Each non-employee director received an annual grant of 5,232 restricted shares, with a grant date valuecalculated by dividing the closing price of approximatelyour stock on May 7, 2019 by $60,000, on August 8, 2018.[rounded up to the nearest whole share]. These grants vest ratably based on continued service over three years. Asyears, and accelerate and fully vest upon a result, each non-employee director received a granttermination of 5,286 restricted shares, equivalent to approximately $60,000 per capita dividedthe director’s service by the closing price of our stock on August 7, 2018.Company without “cause” or due to the director’s death or “disability”

In addition, each of our non-employee directors received an annual cash retainer fee of $60,000 in 2018,2019, which iswas paid quarterly. Also, we provideprovided the following annual fees for non-employee directors for committee service, which arewere paid quarterly:

The independent directors who serve on the SLC are compensated $4,000 per month for those months in which the SLC is working in earnest and its members are fully engaged. In 2018,2019, each member of the SLC received $16,000$48,000 in compensation for service on that committee.

Our certificate of incorporation provides that the number of directors on our Board is to be fixed exclusively pursuant to Board resolution. The exact size of our Board shall be determined from time to time by the Board. 

Our Board is divided into three classes, with each director serving a three-year term and with one class to be elected at each year’s annual meeting of stockholders. 

Douglas J. Babb, William R. Floyd, and Dean C. Kehler are Class II directors serving until the 2019 annual meeting and are standing to be re-elected until the 2022 annual meeting of stockholders. Samuel N. Borgese, Mark Buller, and John M. Roth are Class III directors serving untilwhose current terms expire at the 2020annual meeting and who were nominated for re-election by our Board to serve for a three-year term expiring at the 2023 annual meeting of stockholders. Bernard Acoca, Carol (“Lili”) Lynton, and Michael G. Maselli are Class I directors serving untilwhose terms expire at the 2021 annual meeting of stockholders. Douglas J. Babb, William R. Floyd, and Dean C. Kehler are Class II directors whose terms will expire at the 2022 annual meeting of stockholders.  

Two individuals serve as our Chairman and our Chief Executive Officer. Our certificateMr. Acoca currently serves as our President and Chief Executive Officer and Mr. Maselli currently serves as the Chairman of incorporation and bylawsthe Board. We do not requirehave a policy requiring the separation of these positions. Rather, as our corporate governance guidelines explain, the Board is free to choose its Chairman in any way that it deems best for the Company at any given point in time. Under the circumstances, we currently believe that this separation is appropriate given that it allows our Chief Executive Officer to focus on operational and day-to-day issues and our Chairman to focus on oversight and long-term strategy. Given our growing business, and the daily operational demands and complexities thereof, we believe that this division of labor helps our Chief Executive Officer’s focus and productivity. In parallel, given the growing complexity of our business and the increased burdens on our Board, as we have moved from a private corporation to a listed company and beyond, we believe that this division of labor helps our Chairman and our Board to remain focused on their respective core responsibilities and competencies, and provides a greater role for non-management director participation than would be the case if the Chairman and Chief Executive Officer positions were combined. 

The Board has adopted corporate governance guidelines to assist it in the exercise of its fiduciary duties and responsibilities to us and to promote the effective functioning of the Board and its committees. Our corporate governance guidelines cover, among other topics:

The Board oversees a company-wide approach to risk management that is carried out by management.management, which is designed to enhance stockholder value, support the achievement of strategic objectives and improve long-term organizational performance. The Board determines the appropriate risk levels for the Company generally, assesses the specific risks faced by the Company, and reviews the steps taken by management to manage those risks.  The Board’s involvement in setting the Company’s business strategy facilitates these assessments and reviews, culminating in the development of a strategy that reflects both the Board’s and management’s consensus as to appropriate levels of risk and the appropriate measures to manage those risks. Pursuant to this structure, risk is assessed throughout the enterprise, focusing on risks arising out of various aspects of the Company’s strategy and the implementation of that strategy, including financial, legal/compliance, operational/strategic, health and safety, and compensation risks. The Board also considers risk when evaluating proposed transactions and other matters presented to the Board, including acquisitions and financial matters.

While the Board maintains ultimate oversight responsibility for the risk management process, its committees oversee risk in specific areas. Our audit committeeAudit Committee oversees management of risks involving accounting and financial reporting. Ourreporting, including internal controls. In addition, the Audit Committee oversees the Company’s compliance program with respect to legal and regulatory requirements, including the Company’s codes of conduct and policies and procedures for monitoring compliance. The Audit Committee also receives regular reports on the Company’s cybersecurity compliance and risk management practices.

The Compensation Committee periodically reviews compensation committee oversees managementpractices and policies to determine whether they encourage excessive risk taking, including an annual review of risksmanagement’s assessment of the risk associated with the Company’s compensation programs covering its employees, including executives. The Compensation Committee also has responsibilities regarding risk related to executive compensation plans and arrangements, and the incentives created by the compensation awards that it administers, as well as having responsibilities regarding succession planning. Our nominatingNominating and corporate governance committeeCorporate Governance Committee oversees management of risks associated with corporate governance and conflicts of interest. At the Board’s instruction, management regularly reports on applicable risks to the Board or to a relevant committee, with additional review or reporting on risks conducted as needed or as requested by the Board and by its committees.

Our Audit Committee is currently comprised of William R. Floyd (chairman), Samuel N. Borgese, and Mark Buller. The committee met six times in 2018.2019. The functions of the committee, among other things, include:

Our Board has determined that Mr. Floyd qualifies as an “audit committee“Audit Committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K, including due to his past experience as a chief executive officer, a role that includes supervising chief financial officers, and his experience as a member of the audit committee of Korn/Ferry International.S-K.

Additionally, our Board has determined that each of Messrs. Floyd, Borgese, and Buller are independent as independence for audit committeeAudit Committee members is defined under Nasdaq listing standards, and under Rule 10A-3 of the Exchange Act. 

Our Compensation Committee is currently comprised of Mark Buller (chairman), Douglas J. Babb, and Carol (“Lili”) Lynton. The committee met fourseven times in 2018.2019. The functions of the committee, among other things, include:

In order to comply with certain SEC and tax law requirements, the committee (or a subcommittee thereof) must consist of at least two directors that qualify as “non-employee directors” for the purposes of Rule 16b-3 under the Exchange Act. The Board has determined that Messrs. Buller and Babb, and Ms. Lynton each qualifies as a “non-employee directors” and “outside directors.director.”

Our processes and procedures for considering and determining executive and director compensation begin with the compensation guidelines in our corporate governance guidelines, which are developed and reviewed by the Nominating and Corporate Governance Committee, and approved by the Board. These guidelines state that directors who are also Company officers are not to receive additional compensation for director service, and that compensation for non-employee directors should be competitive and encourage stock ownership through payment of a portion of compensation in the form of stock, options, or similar securities. Our guidelines also task the Compensation Committee with periodically reviewing the level and form of director compensation, including compared to companies of similar size, industry, and complexity, with changes to director compensation to be proposed to the full Board for consideration.  Moreover, regarding delegation of authority, under its charter, the committee may form subcommittees for any purpose that the committee deems appropriate, and may delegate to such subcommittees such power and authority as the committee deems appropriate; provided, however, that the committee shall not delegate to a subcommittee any power or authority required by any law, regulation, or listing standard to be exercised by the committee as a whole. 

In particular, the committee may delegate the approval of award grants and other transactions and responsibilities regarding the administration of compensatory programs to a subcommittee consisting solely of members of the committee who are (i) “non-employee directors” for the purposes of Rule 16b-3 under the Exchange Act;Act, and (ii) “outside directors” for purposes of section 162(m) of the Internal Revenue Code; provided, however, that no such subcommittee shall consist of fewer than two members.

In addition, the committee may delegate to one or more of our officers the authority to make grants and awards of stock rights or options to any non-section 16 officer of the Company under such of our incentive-compensation or other equity-based plans as the committee deems appropriate and in accordance with the terms of such plans. 

Under its charter, our committee may conduct or authorize investigations into or studies of matters within its scope of responsibilities, and may retain or obtain the advice of a compensation consultant, legal counsel, or other advisor in its sole discretion. The committee is directly responsible for the appointment, compensation, and oversight of the work of any compensation consultant, legal counsel, or other advisor that it retains. The Company bears all expenses. The committee may select, or receive advice from, a compensation consultant, legal counsel, or other advisor to the committee, other than in-house legal counsel, only after conducting an assessment of, and determining, the advisor’s independence, including whether the advisor’s work has raised any questions of independence or conflicts of interest, taking into consideration the Exchange Act, the factors set forth in the rules of the Nasdaq, and any other factors that the committee deems relevant.

In each of 2016, 2017, and 2018,2019, the committee engaged Semler Brossy Consulting Group, LLC (the “compensation consultant”), to advise the committee on an ongoing basis as an independent compensation consultant. The compensation

performed by the compensation consultant. In 2018,2019, as in prior years, the committee again requested the compensation consultant to assist in developingreview of Board compensation and executive compensation review and benchmarking against the 2018 equity incentive plan and assistance with the respective registration statement.  In addition,Company's peers. Except as described in this paragraph, the compensation consultant assisteddid not perform any other services to the committee in connection with the committee’s structuring of the compensation package for the incoming President and Chief Executive Officer, Bernard Acoca, and grant valuation assistance for Mr. Acoca's inducement grants.

Our Nominating and Corporate Governance Committee is currently comprised of Samuel N. Borgese (chairman), William R. Floyd, and John M. Roth. Mark Buller served on the committee for the first part of fiscal 2018, until he was replaced by Mr. Roth. The committee did not meet but acted via unanimous written consentmet once in 2018.2019. The duties, responsibilities, and processes of the committee for identifying and evaluating nominees for director, among other things, include:

As discussed above in the Q&A, the committee will consider director candidates recommended by stockholders. The committee does not have any specific requirements for candidates and nominees, but is tasked by its charter to consider:

As a practical matter, the committee seeks candidates who contribute complimentary and relevant strengths, including diverse perspectives, diverse personal backgrounds, and diverse professional backgrounds encompassing retail, real estate, management, operations, finance, accounting, marketing, and law. 

Similarly, under its corporate governance guidelines, the Board in evaluating nominees may apply all criteria it deems appropriate, including:

The Board held seveneight meetings in 2018.2019. Each incumbent director attended at least 75% of the aggregate of the total number of board meetings and the total number of committee meetings held in 2019 while that director served on the board and on those committees. 

In addition to Bernard Acoca, our Chief Executive Officer and President, whose biography is included under the heading “Director Biographies,” our executive officers as of April 1, 2019,21, 2020, are as follows:

This Compensation Discussion and Analysis ("CD&A") provides an overview of Compensation 

We weight a greater proportion of total compensation toward performance-based components such as annual cash incentive awards, which can increase or decrease to reflect changes in corporate and individual performance on an annual basis, and subjectlong-term compensation, which can reinforce management’s commitment to approval byenhancing profitability and stockholder value over the long-term.

A significant percentage of our Board. It providesnamed executive officers’ total direct compensation is variable based on performance factors (including our share price, in the opportunitycase of long-term incentive awards). We believe this type of variable compensation supports our pay-for-performance philosophy. For 2019, 71% of Mr. Acoca’s total direct compensation as Chief Executive Officer was variable, based on performance factors, and for all of our named executive officers as a group, between 63-67% of their total direct compensation as named executive officers was variable, based on performance factors.

Our named executive officers participate in an annual cash incentive plan which provides them an opportunity to earn a bonuscash award based on the Company'sattainment of certain pre-determined goals of the Company. For 2019 these goals were based on: (i) adjusted EBITDA, and (ii) revenue comprised of company sales (95% of revenue target) and franchisee royalty income (5% of revenue target). Payouts are also subject to an individual performance factor (“IPF”). The individual performance factor can adjust the achievement of Adjusted EBITDA targets. The Adjustedthe Company performance metrics range from 0% to 140% of the amount attributable to the Company performance metric.

For fiscal year 2019, the threshold, target and maximum Company Annual Incentive Plan targets were weighted at 60% for achievement of EBITDA targets and at 40% for revenue based on the following performance target amounts, and the Company’s actual results.

The Annual Incentive Plan payout achieved by each NEO based on the Company’s performance, the adjustment for an individual performance factor ("IPF") for each NEO, and the actual 2019 Annual Incentive Plan payout received by each NEO are set each year based on achievementforth in the table below.

We provide long-term incentive compensation to our named executive officers pursuant to our 2018 Omnibus Equity Incentive Plan (the "2018 Incentive Plan"). We believe that long-term incentive awards help to align the interests of our named executive officers with those of our stockholders, motivate them to create value in the Company over a longer term than annual cash incentive planawards, and encourage our named executive officers to avoid taking excessive risks. We have four types of long-term incentive awards applicable to our named executive officers: restricted stock awards, restricted stock unit awards, stock option awards, and in the case of Mr. Acoca, performance-based restricted stock awards.

In determining the aggregate amount of long-term incentive awards to grant each named executive officer, we consider the individual’s performance, the expense recognized by the Company for equity grants, the potential dilutive effect equity grants may have on existing stockholders, the number of shares available for grant in our 2018 (which was paidIncentive Plan, comparisons to our Peer Group and the accumulated wealth prior equity awards have created. In considering which type of equity grant to make our named executive officers, we consider the motivational effect each award will have. While stock options motivate our named executive officers by providing potential gain if our stock price increases, our stock awards, both time-based and performance-based, more directly expose our named executive officers to the effects of a decrease in 2019) also provided for plan-based bonusesour stock price.

The Compensation Committee believes stock option grants are a useful tool to be paidmotivate our named executive officers to focus on overall corporate performance over the long-term and to align their interests with those of our stockholders. This occurs because our stock option grants provide economic value to our named executive officers only if Adjusted EBITDA achievement was equal to or more than 90%our stock price increases from the date of the Adjusted EBITDA target as well asgrant to the date the stock option is exercised. All of our stock option grants to our named executive officers are considered “non-qualified” for tax purposes, which generally provide a bonus multiplier begins applying for performance above 102% of Adjusted EBITDA and caps at 200%more favorable tax benefit to the Company than “incentive” stock options. Generally, 25% of the target bonus amount. Based onshares subject to our performance, which included add backstock option grants vest one year from the effective date of franchisegrant and wage/hour related litigation expenses as well as severance expenses, bonuses for 2018 were paid out at 71.4% of target. 

We granted restricted shares to our named executive officers. All restricted shares generally vest in four equal annual installments commencing on the one-year anniversary of grant. During the period untilwhile the restricted shares vest,remain unvested, the grantees have all the rights of a stockholder with respect to the restricted shares save onlyexcept the right to transfer the restricted shares (including the right to vote restricted shares and to receive ordinary dividends paid to or made with respect to the restricted shares, if any).

Mr. Acoca entered into a Restricted Share Unit Award Agreement for 96,156 shares of time-vesting restricted share units worth approximately $1,000,000 inIn connection with his appointment as our PresidentMr. Lozano’s commencement of employment, we granted Mr. Lozano a new hire equity award in May 2019 with an aggregate grant date value of approximately $350,000. Mr. Lozano’s equity award consisted of approximately $100,000 worth of time-vested 10-year options that will vest 25% each year and Chief Executive Officer. The awardsapproximately $250,000 worth of time-vested restricted shares that will vest in four equal annual installments commencing on the one-year anniversary of the date of grant. Additionally, he received 72,116 performance-vesting restricted share units, worth approximately $750,000, whereby one-half (36,058 shares) of the grant vests when the price of our stock closes at no less than $15 per share for a period of twenty consecutive trading days and the other one-half of the performance share units vest when the price of our stock reaches a closing price of no less than $20 per share for a period of twenty consecutive trading days or upon the occurrence of a change in control of the Company, provided however, if any of the aforementioned performance thresholds are met, the performance share units may not vest until at least one25% each year has passed from the date of grant.