Committee also discussed with Deloitte the overall scope and plans for the audit. The Audit Committee met with Deloitte both with and without management, to discuss the results of their examination, the evaluation of the Company’s internal controls and the overall quality of the Company’s financial reporting. Management has completed its annual documentation, testing, and evaluation of the Company’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee continues to oversee the Company’s efforts related to its internal controls. Based on the foregoing, we recommended to the board of directors that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended January 3, 2021, for filing with the Securities and Exchange Commission.
The processes and procedures by which
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Board Skills Assessment The Board Skills assessment below illustrates the key skills that our board has identified as particularly valuable to the effective oversight of the Company and our strategy. This highlights the depth and breadth of skills possessed by current directors. 12 Information Regarding Executive Officers
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Information Regarding the Board of Directors and Committees Director Attendance During the fiscal year ended Independence of Directors As required by the listing standards of NASDAQ, a majority of the members of our board of directors must qualify as “independent,” as affirmatively determined by our board of directors. Our board of directors determines director independence based on an analysis of such listing standards and all relevant securities and other laws and regulations regarding the definition of “independent.” Consistent with these considerations, after review of all relevant transactions and relationships between each director, any of his or her family members, and us, our executive officers and our independent registered public accounting firm, the board of directors has affirmatively determined that, other than Mr. Stockinger, all of the members of our board of directors including as nominees for director at the Annual Meeting are independent pursuant to NASDAQ. 14 Committees of the Board The standing committees of our board of directors consist of an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating
All of the current members of the Audit Committee satisfy the independence requirements of Rule The Audit Committee has the sole and direct responsibility for appointing, evaluating and retaining our independent registered public accounting firm and for overseeing their work. All audit services to be provided to us and all permissible
year ended Audit Committee Report The Company’s management has the primary responsibility for the financial statements and the reporting process, including the Company’s system of internal controls and disclosure controls and procedures. The independent registered public accounting firm audits the Company’s financial statements and expresses an opinion on the financial statements based on their audit. The Audit Committee oversees on behalf of the board (i) the accounting, financial reporting, and internal control processes of the Company, and (ii) the audits of the financial statements and internal controls of the Company. The Audit Committee operates under a written charter adopted by the board. The Audit Committee reviews and approves the internal audit plan once a year and receives periodic updates of internal audit activity in meetings held at least quarterly throughout the year. Updates include discussions of audit project results, as well as quarterly assessments of internal controls. 15 The Audit Committee has met and held discussions with management and Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm. Management represented to the Audit Committee that the Company’s financial statements for the year ended The Audit Committee also discussed with Deloitte the overall scope and plans for the audit. The Audit Committee met with Deloitte both with and without management, to discuss the results of their examination, the evaluation of the Company’s internal controls and the overall quality of the Company’s financial reporting. Management has completed its annual documentation, testing, and evaluation of the Company’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Based on the foregoing, we
The processes and procedures by which the Compensation Committee considers and determines executive officer compensation and outside directors’ compensation are described in the Compensation Discussion and Analysis included in this Proxy Statement. During the 16 standards. During the fiscal year ended
All of the members of our Corporate Governance and Nominating Committee are “independent” as defined under Rule 5605 of the NASDAQ listing standards. The Corporate Governance and Nominating Committee has adopted a formal written Corporate Governance and Nominating Committee charter that complies with SEC rules and regulations and the NASDAQ listing standards. During the fiscal year ended
Nominations for the Board of Directors The Corporate Governance and Nominating Committee of the board of directors considers director candidates based upon a number of qualifications. The qualifications for consideration as a director nominee vary according to the particular area of expertise being sought as a complement to the existing composition of the board. At a minimum, however, the Corporate Governance and Nominating Committee seeks candidates for director who possess: •the highest personal and professional ethics, integrity and values; •the ability to exercise sound judgment; •the ability to make independent analytical inquiries; •willingness and ability to devote adequate time, energy, and resources to diligently perform board and board committee duties and responsibilities; and •a commitment to representing the In addition to such minimum qualifications, the Corporate Governance and Nominating Committee takes into account the following factors when considering a potential director candidate: •whether the individual possesses specific industry expertise and familiarity with general issues affecting our business; and •whether the person would qualify as an “independent” director under SEC and NASDAQ rules. The Corporate Governance and Nominating Committee has not adopted a specific diversity policy with respect to identifying nominees for director. However, the Corporate Governance and Nominating Committee takes into account the importance of diversified board membership in terms of the individuals involved and their various experiences and areas of expertise. The Corporate Governance and Nominating Committee shall make every effort to ensure that the board and its committees include at least the required number of independent directors, as that term is defined by applicable standards promulgated by NASDAQ and/or the SEC. Backgrounds giving rise to actual or perceived conflicts of interest are undesirable. In addition, prior to nominating an existing director for election to the board, the Corporate 17 Governance and Nominating Committee will consider and review such existing director’s board and committee attendance and performance, independence, experience, skills, and the contributions that the existing director brings to the board. The Corporate Governance and Nominating Committee has relied upon The Corporate Governance and Nominating Committee will consider qualified director candidates recommended by shareholders in compliance with our procedures and subject to applicable inquiries. The Corporate Governance and Nominating Committee’s evaluation of candidates recommended by shareholders does not differ materially from its evaluation of candidates recommended from other sources. Pursuant to our Bylaws, any shareholder may recommend nominees for director not less than 90 days nor more than 120 days in advance of the anniversary date of the immediately preceding annual meeting of shareholders (provided that if the date of the current year’s annual meeting of shareholders is advanced by more than 30 days, or delayed by more than 70 days from the anniversary date of the immediately preceding annual meeting of shareholders, any shareholder may recommend nominees for director not more than 120 days in advance of the date of the current year’s annual meeting of shareholders and not less than the close of business on the later of the 90th day prior to the date of the current year’s annual meeting of shareholders or the 10th day following the date of the public announcement of the date of the current year’s annual meeting of shareholders), by writing to
the candidate’s name, address and other contact information, any direct or indirect holdings of our securities by the nominee, any information required to be disclosed about directors under applicable securities laws and/or stock exchange requirements, information regarding related party transactions with us, the nominee and/or the shareholder submitting the nomination, any actual or potential conflicts of interest, the nominee’s biographical data, current public and private company affiliations, employment history and qualifications and status as “independent” under applicable securities laws and/or stock exchange requirements. All of these communications will be reviewed by our Secretary and forwarded to Stacey Rauch, the Chairman of the Corporate Governance and Nominating Committee, or her successor, for further review and consideration in accordance with this policy. Any such shareholder recommendation should be accompanied by a written statement from the candidate of his or her consent to be named as a candidate and, if nominated and elected, to serve as a director.
Board Leadership Structure and Role in Risk Oversight Board Leadership Our board of directors believes that our current model of separate individuals serving as Chairman of the board of directors and as Chief Executive Officer is the appropriate leadership structure for us at this time. The board of directors believes that each of the possible leadership structures for a board has its particular advantages and disadvantages, which must be considered in the context of the specific circumstances, culture and challenges facing a company. The Company does not have a member of our board of directors who is formally identified as the “lead independent director.” However, the board of directors has determined that having an independent director serve as Chairman of the board of directors is in the best interest of our shareholders at this time. This structure ensures a greater role for the independent directors in the oversight of Fiesta Restaurant Group, active participation of the independent directors in setting agendas and establishing the board of directors’ priorities and procedures, including with respect to our corporate governance. Risk Oversight Our board administers its risk oversight function directly and through its Audit Committee and receives regular reports from members of 18 Committee assists the board in fulfilling its oversight responsibilities with respect to the management of Some risks, particularly those relating to potential operating liabilities, the protection against physical loss or damage to our facilities, cybersecurity and the possibility of business interruption resulting from a large loss event, are contained and managed by legal contracts of insurance. Our insurance contracts are reviewed, managed and procured by our Risk Management and Legal departments along with our Chief Financial Officer to optimize their completeness and efficacy.
Codes of Ethics We have adopted written codes of ethics applicable to our directors, officers, and employees in accordance with the rules of the SEC and the NASDAQ listing standards. With respect to our Code of Ethics for Executives and Principal Financial Employees, our policy requires covered employees to execute an annual certification confirming that they understand and will comply with the Code. We make our codes of ethics available on the investor relations section of our website atwww.frgi.com. We will disclose on our website amendments to, or waivers from, our codes of ethics in accordance with all applicable laws and regulations. Delinquent Section Based upon a review of the filings furnished to us pursuant to Rule Employee, Officer Director Hedging Policy Our Insider Trading Policy and Management Insider Trading Policy prohibit directors and executive officers from purchasing securities or other 19 Shareholder Communications with the Board of Directors Any shareholder or other interested party who desires to communicate with our Chairman of the board of directors or any of the other members of the board of directors may do so by writing to: Board of Directors, c/o Stacey Rauch, Chairman of the Board of Directors, Fiesta Restaurant Group, Inc., 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254. Communications may be addressed to the Chairman of the board, an individual director, a board committee, the
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table provides information regarding beneficial ownership of our common stock as of March •each person known by us to beneficially own more than 5% of all outstanding shares of our common stock; •each of our directors, nominees for director, and Named Executive Officers (as set forth in “Executive •all of our directors and executive officers as a group.
Except as otherwise indicated, to our knowledge, all persons listed below have sole voting power and investment power and record and beneficial ownership of their shares, other than to the extent that authority is shared by spouses under applicable law. The information contained in this table reflects “beneficial ownership” as defined in Rule
____________ * Less than one percent (1) Information was obtained from a Schedule 13D/A filed on February 28, 2020 with the SEC. Jefferies owns our shares as follows: (a) Sole Voting Power: 5,262,189, (b) Shared Voting Power: 0, (c) Sole Dispositive Power: 5,262,189 and (d) Shared Dispositive Power: 0. The address for Jefferies is 520 Madison Avenue, New York, New York. 21 (2) Information was obtained from a Schedule 13G/A filed on February
(4) Information was obtained from a Schedule (5) Information was obtained from a Schedule 13G/A filed on February (6) Information was obtained from a Schedule (7)
(8) Information was obtained from a Statement of Changes in Beneficial Ownership on Form 4/A filed on May 18, 2020 with the SEC. Securities owned directly by AREX Master and held in AREX Managed Accounts managed by AREX Management, which also acts as the investment advisor to AREX Master. Mr. Rechtschaffen solely by virtue of his position as the managing member of each of AREX Capital GP, the general partner of AREX Master, and AREX Management GP, the general partner of AREX Management, may be deemed to beneficially own the securities owned directly by AREX Master and held in the AREX Managed Accounts for purposes of Section 16 of the Exchange Act. Mr. Rechtschaffen expressly disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. The address of Mr. Rechtschaffen is 250 West 55th Street, 15th Floor, New York, NY 10019. (9) Includes 28,668 shares of 22 Equity Compensation Plan The following table summarizes our 2012 Stock Incentive Plan, as amended, which is the equity compensation plan under which our common stock may be issued as of
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Related Party Transaction Procedures The board of directors has assigned responsibility for reviewing related party transactions to our Audit Committee. The board of directors and the Audit Committee have adopted a written policy pursuant to which certain transactions between us or our subsidiaries and any of our directors or executive officers must be submitted to the Audit Committee for consideration prior to the consummation of the transaction as required by the rules of the SEC. The Audit Committee reports to the board of directors on all related party transactions considered. The Company, after a competitive process, engaged Jefferies LLC (“Jefferies LLC”), an affiliate of, Messrs. Friedman and Daraviras, two of the members of Fiesta’s board of directors and a subsidiary of Jefferies Financial Group, Inc, a holder of more than 20 percent of the total outstanding shares of the Company, in connection with a refinancing of the Company’s former amended senior credit facility and other advisory services. Jefferies Finance LLC served as lead arranger and sole bookrunner under the Credit Agreement (the “Senior Credit Facility”) dated November 23, 2020 among the Company, Fortress Credit Corp., as administrative agent and collateral agent, and the lenders party thereto. The engagement of Jefferies LLC and the corresponding engagement letter was approved by the Audit Committee in accordance with the Company’s Related Party Transaction Policy as described on page 15 of this proxy statement. The Company paid fees of $1.7 million to Jefferies LLC and reimbursed Jefferies LLC for reasonable out of pocket and ancillary expenses of less than $0.1 million in 2020. Family Relationships There are no family relationships between any of our executive officers or directors.
Recent Corporate Governance Initiatives Over the last few years, we adopted multiple structures to strengthen our board’s independence, ensure robust risk oversight and enhance our Company’s governance and executive compensation programs. The following table of corporate governance highlights is indicative of our commitment to shareholders and desire to ensure Fiesta implements
Shareholder Engagement Initiatives The Company’s board of directors, Compensation Committee, and management value the opinions of our shareholders. We are committed to being transparent with shareholders on all topics, including our business strategy, governance and compensation programs, and responsive to shareholder feedback provided.
Based on feedback received during these meetings, as well as historical voting outcomes, we believe our shareholders are generally supportive of the Company’s governance and compensation programs. Nevertheless, we believe these conversations with shareholders are invaluable and will continue to seek shareholder input on similar topics when making future board decisions. Board Declassification
Majority Voting In response to strong shareholder support, in 2017, our Board, with the approval of our shareholders, adopted a majority vote standard in uncontested director elections. This enhancement to our governance program Mandatory Director Retirement Age Our Board of directors also
Our Board conducted a national search for a Board member with skills which would complement the existing membership of the Board and which would provide the Company with valuable experience relevant for its Business. In November 2018, we appointed Sherrill Kaplan, an experienced marketing professional with experience in the restaurant and retail industries and with a focus on digital. 25 Compensation Discussion and Analysis The purpose of this Compensation Discussion & Analysis, which we refer to as the “CD&A”, is to provide relevant information to shareholders regarding the Company’s executive compensation processes, procedures, plan designs, and practices with respect to its executive officers named in the Summary Compensation Table, which we refer to each as a “Named Executive Officer” or “NEO”, for
Executive Compensation: Context and Overview Introduction The Compensation Committee is committed to designing an executive compensation program that pays for delivering performance in a straightforward manner and promotes the recruitment and retention of our executives. Accordingly, the majority of the compensation for our NEOs is
The Role of Shareholder Feedback and Vote Results The Company’s board of directors, Compensation Committee, and management value the opinions of the Company’s shareholders. The Company is open to receiving feedback from shareholders, and currently provides shareholders with the opportunity to cast an advisory vote to approve NEO compensation every year, or
In the face of the COVID-19 global pandemic, we responded quickly and not only met the unprecedented challenges presented to us and minimized the disruption to our business and protected the well-being of our employees and guests, but also, particularly in the last six months of 2020, we experienced a number of financial and operational successes. With respect to our accomplishments relative to the health and well-being of all of our employees during the COVID-19 pandemic, we provided a number of incremental COVID-19 benefits, including:
• Sponsored employer paid COVID-19 testing for employees; • Embarked on a communication plan to ensure that associates are aware of our Employee Assistance Program coverage with a focus on mental health support for employees and their families; 26 • Increased all hourly base wages during the second quarter of 2020 when we were most impacted by the global pandemic; • Provided a special bonus for our salaried restaurant managers; • Instituted protocols on wearing masks and gloves, conducting employee screenings and temperature checks, and using enhanced cleaning measures; • Implemented work from home for each of our support centers; • Initiated a program for providing employees with the necessary tools and resources to educate themselves about the benefits of the vaccine to enable employees to make the best decision for themselves; and • Provided employees with an additional two hours of paid time off for each COVID-19 vaccine shot (up to a total of 4 hours). In addition to this response, we also achieved a number of accomplishments relative to our overall business operations and results, including: • Restaurant-level Adjusted EBITDA margins, a non-GAAP financial measure, of 19.5% and 12.4% in 2020 for Pollo Tropical and Taco Cabana, respectively1; • Consolidated Adjusted EBITDA margins, a non-GAAP financial measure, of 8.1% for 2020, a moderate decrease from prior year levels1; • Grew Consolidated Adjusted EBITDA, a non-GAAP financial measure, in the third and fourth quarters of 2020 above 2019 levels1. • Generated cash flow from operating and investing activities totalling $48.7 million, significantly above prior year levels; • Completed the sale of 13 owned properties over a six-month period generating $26.8 million in cash flow; • Experienced sequential improvement in consolidated comparable restaurant sales in the third and fourth quarters of 2020; • Introduced new digital application platforms for both brands; and • Fully implemented or initiated a number of best-in-class digital initiatives such as curbside delivery, integration of geofencing technology for customer pickup, and speed of service improvements for our drive thrus enabled by technology. We accomplished these milestones while continuing to make significant progress against our strategic initiatives. While reviewing the rapidly evolving and volatile economic environment throughout the year, the Compensation Committee ultimately determined that it would not revise, or otherwise update, the Company’s short term incentive bonus program metrics for 2020 given the extreme difficulty in establishing new performance metrics in the context of such significant and unprecedented uncertainty. Alternatively, the Compensation Committee determined to review management’s performance following the end of 2020 and make its assessment based upon the accomplishments of the Company overall and in the face of the COVID-19 global pandemic. In large part due to the fact that the Compensation Committee approved the 2020 short-term incentive bonus program metrics prior to the full impact of the global pandemic being felt by the broader economy, we failed to achieve the threshold levels for the key metrics established under our short-term incentive program, namely Adjusted EBITDA (50%) and comparable restaurant sales (SRS) (50%) metrics. However, in recognition of the significant results and accomplishments noted above, the Compensation Committee determined to pay a discretionary cash bonus to its CEO and NEOs, at a level below target. Additionally, the market-based performance stock units previously issued to our CEO and one of our NEOs did not vest in 2020 given that the underlying stock price hurdles were not met. ____________ 1 For further details regarding non-GAAP financial measures and a reconciliation to their most comparable GAAP measure, please see the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021. 27 2020 CEO Compensation For
____________ (1) Pursuant to Mr. Stockinger’s Employment Agreement, Mr. Stockinger received a sign-on grant of restricted common stock of the Company pursuant to the Company’s 2012 Stock Incentive Plan with a target value of $3,000,000, which consisted of 50% time-based restricted stock of the Company granted on March 6, 2017 vesting 25% on each anniversary date over four years and 50% performance based restricted stock units of the Company granted on June 2, 2017. The sign-on grant is intended to represent awards for fiscal years 2017-2020. (2) Represents a grant of time-based restricted stock of the Company granted on April 29, 2020 vesting on each anniversary date over four years. (3) Represents a special one-time retention award of restricted stock of the Company granted on November 11, 2020 vesting 100% on the second anniversary of the vesting date. Pay for performance is the most significant structural element of Fiesta’s executive compensation program. As shown below for 2020, nearly 65% of targeted CEO compensation was at risk and subject to performance or variable based upon our stock price. Our 2020 performance and corresponding CEO short-term incentive bonus and long-term incentive achievement illustrates how our financial results are closely aligned with CEO compensation. Specifically, while our board and Compensation Committee recognized the continued, significant positive contributions from our CEO in the face of the COVID-19 global pandemic, including the Company’s ability’s to improve its SRS sequentially throughout the year and improved Restaurant-level Adjusted EBITDA and Consolidated Adjusted EBITDA, particularly during the final six months of 2020 and the progress we made against our key strategic initiatives, our CEO only received a modest discretionary cash bonus representing only a portion of his annual incentive bonus target, given that we did not achieve the performance levels established by our Compensation Committee pursuant to the short-term cash incentive program. Additionally, the threshold stock price for the initial performance stock unit tranche scheduled to vest in March 2020 was not met and all underlying Awards did not vest and were forfeited in March 2021. 28 Executive Compensation Philosophy Fiesta’s compensation philosophy is designed to strike an appropriate balance between aligning executive compensation with financial performance and promoting retention. We strongly believe that our compensation program is aligned with this compensation philosophy and that the at-risk compensation components have delivered value and encouraged sustainable shareholder value creation. Our executive compensation program is designed to achieve the following key objectives: • Motivate executives to enhance long-term shareholder value; • Reinforce Fiesta’s pay for performance culture by aligning executive compensation with Fiesta’s business objectives and financial performance; • Provide competitive market compensation that allows Fiesta to attract and retain talented high-quality executives; and • Use incentive compensation to promote desired behavior without encouraging unnecessary or excessive risk-taking. Executive Compensation Components Base Salary The Compensation Committee reviews and considers salary increases of our NEOs on an annual basis, taking into consideration factors such as the Company’s compensation philosophy and strategy, the Company’s performance, individual executive performance and tenure, internal equity among executives, and competitive market pay levels.
____________ (1) During the second quarter of 2020, the base salary of each of Messrs. Stockinger, Montgomery, DiPietro and Romeo and Ms. Diaz was temporarily reduced by 35%, 30%, 25%, 20% and 25%, respectively, and was fully restored to prior levels in the beginning of the third quarter of 2020. (2) Mr. DiPietro’s base salary was increased to $400,000, effective September 1, 2020. (3) Mr. Romeo’s base salary was increased to $250,000, effective October 1, 2020. The board and the Compensation Committee approved a salary increase for Mr. DiPietro in connection with his appointment as Chief Legal and People Officer and in recognition of his increased responsibilities for the Company’s human resources function and for Mr. Romeo in connection with a rebalancing of his base salary and short term incentive bonus target in an effort to remain competitive with companies with which we compete for executive talent and attract the essential executive talent we believe is necessary for us to achieve our goals and objectives. Short-Term Incentive Beginning in 2018, the Company implemented a new short-term cash incentive program pursuant to which annual incentives were entirely formulaic based on financial results. The key metrics considered for purposes of determining whether an award is earned are Adjusted EBITDA (50%) and SRS metrics (50%). 29 For fiscal 2020, the performance measures comprising our short-term cash incentive bonus, our actual achievement during the performance period performance outcome for each measure (as reported in our Annual Report on Form 10-K) for the 2020 fiscal year were as follows:
____________ (1) Consolidated Adjusted EBITDA is a non-GAAP financial measure. For further details regarding non-GAAP financial measures and a reconciliation to their most comparable GAAP measure, please see the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021. As a result, the bonus payout achievement attributed to our annual incentive bonus program was scored at 0% of the target level. In 2020, while the annual performance metrics scored below threshold, the Compensation Committee determined that this outcome did not appropriately reflect management’s overall performance for 2020. To recognize the Company’s overall performance in the context of the broader challenges presented by the COVID-19 global pandemic, including the Company’s ability to improve its SRS sequentially throughout the year, improved Consolidated Adjusted EBITDA in the third and fourth quarters of 2020 compared 2019, particularly for the final six months of 2020, and the progress made against key strategic initiatives the Compensation Committee made the decision to apply discretion. The following annual discretionary cash incentive bonuses were paid to each of our NEOs for fiscal 2020 performance. All awards are equal to 50% of each NEOs target based upon their base salary at year-end, consistent with the determination of the Compensation Committee as described above:
Long-Term Incentive The Company has adopted a long-term incentive program that provides the opportunity for annual equity grants to the NEOs pursuant to the 2012 Stock Incentive Plan, as amended, which we refer to as the “Plan”. The purpose of the long-term incentive program is to align long-term pay with long-term performance goals by providing stock-based compensation that will reward executives for creating sustainable shareholder value. Additionally, in order to meet the Company’s executive officer retention goals, in November 2020 the Compensation Committee approved a special, one-time retention grant to its NEOs. In early 2020, the Compensation Committee reviewed the grant mix for its executive officers and initially determined that a mix of 50% performance-based awards and 50% time-based awards was appropriate. Grants are determined pursuant to the target long-term incentive grant date value and typically granted annually in February or March on a grant date which is generally five business days following the announcement of the Company’s financial results for the prior fiscal year with annual vesting dates linked to the grant date. For 2020 only, however, given the uncertainty created by the COVID-19 global pandemic, and the extreme difficulty in properly determining appropriate performance metrics, the Compensation Committee determined to grant the Long-Term Incentive Awards entirely in restricted stock. Further, while the grants were not made until April 29, 2020, for purposes of calculating the award target value, the Compensation Committee utilized the closing price of the Company’s stock according to its prior 30 precedent of reflecting a grant date five days following the release of the Company’s financial results for prior fiscal year. The Compensation Committee further determined as a matter of fairness and equity that this approach was appropriate given that the Company’s stock price had decreased from $8.91 on March 4, 2020 to $7.86 on April 29, 2020. The measurement of the value of any restricted stock grant or performance stock unit grant has been and would be based upon the price of our common stock at the close of business on such grant date as noted above. Given that the Compensation Committee’s policy is to grant restricted stock and performance stock units on a fixed date, the Compensation Committee may have previously, or may in the future, grant restricted stock at a time when it, as well as the senior management, may be aware of material non-public information that, once made public, could either have a positive or negative effect on the price of our common stock. In 2018, the performance stock unit portion of the annual equity grants to the NEOs (excluding the CEO) were structured to align with the CEO’s remaining closing price performance conditions. None of the closing conditions of this award were met and, as a result, were forfeited on March 6, 2021. Annual Restricted Stock Grants The use of restricted stock creates stock ownership opportunities and retention strength. On April 29, 2020, the restricted stock grants were made to the following NEOs employed on such date: Messrs. Stockinger, Montgomery, DiPietro and Romeo and Ms. Diaz were granted 84,175, 53,311, 28,676, 18,855 and 25,533 shares of restricted stock, respectively. The restricted stock awards granted on April 29, 2020 vest 25% on each anniversary date over four years. The annual grants were calculated at 70% of each executive’s annual base salary at the time of the grant and, as noted above, for consistency and fairness, the share price used to determine the number of shares subject to the awards was determined according to its prior precedent of reflecting a grant date and stock price of $7.86, five days following the release of the Company’s financial results for 2019. The following sets forth the target annual long-term grant date value (based on the closing price of the common stock on the date of grant for each NEO):
Performance Stock Units The use of performance stock units creates alignment between long-term pay and long-term company performance. Prior to 2020, each NEO was generally granted market-based performance stock units during the first 12 months following the date on which such NEO joins the Company. Commencing in 2021, the Compensation Committee will grant performance stock units as a material component to its NEOs long-term incentive awards. Such performance awards will vest based upon the achievement of certain long-term financial goals, initially over three-years, and comprise one-half of the annual long-term incentive award value. As noted above, we did not grant performance units in 2020 due to the lack of visibility and difficulty in goal-setting. Special Retention Restricted Stock Grant Given the significant strategic initiatives underway by the Company and the value that the Board and Compensation Committee placed on the current executive leadership, the Compensation Committee reviewed, with the assistance of its compensation consultant, the retention value of the current outstanding awards held by its executive officers. Following such review, the Compensation Committee determined that the current outstanding 31 awards were insufficient to provide the appropriate retention value desired by the Board for management, in each case representing a total value below or only slightly above such executive’s annual salary. In keeping with the intent to retain the executive team and the importance of consistency in leadership to manage through these unprecedented times, the Compensation Committee awarded to its executive officers, including the NEOs, restricted stock awards equal to one and one half times each recipient’s annual base salary valued at the closing market price of the Company’s common stock on November 11, 2020. Messrs. Stockinger, Montgomery, DiPietro and Romeo and Ms. Diaz were granted 92,681, 67,728, 57,034, 35,646 and 46,340 shares of restricted stock, respectively. The awards will vest in their entirety on the second anniversary of the date of grant to align with the timeline for many of the Company’s planned key strategic initiatives and, as a condition to the issuance of the awards, Mr. Montgomery, Mr. DiPietro, Ms. Diaz and Mr. Romeo were required to enter into an agreement to not compete with the Company for a period ending one year after such recipient’s termination of employment with the Company. The following sets forth the target long-term grant date value for the special retention awards (based on the closing price of the common stock on the date of grant) for each NEO:
Additional Compensation Policies and Practices
Executive Stock Ownership Guidelines Executives of the Company are expected to acquire and continue to hold shares of the Company’s common stock having an aggregate market value which equals or exceeds a multiple of base salary as outlined below within five years of being named an executive. The following sets forth the minimum stock ownership level for each NEO:
Only actual shares owned by each executive, including direct and indirect ownership as reported to the SEC, count toward compliance with these guidelines. 32 Compensation Clawback Policy The Company has adopted a compensation clawback policy. The NEOs are covered by the policy, which enables the board of directors to seek repayment of incentive compensation that was paid based on financial results that are subsequently restated whereby the amount of incentive compensation that would have been awarded or earned based on the restated financial results is lower than what was paid based on the original financial results. This policy will be reviewed from time to time to ensure that it is compliant with any SEC requirements. Executive Compensation Roles and Responsibilities Compensation Committee The Compensation Committee establishes the overall compensation philosophy and strategy for the NEOs, determines the Chief Executive Officer’s compensation, and reviews and approves compensation levels, plan designs, policies, and practices that it believes are aligned with this philosophy and strategy and that are in the best interests of the Company and its shareholders. Although the Compensation Committee receives input from the Chief Executive Officer (particularly with respect to the other NEOs), executive leadership, and its independent compensation advisor, the Compensation Committee makes its own independent determinations regarding executive compensation. Chief Executive Officer The Chief Executive Officer attends portions or all of certain Compensation Committee meetings and makes specific recommendations to the Compensation Committee with respect to each NEO’s compensation other than his own. This information is reviewed and considered by the Compensation Committee along with all other relevant factors and circumstances. The Chief Executive Officer is never present when the Compensation Committee meets in executive sessions to discuss the compensation of the NEOs. Executive Leadership Various members of executive leadership provide information from time to time either to the Chief Executive Officer or to the Compensation Committee directly. For example, the Chief Financial Officer provides information regarding financial performance and payouts under the
Independent Compensation Advisor The Compensation Committee has the authority to retain a compensation advisor. Since 2012, the Compensation Committee has annually chosen to retain Pearl Meyer as its compensation advisor. In selecting Pearl Meyer, the Compensation Committee considered the SEC’s independence criteria and concluded that Pearl Meyer is independent per the criteria and that the work of Pearl Meyer did not raise any conflicts of interest. Pearl Meyer reports directly to the Compensation Committee and provides no other services to the Company. Pearl Meyer’s services to the Compensation Committee include providing periodic data and information regarding market pay practices and trends, as well as assisting in the development of appropriate compensation program designs and policies, and the preparation of the CD&A. The Compensation Committee has been satisfied with Pearl Meyer’s services. Change of Control Agreements The Stockinger Employment Agreement provides for certain potential enhanced benefits upon a termination of employment following a change of control of the Company which is further described on pages 42 During 33 The Plan and individual award agreements for awards of restricted stock and performance stock units contain a change of control provision. Under the Plan and individual award agreements for restricted stock, in the event of a change of control of the Company, the vesting provisions on all outstanding unvested restricted shares shall be accelerated and such shares will become fully vested and free of all restrictions. With regard to performance stock units, in the event of a change of control, if the performance stock unit awards (i) are not continued by the Compensation Committee, or not assumed or replaced in an equitable manner to the holder by the successor entity or company after a change in control, then a portion of such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest, and (ii) are continued by the Compensation Committee, or are assumed or replaced in an equitable manner to the holder by the successor entity or company after a change of control and if the holder of such performance stock unit award is terminated by the Company for reasons other than cause (as defined under the Plan) or the result of a voluntary termination by the holder, or employment is terminated by the holder for good reason (as defined under the Plan) within one year of the date of the change of control, a portion of such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest. The Role of Benchmarking The Compensation Committee periodically requests data and information regarding the pay practices and program designs of other, similar companies. However, the Compensation Committee does not benchmark or target a specified pay level or percentile, nor does it follow the practices of similar companies. Instead, the Compensation Committee considers this information along with all other relevant facts and circumstances facing the Company and the executives. Such factors include Company performance, individual executive performance, internal equity, succession planning, affordability, return on investment, accounting expense, tax deductibility and shareholder dilution. During Retirement Benefits The Company provides and maintains a 401(k) Savings Plan, which we refer to as the “401(k) Plan”, and a Deferred Compensation Plan, which we refer to as the “Deferred Compensation Plan”, which are intended to provide the Company’s team members with a competitive
Executive Perquisites
34 Tax Implications The Compensation Committee has considered the impact of Section 162(m) of the Code. This section disallows a tax deduction for any
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation
Compensation Committee Interlocks and Insider Participation The members of the Compensation Committee for the fiscal year ended
The following table summarizes historical compensation awarded, paid to or earned by the NEOs for the fiscal year ended
____________ (1) Amounts for Mr. Stockinger (2) These amounts represent the aggregate grant date fair value of restricted stock, performance restricted stock units and market
(3) (4)
36 four years and 50%
Stockinger Employment Agreement Mr. Stockinger was appointed Chief Executive Officer and President of the Company effective February 28, 2017. On February 24, 2017, the Company entered into an Executive Employment Agreement with Mr. Stockinger, which we refer to as the “Stockinger Employment Agreement” pursuant to which Mr. Stockinger will earn a base salary of $550,000 per year which can be increased at the sole discretion of the Compensation Committee. Pursuant to the Stockinger Employment Agreement, Mr. Stockinger was (i) eligible to receive a short term cash incentive bonus equal to at least 100% of Mr. Stockinger’s then base salary based upon attainment of objectives to be established by the Compensation Committee, (ii) received a sign on grant of restricted common stock of the Company pursuant to the Plan with a value of $3,000,000 (based on the closing price of the Company’s common stock on March 6, 2017) which consisted of 50% The Stockinger Employment Agreement provides that if Mr. Stockinger’s employment with the Company is terminated by the Company for Cause (as defined in the Stockinger Employment Agreement) or if his employment with the Company ends due to death or “permanent and total disability” (within the meaning of Section 22(e)(3) of the Code) or voluntary termination of employment by Mr. Stockinger without Good Reason (as defined in the Stockinger Employment Agreement), he shall be entitled to receive (i) any earned but unpaid compensation, (ii) solely with respect to Mr. Stockinger’s termination for death or “permanent and total disability”, any earned but unpaid bonus for any completed year prior to the date of termination and (iii) any other amounts or benefits owing to Mr. Stockinger under the terms of any employee benefit plan of the Company or, in the case of
The Stockinger Employment Agreement also provides that if Mr. Stockinger’s employment with the Company is terminated by the Company without Cause or for reasons other than death or “permanent and total disability” or is voluntarily terminated by Mr. Stockinger for Good Reason, he shall be entitled to receive (i) 1.5 times his then base salary, to be paid at least monthly, for a period of twelve months, (ii) any earned but unpaid bonus for any completed year prior to the date of termination plus a pro rata portion of any annual bonus that Mr. Stockinger would have been entitled to receive with respect to the fiscal year of termination had his employment not been terminated, (iii) the payment by the Company of premium payments for a period of up to twelve months if Mr. Stockinger and his dependents elect coverage under the Company’s health insurance plan pursuant to the Consolidated Omnibus Budget Reconciliation Act, which we refer to as “COBRA”, (iv) executive outplacement services in an amount not to exceed $25,000 to be incurred no later than the end of the second year following the year of termination and (v) the Accrued Benefits (except as otherwise may be provided in connection with a Change of Control (as defined in the Stockinger Employment Agreement)). If within one year after the occurrence of a Change of Control (as defined in the Stockinger Employment Agreement), Mr. Stockinger’s employment with the Company is terminated by the Company without Cause and for reasons other than death or “permanent and total disability” or is voluntarily terminated by Mr. Stockinger for Good Reason, then Mr. Stockinger shall be entitled to (i) 2.0 times his then base salary, payable in a lump sum (ii) any earned but unpaid bonus for any completed year prior to the date of termination plus a pro rata portion of any annual bonus that 37 Mr. Stockinger would have been entitled to receive with respect to the fiscal year of termination had his employment not been terminated, (iii) the acceleration of the vesting provisions of Mr. Stockinger’s outstanding unvested Mr. Stockinger, pursuant to the Stockinger Employment Agreement, agreed, for a period of two years following his termination of employment with the Company, not to directly or indirectly solicit for employment or employ any person who is or was employed by the Company within six months prior to his termination date. Additionally, under the Stockinger Employment Agreement, Mr. Stockinger agreed for a period of eighteen months following his termination of employment with the Company, not to be employed by or associated with as employee, consultant, director, or in any other equivalent capacity, any company operating
Pursuant to the terms of an offer letter between Fiesta Restaurant Group and
On September 9, 2019, the Company and Mr. Montgomery entered into an Agreement (the “Montgomery Agreement”) which provides for severance payments by the Company upon termination of Mr. Montgomery’s employment by
38
Pursuant to an offer letter dated
60% of On
Pursuant to an offer letter dated
Romeo Agreement On February 24, 2020, the Company and Mr. Romeo entered into an Agreement, which we refer to as the “Romeo Agreement”, a summary of which is provided on page 44 of this Proxy Statement. 39 The following table provides certain historical information regarding grants of
____________ (1)
2012 Stock Incentive Plan. The Plan provides for the grant of stock options and stock appreciation rights, stock awards, performance awards, outside director stock options, and outside director stock awards. Any officer, employee, associate, director and any consultant or advisor providing services to us are eligible to participate in the Plan. The Plan is administered by the Compensation Committee which approves awards and may base its considerations on recommendations by our Chief Executive Officer. The Compensation Committee has the authority to (1) approve plan participants, (2) approve whether and to what extent stock options, stock appreciation rights, stock awards, and performance awards are to be granted and the number of shares of stock to be covered by each award (other than an outside director award), (3) approve forms of agreement for use under the Plan, (4) determine terms and conditions of awards (including, but not limited to, the option price, any vesting restriction or limitation, any vesting acceleration or waiver or forfeiture, and any right of repurchase, right of first refusal or other transfer restriction regarding any award), (5) modify, amend or adjust the terms and conditions of any award, (6) determine the fair market value, and (7) determine the type and amount of consideration to be received by us for any stock award issued.
Outstanding Equity Awards at Fiscal Year-End The following table sets forth certain information with respect to the value of all equity awards that were not vested at the
____________ (1) The market value of the restricted stock awards and the market-based performance awards was determined based on the closing price of our common stock on the last trading day of the fiscal year, December (2) (3) Represents restricted shares of common stock that vest in increments of
(5) Represents market
(9) Represents 41
Options Exercised and Stock Vested The following table provides summary information about options exercised by our NEOs and shares of restricted stock that vested during the fiscal year ended
____________ (1) Based on the closing price of our common stock on the date of vesting. Non-Qualified Deferred Compensation We have adopted a Deferred Compensation Plan for employees not eligible to participate in our Retirement Savings Plan, which we refer to as the “Retirement Plan”, because they have been excluded as “highly compensated” employees (as so defined in the Retirement Plan), to voluntarily defer portions of their base salary and annual bonus. An eligible employee may elect, on a deferral agreement, to defer all or a specified percentage of base salary and, if applicable, all or a specified percentage of cash bonuses.
The following table describes contributions, earnings and balances at
____________ (1) (2) Amounts reported in this column include contributions made by the NEO prior to Potential Payments upon Termination or Change-of-Control Stockinger Employment Agreement The Stockinger Employment Agreement provides that if Mr. Stockinger’s employment with the Company is terminated by the Company for Cause (as defined in the Stockinger Employment Agreement) or if his employment with the Company ends due to death or “permanent and total disability” (within the meaning ofSection 22(e)(3) of the Code) or voluntary termination of employment by Mr. Stockinger without Good Reason (as defined in the Stockinger Employment Agreement), he shall be entitled to receive (i) any earned but unpaid compensation, (ii) solely with respect to Mr. Stockinger’s termination for death or “permanent and total disability”, any earned but unpaid bonus for any completed year prior to the date of termination and (iii) the 42 The Stockinger Employment Agreement also provides that if Mr. Stockinger’s employment with the Company is terminated by the Company without Cause or for reasons other than death or “permanent and total disability” or is voluntarily terminated by Mr. Stockinger for Good Reason, he shall be entitled to receive (i) 1.5 times his then base salary, to be paid at least monthly, for a period of twelve months, (ii) any earned but unpaid bonus for any completed year prior to the date of termination plus a pro rata portion of any annual bonus that Mr. Stockinger would have been entitled to receive with respect to the fiscal year of termination had his employment not been terminated, (iii) the payment by the Company of premium payments for a period of up to twelve months if Mr. Stockinger and his dependents elect coverage under the Company’s health insurance plan pursuant to the Consolidated Omnibus Budget Reconciliation Act, which we refer to as “COBRA”, (iv) executive outplacement services in an amount not to exceed $25,000 to be incurred no later than the end of the second year following the year of termination and (v) the Accrued Benefits (except as otherwise may be provided in connection with a Change of Control). If within one year after the occurrence of a Change of Control (as defined in the Stockinger Employment Agreement), Mr. Stockinger’s employment with the Company is terminated by the Company without Cause and for reasons other than death or “permanent and total disability” or is voluntarily terminated by Mr. Stockinger for Good Reason, then Mr. Stockinger shall be entitled to (i) 2.0 times his then base salary, payable in a lump sum (ii) any earned but unpaid bonus for any completed year prior to the date of termination plus a pro rata portion of any annual bonus that Mr. Stockinger would have been entitled to receive with respect to the fiscal year of termination had his employment not been terminated, (iii) the acceleration of the vesting provisions of Mr. Stockinger’s outstanding unvested
Mr. Stockinger for Good Reason, (v) the payment by the Company of premium payments for a period of up to twelve months if Mr. Stockinger and his dependents elect coverage under the Company’s health insurance plan pursuant to COBRA, (vi) executive outplacement services in an amount not to exceed $25,000 to be incurred no later than the end of the second year following the year of termination and (vii) the Accrued Benefits. The following table summarizes estimated benefits that would have been payable to Mr. Stockinger (a) if his employment had been terminated on
____________ (1) Reflects a cash lump sum payment in the amount equal to one and 43 ____________ amount equal to two times the yearly salary in effect on January 3, 2021 upon a termination by the Company without cause and for reasons other than death or “permanent and total disability” or termination by Mr. Stockinger for good reason within one year of the occurrence of a change of control (as defined in the Stockinger Employment Agreement). (2) (3) (4) Mr. Stockinger did not participate in the deferred compensation plan. (5) (6) All unvested shares of restricted stock held by the NEO will automatically vest under the terms of the Plan and the applicable award agreement upon a termination by us without cause (as defined under the Plan and the applicable award agreement), or by the NEO for good reason (as defined under the applicable award agreement), or due to death or disability or upon a change of control. For the market
price for the applicable performance period shall immediately vest.
Montgomery Agreement, DiPietro Agreement, Diaz Agreement and Romeo Agreement
44 defined in the The following table summarizes estimated benefits that would have been payable to Mr.
____________ (1) Reflects a cash lump sum payment in the amount equal to (2) (3) (4) (5)
____________ (1) Reflects a cash lump sum payment in the (2) Does not include a 2020 discretionary bonus of $100,000 approved in 2021. (3) Actual earned vacation accrual as of January 3, 2021. (4) Mr. DiPietro did not participate in the (5) All unvested shares of restricted stock held by the NEO will automatically vest under the terms of the Plan and the applicable award agreement upon a termination
control. For the market 45 NEO’s employment ended, and the denominator is the number of days in the applicable performance period. If the NEO’s employment with the Company is terminated by us without cause (as defined under the applicable award agreement) or by the NEO for good reason (as defined under the applicable award agreement), the market The amount is based on the unvested shares held by the NEO at
The following table summarizes estimated benefits that would have been payable to Ms.
____________ (1) Reflects a cash lump sum payment in the amount equal to one year of base salary in effect at (2) (3) (4) Ms. Diaz did not participate in the deferred compensation plan. (5) All unvested shares of restricted stock held by the NEO will automatically vest under the terms of the Plan and the applicable award agreement upon a termination by us without cause (as defined under the Plan and the applicable award agreement), 46 or by the NEO for good reason (as defined under the applicable award agreement), or due to death or disability or upon a change of control. The amount is based on the
____________ (1) Reflects a cash lump sum payment in the amount (2) Does not include a 2020 discretionary bonus of $97,500 approved in 2021. (3) Actual earned vacation accrual as of January 3, 2021. (4) Mr. Romeo participated in the Deferred Compensation (5)
control. The amount is based on the unvested shares held by the NEO at
47
The following table summarizes the compensation we paid to our
____________ (1) The amounts listed in this column include the payment of director fees. Each member of our board of directors declined his or her payment for the second quarter of the fiscal year ended January 3, 2021 and encouraged the Company to use the funds, in its discretion, to support the employees of the Company, either through the Fiesta Family Foundation or otherwise. (2) On
We use a combination of cash and •Our board members each receive an annual retainer of $50,000 for serving as a director, except that the Chairman of our board of directors receives an annual retainer of $65,000. •The Chairman of our Audit Committee receives an additional fee of $15,000 per year and each other member of our Audit Committee receives an additional fee of $7,500 per year. •The Chairman of our Compensation Committee receives an additional fee of $10,000 per year and each other member of our Compensation Committee receives an additional fee of $5,000, per year. •The Chairman of our Corporate Governance and Nominating Committee receives an additional fee of $5,000 per year and each other member of our Corporate Governance and Nominating Committee receives an additional fee of $2,500. •
•Members of our board of directors do not receive separate attendance fees for attending meetings. All directors are reimbursed for all reasonable expenses they incur while acting as directors, including as members of any committee of our board of directors. 48 •If any Special Committees are created during the year, the chairman of such committee receives a retainer of $7,500 per annum (prorated for the time that the committee is active), and each •Pursuant to the Plan, upon becoming a director, any future director will receive a number of shares of our restricted common stock having an aggregate fair market value (as defined in the Plan) of $100,000 which will vest in equal installments over five years. Board of Directors Stock Ownership Guidelines Members of our board of directors are expected to acquire and continue to hold shares of our Pay Ratio Disclosure As required by Section 953(b) of the We determined our median employee based on To identify the median employee, we used Hourly
Based on the foregoing, for our 2020 fiscal, year our estimate of the ratio of the
49
PROPOSAL 2 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE We are providing our shareholders an opportunity to cast a vote to approve, on an advisory The Compensation Committee continually reviews the compensation programs for our Named Executive Officers to ensure they achieve the desired goals of encouraging and rewarding executives to contribute to the achievement of the Company’s business objectives and to attract, retain and motivate talented executives to perform at the highest level and contribute significantly to the Company’s success. The program is intended to align the interests of the Named Executive Officers with those of shareholders, provide an appropriate and balanced mix of The Compensation Committee believes that the amounts of We are asking our shareholders to indicate their support for our Named Executive Officers’ compensation as described in this Proxy Statement under “Executive Compensation”. This proposal, commonly known as a RESOLVED, that the shareholders of Fiesta Restaurant Group, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s Named Executive Officers as disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s This advisory resolution will be considered approved if it receives an affirmative vote of the majority of the shares present at the The board of directors recommends a vote FOR the approval of the
PROPOSAL 3 —
We are asking our shareholders to approve the 2021 Stock Incentive Plan, as amended (the “2021 Plan”), which was approved, upon recommendation of our Compensation Committee, by our board of directors
Under the 2012 Plan, as of March 1, 2021, • 679,187 shares were available for future awards; • 868,151 full value awards were outstanding (i.e. restricted stock and restricted stock units); • 0 appreciation awards were outstanding; • 0 earned performance awards were outstanding; • 150,585 unearned performance awards were outstanding. If the 2021 Plan is approved by our
The affirmative vote of The Purpose The purpose of the Administration The 2021 Plan is administered by the 51 Eligibility Any employee, officer, director, associate, advisor or consultant to us or any of our affiliates is generally eligible to participate in the 2021 Plan. In each case, the Compensation Committee selects the actual grantees. As of March 1, 2021, there were approximately 19 officers, 152 other employees, and no consultants, associates or advisors eligible for awards under the 2021 Plan. As of March 1, 2021, there were eight outside directors eligible for awards (other than cash awards) under the 2021 Plan. Awards The Shares Subject to the Subject to adjustment as provided below, the aggregate number of shares of our common stock that may be delivered pursuant to awards granted under the 2021 Plan will be 2,000,000 shares less one (1) share of stock for every one (1) share of stock granted under the 2012 Plan after March 1, 2021. The closing price of our common stock on March 1, 2021 was $15.86. With respect to the shares of common stock reserved under the 2021 Plan, a maximum of 2,000,000 of such shares may be subject to grants of incentive stock options. The maximum number of shares that may be covered by awards, in the In the event of any change affecting the outstanding shares of our common stock by reason of, among other things, a stock dividend, special cash dividend, stock split, combination or exchange of shares, recapitalization or other change in our capital structure, our corporate separation or division (including, but not limited to, a split-up, spin-off, split-off or other distribution to our
Options and Stock Appreciation Rights Under the 2021 Plan, the Compensation Committee may grant both options intended to constitute “incentive stock options” within the meaning of Section 422 of the Code and non-qualified stock options. The exercise price for options will be determined by the 52 classes of our stock or the The Compensation Committee determines when, and upon what terms and conditions, options granted under the 2021 Plan will be exercisable, except that no option will be exercisable more than 10 years after the date on which it is granted. The Compensation Committee determines the vesting of stock options at the time of grant, except that no stock option shall become vested earlier than the first anniversary of, or later than the seventh anniversary of, the date of grant of such stock option, and the participant must remain in active employment or service with us or an affiliate until the applicable vesting date. The Compensation Committee may impose a vesting schedule of less than one year from the date of grant of stock options; provided, the maximum number of shares of common stock that may be issued under the 2021 Plan with respect to all awards having a vesting schedule of less than one year shall not exceed five percent (5%) of the total number of shares of common stock that may be issued under the 2021 Plan. The exercise price may generally be paid (1) with cash, (2) unrestricted and vested shares of our common stock owned by the optionee, (3) unless otherwise prohibited by law for either us or the optionee, by irrevocably authorizing a third party to sell shares (or a sufficient portion of the shares) of our common stock acquired upon the exercise of the stock option and remit to us a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise, or (4) a combination of the above methods. The Compensation Committee may only grant SARs under the 2021 Plan as a standalone award. The Compensation Committee determines the term of a SAR at the time of grant, except that no SAR will be exercisable more than 10 years after the date on which it is granted. The Compensation Committee determines the vesting of a SAR at the time of grant, except that no SAR shall become vested earlier than the first anniversary of the date of, or later than the seventh anniversary of, the date of grant of such SAR, and the participant must remain in active employment or service with us or an affiliate until the applicable vesting date. The Compensation Committee may impose a vesting schedule of less than one year from the date of grant of Stock Appreciation Rights; provided, the maximum number of shares of common stock that may be issued under the 2021 Plan with respect to all awards having a vesting schedule of less than one year shall not exceed five percent (5%) of the total number of shares of common stock that may be issued under the 2021 Plan, provided, further, that the Compensation Committee may provide that vesting of an award will accelerate in the event of a participant’s death, disability or occurrence of a change in control without regard to the minimum vesting provision. When a SAR recipient exercises his or her SAR with respect to a share, the recipient is entitled to Unless otherwise provided in the applicable award agreement, stock options or SARs granted under the 2021 Plan will have the following terms: • If a participant’s employment or provision of services terminates by reason of death or Disability (as defined in the 2021 Plan), all stock options or SARs held by such participant will become fully vested and exercisable and may be exercised until the earlier of the one year anniversary of such death or termination of employment or services, as applicable, and the expiration of the stock option’s or SAR’s term. • If a • If a participant’s employment or provision of services terminates involuntarily without Cause (as defined in the 2021 Plan), any stock option or SAR held by such participant may thereafter be exercised, to the extent it was exercisable at the time of termination, until the earlier of the three month anniversary of such termination of employment or provision of services, and the expiration of such stock option’s or SAR’s term. Any stock option or SAR that is unvested or unexercisable on the date of termination shall immediately terminate. 53 • If a participant’s employment or provision of services terminates involuntarily for Cause, all outstanding stock options or SARs held by such participant (whether vested or unvested) shall immediately terminate. • If a participant’s employment or provision of services is terminated by the participant for any reason other than death, Disability, Retirement, involuntary termination without Cause or involuntary termination for Cause, any stock option or SAR held by such participant may thereafter be exercised, to the extent it was exercisable at the time of termination, until the earlier of the one month anniversary of such termination of employment or provision of services, and the expiration of such stock option’s or SAR’s term. Any stock option or SAR that is unvested or unexercisable at the date of termination shall immediately terminate. Stock Awards The Compensation Committee may grant awards of shares, restricted shares and restricted stock units upon the terms, conditions, performance requirements, restrictions, forfeiture provisions, contingencies and limitations as it determines. The Compensation Committee determines the vesting of stock awards at the time of grant, except that no stock award shall become vested earlier than the first anniversary of, or later than the seventh anniversary of, the date of grant of such stock award, unless otherwise provided in the 2021 Plan, and the participant must remain in active employment or service with us or an affiliate until the applicable vesting date. The Compensation Committee may impose a vesting schedule of less than one year from the date of grant of stock awards; provided, the maximum number of shares of common stock that may be issued under the 2021 Plan with respect to all awards having a vesting schedule of less than one year shall not exceed five percent (5%) of the total number of shares of common stock that may be issued under the 2021 Plan, provided, further, that the Compensation Committee may provide that vesting of an award will accelerate in the event of a participant’s death, disability or occurrence of a change in control without regard to the minimum vesting provision. Except as otherwise provided in the applicable award agreement, if a participant’s employment or provision of services is (1) terminated by death, Disability or by us for any reason other than Cause, all stock underlying a stock award will become fully vested and non-forfeitable, and (2) terminated by us for Cause or by the participant for any reason other than death or Disability, all stock underlying a stock award, to the extent unvested at the time of termination, will be forfeited. Performance Awards The right of a participant to exercise or receive a grant or settlement of any award, and its timing, may be subject to performance conditions specified by the Compensation Committee at the time of grant. Performance awards under the 2021 Plan may be in the form of stock options, SARs, stock awards and cash awards. The Compensation Committee may use business criteria and other measures of performance it deems appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase amounts payable under any award subject to performance conditions. No performance award shall become vested earlier than the first anniversary of the date of grant of such performance award; and provided, further, that the participant shall have continuously remained in the active employment of the Company or an affiliate until the applicable vesting date. Notwithstanding the foregoing, the Compensation Committee may impose a vesting schedule of less than one year from the date of grant of a performance award; provided, the maximum number of shares of stock that may be issued under the 2021 Plan with respect to awards having a vesting schedule of less than one year shall not exceed five percent (5%) of the total number of shares of stock that may be issued under the 2021 Plan, provided, further, that the Compensation Committee may provide that vesting of an award will accelerate in the event of a participant’s death, disability or occurrence of a change in control without regard to the minimum vesting provision. Settlement of performance awards may be in cash or our common stock, or other awards, or other property, in the discretion of the Compensation Committee. Any cash-settled performance award will be based on the fair market value of the shares of our common stock subject to the performance award at the time of settlement. The Compensation Committee may, in its discretion, reduce or increase the amount of a settlement otherwise to be made in connection with a performance award. Outside Director Stock Options The Compensation Committee can grant outside director stock options to outside directors in its discretion. The term of an outside director stock option cannot be greater than seven years. An outside director stock option shall vest and become exercisable in installments over five years with options for one-fifth of the shares underlying the outside 54 director stock option vesting and becoming exercisable on the first anniversary of the date of grant of the outside director stock option and options for an additional one-fifth of the underlying shares vesting and becoming exercisable on each subsequent anniversary of the date of grant, provided that such outside director continuously remained a director through the applicable vesting date. Any unvested outside director stock option terminates immediately upon the outside director ceasing to be a director. Notwithstanding the foregoing, the Compensation Committee may impose a vesting schedule of less than one year from the date of grant on outside director stock options; provided, the maximum number of shares of stock that may be issued under the 2021 Plan with respect to awards having a vesting schedule of less than one year shall not exceed five percent (5%) of the total number of shares of stock that may be issued under the 2021 Plan, provided, further, that the Compensation Committee may provide that vesting of an award will accelerate in the event of a participant’s death, disability or occurrence of a change in control without regard to the minimum vesting provision. Outside Director Stock Awards Unless otherwise determined by the Compensation Committee, each outside director appointed to the board of directors shall receive as of the date of such appointment, stock awards of an aggregate fair market value of $100,000 on the date of grant. Unless otherwise determined by the Compensation Committee, on the date of each annual meeting of the Company, outside directors receive a number of shares of restricted common stock in an amount equal to $75,000 or such other amount or number of shares of stock as determined by the Compensation Committee. With respect to outside director stock awards granted annually on the date of each annual meeting of shareholders or upon appointment to the Company’s board of directors, an outside director stock award will vest and become exercisable in the discretion of the Compensation Committee, provided that the outside director continuously remains a director through the applicable vesting date. Any unvested shares underlying an outside director stock award will be immediately forfeited upon the outside director ceasing to be a director. Notwithstanding the foregoing, the Compensation Committee may impose a vesting schedule of less than one year from the date of grant on outside director stock awards; provided, the maximum number of shares of stock that may be issued under the 2021 Plan with respect to awards having a vesting schedule of less than one year shall not exceed five percent (5%) of the total number of shares of stock that may be issued under the 2021 Plan, provided, further, that the Compensation Committee may provide that vesting of an award will accelerate in the event of a participant’s death, disability or occurrence of a change in control without regard to the minimum vesting provision. Change of Control Unless otherwise provided in an applicable award agreement, upon the occurrence of a Change in Control (as defined in the 2021 Plan), the Compensation Committee may in its sole and absolute discretion, provide on a case by case basis that (i) some or all outstanding awards may become immediately exercisable or vested, without regard to any limitation imposed pursuant to the 2021 Plan, (ii) that all awards shall terminate, provided that participants has the right, immediately prior to the occurrence of such Change in Control and during such reasonable period as the Compensation Committee in its sole discretion determines and designates, to exercise any vested award in whole or in part, (iii) that all awards will terminate, provided that participants are entitled to a cash payment equal to the Change in Control Price (as defined in the 2021 Plan) with respect to shares subject to the vested portion of the award net of the exercise price thereof (if applicable), (iv) provide that, in connection with a liquidation or dissolution of the Company, awards will convert into the right to receive liquidation proceeds net of the exercise price (if applicable) and (v) any combination of the foregoing. If the New Plan Benefits No grants of awards have been made under the 2021 Plan and the 2021 Plan will be effective on April 28, 2021, the date of the Annual Meeting, if it is 55 Meeting. The Summary Compensation Table and Equity Compensation Plans The following table summarizes the equity compensation plans under which our common stock may be issued as of January 3, 2021. Our shareholders approved all plans.
U.S. Federal Income Tax Consequences The following is a summary of the principal U.S. federal income tax consequences of transactions under the 2021 Plan, based on current U.S. federal income tax laws, which are subject to change. This summary is not intended to be
Since the exercise price of a non-qualified stock option under the 2021 Plan cannot be less than 100% of the fair market value of our common stock on the grant date, no income will be recognized by a participant at the time a non-qualified stock option is granted. Ordinary (compensation) income will be recognized by a participant at the time a non-qualified stock option is exercised, and the amount of such income will be equal to the excess of the fair market value on the exercise date of the shares issued to the participant over the exercise price for such shares. In the case of a participant who is our employee or an employee of any of our subsidiaries, this ordinary income will also constitute wages subject to the withholding of income tax and the participant will be required to make arrangements satisfactory to us regarding the payment of any amounts required to be withheld. Capital gain or loss on a subsequent sale or other disposition of the shares of common stock acquired upon exercise of a non-qualified stock option will be measured by the difference between the amount realized on the disposition and the tax basis of such shares. The tax basis of a share acquired upon the exercise of the non-qualified stock option will be equal to the sum of the exercise price of an option and the amount recognized and included in income with respect to the share upon exercise of the option. We generally will be entitled to a deduction for federal income tax purposes at such time, and in the same amount as the amount included in ordinary income by the participant upon exercise of his or her non-qualified stock option, subject to the usual rules as to reasonableness of compensation and provided that we timely comply with the applicable information reporting requirements. 56 Incentive Stock Options In general, neither the grant nor the exercise of an incentive stock option will result in taxable income to a participant or a deduction to us. However, generally, for purposes of the alternative minimum tax, the excess of the fair market value on the exercise date of the shares issued to the participant over the exercise price for such shares will be considered as part of the participant’s income for the year in which the incentive stock option is exercised. In addition, a participant generally must be our employee (or of our subsidiary) at all times between the date of grant and the date three months before exercise of the option or the option will be treated as a non-qualified stock option when exercised. The If the holding period rule is not satisfied, the portion of any gain recognized on the disposition of the shares acquired upon the exercise of the option that is equal to the lesser of (1) the excess of the fair market value on the exercise date of the shares issued to the participant over the exercise price for such shares, or (2) the amount realized on the disposition minus the exercise price for such shares, will be treated as ordinary (compensation) income, with any remaining gain being treated as capital gain. We will generally be entitled to a deduction equal to the amount of the ordinary income. If a participant makes payment of the exercise price by delivering shares of common stock, he or she generally will not recognize any gain with respect to such shares as a result of such delivery, but the amount of gain, if any, which is not so recognized will be excluded from his or her basis in the new shares received. However, the use by a participant of shares previously acquired pursuant to the exercise of an incentive stock option before the holding period rule is satisfied will be treated as a taxable disposition. Stock Appreciation Rights Since the exercise price of a SAR under the 2021 Plan cannot be less than 100% of the fair market value of our common stock on the grant date, the grant of a SAR will create no tax consequences for the participant or us. Upon the exercise of a SAR, the participant will recognize ordinary (compensation) income, in an amount equal to the fair market value of the common stock received from the exercise for a stock-settled SAR or the cash received for a cash-settled SAR. The participant’s tax basis in the shares of common stock received in the exercise of the SAR will be equal to the ordinary income recognized with respect to the common stock. The participant’s holding period for capital gains purposes for shares acquired after the exercise of a SAR generally begins on the exercise date. The ordinary income attributable to the participant’s exercise of a SAR constitutes wages subject to withholding by us and the participant will be required to make arrangements satisfactory to us regarding the payment of any amounts required to be withheld. Upon the exercise of a SAR, we generally will be entitled to a deduction in the amount of the compensation income recognized by the participant. Restricted Stock In general, no income will be recognized by a participant at the time shares of restricted stock, which we refer to as “Restricted Shares”, are allocated to him or her. Ordinary (compensation) income will be recognized by a participant at the time his or her Restricted Shares “vest” (i.e., at the time the stock restrictions terminate with respect to such Restricted Shares and the participant is no longer obligated to redeliver such Restricted Shares to us in the event of his or her termination of employment with us and our subsidiaries). The amount of such ordinary income with respect to each Restricted Share will equal the excess, if any, of the fair market value of a share of the common stock on the date the Restricted Shares vest, over the price paid by the participant for the Restricted Shares, if any. This ordinary (compensation) income will also constitute wages subject to withholding by us and the participant will be required to make arrangements satisfactory to us regarding the payment of any amounts required to be withheld. Any subsequent realized gain or loss will be a capital gain or loss with the participant’s holding period measured from the date the Restricted Shares vested and with the participant’s basis in each share being equal to the price paid by the participant per share of Restricted Shares, if any, plus the amount of ordinary income, if any, recognized with respect to such Restricted Share. 57 Notwithstanding the foregoing, a participant may, within 30 days after Restricted Shares are allocated to him or her under the 2021 Plan, elect under Section 83(b) of the Code, which we refer as a “Section 83(b) Election”, to include in income as of the date of such allocation the excess, if any, of the fair market value of a share of the common stock on the date the Restricted Shares are allocated over the price paid by the participant for the Restricted Shares, if any. Such income will be ordinary (compensation) income which will also constitute wages subject to withholding by us and the participant will be required to make arrangements satisfactory to us regarding the payment of any amounts required to be withheld. If a participant subsequently vests in Restricted Shares as to which a Section 83(b) Election has been made, such vesting will not result in a taxable event to the participant. If a participant makes a Section 83(b) Election, and subsequently is required under the 2021 Plan to
We generally will be entitled to a deduction for federal income tax purposes at such time as the participant recognizes ordinary income with respect to the Restricted Shares. Such deduction will be in an amount equal to the amount included in ordinary income by the participant.
Other awards under the 2021 Plan, including performance awards, generally will result in ordinary (compensation) income to the participant at the later of the time of delivery of cash, shares of our common stock, or other property, or in the case of previously delivered shares or other property and in absence of an appropriate Section 83(b) Election, the time that either the risk of forfeiture or restriction on transferability lapses. We generally would be entitled to a deduction equal to the amount recognized as ordinary income by the participant in connection with an award. Requirements Regarding “Deferred Compensation” Section 409A of the Code regulates the federal income tax treatment of all amounts that constitute non-qualified deferred compensation. If a deferred compensation arrangement does not meet the requirements of Section 409A of the Code, the timing of taxation for these amounts could be accelerated, meaning that these amounts could become immediately taxable to the recipient of the deferred compensation even if it has not yet been paid. In addition, the IRS may impose substantial tax penalties and interest on the recipient. It is intended that all awards under the 2021 Plan shall comply with Section 409A of the Code and the 2021 Plan and all awards shall be interpreted accordingly. Effect of Section 280G of the Internal Revenue Code Section 280G of the Code limits the deductibility of certain payments made to certain individuals that are contingent upon a change of control if the total amount of such payments equals or exceeds three times a participant’s average annual compensation for the past five years. If payment or settlement of an award is accelerated upon a change of control, a portion of such payment attributable to the value of the acceleration is considered a payment that is contingent upon a change of control. Amounts that are not deductible under Section 280G of the Code also lower the Section 162(m) $1,000,000 deductible compensation cap. In addition, the person receiving the payments we must pay an excise tax (in addition to any income tax) equal to 20% of such payments. Unless a participant’s award agreement or another agreement with us provides otherwise, if any amounts payable from the 2021 Plan would not be deductible for us because of Section 280G of the Code and subject such participant to a 20% excise tax, such amounts shall be reduced to the extent necessary to allow us to deduct them and prevent imposition of such tax. However, this reduction will not apply if the participant would receive a greater amount after paying the 20% excise tax than such participant would if this reduction did apply. The board of directors recommends 58
PROPOSAL 4 — RATIFICATION OF APPOINTMENT The Audit Committee has selected Deloitte & Touche LLP as the independent registered public accounting firm to audit and report upon the consolidated financial statements of the Company for the fiscal year ending A representative of Deloitte & Touche LLP is expected to be present at the The majority of the shares present at the The board of directors recommends a vote FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending Fees for Professional Services The following table sets forth the aggregate fees billed to us for the fiscal years ended January 3, 2021 and December
____________ (1) Audit fees represents the aggregate fees billed or to be billed for professional services rendered for the audit of our annual consolidated financial statements, review of interim quarterly financial statements included in our quarterly reports on Form (2)
Policy on Audit Committee Pre-Approval of Services Provided by Deloitte & Touche LLP The Audit Committee has established policies and procedures regarding
Annual Meeting Admission Only Participation during the Annual Meeting As part of the Annual Meeting, we will hold a live question and answer session during which we intend to answer all questions properly submitted during the Annual Meeting in We ask that all stockholders provide their name and contact details when submitting a question through the virtual meeting platform so that we may address any individual concerns or follow up matters directly. If you have a question of personal interest that is not of general concern to all stockholders, or if a question posed at the Annual Meeting was not otherwise answered, we encourage you to contact us separately after the Annual Meeting by visiting https://www.frgi.com/investor-relations/investor-resources/investor-contacts/default.aspx. Once you login to the virtual meeting platform at www.virtualshareholdermeeting.com/FRGI2021, you may select the “Q&A” button on the bottom right side of the virtual meeting platform interface and then type your question into the “Submit a Question” field and click “Submit”. Please note that stockholders will need their valid 16-digit control number to ask questions at the Annual Meeting. If you are experiencing technical difficulties accessing the Annual Meeting, you may call the technical support numbers posted on the
Who Can Vote, Outstanding Shares Holders of record of our common stock at the close of business on March Voting Procedures You can vote by attending the
• Before the Annual Meeting — You may submit your proxy online via the Internet by following the instructions provided on the enclosed proxy card. Internet voting facilities will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on April 27, 2021. 60 •During the Annual Meeting — You may attend the meeting via the Internet at www.virtualshareholdermeeting.com/FRGI2021 and vote during the meeting by following the instructions provided on the enclosed proxy card. By Telephone: Shareholders located in the United States may vote by timely submitting a proxy by telephone by calling the
If you hold your shares of common stock in “street name,” meaning such shares are held for your account by a broker, bank or other nominee, then you will receive instructions from such institution or person on how to vote your shares. Your broker, bank or other nominee will allow you to deliver your voting instructions via the Internet and may also permit you to submit your voting instructions by telephone. Proxy The shares represented by proxies will be voted in accordance with the directions made thereon at the
the approval of the The board is not aware of any matters that are expected to come before the Record Date Only holders of record of common stock at the close of business on March Quorum A majority of the outstanding shares of common stock, present in person or represented by proxy at the Required Vote As a holder of our common stock, you are entitled to one vote per share on any matter submitted to a vote of the shareholders. Proposal 1 will be decided by the affirmative vote of a majority of the shares of common stock voting with respect to such nominee. Proposals
THE BOARD UNANIMOUSLY RECOMMENDS VOTING Abstentions and Broker Non-Votes If you are a beneficial owner holding your shares in “street name” and you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares of our common stock for you, your shares of common stock will not be voted with respect to any proposal for which the shareholder of record does not have “discretionary” authority to vote. You are deemed to beneficially own your shares in “street name” if your shares are held in an account at a brokerage firm, bank, We encourage you to provide voting instructions on the proxy card or a provided voting instruction form to the bank, broker, trustee or other nominee that holds your shares by carefully following the instructions provided in their notice to you.
Revocability of Proxy A shareholder of record who has properly executed and delivered a proxy may revoke such proxy at any time before the •timely complete and return a new proxy card bearing a later date; •vote on a later date by using the Internet or telephone; •deliver a written notice to our Secretary prior to the •attend the If your shares are held of record by a bank, broker, trustee or other nominee and you desire to vote at the Appraisal Rights Holders of shares of common stock do not have appraisal rights under Delaware law in connection with this proxy solicitation. Shareholder List A list of our shareholders as of the close of business on March Communications with the Board Any shareholder or other interested party who desires to communicate with the chair of our board of directors or any of the other members of the board of directors may do so by writing to: Board of Directors, c/o Stacey Rauch, Chair of the Board of Directors, Fiesta Restaurant Group, Inc., 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254 or through the Company’s website,www.frgi.com, under the Investor Relations link. Communications may be 62 addressed to the Chair of the board, an individual director, a board committee, the Other Matters If you have any questions, or if you need additional copies of the proxy materials, please contact IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
Costs of Solicitation We are required by law to convene an annual meeting of shareholders at which directors are elected. Because our shares are widely held, it would be impractical for our shareholders to meet physically in sufficient numbers to hold a meeting. Accordingly, the Company is soliciting proxies from our shareholders. United States federal securities laws require us to send you this Proxy Statement, and any amendments and supplements thereto, and to specify the information required to be contained in it. The Company will bear the expenses of calling and holding the
Other Matters Shareholder proposals intended for inclusion in our proxy statement relating to the Annual Meeting of Shareholders in We will bear the cost of preparing, assembling, and mailing the form of proxy, this Proxy Statement and other material which may be sent to shareholders in connection with this solicitation and all costs associated with delivering our proxy materials to shareholders. In addition to solicitation of proxies by use of the Internet, telephone, and mail, our directors, officers, and employees (who will receive no compensation therefore in addition to their regular remuneration) may solicit the return of proxies by telephone, telegram, or personal interview. We will request banks, brokerage houses, and other custodians, nominees, and fiduciaries to forward copies of the proxy materials to their principals and to request instructions for voting the proxies. We may reimburse such banks, brokerage houses, and other custodians, nominees, and fiduciaries for their expenses in connection therewith. COPIES OF OUR ANNUAL REPORT ON FORM Our board of directors does not intend to present, and does not have any reason to believe, that others intend to present, any matter of business at the 64 WE ENCOURAGE YOU TO AUTHORIZE YOUR PROXY ELECTRONICALLY BY GOING TO THE WEBSITEWWW.PROXYVOTE.COM
7255 Corporate Center Dr.
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Appendix A
2021 STOCK INCENTIVE PLAN Appendix A-1 FIESTA RESTAURANT GROUP, INC. 2021 STOCK INCENTIVE PLAN 1. ESTABLISHMENT AND PURPOSE. The Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan (the “Plan”) is established by Fiesta Restaurant Group, Inc., a Delaware corporation (the “Company”), to
2. ADMINISTRATION; ELIGIBILITY. The Plan shall be administered by the Compensation Committee of the Board, The Administrator shall have plenary authority to grant Awards pursuant to the terms of the Plan to Eligible Individuals. Participation shall be limited to such persons as are selected by the Administrator. Subject to Section 409A of the Code, Awards may be granted as alternatives to, in exchange or substitution for, or replacement of, awards outstanding under the Plan or any other plan or arrangement of the Company or a Subsidiary (including, subject to the requirements under the Plan, a plan or arrangement of a business or entity, all or a portion of which is acquired by the Company or a Subsidiary). The provisions of Awards need not be the same with respect to each Participant. Among other things, the Administrator shall have the authority, subject to the terms of the Plan: (a) to select the Eligible Individuals to whom Awards may from time to time be granted, provided that Outside Directors of the Company shall receive Outside Director Awards pursuant to Sections 8 and 9; (b) to determine whether and to what extent Stock Options, Stock Appreciation Rights, Stock Awards or any combination thereof are to be granted hereunder; (c) to determine the number of shares of Stock to be covered by (d) to approve forms of agreement for use under the Plan; (e) to determine the terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder (including, but not limited to, the option price, any vesting restriction or limitation, any vesting acceleration or waiver of forfeiture, and any right of repurchase, right of first refusal or other transfer restriction regarding any Award and the shares of Stock relating thereto, based on such factors or criteria as the Administrator shall determine); (f) �� subject to Sections 11(b) and 11(c), to modify, amend or adjust the terms and conditions of any Award, at any time or from time to time, including, but not limited to, with respect to (i) performance goals and targets applicable to performance based Awards pursuant to the terms of the Plan and (ii) extension of the post-termination exercisability period of Stock Options; (g) to determine the Fair Market Value; and (h) to determine the type and amount of consideration to be received by the Company for any Stock Award issued under Section 6. Appendix A-2 The Administrator shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreement relating thereto) and to otherwise supervise the administration of the Plan. In order to assure the viability of Awards granted to Participants employed in foreign countries who are not subject to U.S. tax law, the Administrator may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom. Moreover, the Administrator may approve such supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Section 3 of the Plan. Except to the extent prohibited by applicable law, the Administrator may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person or persons selected by it. Any such allocation or delegation may be revoked by the Administrator at any time. The Administrator may authorize any one or more of their members or any officer of the Company to execute and deliver documents on behalf of the Administrator. Any determination made by the Administrator or pursuant to delegated authority pursuant to the provisions of the Plan with respect to any Award shall be made in the sole discretion of the Administrator or such delegate at the time of the grant of the Award or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Administrator or any appropriately delegated officer pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and Participants. No member of the Administrator, and no officer of the Company, shall be liable for any action taken or omitted to be taken by such individual or by any other member of the Administrator or officer of the Company in connection with the performance of duties under this Plan, except for such individual’s own willful misconduct or as expressly provided by law. 3. STOCK SUBJECT TO PLAN. Subject to adjustment as provided in this Section 3, the aggregate number of shares of Stock which may be delivered under the Plan shall not exceed 2,000,000 shares less one (1) share of Stock for every one (1) share of Stock granted under the Prior Plan after March 1, 2021. If any shares of Stock subject to any Awards under the Prior Plan are cancelled, forfeited, terminated for any reason or is settled in cash, the shares of Stock that were subject to such Award shall, to the extent cancelled, forfeited, terminated or settled in cash, immediately become available for Awards under this Plan; provided, however, that any shares of Stock subject to any Award under the Prior Plan that are tendered, cancelled, forfeited, withheld or terminated in order to pay the exercise price, purchase price or any taxes or tax withholdings on an Award under the Prior Plan shall not be available for Awards granted under this Plan. To the extent any shares of Stock covered by an With respect to the shares of Stock reserved pursuant to this Section 3, a maximum of 2,000,000 of such shares may be subject to grants of Incentive Stock Options. The maximum number of shares that may be covered by Awards, in the aggregate, to any one Participant during any calendar year shall be 750,000 shares. The maximum value on the date of the grant of Awards that may be granted to any Outside Director during any one fiscal year shall be $300,000. Any Award settled in cash will be based on the Fair Market Value of the shares of Stock subject to such Award. In the event of any Company stock dividend, special cash dividend, stock split, combination or exchange of shares, recapitalization or other change in the capital structure of the Company, corporate separation or division of the Company (including, but not limited to, a split-up, spin- off, split-off or other distribution to Company stockholders, Appendix A-3 other than a normal cash dividend), sale by the Company of all or a substantial portion of its assets (measured on either a stand-alone or consolidated basis), reorganization, rights offering, partial or complete liquidation, merger or consolidation in which the Company is the surviving corporation, or any other corporate transaction, Company share offering or other event involving the Company and having an effect similar to any of the foregoing, the Administrator may make such substitution or adjustments in the (a) number and kind of shares that may be delivered under the Plan, (b) additional maximums imposed in the immediately preceding paragraph, (c) number and kind of shares subject to outstanding Awards, (d) exercise price of outstanding Stock Options, Outside Director Stock Options, and Stock Appreciation Rights and (e) other characteristics or terms of the Awards as it may determine appropriate in its sole discretion to equitably reflect such corporate transaction, share offering or other event; provided, however, that the number of shares subject to any Award shall always be a whole number and any fractional share resulting from an adjustment or substitution provided for hereunder shall be rounded up to the nearest whole share. In the event of the dissolution or liquidation of the Company, or a merger, reorganization or consolidation in which the Company is not the surviving corporation, then, except as otherwise provided herein and/or in the discretion of the Administrator, each Stock Option and Outside Director Stock Option, to the extent not theretofore exercised, shall terminate forthwith. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 3 to the extent that such adjustment would violate Section 409A of the Code. 4. STOCK OPTIONS. Stock Options may be granted alone or in addition to other Awards granted under the Plan and may be of two types: Incentive Stock Options and Non-Qualified Stock Options. Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve. The Administrator shall have the authority to grant any Participant Incentive Stock Options, Non-Qualified Stock Options or both types of Stock Options. Incentive Stock Options may be granted only to associates of the Company and its subsidiaries (within the meaning of Section 424(f) of the Code). To the extent that any Stock Option is not designated as an Incentive Stock Option or, even if so designated, does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. Incentive Stock Options may be granted only within 10 years from the date the Plan is adopted or the date the Plan is approved by the Company’s stockholders, whichever is earlier. Stock Options shall be evidenced by option agreements, each in a form approved by the Administrator. An option agreement shall indicate on its face whether it is intended to be an agreement for an Incentive Stock Option or a Non-Qualified Stock Option. The grant of a Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify the Plan under Section 422 of the Code or, without the consent of the Optionee affected, to disqualify any Incentive Stock Option under Section 422 of the Code. To the extent that the aggregate Fair Market Value of Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under all plans of the Company and its subsidiaries within the meaning of Section 424(f) of the Code) exceeds $100,000, such Stock Options shall be treated as Non-Qualified Stock Options. Stock Options granted under this Section 4 shall be subject to the following terms and conditions and shall contain such additional terms and conditions as the Administrator shall deem desirable: (a) Exercise Price. The Appendix A-4 (b) Option Term. The term of a Stock Option shall be determined by the Administrator at the time of grant and set forth in the applicable option agreement, provided, however, that no Stock Option shall be exercisable more than 10 years after the date that the Stock Option is granted (or more than five years after the date that the Stock Option is granted in the case of an Incentive Stock Option granted to an individual who is a Ten Percent Holder). (c) Vesting. A Stock Option shall become vested and nonforfeitable as determined by the Administrator at the time of grant and set forth in the applicable option agreement, and unless otherwise provided in the Plan or (d) Exercisability. Stock Options shall be exercisable to the extent vested; provided that the exercise of a Stock Option shall be subject to such additional terms and conditions, performance requirements, restrictions, forfeiture provisions, contingencies and limitations, if any, as shall be determined by the Administrator and listed in the applicable option agreement. If any Stock Option is exercisable only in installments, the Administrator may at any time waive such installment exercise provisions, in whole or in part, based on such factors as the Administrator may determine. (e) Method of Exercise. Stock Options may be exercised, in whole or in part, by giving written notice of exercise to the Company specifying the number of shares of Stock subject to the Stock Option to be purchased. The option price of any Stock Option shall be paid in full in cash (by certified or bank check or such other instrument as the Company may accept) or, if permitted by the Administrator in its sole and absolute discretion, by one or more of the following: (i) in the form of shares of unrestricted and vested Stock already owned by the Optionee, based on the Fair Market Value of the Stock on the date the Stock Option is exercised; (ii) by certifying ownership of shares of Stock owned by the Optionee to the satisfaction of the Administrator for later delivery to the Company as specified by the Company; (iii) unless otherwise prohibited by law for either the Company or the Optionee, by irrevocably authorizing a third party to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire No shares of Stock shall be (f) Termination by Death. Except as otherwise provided in the applicable option agreement, if an Optionee’s employment or provision of services terminates by reason of death, any Stock Option held by such Optionee shall be fully vested upon such death and may thereafter be exercised for a period of one year from the date of such death or until the expiration of the stated term Appendix A-5 (g) Termination by Reason of Disability. Except as otherwise provided in the applicable option agreement, if an Optionee’s employment or provision of services terminates by reason of Disability, any Stock Option held by such Optionee shall be fully vested upon such termination of employment or provision of services and may thereafter be exercised by the Optionee for a period of one year from the date of such termination of employment or provision of services or until the expiration of the stated term of such Stock Option, whichever period is shorter. (h) Termination by Reason of Retirement. Except as otherwise provided in the applicable option agreement, if an Optionee’s employment or provision of services terminates by reason of Retirement, any Stock Option held by such Optionee, to the extent it was exercisable at the time of termination, may thereafter be exercised by the Optionee for a period of 12 months from the date of such termination of employment or provision of services or until the expiration of the stated term of such Stock Option, whichever period is shorter, and any Stock Option that is unvested or unexercisable at the date of termination shall thereupon terminate. (i) Involuntary Termination Without Cause. Except as otherwise provided in the applicable option agreement, if an Optionee’s employment or provision of services terminates involuntarily without Cause, and for reasons other than death, Disability or Retirement, any Stock Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination, for a period of three months from the date of such termination of employment or provision of services or until the expiration of the stated term of such Stock Option, whichever period is shorter, and any Stock Option that is unvested or unexercisable at the date of termination shall thereupon terminate. (j) Involuntary Termination for Cause. Except as otherwise provided in the applicable option agreement, if an Optionee’s employment or provision of services terminates involuntarily for Cause, all Stock Options held by such Optionee, whether or not then vested and exercisable, shall thereupon terminate. (k) Other Termination. Except as otherwise provided in the applicable option agreement, if an Optionee’s employment or provision of services is terminated by the Optionee for any reason other than death, Disability, Retirement, involuntary termination without Cause or involuntary termination for Cause any Stock Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination, for a period of 1 month from the date of such termination of employment or provision of services or until the expiration of the stated term of such Stock Option, whichever period is shorter, and any Stock Option that is unvested or unexercisable at the date of termination shall thereupon terminate. (l) Exception to Termination. If employment or provision of services by the Optionee to the Company or an Affiliate ceases as a result of a transfer of such Optionee from the Company to an Affiliate, or from an Affiliate to the Company, or from one classification of Eligible Individual to another classification of Eligible Individual, such transfer shall not be a termination of employment or provision of services for purposes of this Plan, unless expressly determined otherwise by the Administrator. Unless expressly determined otherwise by the Administrator, a termination of employment or provision of services shall occur for an Optionee who is employed by, or provides services to, an Affiliate of the Company if the Affiliate shall cease to be an Affiliate and the Optionee shall not immediately thereafter be employed by, or provide services to, the Company or an Affiliate. (m) Notwithstanding the foregoing, to the extent permitted under Section 409A of the Code, the exercise period following a termination described in subsection (g), (h), (i), (j) or (l) above shall be tolled for any applicable window/blackout period restrictions under the Company’s insider trading policy. 5. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted under the Plan on a stand-alone basis only. The Administrator shall have the authority to grant Stock Appreciation Rights to any Participant. Except as otherwise provided herein, a Stock Appreciation Right shall terminate and no longer be exercisable as determined by the Administrator. Stock Appreciation Rights shall be evidenced by stock appreciation right agreements, each in a form approved by the Administrator. A Stock Appreciation Right may be exercised by a Participant as determined by the Administrator in accordance with this Section 5. Upon such exercise, the Participant shall be entitled to receive an amount determined in the manner prescribed in this Section 5. Appendix A-6 Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined by the Administrator, including the following: (a) Stock Appreciation Right Term. The term of a Stock Appreciation Right shall be determined by the Administrator at the time of grant and set forth in the applicable stock appreciation right agreement, provided, however, that no Stock Appreciation Right shall be exercisable more than 10 years after the date that the Stock Appreciation Right is granted. (b) Vesting. A Stock Appreciation Right shall become vested and nonforfeitable as determined by the Administrator at the time of grant and set forth in the applicable stock appreciation right agreement, and unless otherwise provided in the Plan, no Stock Appreciation Right shall become vested earlier than the first anniversary of the date of grant of such Stock Appreciation Right or later than the seventh anniversary of the date of grant of such Stock Appreciation Right; and provided, further, that the Participant shall have continuously remained in the active employment of the Company or an Affiliate until the applicable vesting date. Notwithstanding the foregoing, the Administrator may impose a vesting schedule of less than one year from the date of grant on Stock Appreciation Rights; provided, the maximum number of shares of Stock that may be issued under this Plan with respect to Awards having a vesting schedule of less than one year shall not exceed five percent (5%) of the total number of shares of Stock that may be issued under this Plan, provided, further, that the Administrator may provide that vesting of an Award will accelerate in the event of a Participant’s death, Disability or occurrence of a Change in Control without regard to the minimum vesting provision. (c) Exercisability. Stock Appreciation Rights shall be exercisable to the extent vested; provided that the exercise of a Stock Appreciation Right shall be subject to such additional terms and conditions, performance requirements, restrictions, forfeiture provisions, contingencies and limitations, if any, as shall be determined by the Administrator and listed in the applicable stock appreciation rights agreement. If any Stock Appreciation Right is exercisable only in installments, the Administrator may at any time waive such installment exercise provisions, in whole or in part, based on such factors as the Administrator may determine. In addition, the Administrator may at any time, in whole or in part, accelerate the exercisability of any Stock Appreciation Right. (d) Method of Exercise. Subject to the provisions of this Section 5, Stock Appreciation Rights may be exercised, in whole or in part, by giving written notice of exercise to the Company specifying the number of shares with respect to which the Stock Appreciation Right is being exercised. (e) Upon the exercise of a Stock Appreciation Right, a Participant shall be entitled to receive an amount in cash or in shares of Stock, as set forth in the grant agreement, which in the aggregate are equal in value to the excess of the Fair Market Value of one share of Stock on the date of exercise over the Fair Market Value of one share of Stock on the date of grant, multiplied by the number of shares in respect of which the Stock Appreciation Right shall have been exercised. (f) Termination by Death. Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s employment or provision of services terminates by reason of death, any Stock Appreciation Right held by such Participant shall be fully vested upon such death and may thereafter be exercised for a period of one year from the date of such death or until the expiration of the stated term of such Stock Appreciation Right, whichever period is shorter. (g) Termination by Reason of Disability. Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s employment or provision of services terminates by reason of Disability, any Stock Appreciation Right held by such Participant shall be fully vested upon such termination of employment or provision of services and may thereafter be exercised by the Participant for a period of one year from the date of such termination of employment or provision of services or until the expiration of the stated term of such Stock Appreciation Right, whichever period is shorter. (h) Termination by Reason of Retirement. Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s employment or provision of services terminates by reason of Retirement, any Stock Appreciation Right held by such Participant, to the extent it was exercisable at the time of termination, may thereafter be exercised by the Participant for a period of six months from the date of Appendix A-7 such termination of employment or provision of services or until the expiration of the stated term of such Stock Appreciation Right, whichever period is shorter and any Stock Appreciation Right that is unvested or unexercisable at the date of termination shall thereupon terminate. (i) Involuntary Termination Without Cause. Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s employment or provision of services terminates involuntarily without Cause, and for reasons other than death, Disability or Retirement, any Stock Appreciation Right held by such Participant may thereafter be exercised, to the extent it was exercisable at the time of termination, for a period of three months from the date of such termination of employment or provision of services or until the expiration of the stated term of such Stock Appreciation Right, whichever period is shorter, and any Stock Appreciation Right that is unvested or unexercisable at the date of termination shall thereupon terminate. (j) Involuntary Termination for Cause. Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s employment or provision of services terminates involuntarily for Cause, Stock Appreciation Rights held by such Participant, whether or not then vested and exercisable, shall thereupon terminate. (k) Other Termination. Except as otherwise provided in the applicable stock appreciation rights agreement, if a Participant’s employment or provision of services is terminated by the Participant for any reason other than death, Disability, Retirement, involuntary termination without Cause or involuntary termination for Cause, any Stock Appreciation Right held by such Participant may thereafter be exercised, to the extent it was exercisable at the time of termination, for a period of one month from the date of such termination of employment or provision of services or until the expiration of the stated term of such Stock Appreciation Right, whichever period is shorter, and any Stock Appreciation Right that is unvested or unexercisable at the date of termination shall thereupon terminate. (l) Exception to Termination. If provision of services by the Participant to the Company or an Affiliate ceases as a result of a transfer of such Participant from the Company or an Affiliate, or from an Affiliate to the Company, or from one classification of Eligible Individual to another classification of Eligible Individual, such transfer shall not be a termination of employment or provision of services for purposes of this Plan, unless expressly determined otherwise by the Administrator. Unless expressly determined otherwise by the Administrator, termination of employment or provision of services shall occur for a Participant who is employed by, or provides services to, an Affiliate of the Company if the Affiliate shall cease to be an Affiliate and the Participant shall not immediately thereafter be employed by, or provide services to, the Company or an Affiliate. (m) Notwithstanding the foregoing, to the extent permitted under Section 409A of the Code, the exercise period following a termination described in subsection (g), (h), (i), (j) or (l) above shall be tolled for any applicable window/blackout period restrictions under the Company’s insider trading policy. 6. STOCK AWARDS. Stock Awards may be directly issued under the Plan (without any intervening options), subject to such terms, conditions, performance requirements, restrictions, forfeiture provisions, contingencies and limitations as shall be determined by the Administrator and set forth in the applicable award agreement. Subject to the provisions of this Section 6, Stock Awards may be issued which vest in one or more installments over the Participant’s period of employment and/or other service to the Company or an Affiliate and/or upon the attainment of specified performance objectives, and/or the Company may issue Stock Awards which entitle the Participant to receive a specified number of vested shares of Stock upon the attainment of one or more performance goals and/or service requirements established by the Administrator. A Stock Award that is subject to restrictions on transfer and/or forfeiture provisions may be referred to as an award of “Restricted Stock” or “Restricted Stock Units.” A Stock Award shall become vested and nonforfeitable as determined by the Administrator at the time of grant and set forth in the applicable award agreement, and unless otherwise provided in the Plan, no Stock Award shall become vested earlier than the first anniversary of the date of such Stock Award or later than the seventh anniversary of the date of such Stock Award; and provided, further, that the Participant shall have continuously remained in the active employment of the Company or an Affiliate until the applicable vesting date. The determination of whether the Participant has continuously remained in the active employment of the Company or an Affiliate shall be made by the Administrator in its discretion. Notwithstanding the foregoing, the Administrator Appendix A-8 may impose a vesting schedule of less than one year from the date of grant on Stock Awards; provided, the maximum number of shares of Stock that may be issued under this Plan with respect to Awards having a vesting schedule of less than one year shall not exceed five percent (5%) of the total number of shares of Stock that may be issued under this Plan, provided, further, that the Administrator may provide that vesting of an Award will accelerate in the event of a Participant’s death, Disability or occurrence of a Change in Control without regard to the minimum vesting provision. Shares representing a Stock Award shall be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration or issuance of one or more certificates (which may bear appropriate legends referring to the terms, conditions and restrictions applicable to such Award). The Administrator may require that any such certificates be held in custody by the Company until any restrictions thereon shall have lapsed and that the Participant deliver a stock power, endorsed in blank, relating to the Stock covered by such Award. Restricted Stock Units shall be evidenced by a book entry in a notional account maintained under the Participant’s name in the Company’s books and records. A Stock Award may be issued in exchange for any consideration which the Administrator may deem appropriate in each individual instance, including, without limitation: (a) cash or cash equivalents; (b) past services rendered to the Company or any Affiliate; or (c) future services to be rendered to the Company or any Affiliate (provided that, in such case, the par value of the stock subject to such Stock Award shall be paid in cash or cash equivalents, unless the Administrator provides otherwise). With respect to a Restricted Stock Award, a Participant, at his or her option, will be entitled to make the election permitted under Section 83(b) of the Code, to include in gross income in the taxable year in which the Restricted Stock Award is transferred to him or her, the fair market value of such shares at the time of transfer, notwithstanding that such shares are subject to a substantial risk of forfeiture within the meaning of the Code, or he or she may elect to include in gross income the Fair Market Value of the Restricted Stock Award as of the date or date on which such restrictions lapse. Notwithstanding the foregoing, the Administrator shall adopt, from time to time, such rules with respect to the return of executed award agreements as it deems appropriate and failure by a Participant to comply with such rules shall, without limitation, terminate the grant of such Restricted Stock Award to such Participant and/or cause the forfeiture of any Restricted Stock Award as to which restrictions have not yet lapsed. Notwithstanding anything herein to the contrary and except as otherwise provided in the applicable award agreement, if a Participant’s employment and provision of services is terminated (A) by the Company for any reason other than Cause or (B) by reason of the Participant’s death or Disability, all Stock underlying a Stock Award, to the extent unvested at the time of termination, shall become fully vested and non-forfeitable. Notwithstanding anything herein to the contrary and except as otherwise provided in the applicable award agreement, if a Participant’s employment or provision of services is terminated (A) by the Company for Cause or (B) by the Participant for any reason other than death or Disability, all Stock underlying a Stock Award, to the extent unvested at the time of termination, shall be forfeited. Unless otherwise provided in an award agreement, until the expiration of all applicable restrictions, (i) the Restricted Stock shall be treated as outstanding and (ii) the Participant holding shares of Restricted Stock may exercise full voting rights with respect to such shares 7. PERFORMANCE AWARDS. (a) Performance Conditions. The right of a Participant to exercise or receive a grant or settlement of any Award, and its timing, may be subject to performance conditions specified by the Administrator at the time of grant (except as provided in this Section 7). The Administrator may use business criteria and other measures of performance it deems appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase amounts payable under any Award subject to performance conditions. No Performance Award shall become vested earlier than the first anniversary of the date of grant of such Performance Award; and provided, further, that the Participant shall have continuously remained in the active employment of the Company or an Affiliate until the applicable vesting date. Appendix A-9 Notwithstanding the foregoing, the Administrator may impose a vesting schedule of less than one year from the date of grant of a Performance Award; provided, the maximum number of shares of Stock that may be issued under this Plan with respect to Awards having a vesting schedule of less than one year shall not exceed five percent (5%) of the total number of shares of Stock that may be issued under this Plan, provided, further, that the Administrator may provide that vesting of an Award will accelerate in the event of a Participant’s death, Disability or occurrence of a Change in Control without regard to the minimum vesting provision. (b) Settlement of Performance Awards; Other Terms. Settlement of Performance Awards may be in cash or Stock, or other Awards, or other property, in the discretion of the Administrator. Any cash-settled Performance Award will be based on the Fair Market Value of the shares of Stock subject to such Performance Award. The Administrator may, in its discretion, increase or reduce the amount of a settlement otherwise to be made in connection with such Performance Awards. All determinations of the Administrator as to the achievement of the performance goals applicable to a Performance Award subject to this Section 7(b) shall be in writing prior to the payment of the Award. 8. OUTSIDE DIRECTOR STOCK OPTIONS. The Company may, in the discretion of the Administrator, grant an Outside Director Stock Option to purchase such number of shares of Stock as shall be determined by the Administrator. Outside Director Stock Options shall be evidenced by option agreements, each in a form approved by the Administrator. Outside Director Stock Options granted under this Section 8 shall be subject to the following terms and conditions and shall contain such additional terms and conditions as the Administrator shall deem desirable: (a) Exercise Price. The exercise price per share of Stock purchasable under an Outside Director Stock Option shall be the Fair Market Value per share on the date the Outside Director Stock Option is granted. (b) Option Term. No Outside Director Stock Option shall be exercisable more than seven years after the date that the Outside Director Stock Option is granted. (c) Vesting. Unless otherwise determined by the Administrator, and set forth in the applicable award agreement, an Outside Director Stock Option shall become vested and non-forfeitable with respect to one-fifth of the Stock underlying such Outside Director Stock Option on the first anniversary of the date of grant, with an additional one-fifth of the Stock underlying such Outside Director Stock Option becoming vested and non-forfeitable on each of the second, third, fourth and fifth anniversaries of the date of grant; provided that, in each case, the Outside Director shall have continuously remained a Director of the Company. Unless otherwise determined by the Administrator, and set forth in the applicable award agreement, any Outside Director Stock Option that is unvested at the date of termination of the Outside Director’s provision of services shall be forfeited upon such termination. Notwithstanding the foregoing, the Administrator may impose a vesting schedule of less than one year from the date of grant on Outside Director Stock Options; provided, the maximum number of shares of Stock that may be issued under this Plan with respect to Awards having a vesting schedule of less than one year shall not exceed five percent (5%) of the total number of shares of Stock that may be issued under this Plan, provided, further, that the Administrator may provide that vesting of an Award will accelerate in the event of a Participant’s death, Disability or occurrence of a Change in Control without regard to the minimum vesting provision. (d) Exercisability. Outside Director Stock Options shall be exercisable to the extent vested. (e) Method of Exercise. Outside Director Stock Options may be exercised, in whole or in part, by giving written notice of exercise to the Company specifying the number of shares of Stock subject to the Outside Director Stock Option to be purchased. The option price of any Outside Director Stock Option shall be paid in full in cash (by certified or bank check or such other instrument as the Company may accept) or, unless otherwise provided in the applicable option agreement, by one or more of the following: (i) in the form of shares of unrestricted and vested Stock already owned by the Outside Director, based on the Fair Market Value of the Stock on the date the Outside Director Stock Option is exercised; (ii) by certifying ownership of shares of Stock owned by the Outside Director to the satisfaction of the Administrator for later delivery to the Company as specified by Appendix A-10 the Company; (iii) unless otherwise prohibited by law for either the Company or the Outside Director, by irrevocably authorizing a third party to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Outside Director Stock Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such exercise; or (iv) by any combination of cash and/or any one or more of the methods specified in clauses (i), (ii) and (iii). Notwithstanding the foregoing, a form of payment may not be permitted to the extent it would cause the Company to recognize a compensation expense (or additional compensation expense) with respect to the Outside Director Stock Option for financial reporting purposes. No shares of Stock shall be issued upon exercise of an Outside Director Stock Option until full payment therefor has been made. Upon exercise of an Outside Director Stock Option (or a portion thereof), the Company shall have a reasonable time to issue the Stock for which the Outside Director Stock Option has been exercised, and the Outside Director shall not be treated as a stockholder for any purposes whatsoever prior to such issuance. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date such Stock is recorded as issued and transferred in the Company’s official stockholder records, except as otherwise provided herein or in the applicable option agreement. 9. OUTSIDE DIRECTOR STOCK AWARDS. The following Outside Director Stock Awards shall be granted pursuant to this Section 9: (a) Unless otherwise determined by the Administrator, on the date of the annual meeting of (b) Unless otherwise determined by the Administrator, and set forth in the applicable award agreement, each individual who is appointed to the Board as an Outside Director after the Effective The Stock subject to Outside Director Stock Awards granted under this Section 9 shall vest and become nonforfeitable based on the Outside Director’s provision of services as a Director, and is therefore an award of “Restricted Stock.” Outside Director Stock Awards may be directly issued under the Plan. Unless otherwise determined by the Administrator, and set forth in the applicable award agreement, an Outside Director Stock Award granted pursuant to Section 9(b) shall become vested and nonforfeitable as to one-fifth of the shares of Restricted Stock underlying such Outside Director Stock Award on the first anniversary of the date of grant, with an additional one-fifth of the Restricted Stock becoming vested and non-forfeitable on each of the second, third, fourth and fifth anniversaries of the date of grant; provided that, in each case, the Outside Director shall have continuously remained a Director of the Company. Unless otherwise determined by the Administrator, and set forth in the applicable award agreement, an Outside Director Stock Award granted pursuant to Section 9(a) shall become vested and nonforfeitable as to one-third of the shares of Restricted Stock underlying such Outside Director Stock Award on the first anniversary of the date of grant, with an additional one-third of the Restricted Stock becoming vested and non-forfeitable on each of the second and third anniversaries of the date of grant; provided that, in each case, the Outside Director shall have continuously remained a Director of the Company. Unless otherwise determined by the Administrator, and set forth in the applicable award agreement, any Outside Director Stock Award that is unvested at the Appendix A-11 Shares representing an Outside Director Stock Award shall be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration or issuance of one or more certificates (which may bear appropriate legends referring to the terms, conditions and restrictions applicable to such Award). The Administrator may require that any such certificates be held in custody by the Company until any restrictions thereon shall have lapsed and that the Outside Director deliver a stock power, endorsed in blank, relating to the Stock covered by such Award. Unless otherwise provided in an award agreement, until the expiration of all applicable restrictions, (i) the Restricted Stock shall be treated as outstanding and (ii) the Participant holding shares of Restricted Stock may exercise full voting rights with respect to such shares. With respect to an Outside Director Stock Award, an Outside Director, at his or her option, will be entitled to make the election permitted under Section 83(b) of the Code, to include in gross income in the taxable year in which the Outside Director Stock Award is transferred to him or her, the fair market value of such shares at the 10. CHANGE IN CONTROL PROVISIONS. (a) Impact of Event. Unless otherwise provided in an applicable award agreement, upon the occurrence of a Change in Control of the Company, the Committee may in its sole and absolute discretion, provide on a case by case basis that (i) some or all outstanding Awards may become immediately exercisable or vested, without regard to any limitation imposed pursuant to this Plan, (ii) that all Awards shall terminate, provided that Participants shall have the right, immediately prior to the occurrence of such Change in Control and during such reasonable period as the Committee in its sole discretion shall determine and designate, to exercise any vested Award in whole or in part, (iii) that all Awards shall terminate, provided that Participants shall be entitled to a cash payment equal to the Change in Control Price with respect to shares subject to the vested portion of the Award net of the exercise price thereof (if applicable), (iv) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds net of the exercise price (if applicable) and (v) any combination of the foregoing. In the event that the Committee does not terminate or convert an Award upon a Change in Control of the Company, then the Award shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring, or succeeding corporation (or an affiliate thereof). (b) Definition of Change in Control. (i) For purposes of the Plan, a “Change in Control” shall occur or be deemed to have occurred only if any of the following events occur: (A) The acquisition, directly or indirectly, by any person or group (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and the rules thereunder) of beneficial ownership (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors (1) An acquisition by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company; or Appendix A-12 (2) An acquisition of voting securities by the Company or a corporation owned, directly or indirectly by all of the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company. Notwithstanding the foregoing, the following event shall not constitute an acquisition by any person or group for purposes of this subsection (a): an acquisition of the Company’s securities by the Company which causes the Company’s voting securities beneficially owned by a person or group to represent 50% or more of the combined voting power of the Company’s then outstanding voting securities; provided, however, that if a person or group shall become the beneficial owner of 50% or more of the combined voting power of the Company’s then outstanding voting securities by reason of share acquisitions by the Company as described above and shall, after such share acquisitions by the Company, become the beneficial owner of any additional voting securities of the Company, then such acquisition shall constitute a Change in Control; or (B) Individuals who, as of or immediately following Effective Date, constitute the Board of Directors of the Company (as of the Effective Date, the “Incumbent Board”) cease for any reason to constitute at (C) The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) the acquisition of assets or stock of another entity, in each case other than a transaction: (1) Which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by the remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction; and (2) After which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (2) as beneficially owning 50% or more of combined voting power of the Successor Entity solely as a (D) A sale or disposition of all or substantially all of the Company’s assets; or (E) The Company’s stockholders approve a liquidation or dissolution of the Company. The Committee shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change in Control and any incidental matters relating thereto. (ii) For purposes of Section 10(b), stock ownership is Appendix A-13 (c) Change in Control Price. For purposes of the Plan, “Change in Control Price” means the Fair Market Value (which may be the amount of consideration per share of Stock received by the holder of Stock in connection with the Change in Control transaction or, in the case of a tender or exchange offer, the highest price per share of Stock paid in such tender or exchange offer, in each case, as determined by the Administrator in accordance with Section 12(o) hereunder) of a share of Stock on the date of a Change in Control. To the extent that the consideration paid in any such transaction described above consists all or in part of securities or other non-cash consideration, the value of such securities or other non-cash consideration shall be determined in the sole discretion of the Board. The Participant shall receive the same form of consideration as holders of common stock, subject to the same restrictions and limitations and indemnification obligations as the holders of common stock and will execute any and all documents required by the Administrator to evidence the same. 11. MISCELLANEOUS. (a) Dividends and Dividend Equivalents. A Participant shall not be entitled to receive cash or stock dividends, Dividend Equivalents, or cash payments in amounts equivalent to cash or stock dividends on shares of Stock covered by an Award which has not vested. Notwithstanding the foregoing, the Administrator in its absolute and sole discretion may credit a Participant’s Award with cash or stock dividends, Dividend Equivalents, or cash payments with respect to any unvested Awards, provided that (b) Amendment. The Board may at any time terminate, amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be The Administrator may amend the terms of any Stock Option or other Award theretofore granted, prospectively or retroactively, but except as provided in Section 3 hereof no such amendment shall adversely affect the rights of a Participant without the Participant’s consent. (c) Limitation on Repricing. Unless such action is approved by Company’s shareholders in accordance with applicable law: (i) no outstanding Stock Option or Stock Appreciation Right granted under the Plan may be amended to provide an exercise price that is lower than the then-current exercise price of such outstanding Stock Option or Stock Appreciation Right (other than adjustments to the Exercise Price pursuant to Sections 3 and Appendix A-14 (d) Transferability of Awards. A Participant may not transfer an Award other than by will or the (e) Unfunded Status of Plan. It is intended that this Plan be an “unfunded” plan for incentive and deferred compensation. The Administrator may authorize the creation of trusts or other arrangements to (f) General Provisions. (i) Unless the shares to be issued in connection with an Award are registered prior to the issuance thereof under the Securities Act of 1933, as amended, the Administrator may require each All certificates for shares of Stock or other securities delivered under the Plan shall be subject to such stock transfer orders and other restrictions as (ii) Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting other or additional compensation arrangements for its employees. (iii) The adoption of the Plan shall not confer upon any employee, director, associate, consultant or advisor any right to continued employment, directorship or service, nor shall it interfere in any way with the right of the Company or any Subsidiary or Affiliate to terminate the employment or service of any (iv) No later than the date as of which an
Appendix A-15 (v) The Administrator shall establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable in the event of the Participant’s death are to be paid. In the event of the death of a Participant, a condition of exercising any Award shall be the delivery to the Company of such tax waivers and other documents as the Administrator shall determine. (vi) Neither any Participant nor his or her legal representatives, legatees or distributees shall be or be deemed to be the holder of any share of Stock covered hereby unless and until a certificate for such share has been issued (whether by book entry format or physical certificates). Upon payment of the purchase price thereof, a share shall be fully paid and non-assessable. (vii) The grant of an Award shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets, or issue bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock, or take any other corporate act or proceeding whether of a similar character or otherwise. (viii) If any payment or right accruing to a Participant under this Plan (without the application of this Section 11(e)(viii)), either alone or together with other payments or rights accruing to the Participant from the Company or an Affiliate (“Total Payments”) would constitute a “parachute payment” (as defined in Section 280G of the Code and regulations thereunder), such payment or right shall be reduced to the largest amount or greatest right that will result in no portion of the amount payable or right accruing under this Plan being subject to an excise tax under Section 4999 of the Code or being disallowed as a (ix) To the extent that the Administrator determines that the restrictions imposed by the Plan preclude the achievement of the material purposes of the Awards in jurisdictions outside the United States, the Administrator in its discretion may modify those restrictions as it determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States. (x) The headings contained in this Plan are for reference purposes only and shall not affect the meaning or interpretation of this Plan. (xi) If any provision of this Plan shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereby, and this Plan shall be construed as if such invalid or unenforceable provision were omitted. (xii) This Plan shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon a (xiii) This Plan and each agreement granting an Award constitute the entire agreement with Appendix A-16 (xiv) In the event there is an effective registration statement under the Securities Act pursuant to which shares of Stock shall be offered for sale in an underwritten offering, a Participant shall not, during the period requested by the underwriters managing the registered public offering, effect any public sale or (xv) None of the Company, an Affiliate or the Administrator shall have any duty or obligation to disclose affirmatively to a record or beneficial holder of Stock or an Award, and such (xvi) This Plan, and (xvii)No Award granted pursuant to this Plan is intended to constitute “deferred compensation” as defined in Section 409A of the Code, and the Plan and the terms of all Awards shall be interpreted accordingly. If any provision of the Plan or an Award contravenes any regulations or Treasury guidance promulgated under Section 409A of the Code or could cause an Award to be subject to the penalties and interest under Section 409A of the Code, such provision of the Plan or Award shall be modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A of the Code. (g) Clawback. Notwithstanding any other provisions in this 12. DEFINITIONS. For purposes of this Plan, the following terms are defined as set forth below: (a) “Affiliate” means a corporation or other entity (i) controlled by the Company and which, in the case of grants of Stock Options, Outside Director Stock Options and Stock Appreciation Rights would, together with the Company, be classified as the “service recipient” (as defined in the regulations under Section 409A of the Code) with respect to an Eligible Individual, and (ii) is designated by the Administrator as such. (b) “Award” means a Stock Appreciation Right, Stock Option, Stock Award, Outside Director Stock Option or Outside Director Stock Award. (c) “Board” means the Board of Directors of the Company. (d) “Board Meeting” means meeting of the Board of Directors of the Company. (e) “Cause” means (i) the commission by the Participant of any Appendix A-17 the Company or the Affiliate have entered into an employment or services agreement which defines the term “Cause” (or a similar term), such definition shall govern for purposes of determining whether such Participant has been terminated for Cause for purposes of this Plan. The determination of Cause shall be made by the Administrator, in its sole discretion. (f) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. (g) “Commission” means the Securities and Exchange Commission or any successor agency. (h) “Committee” means a committee of Directors appointed by the Board to administer this Plan. Insofar as the Committee is responsible for granting Awards to Participants hereunder, it shall consist solely of two or more directors, each of whom is a “non-employee director” within the meaning of Rule 16b-3, an “independent director” as defined by the Sarbanes-Oxley Act of 2002, and “independent” as defined by the rules of any stock exchange or market on which the Stock (i) “Director” means a member of the Company’s Board. (j) “Disability” means mental or physical illness that entitles the Participant to receive benefits under the long-term disability plan of the Company or an Affiliate, or if the Participant is not covered by such a plan or the Participant is not an employee of the Company or an Affiliate, a mental or physical illness that renders a Participant totally and permanently incapable of performing the Participant’s duties for the Company or an Affiliate; provided, however, that a Disability shall not qualify under this Plan if it is the result of (i) a willfully self- inflicted injury or willfully self-induced sickness; or (ii) an injury or disease contracted, suffered or incurred while participating in a criminal offense. Notwithstanding the foregoing, if the Participant and the Company or an Affiliate have entered into an employment or services agreement which defines the term “Disability” (or a similar term), such (k) “Dividend Equivalents” means an amount equal to the dividends paid by the Company upon one share of Stock subject to an Award granted to a Participant under the Plan. (l) “Effective Date” has the meaning set forth in Section 1 of the Plan. (m) “Eligible Individual” means any (i) officer, employee, associate or director of the Company or a Subsidiary or Affiliate, (ii) any consultant or advisor providing services to the Company or a Subsidiary or Affiliate, or (iii) employees of (x) a corporation or other business enterprise which has been acquired by the Company or a Subsidiary, which, in the case of grants of Stock Options and Stock Appreciation Rights would, together with the Company and, if applicable, the Subsidiary, be classified as the “service recipient” (as defined in the regulations under Section 409A of the Code) with respect to such employees and (y) who hold options with respect to the stock of such corporation which the Company has agreed to assume. (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto. (o) “Fair Market Value” means, as of any given date, the fair market value of the Stock, determined as follows: (i) if the Stock is listed on any established stock exchange or a national market system, including without limitation, the NASDAQ Global Market, its fair market value on such date shall be the reported closing selling price for the Stock on the principal securities exchange or national market system on which the Stock is at such date listed for trading; provided that if there are no sales of Stock on that date, then the reported closing selling price for the Stock on the next preceding date shall be determinative of fair market value; or (ii) if the Stock is listed on the OTC Electronic Bulletin Board, its fair market value on such date shall be the closing selling price on such date for the Stock as reported on the OTC Electronic Bulletin Board; provided that if there are no sales of the Stock on that date, then the reported closing selling price for the Stock on the next preceding date for which such closing selling price is quoted shall be determinative of fair market value; or, (iii) if the Stock is not traded on the OTC Electronic Appendix A-18 Bulletin Board, an exchange, or a national market system, or notwithstanding (i) and (ii) above, if a determination of Fair Market Value under (i) or (ii) above would violate the rules under Section 409A of the Code and the regulations thereunder with respect to the determination of fair market value, Fair Market Value of the Stock on such date shall be determined in good faith by the Administrator in accordance with Section 409A of the Code and the regulations issued thereunder, and such determination shall be conclusive and binding on all persons. In the event of a Change in Control, notwithstanding the foregoing provisions of this Section 12(o), Fair Market Value of the Stock in connection with such Change in Control transaction shall be determined in good faith by the Administrator in accordance with Section 409A of the Code and the regulations issued thereunder, and such determination shall be conclusive and binding on all persons. (p) “Family Member” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a Participant (including adoptive relationships); any person sharing the Participant’s household (other than a tenant or employee); any trust in which the Participant and any of these persons have all of the beneficial interest; any foundation in which the Participant and any of these persons control the management of the assets; any corporation, partnership, limited liability company or other entity in which the Participant and any of these other persons are the direct and beneficial owners of all of the equity interests (provided the Participant and these other persons agree in writing to remain the direct and beneficial owners of all such equity interests); and any personal representative of the Participant upon the Participant’s death for purposes of administration of the Participant’s estate or upon the Participant’s incompetency for purposes of the protection and management of the assets of the Participant. (q) “Incentive Stock Option” means any Stock Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the Code. (r) “Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option. (s) “Optionee” means a person who holds a Stock Option. (t) “Outside Director” means a person who is a “non-employee director” of the Company within the meaning of Section 16 of the Exchange Act and the regulations promulgated thereunder (irrespective of whether Section 16 of the Exchange Act is applicable to the Company or such Director). (u) “Outside Director Award” means an Outside Director Stock Option or Outside Director Stock Award. (v) “Outside Director Stock Award” means an Award, other than a Stock Option, Stock Appreciation Right, Stock Award or Outside Director Stock Option, made in Stock or denominated in shares of Stock. (w) “Outside Director Stock Option” means an Option granted under Section 8. (x) “Participant” means a person granted an Award. (y) “Performance Award ” means a right, granted to a Participant under Section 7, to receive Awards based upon performance criteria specified by the Administrator and shall include Awards as defined in Section 12(b) and cash awards.”. (z) “Prior Plan” means the Fiesta Restaurant Group, Inc. 2012 Stock Incentive Plan. (aa) “Representative” means (i) the person or entity acting as the executor or administrator of a Participant’s estate pursuant to the last will and testament of a Participant or pursuant to the laws of the jurisdiction in which the Participant had his or her primary residence at the date of the Participant’s death; (ii) the person or entity acting as the guardian or temporary guardian of a Participant; (iii) the person or entity which is the beneficiary of the Participant upon or following the Participant’s death; or (iv) any person to whom a Stock Option has been transferred with the permission of the Administrator or by operation of law; provided that only one of the foregoing shall be the Representative at any point in time as determined under applicable law and recognized by the Administrator. (bb) “Retirement” means termination of employment or provision of services without Cause, death or Disability on or after age 65 with 5 years of service including in such calculation all periods of service with the Company. Appendix A-19 (cc) “Stock” means the common stock, par value $.01 per share, of the Company. (dd) “Stock Appreciation Right” means a right granted under Section 5. (ee) “Stock Award” means an Award, other than a Stock Option, Outside Director Stock Option, Stock Appreciation Right or Outside Director Stock Award, which can be made in Stock, cash or denominated in shares of Stock, and shall include Performance Awards.” (ff) “Stock Option” means an option granted under Section 4. (gg) “Subsidiary” means any company during any period in which it is a “subsidiary corporation” (as such term is defined in Section 424(f) of the Code) with respect to the Company. (hh) “Ten Percent Holder” means an individual who owns, or is deemed to own, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any parent or subsidiary corporation of the Company, determined pursuant to the rules applicable to Section 422(b)(6) of the Code. In addition, certain other terms used herein have the definitions given to them in the places they are first used. Appendix A-20 FIESTA RESTAURANT GROUP, INC. ATTN: LOUIS DIPIETRO, SVP, CLPO, GC, SECRETARY 14800 LANDMARK BOULEVARD, SUITE 500 DALLAS, TX 75254 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on April27, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/FRGI2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on April27, 2021. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D41874-P50071 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY FIESTA RESTAURANT GROUP, INC. The Board of Directors recommends you vote FOR the following: 1. To elect the following Directors of Fiesta Restaurant Group, Inc.: Nominees: For Against Abstain 1a. Stacey Rauch 1b. Nicholas Daraviras 1c. Stephen Elker 1d. Nicholas Shepherd 1e. Richard Stockinger 1f. Paul Twohig 1g. Sherrill Kaplan 1h. Andrew Rechtschaffen The Board of Directors recommends you vote FOR proposals2,3, 4 and 5. For Against Abstain 2. To adopt, on an advisory basis, a non-binding resolution approving the compensation of the Company’s Named Executive Of_cers, as described in the Proxy Statement under “Executive Compensation”. 3. To approve the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan. 4. To ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting _rm of Fiesta Restaurant Group, Inc. for the 2021 _scal year. 5. To consider and act upon such other matters as may properly come before the 2021 Annual Meeting. NOTE: The shares represented by this
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. D41875-P50071 FIESTA RESTAURANT GROUP, INC. PROXY FOR HOLDERS OF COMMON STOCK THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The stockholder(s) appoint(s) Louis DiPietro and Dirk Montgomery, or either of them, as proxies, each with full power of substitution and revocation, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of FIESTA RESTAURANT GROUP, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 10:00 AM, EDT on Wednesday, April28, 2021 exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021, and any adjournment or postponement thereof. Only stockholders of record on March1, 2021 may vote at the meeting of any adjournment thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR PROPOSALS2,3, 4 AND 5. Continued and to be signed on reverse side
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