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PRE 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.    )

 

Filed by the Registrant  

 

Filed by a Party other than the Registrant  

 

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under §240.14a-12

 

Dine Brands Global, Inc.

 

(Name of Registrant as Specified In Its Charter)

 

      

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

  (2)  

Aggregate number of securities to which transaction applies:

 

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

  (4)  

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  (5)  

Total fee paid:

 

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

  (2)  

Form, Schedule or Registration Statement No.:

 

  (3)  

Filing Party:

 

  (4)  

Date Filed:

 


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LOGO

 

LOGO

 

Notice of 2019 Annual Meeting

and Proxy Statement

 

 

 

 


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2019 PROXY STATEMENT  

 

 

 

PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION

 

 

LOGO

450 North Brand Boulevard

Glendale, California 91203

(866) 995-DINE

April 1, 2019

Dear Fellow Stockholders:

We are pleased to invite you to attend the 2019 Annual Meeting of Stockholders of Dine Brands Global, Inc., which will be held on Tuesday, May 14, 2019, at 8:00 a.m., Local Time, at our offices located at 450 North Brand Boulevard, Glendale, California 91203. At this year’s Annual Meeting, you will be asked to: (i) approve and adopt amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation to declassify the Board of Directors and make other related changes; (ii) elect the four Class I directors identified in this proxy statement; (iii) ratify the appointment of Ernst & Young LLP as our independent auditor; (iv) approve, on an advisory basis, the compensation of our named executive officers; and (v) approve the Dine Brands Global, Inc. 2019 Stock Incentive Plan.

Whether or not you plan to attend the Annual Meeting in person, we hope you will vote as soon as possible. Voting your proxy will ensure your representation at the Annual Meeting. You can vote your shares over the Internet, by telephone or by using a traditional proxy card. Instructions on each of these voting methods are outlined in the enclosed proxy statement.

We urge you to review carefully the proxy materials and to vote: FOR the approval and adoption of amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation; FOR the election of each of the Class I directors identified in this proxy statement; FOR the ratification of the appointment of Ernst & Young LLP as our independent auditor; FOR the approval, on an advisory basis, of the compensation of our named executive officers; and FOR the approval of the Dine Brands Global, Inc. 2019 Stock Incentive Plan.

Thank you for your continued support of and interest in Dine Brands Global, Inc. We look forward to seeing you on May 14th.

Sincerely yours,

 

LOGO   

LOGO

 

Richard J. Dahl    Stephen P. Joyce
Chairman of the Board of Directors    Chief Executive Officer

 

      


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  2019 PROXY STATEMENT

 

 

 

 

 

LOGO

450 North Brand Boulevard

Glendale, California 91203

(866) 995-DINE

NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 14, 2019

April 1, 2019

To the Stockholders of Dine Brands Global, Inc.:

NOTICE IS HEREBY GIVEN that the 2019 Annual Meeting of Stockholders (the “Annual Meeting”) of Dine Brands Global, Inc., a Delaware corporation (the “Corporation”), will be held at the Corporation’s offices located at 450 North Brand Boulevard, Glendale, California 91203, on Tuesday, May 14, 2019, at 8:00 a.m., Local Time, for the following purposes as more fully described in the accompanying proxy statement:

 

  (1)

To approve and adopt amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation;

 

  (2)

To elect the four Class I directors identified in the proxy statement;

 

  (3)

To ratify the appointment of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ending December 31, 2019;

 

  (4)

To approve, on an advisory basis, the compensation of the Corporation’s named executive officers; and

 

  (5)

To approve the Dine Brands Global, Inc. 2019 Stock Incentive Plan

Only stockholders of record at the close of business on March 18, 2019, the record date for the Annual Meeting, are entitled to notice of, and to vote at, the Annual Meeting and any adjournment thereof.

By Order of the Board of Directors,

 

 

LOGO

Bryan R. Adel

Senior Vice President, Legal, General Counsel and Secretary

 

      


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2019 PROXY STATEMENT  

 

 

 

Important Notice Regarding the Availability of

Proxy Materials for the Annual Meeting of Stockholders

of Dine Brands Global, Inc.

to be Held on May 14, 2019

The notice of the Annual Meeting, proxy statement and 2018 annual report to stockholders and the means to vote by Internet are available at www.envisionreports.com/DIN.

Your Vote is Important

Please vote as promptly as possible by using the Internet or telephone or by signing, dating and returning the proxy card. If you did not receive a paper copy of the proxy statement with the proxy card and would like to vote by proxy card, please refer to the instructions on requesting a paper copy of these materials in this proxy statement. All stockholders are cordially invited to attend the Annual Meeting in person. If you attend the Annual Meeting, you may vote in person if you wish, even if you have previously voted by another method.

 

      


Table of Contents

 

2019 PROXY STATEMENT  

 

 

TABLE OF CONTENTS   

 

Table of Contents

 

     Page  
Questions and Answers      1  
Important Note      4  
Corporate Governance      5  

 

Current Board of Directors

     5  

The Structure of the Board of Directors

     5  

The Role of the Board of Directors in Risk Oversight

     6  

Director Independence

     6  

Codes of Conduct

     7  

Corporate Governance Guidelines

     8  

Director Attendance at Meetings

     8  

Executive Sessions of Non-Management Directors

     8  

Communications with the Board of Directors

     8  

Board of Directors Retirement Policy

     8  

Other Public Corporation Directorships

     9  

Certain Relationships and Related Person Transactions

     9  

Board of Directors Committees and Their Functions

     9  

Board of Directors Nominations

     12  

Stockholder Nominations

     13  
Director Compensation      14  

 

Stock Ownership Guidelines

     14  

Director Compensation Table for 2018

     15  
Security Ownership of Certain Beneficial Owners and Management      16  
Section 16(a) Beneficial Ownership Reporting Compliance      19  
Executive Compensation      20  

 

Compensation Committee Report

     20  

Compensation Discussion and Analysis

     20  

Compensation Tables

     39  

2018 Summary Compensation Table

     39  

Grants of Plan-Based Awards in 2018

     42  

Outstanding Equity Awards at 2018 Fiscal Year-End

     44  

2018 Option Exercises and Stock Vested

     46  

2018 Nonqualified Deferred Compensation

     47  

Employment Agreements

     47  

Potential Payments Upon Termination or Change in Control

     51  
     Page  

CEO Pay Ratio

     53  

Securities Authorized for Issuance Under Equity Compensation Plans

     54  

Equity Compensation Plan Information

     54  

Compensation Committee Interlocks and Insider Participation

     55  

Executive Officers of the Corporation

     56  
Audit-Related Matters      57  

 

Report of the Audit and Finance Committee

     57  

Independent Auditor Fees

     58  

Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditor

     59  
Matters to Be Voted Upon at the Annual Meeting      60  

 

PROPOSAL ONE: APPROVE AND ADOPT AMENDMENTS TO THE DINE BRANDS GLOBAL, INC. RESTATED CERTIFICATE OF INCORPORATION

     60  

PROPOSAL TWO: ELECTION OF FOUR CLASS I DIRECTORS

     61  

Director Nominees

     61  

Continuing Directors

     62  

PROPOSAL THREE: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG  LLP AS THE CORPORATION’S INDEPENDENT AUDITOR FOR THE 2019 FISCAL YEAR

     63  

PROPOSAL FOUR: APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE CORPORATION’S NAMED EXECUTIVE OFFICERS

     64  

PROPOSAL FIVE: APPROVAL OF DINE BRANDS GLOBAL, INC. 2019 STOCK INCENTIVE PLAN

     64  
Proposals of Stockholders      71  
Other Business      73  
Appendix A      A1  

 

Proposed Amendment to DINE BRANDS GLOBAL, INC. Restated Certificate of Incorporation

     A1  
Appendix B      B1  

 

DINE BRANDS GLOBAL, INC. 2019 STOCK INCENTIVE PLAN

     B1  
Appendix C      C1  

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

     C1  
 

 

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Table of Contents

 

2019 PROXY STATEMENT  

 

 

PROXY STATEMENT FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS   

 

 

 

LOGO

450 North Brand Boulevard

Glendale, California 91203

(866) 995-DINE

PROXY STATEMENT FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS

QUESTIONS AND ANSWERS

 

Q: Why am I receiving these materials?

A: Dine Brands Global, Inc. (the “Corporation”) has made these materials available to you on the Internet and by mail in connection with the Corporation’s solicitation of proxies for use at the 2019 Annual Meeting of Stockholders (“Annual Meeting”) to be held on Tuesday, May 14, 2019, at 8:00 a.m., Local Time, and at any adjournment or postponement thereof. These materials were first sent or made available to stockholders on April 1, 2019. You are invited to attend the Annual Meeting and are requested to vote on the proposals described in this proxy statement. The Annual Meeting will be held at the Corporation’s offices located at 450 North Brand Boulevard, Glendale, California 91203.

Q: What is included in these materials?

A: These materials include:

 

    This proxy statement for the Annual Meeting; and

 

    The Corporation’s 2018 annual report to stockholders, which contains the annual report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission (“SEC”) on February 21, 2019.

Q: What items will be voted on at the Annual Meeting?

A: The Board of Directors is requesting that stockholders vote on the following five proposals at the Annual Meeting:

Proposal One: The approval and adoption of amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation to declassify the Board of Directors and make other related changes.

Proposal Two: The election of the four Class I directors identified in this proxy statement.

Proposal Three: The ratification of the appointment of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ending December 31, 2019.

Proposal Four: The approval, on an advisory basis, of the compensation of the Corporation’s named executive officers.

Proposal Five: The approval of the Dine Brands Global, Inc. 2019 Stock Incentive Plan.

Q: What are the voting recommendations of the Board of Directors?

A: The Board of Directors recommends that you vote your shares:

 

    “FOR” the approval and adoption of amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation to declassify the Board of Directors and make other related changes;

 

    “FOR” the four individuals nominated to serve as Class I directors;

 

    “FOR” the ratification of the appointment of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ending December 31, 2019;

 

    “FOR” the approval, on an advisory basis, of the compensation of the Corporation’s named executive officers; and

 

    “FOR” the approval of the Dine Brands Global, Inc. 2019 Stock Incentive Plan.
 

 

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  2019 PROXY STATEMENT

 

 

  PROXY STATEMENT FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS

 

 

Q: Who is entitled to vote?

A: Only stockholders of record at the close of business on March 18, 2019 (the “Record Date”) will be entitled to receive notice of, and to vote at, the Annual Meeting. As of the Record Date, there were [•] shares of common stock, par value $.01 per share (the “Common Stock”) outstanding. The holders of Common Stock are entitled to one vote per share. Stockholders of record of the Common Stock may vote their shares either in person or by proxy.

Q: What constitutes a “quorum”?

A: A quorum is necessary to hold a valid meeting of stockholders. A quorum exists if the holders of a majority of the voting power of the capital stock issued and outstanding and entitled to vote at the Annual Meeting are present in person or represented by proxy.

Q: How do I cast my vote?

A: There are four ways to vote:

 

    By Internet. To vote by Internet, go to www.envisionreports.com/DIN. Internet voting is available 24 hours a day, although your vote by Internet must be received by 11:59 p.m. Eastern Time on May 13, 2019. You will need the control number found either on the Notice of Internet Availability of Proxy Materials or on the proxy card if you are receiving a printed copy of these materials. If you vote by Internet, do not return your proxy card or voting instruction card unless you intend to revoke your earlier vote. If you hold your shares in “street name,” please refer to the Notice of Internet Availability of Proxy Materials or voting instruction card provided to you by your broker, bank or other holder of record for Internet voting instructions.

 

    By Telephone. To vote by telephone, registered stockholders should dial 800-652-VOTE (8683) and follow the instructions. Telephone voting is available 24 hours a day, although your vote by phone must be received by 11:59 p.m. Eastern Time, May 13, 2019. You will need the control number found either on the Notice of Internet Availability of Proxy Materials or on the proxy card if you are receiving a printed copy of these materials. If you vote by telephone, do not return
   

your proxy card or voting instruction card unless you intend to revoke your earlier vote. If you hold your shares in street name, please refer to the Notice of Internet Availability of Proxy Materials or voting instruction card provided to you by your broker, bank or other holder of record for telephone voting instructions.

 

    By Mail. By signing the proxy card and returning it in the prepaid and addressed envelope enclosed with proxy materials delivered by mail, you are authorizing the individuals named on the proxy card to vote your shares at the Annual Meeting in the manner you indicate. Stockholders are encouraged to sign and return the proxy card even if you plan to attend the Annual Meeting so that your shares will be voted if you are ultimately unable to attend the Annual Meeting. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted.

 

    In Person. If you attend the Annual Meeting and plan to vote in person, you will be provided with a ballot at the Annual Meeting. If your shares are registered directly in your name, you are considered the stockholder of record and you have the right to vote in person at the Annual Meeting. If your shares are held in the name of your broker or other nominee, you are considered the beneficial owner of shares held in street name. As a beneficial owner, if you wish to vote at the Annual Meeting, you will need to bring to the Annual Meeting a legal proxy from your broker or other nominee authorizing you to vote those shares. Whether you are a stockholder of record or a beneficial owner, you must bring valid, government-issued photo identification to gain admission to the Annual Meeting. For directions to the Annual Meeting, please visit the Investors section of the Corporation’s website at http://www.dinebrands.com.

Whichever method you use, each valid proxy received in time will be voted at the Annual Meeting by the persons named on the proxy card in accordance with your instructions. To ensure that your proxy is voted, it should be received by 11:59 p.m., Eastern Time on May 13, 2019.

 

 

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2019 PROXY STATEMENT  

 

 

PROXY STATEMENT FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS   

 

 

Q: What happens if I do not give specific voting instructions?

A: If you do not give specific voting instructions, the following will apply:

Stockholders of Record. If you are a stockholder of record and properly sign and return a proxy card, but do not give specific voting instructions for each proposal, then the proxy holders will vote your shares as follows:

 

    “FOR” the approval and adoption of amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation;

 

    “FOR” the election of the four individuals nominated to serve as Class I directors;

 

    “FOR” the ratification of the appointment of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ending December 31, 2019;

 

    “FOR” the approval, on an advisory basis, of the compensation of the Corporation’s named executive officers; and

 

    “FOR” the approval of the Dine Brands Global, Inc. 2019 Stock Incentive Plan.

Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of the New York Stock Exchange (the “NYSE”), the organization that holds your shares may generally vote on routine matters in its discretion (such as Proposal Three—ratification of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ended December 31, 2019) but cannot vote on non-routine matters (such as Proposal One—the approval and adoption of amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation; Proposal Two—the election of the Corporation’s Class I directors, Proposal Four—the approval, on an advisory basis, of the compensation of the Corporation’s named executive officers, and Proposal Five—the approval of the Dine Brands Global, Inc. 2019 Stock Incentive Plan). If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform the tabulator of votes that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote” and will have no impact on the voting results of such proposal. Accordingly, stockholders are urged to give their broker or bank instructions on voting their shares on all matters.

Q: How will my stock be voted on other business brought up at the Annual Meeting?

A: By signing and submitting your proxy card or voting your shares on the Internet or by telephone, you authorize the persons named on the proxy card to use their discretion in voting on any other matter brought before the Annual Meeting. As of the date of this proxy statement, the Corporation does not know of any other business to be considered at the Annual Meeting.

Q: Can I change my vote or revoke my proxy?

A: Yes. If you are a stockholder of record, you can change your vote at any time before it is voted at the Annual Meeting by entering a new vote using the Internet or telephone, by submitting a later-dated proxy card or by voting by ballot at the Annual Meeting. You may also revoke your proxy at any time before it is voted at the Annual Meeting by giving written notice of revocation to the Secretary of the Corporation or by revoking your proxy in person at the Annual Meeting. If you hold shares in street name, you may submit new voting instructions by contacting your broker or other nominee. You may also change your vote or revoke your proxy in person at the Annual Meeting if you obtain a legal proxy from your broker or other nominee authorizing you to vote the shares.

Q: What vote is necessary to pass the items of business at the Annual Meeting?

A: Assuming a quorum is present at the Annual Meeting, the amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation (Proposal One) will be approved and adopted if the proposal receives the affirmative vote of the holders of at least 80% of the voting power of all of the shares of common stock outstanding. Abstentions and broker non-votes will have the same effect as a vote against the proposal relating to the amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation.

The four director nominees identified in this proxy statement will be elected if they receive a majority of the votes cast. This means that the individuals nominated for election to the Board of Directors (Proposal Two) will be elected if the votes cast “FOR” such nominee’s election exceed the number of votes cast “AGAINST” such nominee’s election. Abstentions and broker non-votes have no effect on the proposal for the election of directors. Any nominee for director who receives a greater number of votes cast “AGAINST” his or her election than votes cast “FOR” such election is required to tender his or her resignation to the Nominating and Corporate Governance Committee of the Board of Directors within 15 days of the

 

 

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  PROXY STATEMENT FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS

 

certification of the stockholder vote at the Annual Meeting. The Nominating and Corporate Governance Committee will make a recommendation to the Board of Directors on whether to accept or reject the tendered resignation, and the Board of Directors will act on such recommendation within 90 days of the certification of the stockholder vote at the Annual Meeting.

The affirmative vote of a majority of the voting power of the stock present or represented by proxy and entitled to vote on the proposal is required to approve Proposal Three, the ratification of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ending December 31, 2019, Proposal Four, the approval, on an advisory basis, of the compensation of the Corporation’s named executive officers, and Proposal Five, the approval of the Dine Brands Global, Inc. 2019 Stock Incentive Plan. If you abstain from voting on these matters, the abstention will have the same effect as a vote against that proposal. Broker non-votes, if any, will have no effect on the outcome of the proposals.

Q: Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

A: Pursuant to rules adopted by the SEC, the Corporation has elected to provide access to its proxy materials via the Internet. Accordingly, the Corporation mailed a Notice of Internet Availability of Proxy Materials (the “Notice”) to its stockholders on April 1, 2019. The Notice contains instructions on how to access the Corporation’s proxy materials, including this proxy statement and the Corporation’s 2018 annual report to stockholders. The Notice also contains instructions on how to vote. All stockholders will have the ability to access the proxy

materials on the website referred to in the Notice or request to receive a printed set of the proxy materials by mail or electronically by email. The Corporation encourages stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of its annual meetings. This process is designed to expedite stockholders’ receipt of proxy materials, lower the cost of the Annual Meeting and help conserve natural resources. However, if you would prefer to receive printed proxy materials on an ongoing basis, please follow the instructions included in the Notice. If you have previously elected to receive the Corporation’s proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.

Q: What are the costs of this proxy solicitation and who will bear them?

A: The Corporation will bear the expense of printing, mailing and distributing these proxy materials and soliciting votes. In addition to using the mail, the Corporation’s directors, officers, employees, and agents may solicit proxies by personal interview, telephone, or otherwise, although they will not be paid any additional compensation. The Corporation will request brokers and nominees who hold shares of the Corporation’s Common Stock in their names to furnish proxy materials to beneficial owners of the shares. The Corporation will reimburse such brokers and nominees for their reasonable out-of-pocket expenses for forwarding proxy materials to such beneficial owners.

Q: Who will count the votes?

A: A representative of Computershare, transfer agent for the Corporation, will count the votes and will serve as the independent inspector of elections for the Annual Meeting.

 

 

Additional Information

The Corporate Governance section of the Dine Brands Global, Inc. website provides up-to-date information about the Corporation’s corporate governance policies and practices. In addition, the Investors section of the website includes links to the Corporation’s filings with the SEC, news releases, and investor presentations by management. Please note that information contained on the Corporation’s website does not constitute part of this proxy statement. You may also obtain a copy of our periodic filings from the SEC’s EDGAR database at www.sec.gov.

IMPORTANT NOTE

You should rely only on the information contained in this proxy statement to vote on the proposals at the Annual Meeting. The Corporation has not authorized anyone to provide you with information that is different from what is contained in this proxy statement. This proxy statement is dated April 1, 2019. You should not assume that the information contained in this proxy statement is accurate as of any date other than such date, unless indicated otherwise herein, and the mailing of this proxy statement to stockholders shall not create any implication to the contrary.

 

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2019 PROXY STATEMENT  

 

 

CORPORATE GOVERNANCE   

 

CORPORATE GOVERNANCE

Current Board of Directors

There are currently 9 members of the Board of Directors who are divided into the following three classes:

 

Class I

  Class II   Class III

 

Howard M. Berk

 

 

Larry A. Kay

 

 

Richard J. Dahl

Daniel J. Brestle   Douglas M. Pasquale   Stephen P. Joyce

Caroline W. Nahas

Gilbert T. Ray

 

    Lilian C. Tomovich

Class I directors will serve until the Annual Meeting. Class II directors will serve until the annual meeting in 2020 and Class III directors will serve until the annual meeting in 2021 (in each case until their respective successors are duly elected and qualified). At the Annual Meeting, depending on the outcome of the stockholder vote on Proposal One – Approval and Adoption of Amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation to declassify the Board of Directors and to make other related changes, the four Class I directors will be elected to serve either: (1) a term of three years if Proposal One – Approval and Adoption of Amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation does not pass or (2) a term of one year if Proposal One – Approval and Adoption of Amendments to the Dine Brands Global, Inc. Restated Certificate of Incorporation does pass, and, in either case, until their respective successors are duly elected and qualified.

The Structure of the Board of Directors

The business and affairs of the Corporation are managed under the direction of the Board of Directors. It is management’s responsibility to formalize, propose and implement strategic choices and it is the Board of Directors’ role to approve strategic direction and evaluate strategic results, including both the performance of the Corporation and the performance of the Chief Executive Officer.

The Corporation’s Amended Bylaws require the Chairman of the Board of Directors to be elected from the independent members of the Board of Directors as determined by the NYSE listing standards. Mr. Dahl was elected to serve as the independent Chairman of the Board of Directors effective September 2017.

The Board of Directors believes the separation of the roles of Chairman of the Board of Directors and Chief Executive Officer allows the Chief Executive Officer to focus on managing the daily operations of the business and enhances the Board of Directors’ independence from management, thus leading to better monitoring and oversight of management. The Board of Directors believes this structure best serves the interests of the Corporation and its stockholders.

The Corporation’s Corporate Governance Guidelines outline the responsibilities of the Chairman of the Board of Directors. Amongst other responsibilities, the duties of the Chairman of the Board of Directors include:

 

   

leading and overseeing the Board of Directors;

 

   

presiding at Board of Directors meetings and the annual meeting of stockholders;

 

   

developing the agenda for Board of Directors meetings in consultation with the Chief Executive Officer;

 

   

working with the Nominating and Corporate Governance Committee to oversee the annual evaluations of the Board of Directors;

 

   

serving as the principal liaison between the independent directors and the Chief Executive Officer and other members of management, provided that the Board of Directors also has full and unfettered access to the Chief Executive Officer and management;

 

   

advising and serving as a partner to the Chief Executive Officer;

 

   

after reviewing with the Board of Directors, conducting the Chief Executive Officer’s annual performance review with the Chair of the Nominating and Corporate Governance Committee and conducting the Chief Executive Officer’s annual compensation discussion with the Chair of the Compensation Committee;

 

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  CORPORATE GOVERNANCE

 

 

   

calling special meetings of stockholders and the Board of Directors as the Chairman of the Board of Directors deems appropriate; and

 

   

meeting with the Chair of each committee in the first quarter of each year to discuss and set such committee’s goals and priorities for the year following the annual meeting of stockholders.

The Role of the Board of Directors in Risk Oversight

The Board of Directors and each of its committees have an active role in overseeing management of the Corporation’s risks. The Board of Directors regularly reviews information regarding the Corporation’s strategic, financial and operational risks and believes that evaluating how the executive team manages the various risks confronting the Corporation is one of its most important areas of oversight.

In carrying out this critical responsibility, the Board of Directors has established an Enterprise Risk Management Council consisting of key members of the brand business units, risk management, quality assurance, legal, finance and internal audit functions within the Corporation. The Enterprise Risk Management Council assists the Board of Directors with the identification, assessment, management, and monitoring of risks inherent to the business of the Corporation and with risk management decisions pertaining to the Corporation’s practices and activities. The Enterprise Risk Management Council is led by the Corporation’s Executive Director, Risk Management, who reports regularly to the Audit and Finance Committee and the Board of Directors.

The Audit and Finance Committee oversees the Corporation’s policies with respect to risk assessment and risk management. In addition, the Audit and Finance Committee oversees and evaluates the management of risks associated with accounting, auditing, financial reporting, internal controls over financial reporting and cybersecurity. The Audit and Finance Committee assists the Board of Directors and the Chief Executive Officer in its oversight of the integrity of the Corporation’s financial statements, the Corporation’s compliance with legal and regulatory requirements, the performance, qualifications, and independence of the Corporation’s independent auditor and the performance of the Corporation’s internal audit function. The Audit and Finance Committee is responsible for reviewing and discussing the guidelines and policies governing the process by which senior management and the Corporation’s internal audit function assess and manage the Corporation’s exposure to risk, as well as the Corporation’s major financial risk exposures and the steps management has taken to monitor and control such exposures.

The Compensation Committee and the Nominating and Corporate Governance Committee also oversee risks within their respective areas of responsibility. The Compensation Committee oversees the management of risks relating to the Corporation’s compensation policies and practices. The Nominating and Corporate Governance Committee oversees the management of risks associated with the Board of Directors’ organization, membership and structure, corporate governance, the independence of members of the Board of Directors and assessment of the performance and effectiveness of each member of the Board of Directors. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board of Directors is regularly informed through committee reports and management updates about such risks.

Director Independence

The NYSE rules require listed companies to have a board of directors with at least a majority of independent directors. The Board of Directors has had a majority of independent directors since the Corporation went public in 1991.

Under the NYSE rules, a director qualifies as “independent” if the Board of Directors affirmatively determines that he or she has no material relationship with the Corporation (either directly or as a partner, stockholder or officer of an organization that has a material relationship with the Corporation). Based upon a review of the directors’ backgrounds and business activities, the Board of Directors has affirmatively determined that directors Howard M. Berk, Daniel J. Brestle, Richard J. Dahl, Larry A. Kay, Caroline W. Nahas, Douglas M. Pasquale, Gilbert T. Ray, and Lilian C. Tomovich have no material relationships (other than service as a director on the Board of Directors) with the Corporation and therefore that they each qualify as independent.

 

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In making its determination for Mr. Berk and Ms. Nahas, the Board of Directors specifically considered, amongst other factors, the following:

 

   

Mr. Berk’s position as a partner of MSD Capital, L.P. and the fact that MSD Capital, L.P. may be deemed to beneficially own 740,545 shares of the Corporation’s Common Stock.

 

   

Ms. Nahas’ position as the Vice Chair of Korn/Ferry International (“Korn/Ferry”) and the Corporation’s engagement of Korn/Ferry to provide sensitivity and inclusion training for the Corporation’s employees, franchisees, and the Board of Directors as well as customized training materials for the Corporation’s future use. The Corporation paid Korn/Ferry a total of $362,173 for such services in 2018. The Board of Directors considered the fact that Ms. Nahas did not have any direct or indirect involvement with the Corporation’s consideration or selection of Korn/Ferry. Additionally, the Board of Directors does not believe Ms. Nahas has a material direct or indirect interest in the engagement or the services to be provided nor does the Board of Directors believe that such engagement impairs Ms. Nahas’ judgment regarding the Corporation’s executive compensation.

Stephen P. Joyce, the Corporation’s Chief Executive Officer, does not qualify as an independent director.

Both the Sarbanes-Oxley Act of 2002 and the NYSE rules require the Board of Directors to have an audit committee comprised solely of independent directors, and the NYSE rules also require the Board of Directors to have a compensation committee and a nominating and corporate governance committee, each of which is comprised solely of independent directors. The Corporation is in compliance with these requirements.

Codes of Conduct

The Corporation is committed to maintaining high standards of business conduct and corporate governance, which the Corporation considers essential to running its business efficiently, serving the Corporation’s stockholders well and maintaining the Corporation’s integrity in the marketplace. Accordingly, the Board of Directors has adopted a Global Code of Conduct, which applies to all directors, officers and employees of the Corporation. The Global Code of Conduct sets forth the fundamental principles and key policies that govern the way the Corporation conducts business, including workplace conduct, conflicts of interest, gifts and entertainment, political and community involvement, protection of corporate property, fair business practices, global relations and other laws and regulations applicable to the Corporation’s business.

In addition to the Global Code of Conduct, the Board of Directors has adopted a Code of Conduct for Non-Employee Directors, which serves as guidance to the Corporation’s non-employee directors on ethical issues including conflicts of interest, confidentiality, corporate opportunities, fair disclosure, protection and proper use of corporate assets, fair dealing, harassment and discrimination, and other laws and regulations applicable to the Corporation’s business.

The Board of Directors has also adopted the Code of Ethics for the Chief Executive Officer and Senior Financial Officers. These individuals are expected to avoid actual or apparent conflicts between their personal and professional relationships and make full disclosure of any material transaction or relationship that could create or appear to create a conflict of interest to the General Counsel, who will inform and seek a determination from the Chair of the Audit and Finance Committee as to whether a conflict exists and the appropriate disposition of the matter. In addition, these individuals are expected to promote the corporate policy of making full, fair, accurate and understandable disclosure in all reports and documents filed with the SEC; report violations of the Code of Ethics to the General Counsel or the Chair of the Audit and Finance Committee; and request from the General Counsel any waivers of the Code of Ethics, which shall be publicly disclosed if required by applicable law.

Any waiver of any provision of the Global Code of Conduct or the Code of Ethics for Chief Executive Officer and Senior Financial Officers for any executive officer may be granted only by the Board of Directors. Any waiver of the Code of Conduct for Non-Employee Directors may be granted only by the disinterested directors of the Board of Directors or the Audit and Finance Committee, and any such waiver shall be promptly disclosed to the Corporation’s stockholders. The Board of Directors and the Audit and Finance Committee review whether such waivers are in the best interests of the Corporation and its stockholders, taking into account all relevant factors. In 2018, there were no waivers of (a) the Global Code of Conduct for executive officers, (b) the Code of Ethics for Chief Executive Officer and Senior Financial Officers, or (c) the Code of Conduct for Non-Employee Directors.

The Corporation also maintains an ethics hotline to allow any employee to express a concern or lodge a complaint, confidentially and anonymously, about any potential violation of the Corporation’s Global Code of Conduct.

 

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Copies of the Global Code of Conduct, the Code of Conduct for Non-Employee Directors and the Code of Ethics for Chief Executive Officer and Senior Financial Officers can be found in the Corporate Governance section of the Corporation’s website, http://www.dinebrands.com. In addition, printed copies of the codes of conduct are available at no charge upon request to the Secretary at Dine Brands Global, Inc., 450 North Brand Boulevard, Glendale, California 91203, (866) 995- DINE. We will disclose any future substantive amendments to, or waivers granted to any officer from, the provisions of these ethics policies and standards on the Corporation’s website as promptly as practicable as may be required under applicable rules of the SEC or the NYSE.

Corporate Governance Guidelines

The Corporation has adopted corporate governance guidelines which can be found in the Corporate Governance section of the Corporation’s website, http://www.dinebrands.com. In addition, printed copies of the Corporation’s corporate governance guidelines are available at no charge upon request to the Secretary at Dine Brands Global, Inc., 450 North Brand Boulevard, Glendale, California 91203, (866) 995-DINE.

Director Attendance at Meetings

Directors are expected to attend the Corporation’s Annual Meeting. All directors attended the 2018 annual meeting of stockholders. The Board of Directors held ten meetings during 2018. During 2018, each incumbent director attended 75% or more of the aggregate of the meetings of the Board of Directors and of the committees on which he or she served that were held during the period for which he or she served as a director.

Executive Sessions of Non-Management Directors

The NYSE rules require that the non-management directors of a listed company meet at regularly scheduled executive sessions without management. The Corporation’s non-management directors generally meet separately at regular meetings of the Board of Directors and committee meetings. The independent Chairman of the Board of Directors, Richard J. Dahl, presides during executive sessions of the Board of Directors.

Communications with the Board of Directors

Stockholders and other interested persons wishing to communicate directly with the Board of Directors, the Chairman of the Board of Directors, any committee or chair of a committee, or any non-management director, individually or as a group, may do so by sending written communications appropriately addressed to the following address:

Dine Brands Global, Inc.

(or a particular subgroup or individual director)

c/o Office of the Secretary

450 North Brand Boulevard, 7th Floor

Glendale, California 91203

Each written communication should specify the applicable addressee or addressees to be contacted, as well as the general topic of the communication. The Board of Directors has designated the Secretary of the Corporation as its agent to receive and review communications addressed to the Board of Directors, Chairman of the Board of Directors, any committee or chair of a committee, or any non-management director, individually or as a group. The Office of the Secretary will initially receive and process communications to determine whether it is a proper communication for the Board of Directors. If the envelope containing a communication that a stockholder or other interested person wishes to be confidential is conspicuously marked “Confidential,” the Secretary of the Corporation will not open the communication prior to forwarding it to the appropriate individual(s). Generally, any communication that is primarily commercial, offensive, illegal or otherwise inappropriate, or does not substantively relate to the duties and responsibilities of our Board of Directors, may not be forwarded.

Board of Directors Retirement Policy

The Corporation’s corporate governance guidelines provide that no person may stand for election to serve as a member of the Corporation’s Board of Directors if he or she shall have reached his or her 76th birthday. Under special circumstances,

 

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upon the recommendation of the Nominating and Corporate Governance Committee, and upon approval by the Board of Directors, a person who has reached his or her 76th birthday may be permitted to stand for election and, if elected, continue to serve on the Board of Directors.

Other Public Corporation Directorships

The Corporation’s corporate governance guidelines provide that directors should not serve on more than a total of four public corporation boards, inclusive of service on the Corporation’s Board of Directors. Directors who also serve as executives of the Corporation should not serve on more than a total of two public corporation boards, inclusive of service on the Corporation’s Board of Directors. The Nominating and Corporate Governance Committee has discretion to waive this guideline on a case by case basis if it determines that special circumstances warrant permitting a director to serve on more than the applicable number of public corporation boards allowed under the corporate governance guidelines.

Mr. Dahl serves on the audit committees of IDACORP, Inc. and its subsidiary, Idaho Power Company, and Hawaiian Electric Industries, Inc. and its subsidiary, Hawaiian Electric Company, Inc., which is considered by the NYSE to be service on four separate public company audit committees. Mr. Dahl also serves on our Audit and Finance Committee. The Board of Directors has determined that Mr. Dahl’s simultaneous service on the aforementioned audit committees does not impair Mr. Dahl’s ability to effectively serve on the Corporation’s Audit and Finance Committee.

Certain Relationships and Related Person Transactions

The Corporation’s Global Code of Conduct provides that executive officers who encounter a potential or actual conflict of interest must fully disclose all facts and circumstances to the Corporation’s General Counsel, who will inform and seek a determination from the Audit and Finance Committee as to whether a conflict exists and the appropriate disposition of the matter. The Corporation’s Code of Ethics for Chief Executive and Senior Financial Officers provides that no senior officer may enter into any investment, accept any position or benefits, participate in any transaction or business arrangement or otherwise act in a manner that creates or appears to create a conflict of interest unless the senior officer makes full disclosure of all facts and circumstances to, and obtains the prior written approval of, the General Counsel, the Chair of the Audit and Finance Committee of the Board of Directors and/or the Board of Directors. The Corporation’s Code of Conduct for Non-Employee Directors provides that any director who becomes aware of any situation that involves, or reasonably may appear to involve, a conflict of interest with the Corporation must promptly bring it to the attention of the Corporation’s General Counsel or to the Chair of the Audit and Finance Committee. The charter of the Nominating and Corporate Governance Committee of the Board of Directors provides that it will consider conflicts of interest in evaluating director nominees.

The Board of Directors recognizes that transactions involving the Corporation and related parties present a heightened risk of conflicts of interest. The charter of the Audit and Finance Committee provides that it will review any related party transactions. Since January 1, 2018, there were no transactions between the Corporation and any related party of the type or amount required to be disclosed under Item 404 of Regulation S-K.

Board of Directors Committees and Their Functions

The Board of Directors has three standing committees, each of which operates under a written charter approved by the Board of Directors: the Audit and Finance Committee, Compensation Committee and Nominating and Corporate Governance Committee. Each member of these committees is an independent director in accordance with the NYSE listing standards and the applicable rules and regulations of the SEC. The Audit and Finance Committee Charter, the Compensation Committee Charter, and the Nominating and Corporate Governance Committee Charter can be found in the Corporate Governance section of the Corporation’s website, http://www.dinebrands.com. Printed copies are also available at no charge upon request to the Secretary at Dine Brands Global, Inc., 450 North Brand Boulevard, Glendale, California 91203, (866) 995-DINE.

 

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The chart below identifies directors who are members and chairs of each committee as of the date of this proxy statement, the principal functions of each committee and the number of meetings held by each committee during 2018. The Board of Directors believes that committee rotation fosters the sharing of new perspectives and enables directors with diverse skills and experiences to focus on different areas of oversight. The Nominating and Corporate Governance Committee regularly considers committee rotation and makes recommendations to the Board of Directors as appropriate.

 

   

Name of Committee and

Membership

   Principal Functions and Responsibilities

 

Audit and Finance Committee

Douglas M. Pasquale, Chair

Richard J. Dahl

Howard M. Berk

Gilbert T. Ray

  

 

•  Responsible for the appointment, compensation, retention and oversight of the work of any independent auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Corporation.

 

•  Reviews with management and the independent auditor the Corporation’s annual audited and quarterly financial statements and other financial disclosures, the adequacy and effectiveness of accounting and internal control policies and procedures and major issues regarding accounting principles and financial statement presentations.

 

•  Meets periodically with management, the Corporation’s director of internal audit and the independent auditor in separate executive sessions.

 

 

Meetings in 2018

 

  

•  Reviews risk assessments from management with respect to cybersecurity and

10 Meetings

  

   oversees the Corporation’s cybersecurity risk management processes.

 

 

•  Reviews and discusses with management and, when appropriate, makes recommendations to the Board of Directors regarding the following: (i) the Corporation’s tax program, including tax planning and compliance; and (ii) the Corporation’s insurance risk management policies and programs.

 

•  Reviews the Corporation’s program to monitor compliance with the Corporation’s Global Code of Conduct and meets periodically with the Corporation’s General Counsel or Compliance Officer to discuss compliance with the Global Code of Conduct.

 

•  Reviews requests from directors and executive officers of the Corporation for waivers from the application of the Corporation’s Code of Conduct for Non-Employee Directors and Global Code of Conduct, respectively, and related policies of the Corporation, to make recommendations to the Board of Directors concerning such requests or to grant or deny such requests on behalf of the Board of Directors, as appropriate, and to review any public disclosures related to such waivers.

 

•  Reviews any potential related party transactions.

 

•  Reviews the performance and independence of the Corporation’s independent auditor.

 

•  Prepares a report required by the rules of the SEC to be included in the Corporation’s proxy statement for its annual meeting of stockholders.

 

•  Reviews and provides guidance to the Board of Directors and management regarding: dividend policy; sales, issuance or repurchases of the Corporation’s Common Stock; policies and guidelines on investment of cash; policies and guidelines on short and long-term financing; debt/equity ratios, fixed charge ratios, working capital, other debt covenant ratios; and other transactions or financial issues that management desires to have reviewed by the Audit and Finance Committee from time to time.

 

•  Oversees the Corporation’s policies with respect to risk assessment and risk management. Oversees and evaluates the management of risks associated with accounting, auditing, financial reporting and internal controls over financial reporting, and reviews and discusses with the Board of Directors, at least annually and at the request of the Board of Directors, issues relating to the assessment and mitigation of major financial risk factors affecting the Corporation.

 

 

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Name of Committee and

Membership

   Principal Functions and Responsibilities

 

Compensation Committee

Daniel J. Brestle, Chair

Howard M. Berk

Caroline W. Nahas

  

 

•  Oversees the Corporation’s compensation and employee benefit plans and practices, including its executive compensation plans and its incentive compensation and equity-based plans.

 

•  Reviews at least annually the goals and objectives of the Corporation’s executive compensation plans, and amends, or recommends that the Board of Directors amend, these goals and objectives if the Compensation Committee deems it appropriate.

 

•  Reviews, at least annually, the Corporation’s executive compensation plans in light of the Corporation’s goals and objectives with respect to such plans and, if appropriate, adopts, or recommends that the Board of Directors adopt, any new executive compensation plans or the amendments of existing, executive compensation plans.

 

 

Meetings in 2018

 

  

•  Oversees the Corporation’s succession planning for the Chief Executive Officer and

6 Meetings

  

    management development.

 

 

•  Evaluates annually the performance of the Chief Executive Officer and other executive officers in light of the goals and objectives of the Corporation’s executive compensation plans, and either as a committee or, together with the other independent directors, determines and approves the Chief Executive Officer’s and such other executive officers’ compensation.

 

•  Evaluates annually the appropriate level of compensation for the Board of Directors and committee service by non-employee members of the Board of Directors.

 

•  Prepares a report on executive compensation to be included in the Corporation’s proxy statement for its annual meeting of stockholders or its annual report on Form 10-K. Reviews and discusses with management, the Corporation’s Compensation Discussion and Analysis and, as part of this review, considers the results of the most recent stockholder advisory vote on executive compensation.

 

•  Reviews and approves severance or termination arrangements to be made with executive officers.

 

•  Reviews and approves a peer group of companies against which to compare the Corporation’s executive compensation for the purposes of assessing the competitiveness of the Corporation’s executive compensation programs.

 

•  Reviews annually the compliance of each director and executive officer with the Corporation’s stock ownership guidelines.

 

•  Reviews and monitors risks related to compensation policies and practices, and reviews with the Board of Directors, at least annually, any issues regarding assessment and mitigation of risk factors affecting the Corporation related to the Corporation’s compensation policies and practices.

 

 

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  CORPORATE GOVERNANCE

 

 

   

Name of Committee and

Membership

   Principal Functions and Responsibilities

 

Nominating and Corporate

Governance Committee

Caroline W. Nahas, Chair

Larry A. Kay

Lilian C. Tomovich

  

 

•  Identifies and recommends to the Board of Directors individuals qualified to serve as directors of the Corporation and on committees of the Board of Directors.

 

•  Recommends to the Board of Directors criteria for membership on the Board of Directors.

 

•  Reviews the suitability for continued service as a director of each Board of Directors member when his or her term expires and when he or she has a change in status, and to recommend whether or not the directors should be re-nominated.

 

•  Reviews annually and advises the Board of Directors with respect to the Board of Directors’ composition and reviews periodically and advises the Board of Directors with respect to the size, frequency of meetings, and any other aspects of procedures of the Board of Directors and its committees.

 

 

Meetings in 2018

 

  

•  Develops and recommends to the Board of Directors a set of corporate governance

3 Meetings

  

    guidelines applicable to the Corporation; reviews periodically, and at least annually, the corporate governance guidelines adopted by the Board of Directors to assure that they are appropriate for the Corporation and comply with the requirements of the NYSE; and recommends any desirable changes to the Board of Directors.

 

•  Reviews periodically with management the Corporation’s policies and programs in such areas as charitable contributions, political action and legislative affairs.

 

•  Reviews periodically the Corporation’s Global Code of Conduct and Code of Conduct for Non-Employee Directors and makes recommendations to the Board of Directors for any changes deemed appropriate.

 

•  Oversees the evaluation of the Board of Directors as a whole and evaluates and reports to the Board of Directors on the performance and effectiveness of the Board of Directors.

 

•  Oversees and reviews policies with respect to assessment and management of risks associated with the Board of Directors’ organization, membership and structure, succession planning, corporate governance, independence, and the performance and effectiveness of the Board of Directors.

 

Board of Directors Nominations

Consistent with its charter, the Nominating and Corporate Governance Committee considers various criteria in evaluating Board of Directors candidates, including: business experience, board of directors experience, skills, expertise, education, professions, backgrounds, diversity, personal and professional integrity, character, business judgment, business philosophy, time availability in light of other commitments, dedication, conflicts of interest, and such other relevant factors that the Nominating and Corporate Governance Committee considers appropriate in the context of the needs of the Board of Directors. In considering diversity, the Nominating and Corporate Governance Committee evaluates candidates with a broad range of expertise, experience, skills, professions, education, backgrounds and other board of directors experience. While the Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity, it considers diversity of race, gender and ethnicity as one of several factors in seeking to identify directors who will bring diverse viewpoints, opinions and areas of expertise that will benefit the Board of Directors as a whole. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria in evaluating prospective nominees.

The Nominating and Corporate Governance Committee also considers whether a potential nominee would satisfy the NYSE’s criteria for director “independence,” the NYSE’s “accounting or related financial management expertise” standard and the SEC’s definition of “audit committee financial expert.”

 

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Whenever a vacancy or potential vacancy exists on the Board of Directors due to expansion of the size of the Board of Directors or the resignation or retirement of an existing director, the Nominating and Corporate Governance Committee begins its process of identifying and evaluating potential director nominees. The Nominating and Corporate Governance

Committee considers recommendations of members of the Board of Directors, management, stockholders and others. The Nominating and Corporate Governance Committee has sole authority to retain and terminate any search firm to be used to identify director candidates, including approving its fees and other retention terms.

The Nominating and Corporate Governance Committee conducted an evaluation and assessment of each director whose term expires in 2019 for purposes of determining whether to recommend them for nomination for re-election to the Board of Directors. After reviewing the assessment results, the Nominating and Corporate Governance Committee determined to make a recommendation to the Board of Directors that Howard M. Berk, Daniel J. Brestle, Caroline W. Nahas, and Gilbert T. Ray be nominated for re-election to the Board of Directors. The Board of Directors reviewed and accepted the Nominating and Corporate Governance Committee’s recommendation and has nominated Howard M. Berk, Daniel J. Brestle, Caroline W. Nahas, and Gilbert T. Ray for re-election to the Board of Directors.

Stockholder Nominations

The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders and will apply the same standards in considering director candidates recommended by stockholders that it applies to other candidates. Stockholders wishing to recommend director candidates for consideration by the Nominating and Corporate Governance Committee may do so by writing to the Secretary, giving the recommended nominee’s name, biographical data and qualifications, accompanied by the written consent of the recommended nominee to serve if elected. Any stockholder who wishes to directly nominate a director candidate to stand for election at a meeting of stockholders must provide written notice that is timely and in proper form in accordance with the advance notice procedures provided in the Corporation’s Bylaws.

The Nominating and Corporate Governance Committee did not receive any recommendations from stockholders proposing candidates for election to the Board of Directors at the Annual Meeting.

 

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DIRECTOR COMPENSATION

Generally, the Corporation does not pay directors who are also employees of the Corporation additional compensation for their service on the Board of Directors. Compensation for non-employee directors is comprised of a cash component and an equity component. Cash compensation for non-employee directors includes retainers for Board of Directors membership and for serving as a member and/or chair of a Board of Directors committee and as the Chairman of the Board of Directors.

During 2018, non-employee directors were entitled to receive $70,000 as an annual cash retainer for serving as a member of the Board of Directors. In addition, depending on their roles, non-employee directors were entitled to receive:

 

   

$125,000 as an annual retainer for the Chairman of the Board of Directors;

 

   

$15,000, $12,500 and $7,500, respectively, as an annual retainer for the chairs of the Audit and Finance Committee, Compensation Committee, and Nominating and Corporate Governance Committee;

 

   

$12,500, $10,000 and $7,500, respectively, as an annual retainer for the members of the Audit and Finance Committee, Compensation Committee, and Nominating and Corporate Governance Committee; and

 

   

$1,500 per meeting beyond the eighth meeting attended for each director who serves on a standing committee that meets more than eight times per year.

The Corporation also reimburses each of the directors for reasonable out-of-pocket expenses incurred for attendance at Board of Directors and committee meetings and other corporate events.

Under the Dine Brands Global, Inc. 2016 Stock Incentive Plan (“2016 Stock Incentive Plan”), non-employee directors may receive periodic grants of non-qualified stock options (“NQSOs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), stock appreciation rights (“SARs”) or performance unit awards. In February 2018, equity awards valued at approximately $105,000 in the form of RSUs were granted to each non-employee director under the 2016 Stock Incentive Plan. In December 2018, upon recommendation by the Compensation Committee, the Board of Directors approved a change to the vesting schedule for non-employee director equity award grants from three years from the date of grant to one year from the date of grant, effective for all future grants. The Board of Directors approved this change to better align with current market practice within the Corporation’s peer group. Other than the annual equity awards granted to non-employee directors in February 2019, which are subject to a one-year cliff vesting from the date of grant, all of the currently outstanding RSUs previously granted to non-employee directors are subject to three-year cliff vesting from the date of grant. In the event a director retires from the Board of Directors after completing five years of service, all of the director’s then-outstanding RSUs will vest. To the extent the Corporation declares dividends, non-employee directors receive dividend equivalent rights in the form of additional RSUs in lieu of receiving cash dividends based upon the number of RSUs held by the director at the time of the dividend record dates. Dividend equivalent rights are subject to the same vesting restrictions as the underlying RSUs.

Directors are eligible to defer up to 100% of their annual Board of Directors retainer fees and equity award compensation pursuant to the Dine Brands Global, Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”).

Stock Ownership Guidelines

Non-employee directors are subject to stock ownership guidelines whereby each director is expected to hold the lesser of 7,000 shares of Common Stock or Common Stock with a value of at least five times the amount of the Board of Directors’ annual retainer (currently, $350,000). Directors are expected to meet the ownership guidelines within five years of joining the Board of Directors. Upon review by the Compensation Committee in 2018, all directors met, were on track to meet, or exceeded the ownership guidelines.

 

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Director Compensation Table for 2018

The following table sets forth certain information regarding the compensation earned or paid in cash and stock awards granted to each non-employee director who served on the Board of Directors in 2018. Mr. Joyce did not receive any additional compensation for his service as a director in 2018. Please see the 2018 Summary Compensation Table for the compensation received by Mr. Joyce in his capacity as Chief Executive Officer.

 

Name

     Fees Earned or
Paid in Cash
($)
     Stock
Awards
($)(1)(2)
     Total
($)

Howard M. Berk

       95,500          105,058          200,558  

Daniel J. Brestle

       92,500          105,058          197,558  

Richard J. Dahl

     210,500          105,058          315,558  

Larry A. Kay

       77,500          105,058          182,558  

Caroline W. Nahas(3)

       95,000          105,058          200,058  

Douglas M. Pasquale

     100,500          105,058          205,558  

Gilbert T. Ray

       85,500          105,058          190,558  

Patrick W. Rose(4)

       29,863          105,058          134,921  

Lilian C. Tomovich

       77,500          105,058          182,558  

 

(1)

These amounts reflect the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”). See Note 14 to the Consolidated Financial Statements in the Corporation’s annual report on Form 10-K for the fiscal year ended December 31, 2018 for information regarding assumptions underlying the valuation of equity awards.

 

(2)

The following table sets forth the number of RSUs held by each individual who served as a non-employee director during 2018 and which were outstanding at December 31, 2018.

 

Name

   Stock Awards
Outstanding at
December 31, 2018
(#)
 

Howard M. Berk

     5,089             

Daniel J. Brestle

     5,089             

Richard J. Dahl

     5,089             

Larry A. Kay

     5,089             

Caroline W. Nahas

     5,089             

Douglas M. Pasquale

     5,089             

Gilbert T. Ray

     5,089             

Patrick W. Rose

     —(5)         

Lilian C. Tomovich

     3,082             

 

(3)

Ms. Nahas elected to defer all of her 2018 director cash compensation and annual non-employee director equity awards pursuant to the Deferred Compensation Plan.

 

(4)

Mr. Rose retired as of the 2018 annual meeting of stockholders. Mr. Rose’s retainer fees were prorated for the period of time Mr. Rose served as a director. Upon Mr. Rose’s retirement, all unvested RSUs vested in accordance with our Non-Employee Director Compensation Policy.

 

(5)

As of December 31, 2018, Mr. Rose did not have any outstanding RSUs.

 

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  2019 PROXY STATEMENT

 

 

  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

The following table sets forth information regarding beneficial ownership of more than 5% of the outstanding shares of any class of the Corporation’s voting securities, which information is derived solely from certain SEC filings available as of March 18, 2019, as noted below. The percentages of Common Stock ownership have been calculated based upon [•] shares of Common Stock outstanding as of March 18, 2019.

 

    

Shares of Common
Stock Beneficially
Owned

 

 

Name and Address of Beneficial Owner

 

  

Number

 

    

Percent

 

 

BlackRock, Inc.

55 East 52nd Street

New York, New York 10055

     2,490,106 (1)       [•]%  

The Vanguard Group

100 Vanguard Blvd.

Malvern, PA 19355

     2,304,576 (2)       [•]%  

Capital Research Global Investors

333 South Hope Street

Los Angeles, CA 90071

     1,923,945 (3)       [•]%  

Wells Fargo & Company

420 Montgomery Street

San Francisco, CA 94163

     1,076,512 (4)       [•]%  

FMR LLC

245 Summer Street

Boston, Massachusetts 02210

     1,008,026 (5)       [•]%  

 

(1)

Based solely upon on a Schedule 13G/A filed with the SEC on January 31, 2019 by BlackRock, Inc. reporting beneficial ownership as of December 31, 2018. BlackRock, Inc. reported that it possessed sole power to vote or direct the vote with respect to 2,451,019 of these shares and sole power to dispose or direct the disposition of 2,490,106 of these shares.

 

(2)

Based solely upon a Schedule 13G/A filed with the SEC on February 11, 2019 by The Vanguard Group reporting beneficial ownership as of December 31, 2018. The Vanguard Group reported that it possessed sole power to vote or direct the vote with respect to 27,511 shares, shared power to vote or direct the vote with respect to 2,257 shares, sole power to dispose or direct the disposition of 2,276,551 shares and shared power to dispose or to direct the disposition of 28,025 of these shares.

 

(3)

Based solely upon a Schedule 13G/A filed with the SEC on February 14, 2019 by Capital Research Global Investors reporting beneficial ownership as of December 31, 2018. Capital Research Global Investors reported that it possessed sole power to vote or direct the vote and sole power to dispose or direct the disposition of all of the shares indicated in the table above.

 

(4)

Based solely upon a Schedule 13G filed with the SEC on January 22, 2019 by Wells Fargo & Company reporting beneficial ownership as of December 31, 2018. Wells Fargo & Company reported that it possessed the sole power to vote or direct the vote with respect to 21,987 shares, shared power to vote or direct the vote with respect to 794,546 shares, sole power to dispose or direct the disposition of 21,987 shares and shared power to dispose or direct the disposition of 1,054,525 shares.

 

(5)

Based solely upon a Schedule 13G/A filed with the SEC on February 13, 2019 by FMR LLC reporting beneficial ownership as of December 31, 2018. FMR LLC reported that it possessed sole power to vote none of the shares, shared power to vote none of the shares and sole power to dispose or to direct the disposition of all the shares indicated in the table above.

 

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2019 PROXY STATEMENT  

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT   

 

Security Ownership of Management

The following table sets forth as of March 18, 2019 the beneficial ownership of the Corporation’s Common Stock, including shares as to which a right to acquire ownership exists within the meaning of Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), within 60 days of March 18, 2019, of each director, each nominee for election as director, each named executive officer and all directors and executive officers of the Corporation, as a group. The percentages of ownership have been calculated based upon [•] shares of Common Stock outstanding as of March 18, 2019.

 

    

Amount and Nature of
Beneficial Ownership

 

               

Name

   Shares
Beneficially
Owned(1)
    Unvested
Restricted
Shares(2)
     Total Shares
Beneficially
Owned
     Percent of Class  

Howard M. Berk

     24,287 (3)             24,287        *          

Daniel J. Brestle

     18,287              18,287        *          

Richard J. Dahl

     65,021 (4)             65,021        *          

Larry A. Kay

     20,684 (5)             20,684        *          

Caroline W. Nahas

     27,112              27,112        *          

Douglas M. Pasquale

     6,445 (6)             6,445        *          

Gilbert T. Ray

     8,355              8,355        *          

Lilian C. Tomovich

                         *          

Stephen P. Joyce

     9,290              9,290        *          

Thomas H. Song

           18,090        18,090        *          

Darren M. Rebelez

     108,598       26,595        135,193        *          

John C. Cywinski

     43,724       32,215        75,939        *          

Bryan R. Adel

     53,022       7,417        60,439        *          

Greggory H. Kalvin

     [•]       [•]        [•]        *          

All directors and executive officers as a group (14 persons)

     [•]       [•]        [•]        [•]%         

 

*

Represents less than 1% of the outstanding shares of Common Stock.

 

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  2019 PROXY STATEMENT

 

 

  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

 

(1)

None of the shares have been pledged as security. Share amounts for each of the directors, each nominee for election as director, each named executive officer and for all directors and executive officers as a group include shares subject to stock options that are exercisable within 60 days of March 18, 2019, as follows:

 

Name

 

  

Shares Subject to  

Options  

 

Howard M. Berk

   —  

Daniel J. Brestle

   —  

Richard J. Dahl

   30,334  

Larry A. Kay

   —  

Caroline W. Nahas

   —  

Douglas M. Pasquale

   —  

Gilbert T. Ray

   —  

Lilian C. Tomovich

   —  

Stephen P. Joyce

   —  

Thomas H. Song

   —  

Darren M. Rebelez

   89,790  

John C. Cywinski

   39,250  

Bryan R. Adel

   44,934  

Greggory H. Kalvin

   [•]  

All directors and executive officers as a group (14 persons)

   [•]  

 

    

Directors and certain executive officers also hold RSUs that are not included in the beneficial ownership table because vesting will not occur within 60 days of March 18, 2019. The amounts of RSUs held by non-employee directors as of December 31, 2018 are provided in the section of this proxy statement entitled “Director Compensation” and the amounts of RSUs held by executive officers are provided in the Outstanding Equity Awards at Fiscal Year-End Table.

 

(2)

Unvested RSAs are deemed beneficially owned because grantees of unvested RSAs under the Corporation’s equity compensation plans hold the sole right to vote such shares.

 

(3)

The amount for Mr. Berk does not include 740,545 shares of the Corporation’s Common Stock beneficially owned by MSD SBI, L.P. MSD Capital, L.P. is the general partner of MSD SBI, L.P. and may be deemed to beneficially own securities owned by MSD SBI, L.P. Mr. Berk is a partner of MSD Capital, L.P. and may be deemed to beneficially own securities owned by MSD Capital, L.P. Mr. Berk disclaims beneficial ownership of the shares that may be deemed to be beneficially owned by MSD Capital, L.P., except to the extent of his pecuniary interest therein.

 

(4)

The amount for Mr. Dahl includes 33,332 shares of Common Stock held by the Richard J. Dahl Revocable Living Trust dated 1/20/1995, of which Mr. Dahl serves as Trustee.

 

(5)

The amount for Mr. Kay includes 12,645 shares of Common Stock held by the IRA Trustee for the benefit of Mr. Kay.

 

(6)

The amount for Mr. Pasquale includes 5,090 shares of Common Stock held by the Pasquale Living Trust.

 

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2019 PROXY STATEMENT  

 

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE   

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires that the Corporation’s directors, executive officers and persons who own more than ten percent of the Corporation’s equity securities file reports of ownership and changes in ownership with the SEC. Based on its review of such reports and other information furnished by the directors and executive officers, the Corporation believes that all reports required to be filed pursuant to Section 16(a) of the Exchange Act were filed on a timely basis in 2018 except for one report required to be filed in connection with a transaction for a special retention award granted to Greggory H. Kalvin, the Corporation’s former Senior Vice President, Corporate Controller, in June 2018, and two subsequent reports required to be filed in connection with two transactions for the accrual of dividend equivalent rights on the special retention award in July and October of 2018.

 

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  2019 PROXY STATEMENT

 

 

  EXECUTIVE COMPENSATION

 

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on its review and discussion, the Compensation Committee recommended that the Board of Directors include the Compensation Discussion and Analysis in this proxy statement and the Corporation’s annual report on Form 10-K.

THIS REPORT IS SUBMITTED BY THE

COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

Daniel J. Brestle (Chairman)

Howard M. Berk

Caroline W. Nahas

COMPENSATION DISCUSSION AND ANALYSIS

The following discussion provides an overview and analysis of the Corporation’s compensation programs and policies, the material compensation decisions made under those programs and policies with respect to the Corporation’s named executive officers (the “NEOs”) and the material factors that were considered in making those decisions. Following this Compensation Discussion and Analysis is a series of tables under the heading “Compensation Tables” containing specific data about the compensation earned by or granted to our NEOs in 2018.

The following executive officers were NEOs in 2018:

 

   

Chief Executive Officer, Stephen P. Joyce;

 

   

Chief Financial Officer, Thomas H. Song, who joined the Corporation on May 29, 2018;

 

   

President of the IHOP Business Unit, Darren M. Rebelez;

 

   

President of the Applebee’s Business Unit, John C. Cywinski;

 

   

Senior Vice President, Legal, General Counsel and Secretary, Bryan R. Adel; and

 

   

Former Senior Vice President, Corporate Controller, Greggory H. Kalvin, who served as the Corporation’s Interim Chief Financial Officer from March 15, 2017 to May 29, 2018. Mr. Kalvin ceased service as our Senior Vice President, Corporate Controller as of February 20, 2019 and separated from the Corporation on March 8, 2019.

 

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2019 PROXY STATEMENT  

 

 

EXECUTIVE COMPENSATION   

 

Executive Summary

2018 Fiscal Year Performance Highlights and Link to Pay Decisions

Our compensation decisions for 2018 were driven by our overarching goal of creating long-term stockholder value and linking pay with performance. While 2017 was a transitional year, in 2018, the Corporation delivered against its strategic priorities to enhance brand relevance, build momentum at Applebee’s and IHOP, and return the Corporation to growth. 2018 performance was notably strong across several key metrics:

 

LOGO

STOCK PRICE APPRECIATION

 

LOGO

ADJUSTED EARNINGS PER SHARE (AEPS)

 

LOGO

SAME RESTAURANT SALES

Year over year growth calculated based on the Corporation’s stock price on the last trading day of each period  

AEPS calculated as total adjusted net income available to common stockholders divided by weighted average diluted shares.

 

AEPS is a non-U.S. GAAP measure. Reconciliation of U.S. GAAP earnings per share to AEPS is provided in Appendix C

  Percentage change in sales in 2018 compared to the same period of 2017 for domestic restaurants operated during both years and open for at least 18 months

 

   

Applebee’s full year same restaurant sales performance was the best annual performance Applebee’s has posted in 25 years. Applebee’s also delivered the best traffic growth for the domestic Applebee’s Business Unit in over 11 years, exceeding target performance by 2.25%.

 

   

Domestic Net Franchise Restaurant Development for the IHOP Business Unit continued at an impressive rate with net development of 34 restaurants, marking at least a decade of consecutive net development growth for IHOP.

 

   

Both Applebee’s and IHOP’s same restaurant sales performance outperformed their respective categories.

 

   

The Corporation returned $84.7 million to stockholders via dividends and stock repurchases in 2018.

 

   

Dine Brands, Applebee’s and IHOP operating profit performance all exceeded target levels under our 2018 annual cash incentive plan.

 

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  EXECUTIVE COMPENSATION

 

We believe that the Corporation’s 2018 compensation results were commensurate with the Corporation’s strong performance in 2018, demonstrating a commitment to a pay for performance philosophy.

 

   

The Corporation’s 2018 annual cash incentive plan paid out at approximately 130% of target for Dine Brands, 163% of target for the Applebee’s Business Unit and 114% of target for the IHOP Business Unit. The long-term cash incentive plan for performance years 2016 to 2018 paid out at 83.2% of target.

 

LOGO

Annual Cash Incentive Plan Payout

  LOGO Cash LTIP Payout (as a percentage of target)

 

 

For complete information regarding the Corporation’s 2018 performance, stockholders should read “Management’s Discussion and Analysis of Results of Operation and Financial Condition” and the audited consolidated financial statements and accompanying notes thereto contained in the Corporation’s 2018 annual report on Form 10-K filed with the SEC on February 21, 2019, which is being made available to stockholders with this proxy statement.

 

   

Despite the positive performance results for 2018 and the corresponding increase in payouts under our 2018 annual cash incentive and 2016 – 2018 long-term cash incentive plan, certain NQSOs granted in prior years continue to be underwater and the value of certain RSAs granted in prior years is less than the value at the time of grant. The Corporation believes this reflects a long-term pay for performance alignment as long-term incentive compensation granted in prior years continues to align with the stock price performance of the Corporation during those years.

Compensation Policies, Practices and Risk Management

The Compensation Committee, along with the Chief Executive Officer and the Senior Vice President, Chief People Officer, continually assess the Corporation’s compensation policies and practices to evaluate whether they remain aligned with the Corporation’s pay-for-performance culture, the creation of long-term stockholder value, effective risk management and strong governance practices.

The Compensation Committee believes that, through a combination of risk-mitigating features and incentives guided by relevant market practices and corporate-wide goals, our compensation policies and practices do not present risks that are reasonably likely to have a material adverse effect on the Corporation. The Compensation Committee believes that appropriate safeguards are in place with respect to compensation policies and practices that assist in mitigating excessive risk-taking that could harm the value of the Corporation or reward poor judgment by the Corporation’s executives and other employees.

The Compensation Committee’s independent compensation consultant, Exequity LLP (“Exequity”), conducted a risk assessment in 2018 of the Corporation’s compensation policies and practices as they apply to all employees, including the

 

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2019 PROXY STATEMENT  

 

 

EXECUTIVE COMPENSATION   

 

NEOs. Exequity reviewed the design features and performance metrics of the Corporation’s cash and stock-based incentive programs along with the approval mechanisms associated with each and determined that the Corporation’s policies and practices were unlikely to create risks that are reasonably likely to have a material adverse effect on the Corporation.

The following actions, practices and policies are intended to provide for continued alignment with the Corporation’s principles and/or reduce the likelihood of excessive risk-taking:

 

   

The Compensation Committee reviews Chief Executive Officer pay-for-performance alignment by evaluating the Chief Executive Officer’s compensation relative to the Corporation’s total stockholder return (“TSR”) performance over the last five years.

 

   

Directors and officers of the Corporation are subject to stock ownership guidelines.

 

   

The Corporation’s compensation mix is balanced among fixed components such as salary and benefits, and variable compensation such as annual cash incentive payments and long-term incentive awards including NQSOs, RSAs and participation in the cash long-term incentive plan (“cash LTIP”), which generally vest or are earned over three years.

 

   

The Corporation’s annual cash incentive plan and three-year cash LTIP both have capped payment opportunities and primarily reward achievement for different performance metrics. Further, the cash LTIP is measured against an index of publicly-traded restaurant companies and, beginning in 2018, a second financial performance metric – average adjusted earnings per share over the performance period.

 

   

The Compensation Committee has ultimate authority to determine, and increase or decrease, if appropriate, compensation provided to the Corporation’s executive officers, including each of the NEOs.

 

   

The Compensation Committee annually undertakes a “tally sheet” analysis of total annual compensation and the total potential payout under various termination scenarios for the NEOs.

 

   

The Corporation maintains a Clawback Policy, which allows the Board of Directors to recoup incentive compensation in certain circumstances. See “Clawback Policy” for further details on the Corporation’s policy.

 

   

All employees, including our NEOs, and the Board of Directors are subject to the Corporation’s Insider Trading Policy, which contains a prohibition on engaging in hedging and pledging transactions involving the Corporation’s securities.

 

   

The Compensation Committee has set the grant date for annual equity awards to be the close of business on the second full business day after our announcement of fiscal year-end earnings.

 

   

The Compensation Committee utilizes the services of an independent compensation consultant who does not provide any other services to the Corporation and has the authority to retain any advisor it deems necessary to fulfill its obligations.

 

   

The Corporation’s equity compensation plans do not permit repricing of previously granted stock options without stockholder approval.

 

   

The Corporation has not authorized any multi-year guaranteed bonuses.

 

   

The Corporation does not provide tax “gross-ups” on severance payments or perquisites other than certain expenses related to relocation.

Overview of Executive Compensation Philosophy and Objectives

The Compensation Committee has structured the Corporation’s executive compensation programs to align with a compensation philosophy that is based on several objectives, including:

 

   

Instilling an ownership culture and linking the interests of the NEOs with those of the Corporation’s stockholders;

 

   

Paying for performance;

 

   

Rewarding executives for achievement of both annual and longer-term financial and key operating goals of the Corporation; and

 

   

Facilitating the attraction, motivation and retention of highly talented, entrepreneurial and creative executive leaders.

 

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  2019 PROXY STATEMENT

 

 

  EXECUTIVE COMPENSATION

 

The Role of the Compensation Committee

Under its charter, the Compensation Committee has the sole authority to determine and approve compensation for the Corporation’s NEOs and other executive officers. In addition, the Compensation Committee, which is comprised solely of independent directors and reports regularly to the Board of Directors, reviews and approves compensation and benefits programs including grants made pursuant to the Corporation’s equity compensation plans, oversees the Corporation’s

executive compensation philosophy and strategy, ensures that proper due diligence, deliberations, and reviews of executive compensation are conducted and oversees risks related to the Corporation’s compensation practices. The Compensation Committee is also responsible for reviewing the compensation for the members of the Board of Directors and submits any recommended changes for approval by the Board of Directors.

The Compensation Committee reviews the Corporation’s executive compensation plans throughout the fiscal year. Decisions concerning annual salary increases, the approval of annual cash incentives, the design and objectives of each year’s incentive plan and the granting of long-term incentive (“LTI”) awards are typically made in the first quarter of each fiscal year after a series of meetings among the Compensation Committee, its compensation consultant, the Chief Executive Officer and the Senior Vice President, Chief People Officer. The Compensation Committee also performs a “tally sheet” analysis which provides the Compensation Committee with information related to total annual compensation of each NEO and the potential payout each NEO would receive upon separation from the Corporation. The Compensation Committee performs this analysis on an annual basis as part of its oversight function with respect to executive compensation.

The general practice of the Compensation Committee has been to evaluate annually the performance of the Chief Executive Officer and the other executive officers and approve compensation based on this evaluation. As it relates to the assessment of the Chief Executive Officer’s performance, the Chairman of the Board of Directors and the chairs of the Compensation Committee and the Nominating and Corporate Governance Committee discuss annual performance goals with the Chief Executive Officer and conduct an annual performance review and compensation discussion.

In addition, the Compensation Committee annually determines the compensation of the other executive officers based on evaluations of their respective performance.

Generally, the Chief Executive Officer and the Senior Vice President, Chief People Officer provide input to the Compensation Committee in connection with its compensation deliberations except with regard to decisions concerning themselves:

 

   

The Chief Executive Officer provides assessments of each NEO’s performance against specific objectives and overall contributions, potential future contributions and retention risk;

 

   

Based on the assessment described above, as well as the market data provided by the Compensation Committee’s independent consultant, the Chief Executive Officer and the Senior Vice President, Chief People Officer make recommendations to the Compensation Committee regarding executive compensation for each of the other NEOs; and

 

   

In instances where new executives are hired, the Chief Executive Officer and the Senior Vice President, Chief People Officer discuss available information regarding compensation provided at the executive’s current or former employer, internal and external compensation benchmarking data, skill set and qualifications, and make recommendations for new executive pay packages to the Compensation Committee.

The Role of the Compensation Consultant

The Compensation Committee has the sole authority to retain or terminate a compensation consultant to assist in carrying out its responsibilities. Accordingly, during 2018, the Compensation Committee directly engaged Exequity as its independent compensation consultant to provide objective and expert analyses, advice, and information with respect to executive compensation. In performing its services, Exequity interacted collaboratively with the Compensation Committee and with senior management at the direction of the Compensation Committee. In 2018, Exequity performed the following services:

 

   

Provided executive compensation benchmarking data (as described below);

 

   

Provided analysis and advice regarding annual incentive plan design;

 

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2019 PROXY STATEMENT  

 

 

EXECUTIVE COMPENSATION   

 

 

   

Provided analysis and advice regarding LTI plan design;

 

   

Conducted a non-employee director compensation analysis;

 

   

Assisted with stock plan modeling and design in connection with the 2019 Stock Incentive Plan proposal;

 

   

Responded to other requests including, conducting a Chief Executive Officer pay-for-performance analysis, a risk assessment, peer group analysis, a stock ownership guidelines analysis, and advising on various governance and regulatory developments; and

 

   

Advised on compensation for executive officers, excluding Mr. Joyce whose 2018 compensation was set when he joined the Corporation in 2017.

Exequity did not provide any additional services to the Corporation during 2018 beyond those provided in the capacity of independent compensation consultant to the Compensation Committee. The Compensation Committee has assessed the independence of Exequity pursuant to the rules of the SEC and concluded that Exequity’s work for the Compensation Committee does not raise any conflicts of interest.

Compensation Benchmarking and Peer Group

The Corporation uses a restaurant peer group and compensation surveys for different benchmarking comparisons, including base salary, target annual cash incentive, LTI awards and total direct compensation opportunity (“TDCO”). The Compensation Committee, with input from its independent compensation consultant and management, periodically reviews its peer group (the “NEO Peer Group”) for the purpose of evaluating executive compensation.

The Corporation’s significantly franchised business model is uncommon amongst its peer group. The majority of the peer companies have a significant number of company-owned restaurants. We believe our significantly franchised business model requires less capital investment and general and administrative overhead, generates higher gross profit margins and reduces volatility of adjusted free cash flow performance as compared to owning company-operated restaurants. In acknowledging the structural differences, the Compensation Committee considers a variety of metrics in evaluating the NEO Peer Group which includes but is not limited to revenues, system-wide sales, market capitalization and enterprise value and the ratio of these metrics per employee. The Corporation ranked in the first quartile in revenues and market capitalization, second quartile in enterprise value, and the top quartile in system-wide sales. The NEO Peer Group consists of companies in the Corporation’s industry and companies with similar business models in related industries that the Compensation Committee believes to approximate the Corporation’s general labor market for top executive talent.

The NEO Peer Group used for evaluating 2018 compensation decisions consisted of the companies set forth below. Several changes were made to the NEO Peer Group during 2018 to account for acquisitions impacting former peer group companies (Bob Evans Farms, Inc., Buffalo Wild Wings, Inc. and Ruby Tuesday, Inc.). Bloomin’ Brands, Inc., Choice Hotels International, Inc. and Wyndham Hotels and Resorts, Inc. were added to the NEO Peer Group for 2018 as they satisfied the selection criteria noted above.

 

•  Bloomin’ Brands Inc.

  

•  Denny’s Corporation

  

•  Red Robin Gourmet Burgers, Inc.

•  BJ’s Restaurants, Inc.

  

•  Domino’s Pizza, Inc.

  

•  Sonic Corp.

•  Brinker International, Inc.

  

•  Dunkin’ Brands Group, Inc.

  

•  Texas Roadhouse, Inc.

•  The Cheesecake Factory Incorporated

  

•  Jack in the Box Inc.

  

•  The Wendy’s Company

•  Choice Hotels International, Inc.

  

•  Papa John’s International, Inc.

  

•  Wyndham Hotels and Resorts, Inc.

•  Cracker Barrel Old Country Store, Inc.

     

The NEO Peer Group was the primary data source considered by the Compensation Committee when reviewing total pay levels of the NEOs. The Compensation Committee also considered broader compensation data from the 2018 AON Hewitt US Total Compensation by Industry Survey and the 2018 Chain Restaurant Total Rewards Association Executive and Management Compensation Survey, which provided general industry and restaurant industry pay data on executive positions for companies with comparable sales.

 

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  2019 PROXY STATEMENT

 

 

  EXECUTIVE COMPENSATION

 

The Role of Say on Pay Votes and Stockholder Outreach Efforts

The Corporation provides its stockholders with the opportunity to cast an annual advisory vote on executive compensation (say on pay). In addition to receiving overall feedback on the Corporation’s compensation programs as part of the annual say on pay proposal, the Board of Directors and management are committed to regular engagement with our stockholders to solicit views and input on important topics including executive compensation. In advance of the 2018 annual meeting of stockholders, the Corporation reached out to stockholders representing approximately 58% of outstanding shares to discuss our Chief Executive Officer’s compensation package and other key executive compensation topics. At the Corporation’s annual meeting of stockholders held in May 2018, approximately 81% of the votes present and entitled to vote at the meeting on the say on pay proposal were voted in favor of the proposal approving the compensation of the NEOs as disclosed in the 2018 proxy statement. This was the highest say on pay vote since the Corporation’s 2015 annual meeting of stockholders. The Compensation Committee believes the 2018 say on pay vote reflects stockholders’ support of the Corporation’s approach to executive compensation, including our Chief Executive Officer’s compensation package, and certain other changes that the Compensation Committee has implemented over the years.

Following the Corporation’s stockholder outreach efforts in connection with the 2018 annual meeting of stockholders, the Corporation continued its engagement by reaching out to 12 of its largest institutional stockholders representing approximately 69% of outstanding shares in November 2018 through February 2019, to discuss key topics including executive compensation. The Corporation had meaningful conversations with key institutional stockholders who accepted our invitation to engage, representing approximately 54% of the Corporation’s outstanding shares. In addition to direct feedback from the Corporation’s stockholders, the Compensation Committee will continue to consider the outcome of the Corporation’s say on pay votes when making future compensation decisions for its NEOs.

Compensation Discussion Related to the Chief Executive Officer

Mr. Joyce joined the Corporation as Chief Executive Officer in September 2017 amidst a challenging environment for casual and family dining and during a transitional time for the Corporation. Given Mr. Joyce’s previous experience and proven track record for returning companies to growth, the Board of Directors identified Mr. Joyce as the best candidate to lead the Corporation in executing its long-term strategy to return the Corporation to a growth company focused on delivering strong results. As such, Mr. Joyce’s overall compensation opportunity was strategically designed to include a significant proportion of front-loaded, performance-contingent equity awards that would be directly linked to the performance of the Corporation.

Mr. Joyce’s compensation package primarily consists of the following:

 

   

an annual base salary of $1,000,000;

 

   

participation in the Corporation’s annual incentive plan with a target payout of 100% of base salary;

 

   

a one-time grant of 75,000 time-based RSUs, which will cliff vest on February 1, 2021 assuming Mr. Joyce remains continuously employed by the Corporation through such date;

 

   

a one-time grant of 350,000 performance- and time-based NQSOs and 175,000 performance- and time-based RSUs, both of which will cliff vest on February 1, 2021 based on Mr. Joyce’s achievement of certain price targets for the Corporation’s common stock and if Mr. Joyce remains continuously employed by the Corporation through such vesting date; and

 

   

a commuting allowance of $125,000 per year subject to an annual 5% increase and a temporary housing allowance of $125,000 per year subject to an annual 3% increase.

In determining the overall compensation package for Mr. Joyce, the Compensation Committee considered the state of the business at the time of Mr. Joyce’s hire, the critical role Mr. Joyce would have in returning the Corporation to growth, and Mr. Joyce’s previous experience and proven track record for returning companies to growth. The Compensation Committee also considered competitive market data and the input of Exequity.

Front-loaded Equity Awards

88% of the front-loaded equity awards granted to Mr. Joyce are tied to stock price performance hurdles that represent a rigorous performance standard and directly align his compensation with the interests of our stockholders.

 

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The performance contingent NQSOs and RSUs are earned in increments based on nine different stock price performance hurdles that are successively more difficult to achieve, with the first stock price hurdle set at $50.00, or approximately 123% of the stock price on the date of grant, and the last stock price hurdle set at $90.00, or approximately 221% of the stock price on the date of grant. In order for each and any of the stock price performance hurdles to be considered satisfied, the closing stock price of the Corporation’s common stock must be at or above the stock price target for a period of 20 consecutive New York Stock Exchange trading days. In addition to satisfying the performance conditions referenced above, Mr. Joyce must remain continuously employed through February 1, 2021 in order for any of the equity awards to vest.

2018 Compensation Decisions

The Compensation Committee did not approve any increase to Mr. Joyce’s base salary for 2018 or 2019. Further, the Compensation Committee did not approve an increase to Mr. Joyce’s target opportunity under the annual cash incentive plan, which remains at 100% of base salary. The equity award grants described above which were made in conjunction with Mr. Joyce’s hire are intended to cover the entire term of his employment agreement. To that end, Mr. Joyce did not receive any additional equity awards in 2018 and did not participate in, or receive any payouts under, the Corporation’s cash LTIP for performance periods covering 2018. Further, the Compensation Committee did not grant Mr. Joyce any long-term incentive awards as part of the 2019 annual grant cycle. The Compensation Committee does not intend to grant Mr. Joyce any additional long-term incentive awards prior to the end of the term of his current employment agreement in February 2021.

In line with the sustained improvement in stock price performance since Mr. Joyce joined as Chief Executive Officer, 90% of the performance conditions tied to Mr. Joyce’s performance-contingent equity awards have been satisfied. As of December 31, 2018, the stock price hurdles associated with the performance conditions that were achieved during 2018 ranged from $50.00 to $85.00, representing 123% and 209%, respectively, of the stock price on the date of grant. Mr. Joyce must remain continuously employed through February 1, 2021 for any of these performance-contingent equity awards to vest. This post-performance vesting requirement facilitates the continued retention of the Chief Executive Officer through the term of his employment agreement and was a primary element considered by the Compensation Committee when designing Mr. Joyce’s performance-contingent equity awards. Further, given the stock-denominated awards, the value of the performance-contingent awards Mr. Joyce receives at the end of the vesting period is directly dependent on the Corporation’s stock price on the vesting date and the continued success of the Corporation under Mr. Joyce’s leadership. Please see the Outstanding Equity Awards at 2018 Fiscal Year-End Table in this proxy statement for additional information.

Please see Elements of the Compensation Program For NEOs section below for additional information regarding Mr. Joyce’s 2018 compensation.

Elements of the Compensation Program For NEOs

The Corporation’s executive compensation program for NEOs generally consists of the following components:

 

   

Base Salary. Base salaries are designed to attract and retain talented executives and to provide a competitive and stable component of income.

 

   

Annual Cash Incentives under the Annual Incentive Plan. Annual cash incentives provide a competitive incentive opportunity for achieving financial performance and operational objectives. Generally, no payouts are made under the annual incentive plan unless these objectives are achieved.

 

   

LTI Awards. LTI awards are composed of NQSOs, RSAs and the cash LTIP with each component representing approximately one-third of the total value awarded, excluding one-time equity awards made in connection with hiring, retention or other non-standard circumstances. Each of the annual LTI components is vested or earned over a three-year period to provide ongoing alignment with stockholders’ interests based on the Corporation’s future stock price performance. Stock options provide value to the executive only if the Corporation’s stock price increases above the grant date price. The value of RSAs increases or decreases with changes in the Corporation’s stock price. The cash LTIP provides payment only if the Corporation’s TSR performance is in the 33rd percentile or greater compared to a group of publicly traded restaurant companies over a three-year performance period, and beginning with the 2018 – 2021 cash LTIP cycle, average AEPS performance meets or exceeds pre-established performance goals over the three-year performance period. Beginning with the 2018 – 2021 cash LTIP cycle, 50% of the cash LTIP will be earned based on the TSR metric and 50% will be earned based on the average AEPS performance metric.

 

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  EXECUTIVE COMPENSATION

 

 

   

Benefits and Other Compensation. Benefits and other compensation programs are provided to protect executive health and safety and provide flexibility and efficiencies that facilitate executive productivity.

The Compensation Committee’s compensation strategy is comprised of a TDCO for each NEO which is defined as base salary, target annual cash incentive and the grant date fair market value of LTI awards.

 

Base Salary   +     Annual Cash
Incentive
  +     Long-Term Incentive   =    

 

Total Direct
Compensation
Opportunity

 

 

The TDCO for each NEO is generally set to fall within the third quartile (i.e., between the 50th and 75th percentiles) of relevant benchmark data. Rather than striving for a single market reference point, the Compensation Committee believes that a broader, third-quartile positioning provides appropriate flexibility in tailoring award opportunities based on a variety of factors such as performance, experience level, internal equity and external competitiveness.

The TDCO for 2018, as reviewed and approved by the Compensation Committee for the NEOs, is listed in the following table. TDCO differs from the total compensation amounts reported in the 2018 Summary Compensation Table in that it includes the target annual cash incentive opportunity while the 2018 Summary Compensation Table includes the amounts actually earned under the 2018 Annual Incentive Plan. Further, TDCO does not include amounts set forth in the “All Other Compensation” column of the 2018 Summary Compensation Table nor does it include one-time equity awards made in connection with hiring, retention or other non-standard circumstances. In addition, TDCO includes the value of the target opportunity under the cash LTIP grant at the time it is awarded whereas the 2018 Summary Compensation Table includes the actual value earned, if any, based upon performance under the cash LTIP after the completion of the performance period.

Total Direct Compensation Opportunity

 

Name

   2018
Base
Salary
($)
   2018 Annual Cash
Target Incentive
($)
   2018 Long-
Term
Incentive
($)
  

2018 Total
Direct Compensation  

Opportunity
($)

Stephen P. Joyce

     $ 1,000,000      $ 1,000,000      $ 0      $ 2,000,000

Thomas H. Song

     $ 500,000      $ 375,000      $ 600,050      $ 1,475,050

Darren M. Rebelez

     $ 622,224      $ 497,779      $ 850,121      $ 1,970,124

John C. Cywinski

     $ 592,250      $ 473,800      $ 825,115      $ 1,891,165

Bryan R. Adel

     $ 475,000      $ 332,500      $ 550,100      $ 1,357,600

Greggory H. Kalvin

     $ 350,000      $ 231,875      $ 250,079      $ 831,954

A significant portion of executive pay has been structured to be contingent on satisfying pre-established performance goals and increasing stockholder value. Accordingly, executives will not realize the incentive portion of their TDCO unless these objectives are satisfied. For the NEOs, excluding Mr. Joyce who did not receive any equity awards in 2018, an average of 65% of 2018 TDCO was linked to performance and/or increasing stockholder value.

Mr. Kalvin’s TDCO does not include the additional $5,500 monthly stipend provided to Mr. Kalvin during the time he served as Interim Chief Financial Officer. Additionally, Mr. Kalvin’s annual cash incentive target was pro-rated at 75% of base salary through May 2018 during the period he served as Interim Chief Financial Officer and 60% of base salary for the remainder of the year. The TDCO for Mr. Song, Mr. Rebelez, Mr. Cywinski and Mr. Kalvin excludes one-time sign-on, special retention or recognition awards granted to such individuals.

See the section entitled “Compensation Decisions Made in 2018” in this proxy statement for additional information regarding the elements of compensation for NEOs.

 

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EXECUTIVE COMPENSATION   

 

The chart below illustrates the 2018 pay mix for the NEOs, excluding Mr. Joyce:

 

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Compensation Decisions Made in 2018

Annual Base Salaries

In setting annual base salaries, the Compensation Committee generally considers benchmarking data derived from a review of the proxy statement disclosures of the NEO Peer Group, the AON Hewitt and Chain Restaurant surveys and, in the case of the NEOs other than the Chief Executive Officer, recommendations and assessments of the performance of the individual NEOs by the Chief Executive Officer. The Compensation Committee uses the market data to establish points of reference to determine whether and to what extent it is establishing competitive levels of compensation for the NEOs. In February 2018, the Compensation Committee set annual base salaries for 2018 as follows:

 

Name

   Former
Base Salary ($)
   New
Base Salary($)
  

Percentage  

Increase  

Stephen P. Joyce

       1,000,000        1,000,000        0.0 %

Darren M. Rebelez

       604,101        622,224        3.0 %

John C. Cywinski

       575,000        592,250        3.0 %

Bryan R. Adel

       475,000        475,000        0 %

Greggory H. Kalvin

       333,733        341,283        2.25 %

Base salary increases for the NEOs were based on individual performance and external market competitiveness.

Mr. Song joined the Corporation in May 2018. The Compensation Committee set Mr. Song’s base salary at $500,000 after considering internal and external benchmarking data, the compensation paid to prior chief financial officers of the Corporation and Mr. Song’s skill set and qualifications relative to those desired by the Corporation. Mr. Kalvin received a $5,500 monthly stipend during his service as Interim Chief Financial Officer which is not reflected in the amounts above. After Mr. Song joined the Corporation as Chief Financial Officer, Mr. Kalvin’s base salary was increased to $350,000 in recognition of his service as Interim Chief Financial Officer. Mr. Adel did not receive an annual base salary increase in February 2018 due to the fact that Mr. Adel’s base salary was previously increased in November 2017 in recognition of the expanded scope of his role to include cyber security, internal audit and franchise administration.

 

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  EXECUTIVE COMPENSATION

 

Performance- and Stock-Based Compensation

Annual Cash Incentives

In early 2018, the Compensation Committee approved the 2018 Annual Incentive Plan to reward executive officers whose performance meets or exceeds the Corporation’s expectations, to provide incentives for excellent future performance that contributes to the Corporation’s success and profitability and to serve as a means by which eligible participants may share in the Corporation’s financial success. The Compensation Committee uses negative discretion to reduce the maximum incentive payout for each NEO based on performance against our pre-established metrics as outlined below.

Pursuant to the 2018 Annual Incentive Plan, the target annual cash incentive amount for each of the NEOs is established as a percentage of base salary based on the participant’s level in the management structure. The 2018 threshold, target, and maximum payout amounts for each NEO are provided in the Grants of Plan-Based Awards in 2018 table. The 2018 threshold, target and maximum percentages for each of the NEOs under the Corporation’s 2018 Annual Incentive Plan were as follows:

 

Name

   Threshold as Percentage
of Base Salary
  Target as Percentage
of Base Salary
 

Maximum as Percentage  

of Base Salary

Stephen P. Joyce

       50 %       100 %       200 %

Thomas H. Song

       37.5 %       75 %       150 %

Darren M. Rebelez

       40 %       80 %       160 %

John C. Cywinski

       40 %       80 %       160 %

Bryan R. Adel

       35 %       70 %       140 %

Greggory H. Kalvin

       33.1 %       66.3 %       132.5 %

Decisions regarding the threshold, target and maximum incentive percentages were made in consultation with Exequity and after consideration of the NEO Peer Group and survey data mentioned above and the desired TDCO pay mix. The Compensation Committee believes the incentive targets to be generally consistent with incentive opportunities at the NEO Peer Group companies for similarly situated executives. Mr. Kalvin’s 2018 target was pro-rated at 75% of base salary through May 2018 during his service as Interim Chief Financial Officer and 60% of base salary for the remainder of the year.

The annual cash incentive for the NEOs is based on a combination of the Corporation’s AEPS, Dine Brands Global, Inc., IHOP, and Applebee’s Operating Profit, Traffic, and Net Franchise Restaurant Development. The Compensation Committee focused the 2018 annual incentive metrics entirely on financial and operating performance metrics to drive an emphasis on delivering results and improving performance. The Compensation Committee pivoted from same restaurant sales to traffic as a primary financial performance metric in order to encourage the brands to drive improved same restaurant sales performance based on guests visiting our restaurants rather than increases to average check. Overall, the Compensation Committee believes the 2018 annual cash incentive metrics reflect the appropriate balance between profitability (60-70%) and growth (30-40%). The annual cash incentive for each of the NEOs may then be decreased or increased based on the individual performance of each executive.

The Compensation Committee uses AEPS as a primary incentive metric as it represents a broad and commonly used measure of financial performance for the Corporation. The Compensation Committee includes Operating Profit as a performance measure because it believes operating profit appropriately incentivizes the business units on items specifically within their control. “Operating Profit” is defined as Segment Profit plus gains on asset dispositions, less Direct G&A and losses on asset dispositions. “Segment Profit” is defined as segment revenues less segment expenses. Direct G&A is defined as general and administrative expenses directly incurred at operating units excluding any allocation of shared service and general corporate overhead. Traffic is a growth performance indicator used by the Corporation and the restaurant industry and provides a measure of the change in the number of guests visiting restaurants. Net Franchise Restaurant Development is a growth performance indicator measuring the number of new restaurants opened during the fiscal year, less any restaurant closings.

 

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EXECUTIVE COMPENSATION   

 

The table below outlines the annual cash incentive metrics and weighting for each of the NEOs for 2018:

 

Name

   Dine Brands
AEPS
 

Dine Brands/

IHOP /

Applebee’s
Business Unit
Operating Profit(1)

  Traffic(2)  

Net

Franchise

Development(3)  

Stephen P. Joyce

       40 %       30 %       30 %    

Thomas H. Song

       40 %       30 %       30 %    

Darren M. Rebelez

       40 %       20 %       20 %       20 %

John C. Cywinski

       40 %       30 %       30 %    

Bryan R. Adel

       40 %       30 %       30 %    

Greggory H. Kalvin

       40 %       30 %       30 %    

 

(1)

Operating profit for Mr. Joyce, Mr. Song, Mr. Adel, and Mr. Kalvin was based on Dine Brands’ operating profit, while Business Unit operating profit for Mr. Rebelez and Mr. Cywinski was based entirely on their respective Business Units.

 

(2)

Traffic performance for Mr. Joyce, Mr. Song, Mr. Adel, and Mr. Kalvin was based 50% on Applebee’s Business Unit performance and 50% on IHOP Business Unit performance, while traffic performance for Mr. Rebelez and Mr. Cywinski was based entirely on their respective Business Units.

 

(3)

The net franchise development metric was only applicable to Mr. Rebelez and was based on net domestic franchise development for the IHOP Business Unit.

For each of the performance metrics, amounts were not paid unless the threshold performance level for that metric was achieved. The threshold, target and maximum payout levels for certain of the performance metrics are illustrated in the table below. Payouts increase incrementally for performance up to a maximum of 200% of an executive’s target annual cash incentive opportunity.

 

Metric

   Threshold   Target   Maximum   Actual
Result
   Percentage of
Target
Achieved
 

Payout  

Percentage  

of Target  

for Metric  

AEPS

     $ 4.43     $ 5.10     $ 5.71     $ 5.37        105.3 %       142 %

Dine Brands Operating Profit

     $ 161.2     $ 182.2     $ 200.4     $ 184.2        101.1 %       100 %

IHOP Business Unit Operating Profit

     $ 149.0     $ 168.4     $ 185.2     $ 169.2        100.5 %       100 %

Applebee’s Business Unit Operating Profit

     $ 80.2     $ 90.6     $ 99.7     $ 96.6        106.6 %       156 %

Domestic IHOP Net Restaurant Development*

                         32              100 %

Payout as a Percentage of an Executive’s Target

       50 %       100 %       200 %                   

 

*

Excludes restaurants opened and/or closed in Hawaii

Traffic growth for the domestic IHOP Business Unit fell short of its target by 0.5%, resulting in a payout percentage of 86% of target. Traffic growth for the domestic Applebee’s Business Unit exceeded target by 2.25%, resulting in a maximum payout of 200% of target.

All metrics were set after consideration of the business environment at the time the metrics were approved and the Corporation’s forward-looking strategic plan. The Compensation Committee established challenging levels such that attainment of the targeted amounts was not assured at the time they were set and would require a high level of effort and execution in order to obtain them.

 

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  EXECUTIVE COMPENSATION

 

The final annual cash incentive amounts under the 2018 Annual Incentive Plan were determined by multiplying the results of the performance metrics that each NEO was measured against by an individual performance modifier for the NEOs. The final annual cash incentive payout amount may be modified upward or downward based on individual performance and other factors deemed relevant by the Compensation Committee. At the end of 2018, Mr. Joyce assessed the performance of each of the NEOs, other than himself, and their overall contribution to the Corporation’s strategy and results and assigned a performance modifier as set forth in the table below:

 

Name

   Performance Modifier  

Thomas H. Song

       1.0

Darren M. Rebelez

       1.0

John C. Cywinski

       1.1

Bryan R. Adel

       1.1

Greggory H. Kalvin

       1.0

Mr. Cywinski’s performance modifier was in recognition of the outstanding performance for the Applebee’s Business Unit in 2018. Mr. Adel’s performance modifier was in recognition of Mr. Adel’s leadership in successfully completing several transactions and bringing to resolution certain matters related to Applebee’s franchisee financial health issues.

The amounts in the table below represent the annual cash incentive paid to each of the NEOs pursuant to the 2018 Annual Incentive Plan and are calculated by multiplying the NEO’s base salary by the target percentage and by the achievement level.

 

Name

   Base Salary    Target as
Percentage of
Base Salary
  Percentage of Incentive
Target Achieved
 

Annual Cash  

Incentive Paid  

Stephen P. Joyce

     $ 1,000,000        100 %       129.52 %     $ 1,295,200

Thomas H. Song

     $ 500,000        75 %       129.52 %     $ 485,700

Darren M. Rebelez

     $ 622,224        80 %       113.81 %     $ 566,522

John C. Cywinski

     $ 592,250        80 %       179.40 %     $ 850,000

Bryan R. Adel

     $ 475,000        70 %       142.86 %     $ 475,000

Greggory H. Kalvin

     $ 350,000        66.3 %       129.52 %     $ 300,325

Mr. Kalvin’s base salary does not include the additional $5,500 monthly stipend provided to Mr. Kalvin during the time he served as Interim Chief Financial Officer. Additionally, Mr. Kalvin’s annual cash incentive target was pro-rated at 75% of base salary through May 2018 during the period he served as Interim Chief Financial Officer and 60% of base salary for the remainder of the year, resulting in a pro-rated target opportunity equal to 66.3%.

In November 2018 and March 2019, Mr. Adel received a special recognition bonus of $50,000 and $200,000, respectively, for his leadership in successfully resolving certain matters regarding Applebee’s franchisee financial health.

Annual Long-Term Incentive or LTI Awards

The Compensation Committee grants each of the NEOs, other than the Chief Executive Officer, a blend of NQSOs, RSAs and cash LTIP awards. The NQSOs vest in equal installments over a three-year period and are exercisable for up to a maximum of ten years. The RSAs typically cliff vest after three years and the cash LTIP payout is based on cumulative TSR against an index of publicly-traded restaurant companies over a three-year performance period, and, beginning in 2018, three-year average AEPS over the performance period. NQSOs have value to the executive only if the Corporation’s stock price increases over the price on the date of grant and the value of RSAs increases or decreases with the changes in the Corporation’s stock price. The 2016 – 2018 and 2017 – 2019 cash LTIP cycles provide payment between zero and 200% of the target award based on the Corporation’s relative TSR performance. The 2018 – 2021 cash LTIP provides payment between zero and 200% of the target award based on the Corporation’s relative TSR performance and three-year average AEPS performance against pre-established performance goals, with each performance metric weighted equally. The performance goals were designed to be challenging but achievable with strong management performance.

 

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For the 2016 – 2018 cash LTIP, the award vested based on the Corporation’s TSR performance within the rankings depicted in the table below:

 

     Relative TSR Ranking at
End of Performance Period
   Payout as a Percentage  
of Target Cash LTIP  

No Payout

       < 33rd Percentile of the Index          0%  

Threshold

       33rd Percentile of the Index          50%  

Target

       50th Percentile of the Index          100%  

Maximum

       80th Percentile of the Index          200%  

For the 2018 – 2021 cash LTIP, the award will vest 50% based on the Corporation’s TSR performance within the rankings depicted above as well as 50% based on the Corporation’s AEPS performance as depicted below. AEPS performance is based on the Corporation’s adjusted earnings per share as determined by the Board of Directors and reported in the Corporation’s audited financial statements.

 

Average Annual AEPS Growth

   Percentage of Target AEPS Growth Units Earned  

<10%

       0 %

10%

       50 %

20%

       100 %

³30%

       200 %

The Compensation Committee believes that this mix of long-term incentives appropriately balances an emphasis on absolute and relative stock price performance and aligns the compensation of our NEOs with the long-term interests of stockholders. The LTI awards are comprised of 34% of the grant date value in NQSOs, 33% of the grant date value in RSAs and 33% of the grant date value in the cash LTIP (at target). The Compensation Committee believes this weighting provides a balanced strategy between stockholder alignment, executive retention, risk and performance.

The Compensation Committee considered a range of factors in setting the value to be awarded to the NEOs, including assessments of individual performance, the potential contributions that each NEO could be expected to make in the future, each NEO’s TDCO, LTI awards previously granted to certain NEOs, the size of awards provided to other individuals holding similar positions in the market data considered by the Compensation Committee, the number of shares which remained available for issuance under the 2016 Stock Incentive Plan and overall accounting expense associated with the awards.

The table below summarizes the grant date value of the annual long-term incentive awards made in 2018 (additional detail regarding long-term incentive awards granted in 2018 can be found in the Grants of Plan-Based Awards in 2018 table in this proxy statement):

 

Name

   Stock Options    Restricted Stock    Cash LTIP at Target   

Total Long-Term

Incentive Opportunity  

Thomas H. Song

     $ 204,042      $ 198,008      $ 198,000      $ 600,050

Darren M. Rebelez

     $ 289,055      $ 280,566      $ 280,500      $ 850,121

John C. Cywinski

     $ 280,555      $ 272,310      $ 272,250      $ 825,115

Bryan R. Adel

     $ 187,037      $ 181,563      $ 181,500      $ 550,100

Greggory H. Kalvin

     $ 85,019      $ 82,560      $ 82,500      $ 250,079

The Compensation Committee increased Mr. Adel’s total LTI opportunity to reflect his expanded role in managing the Corporation’s cyber security, internal audit and franchise administration functions and his leadership role in resolving certain Applebee’s franchisee financial health matters.

 

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  EXECUTIVE COMPENSATION

 

In addition, the Compensation Committee approved several additional LTI awards to various NEOs in 2018:

 

   

In March 2018, the Compensation Committee granted a special retention award for Mr. Rebelez of 8,270 RSAs that will cliff vest after 3 years, 26,670 performance- and time-based RSUs, and 25,330 performance- and time-based options. These performance- and time-based equity awards will vest at the end of three years in amounts based on the Corporation’s achievement of certain stock price targets that are successively more difficult to achieve. The Compensation Committee structured these special retention awards consistent with the structure of Mr. Joyce’s awards to further align Mr. Rebelez with the Corporation’s strategic goal of driving long-term stockholder value. The stock price hurdles for Mr. Rebelez’s performance-contingent awards range from $75 to $90. In line with the significant and sustained improvement in the Corporation’s stock price performance in 2018, approximately 80% of the performance conditions tied to Mr. Rebelez’s performance-contingent equity awards were satisfied as of December 31, 2018. Mr. Rebelez must still remain continuously employed through the third anniversary of the grant date for the performance-contingent equity awards to vest. Further, given the stock-denominated awards, the value of the performance-contingent awards Mr. Rebelez receives at the end of the vesting period is directly dependent on the continued success of the Corporation.

 

   

In June 2018, the Compensation Committee granted a sign-on RSA award for Mr. Song of 13,151 RSAs that will vest 20% on the first, third and fourth anniversaries of the grant date and 40% on the second anniversary of the grant date. The Compensation Committee also approved Mr. Song’s participation in the cash LTIP award for the 2016-2018 and 2017-2019 performance cycles with a target award of $100,000 and $200,000, respectively.

 

   

In June 2018, the Compensation Committee granted a one-time special retention award to Mr. Kalvin of 2,631 cash-settled RSUs. Mr. Kalvin forfeited these awards upon his separation from the Corporation.

 

   

In December 2018, the Compensation Committee granted a special retention award to Mr. Cywinski of 28,575 performance- and time-based RSUs which will vest on March 1, 2022 in amounts based on the Corporation’s achievement of certain stock price targets that are successively more difficult to achieve. The Compensation Committee structured these special retention awards consistent with the performance-contingent design of Mr. Joyce’s and Mr. Rebelez’s awards and to align Mr. Cywinski with the Corporation’s strategic goal of driving long-term stockholder value. The stock price hurdles with respect to Mr. Cywinski’s performance-contingent awards range from $85 to $105. As of December 31, 2018, none of the performance conditions tied to Mr. Cywinski’s performance-contingent equity awards were satisfied.

2016—2018 Cash LTIP Payout

Demonstrating the Corporation’s pay-for-performance philosophy and the direct link between pay and the Corporation’s stock price performance, no payouts were made under the cash LTIP for the prior three performance periods. Performance and payouts under the 2016-2018 performance period and prior performance periods were as follows:

 

Performance Period

   Dine
Brands
TSR
  Restaurant Index
Percentile Rank
 

Payout as a  

percentage of  

target award  

2013 - 2015

       40.8 %       27.0 %       0 %

2014 - 2016

       4.6 %       20.5 %       0 %

2015 - 2017

       -40.3 %       2.7 %       0 %

2016—2018

       -8.5 %       44.3 %       83.2 %

 

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EXECUTIVE COMPENSATION   

 

For the 2016-2018 cash LTIP cycle, the Corporation’s TSR performance achieved a percentile rank of 44.3% relative to the companies included in the index of publicly-traded restaurant companies during the three-year performance period. The amounts in the table below represent the target cash LTIP incentive and actual amounts paid to the NEOs pursuant to the 2016-2018 cash LTIP. Mr. Joyce is not eligible to participate in the cash LTIP and did not participate in the 2016-2018 cash LTIP cycle.

 

Name

   2016 - 2018
Target Award
  

2016 - 2018  

Payout  

(83.2% of Target)  

Thomas H. Song

     $ 100,000      $ 83,200

Darren M. Rebelez

     $ 272,250      $ 226,512

John C. Cywinski

     $ 200,000      $ 166,400

Bryan R. Adel

     $ 148,500      $ 123,552

Greggory H. Kalvin

     $ 74,250      $ 61,776

Compensation Decisions Related to Management Transitions

In addition to the above compensation granted to Mr. Song in connection with his hire as Chief Financial Officer, the Compensation Committee also granted Mr. Song a $200,000 cash sign-on bonus and sign-on equity valued at approximately $1,000,000 after taking into consideration the equity awards Mr. Song forfeited when departing from his former employer.

Mr. Kalvin separated from the Corporation in March 2019 and was eligible for retirement treatment under the Corporation’s policies. In connection with Mr. Kalvin’s separation and in exchange for a general release of all claims and liabilities against the Corporation, Mr. Kalvin received the following separation package:

 

   

12 months’ base salary;

 

   

An amount equal to Mr. Kalvin’s bonus under the annual cash incentive plan for 2019, pro-rated through the portion of the performance period that elapsed prior to Mr. Kalvin’s separation and based on actual performance during the performance period;

 

   

Full vesting of all outstanding NQSOs and RSAs (Mr. Kalvin’s cash-settled restricted stock unit award granted in June 2018 was forfeited upon his separation);

 

   

An extended exercise period for all stock options held by Mr. Kalvin of the earlier of five years or the natural expiration of the stock options;

 

   

Eligibility to receive payouts under the long-term cash-based performance awards held by Mr. Kalvin based on actual performance during the applicable performance period, to be paid to Mr. Kalvin at the time such award would have been paid had Mr. Kalvin remained employed with the Corporation through such date; and

 

   

Standard outplacement and COBRA benefits.

Stock Ownership Guidelines

The Corporation maintains robust stock ownership guidelines that are intended to further the Compensation Committee’s objectives of aligning the financial interests of its executives with those of the Corporation’s stockholders. The stock ownership guidelines call for each NEO to accumulate a minimum number of shares equal in value to a multiple of their base salary. For purposes of the guidelines, stock ownership includes Common Stock owned directly, in-the-money value of exercisable NQSOs, RSAs, and stock-settled RSUs. The types and amounts of stock-based awards are intended, in part, to facilitate the accumulation of sufficient shares by the Corporation’s executives to allow them to meet the stock ownership guidelines.

The Compensation Committee annually reviews each NEO’s progress towards meeting the stock ownership guidelines. The Compensation Committee has informed management that it may reduce or choose not to grant future stock-based compensation to any executive who fails to make reasonable progress towards meeting the stock ownership goals within five

 

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years from becoming subject to the guidelines. Based upon its October 2018 review of each NEO’s equity holdings in the Corporation, the Compensation Committee determined that each NEO met, exceeded or was on schedule to meet his guideline as outlined in the following table:

 

Name

   Guideline as a
Multiple of Base Salary
   Holdings as a
Multiple of Base Salary(1)
   Guideline Status  

Stephen P. Joyce

       6        14.2        Meets Guideline  

Thomas H. Song(2)

       4        2.0        On Schedule  

Darren M. Rebelez

       4        6.4        Meets Guideline  

John C. Cywinski

       4        4.0        Meets Guideline  

Bryan R. Adel

       2        2.7        Meets Guideline  

Greggory H. Kalvin

       2        3.4        Meets Guideline  

 

(1)

Based upon holdings in the shares of common stock of the Corporation and one-year average daily price per share of the Corporation’s common stock from October 2, 2017 to October 1, 2018.

 

(2)

Mr. Song has until June 1, 2023 to meet his stock ownership guideline.

Clawback Policy

To the extent permitted by governing law, in the event that (i) the Corporation is required to make a material restatement of its financial statements as a result of fraudulent behavior or material intentional misconduct on the part of the Corporation’s current or former (a) Chief Executive Officer, (b) executive officers subject to Section 16 of the Exchange Act or (c) other executive officers who report directly to the Chief Executive Officer and (ii) any incentive compensation was paid to any of these individuals based upon achievement of certain financial results and in reliance upon the financial statements to be restated, then the Board of Directors of the Corporation may, in its sole discretion and upon making a determination that it would be in the best interest of the Corporation to do so, direct the Corporation to make reasonable efforts to seek reimbursement of any such incentive compensation paid within the past three years from the date of the restatement to the extent it exceeds the amounts that would have been earned under the restated financial statements. This policy shall apply in addition to any right of recoupment against the Chief Executive Officer and Chief Financial Officer pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 or other applicable law or regulation. The Compensation Committee expects that it will review and modify the policy as may be required to comply with NYSE listing standards based on SEC rules if and when finalized.

Hedging and Pledging Restrictions

The Corporation’s Insider Trading Policy prohibits all employees and directors from pledging the Corporation’s securities as collateral and entering into transactions to hedge the value of the Corporation’s securities owned by individuals subject to the policy.

Employment Agreements and Change in Control Provisions

Employment Agreements

The Corporation enters into employment agreements with certain executives when it determines that an employment agreement is desirable for the Corporation to obtain a measure of assurance as to the executive’s continued employment in light of prevailing market competition for the particular position held by the executive officer, or where the Compensation Committee determines that an employment agreement is necessary and appropriate to attract an executive in light of market conditions, the prior experience of the executive or practices at the Corporation with respect to other similarly situated employees.

Mr. Joyce is a party to an employment agreement with the Corporation. The employment agreement calls for a term beginning on September 12, 2017 and ending on February 1, 2021 with no automatic extensions. The Corporation may terminate the agreement at any time, with or without cause upon written notice to the executive. The employment

 

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agreement provides for a base salary, a target annual cash incentive opportunity of 100% of base salary for eligible participation years (2018, 2019 and 2020) and certain other perquisites and benefit programs. The employment agreement does not contain multi-year incentive guarantees or tax gross-ups. The employment agreement contains confidentiality, trade secrets, discoveries and non-solicitation provisions.

Mr. Song, Mr. Rebelez and Mr. Cywinski are also parties to employment agreements with the Corporation. The employment agreements call for an initial employment term of three years and provide for automatic successive one-year extensions unless the Corporation or the executive gives notice to the contrary more than 90 days prior to the expiration of the then-current term of the agreement. The Corporation may terminate the agreements at any time, with or without cause upon written notice to the executive. The employment agreements provide for a base salary, a target annual cash incentive opportunity of 75% of base salary and certain other perquisites and benefit programs. The employment agreements do not contain multi-year incentive guarantees or tax gross-ups. The employment agreements contain confidentiality, trade secrets, discoveries and non-solicitation provisions.

Mr. Kalvin was a party to an employment offer letter with the Corporation, effective as of June 21, 2007 and an offer letter in connection with his assumption of the role of Senior Vice President, Corporate Controller, effective as of November 23, 2009. Mr. Kalvin was also party to an offer letter in connection with his assumption of the role of Interim Chief Financial Officer on March 15, 2017. See the Compensation Decisions Related to Management Transitions above for Mr. Kalvin’s severance compensation.

Mr. Adel is party to an employment offer letter with the Corporation, effective as of August 2, 2010.

Under certain termination scenarios, the employment agreements may provide for severance payments, benefits continuation and vesting of outstanding equity-based awards. See “Potential Payments Upon Termination or Change in Control” in this proxy statement for additional information about severance arrangements, including projected severance payment amounts, pursuant to the employment agreements.

Amended and Restated Executive Severance and Change in Control Policy

Mr. Adel participates, and Mr. Kalvin participated prior to his separation from the Corporation, in the Corporation’s Amended and Restated Executive Severance and Change in Control Policy. This policy is intended to increase the retention of the senior leadership team and to provide severance benefits under specified circumstances to certain individuals who are in a position to contribute materially to the success of the Corporation. These arrangements also are intended to facilitate changes in the leadership team by setting terms for the termination of an executive officer in advance, thereby allowing a smooth transition of responsibilities when it is in the best interests of the Corporation. Under certain termination scenarios, the policy may provide for severance payments, benefits continuation and vesting of certain outstanding equity-based awards. The policy does not provide for tax gross-ups. See “Potential Payments Upon Termination or Change in Control” in this proxy statement for additional information about severance arrangements, including projected severance payment amounts, pursuant to the Amended and Restated Executive Severance and Change in Control Policy.

Nonqualified Deferred Compensation Plan

Pursuant to the Deferred Compensation Plan, all NEOs are eligible to defer their base salaries, annual cash incentives, and long-term incentive plan cash distributions. Deferrals are always 100% vested. This plan provides the NEOs with a long-term capital accumulation opportunity. The Deferred Compensation Plan provides a range of investment opportunities and is designed to comply with Section 409A of the Internal Revenue Code (the “Code”). See “2018 Nonqualified Deferred Compensation” in this proxy statement for additional information.

Perquisites

The Corporation provides all NEOs with limited perquisites as part of a competitive total compensation package. The Compensation Committee annually reviews the perquisites provided to the NEOs and approves those personal benefits or perquisites that it deems to be in the Corporation’s best interest in order to induce executives to maintain or accept employment with us.

 

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Annual Physicals. Each NEO is entitled and expected to have an annual physical provided at the Corporation’s cost.

Automobile Allowances. The Corporation pays each of the NEOs an automobile allowance.

Supplemental Life Insurance. The Corporation provides supplemental life insurance for each of the NEOs in addition to paying for life insurance for all eligible employees. NEOs are provided $900,000 in life insurance under the Corporation’s group policy.

Supplemental Disability Insurance. The Corporation provides supplemental disability insurance for each of the NEOs in addition to paying for disability insurance for all eligible employees. The coverage for each NEO generally provides for a benefit equal to 60% of pre-disability earnings subject to a maximum of $25,000 per month.

Tax Preparation Reimbursement. The Corporation may provide tax preparation reimbursement for certain NEOs who are required to file tax returns in multiple states as a result of their employment with the Corporation. The benefit is taxable to the NEO and is intended to encourage the NEO to engage knowledgeable experts to assist with tax preparation.

Other. On a case-by-case basis, the Corporation may provide other perquisites to certain executives from time to time.

See the 2018 Summary Compensation Table for additional details on these perquisites.

 

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COMPENSATION TABLES

Compensation tables and accompanying notes and disclosures for all NEOs are set forth below.

2018 Summary Compensation Table

The following 2018 Summary Compensation Table and accompanying notes set forth information concerning compensation earned by each of the Corporation’s NEOs for the fiscal year ended December 31, 2018, and, to the extent required under applicable SEC disclosure rules, the fiscal years ended December 31, 2017 and 2016.

 

Name & Principal Position

  Year   Salary
($)(1)
  Bonus
($)
  Stock
Awards
($)(2)
  Option
Awards
($)(3)
  Non-Equity
Incentive
Plan
Compensation
($)(4)
  All Other
Compensation
($)(5)
 

Total  

($)  

Stephen P. Joyce

      2018       1,000,000                         1,295,200       275,503       2,570,703  

Chief Executive Officer

      2017       284,615       750,000 (8)       4,826,500 (9)       1,076,000       (10)       76,328       7,013,443  

Thomas H. Song (11)

Chief Financial Officer

      2018       286,538       200,000 (12)       1,198,010 (13)       204,042       568,900       225,893       2,683,383  

Darren M. Rebelez

      2018       619,436             1,763,425 (14)       537,061 (15)       793,034       70,680       3,783,636  

President, IHOP Business Unit

      2017       601,394             280,502       289,004       243,755       34,161       1,448,816  
      2016       584,736             272,336       280,512       256,110       32,396       1,426,090  

John C. Cywinski

      2018       589,596             2,319,309 (16)       280,555       1,016,400       174,434       4,380,294  

President, Applebee’s Business Unit

      2017       457,788       150,000 (17)       1,764,053 (18)       272,003       271,688       631,758       3,547,290  

Bryan R. Adel

      2018       475,000       250,000 (19)       181,563       187,037       598,552       65,835       1,757,987  

Senior Vice President, Legal, General

      2017       445,461             148,542       153,001       256,757       36,463       1,040,224  

Counsel and Secretary

      2016       432,331             148,531       153,007       140,603       35,925       910,397  

Greggory H. Kalvin (20)

      2018       373,080             282,621 (21)       85,019 (22)       362,101       41,781       1,144,602  

Former Interim Chief Financial Officer

      2017       386,590             266,027       68,001       158,160       31,876       910,654  

Senior Vice President, Corporate Controller

      2016       301,130             74,265       76,503       87,921       39,393       579,212  

 

(1)

Represents 26 bi-weekly pay periods during the fiscal years ended December 31, 2016, 2017 and 2018, respectively.

 

(2)

The amounts reported in this column for 2018 represent the aggregate grant date fair value related to the RSAs that were granted as part of the 2018 LTI award and the new hire, promotion, and special retention grants awarded to certain of the NEOs, each computed in accordance with FASB ASC Topic 718. The amounts in the “Stock Awards” column for prior years include the aggregate grant date fair value related to stock awards granted in each of the years shown, computed in accordance with FASB ASC Topic 718. See Note 14 to Consolidated Financial Statements in the Corporation’s annual report on Form 10-K for the year ended December 31, 2018, and Note 13 to the Consolidated Financial Statements in the Corporation’s annual reports on Form 10-K for the years ended 2017 and 2016 for information regarding assumptions underlying the valuation of equity awards granted in 2018, 2017 and 2016. The amounts reported for Mr. Rebelez’s and Mr. Cywinski’s 2018 performance- and time-based RSUs are calculated based on the probable achievement of the vesting conditions at the time of grant. Under FASB ASC Topic 718, the vesting conditions related to Mr. Rebelez’s and Mr. Cywinski’s 2018 performance- and time-based RSUs are considered a market condition and not a performance condition. Accordingly, there is no grant date fair value below or in excess of the amount reflected in the table above for Mr. Rebelez or Mr. Cywinski that could be calculated and disclosed based on achievement of the underlying market condition.

 

(3)

The amounts in the “Option Awards” column include the aggregate grant date fair value related to option awards granted in each of the years shown, computed in accordance with FASB ASC Topic 718. See Note 14 to Consolidated Financial Statements in the Corporation’s annual report on Form 10-K for the year ended December 31, 2018, and Note 13 to the Consolidated Financial Statements in the Corporation’s annual reports on Form 10-K for the years ended 2017 and 2016 for information regarding assumptions underlying the valuation of equity awards granted in 2018, 2017 and 2016. The amounts reported for Mr. Rebelez’s 2018 performance- and time-based NQSOs are calculated based on the probable achievement of the vesting conditions at the time of grant. Under FASB ASC Topic 718, the vesting conditions related to Mr. Rebelez’s 2018 performance- and time-based NQSOs are considered a market condition and not a performance condition. Accordingly, there is no grant date fair value below or in excess of the amount reflected in the table above for Mr. Rebelez that could be calculated and disclosed based on achievement of the underlying market condition.

 

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  COMPENSATION TABLES

 

 

(4)

The amounts in the “Non-Equity Incentive Plan Compensation” column for 2018 include payouts under the 2018 Annual Incentive Plan and the cash LTIP for the 2016 – 2018 performance period. These payout amounts were based on the Corporation’s attainment of certain pre-determined performance targets.

 

Name

   Annual Incentive Plan Award ($)    Cash LTIP Award ($)    Non-Equity Incentive Plan Compensation ($)

Stephen P. Joyce

       1,295,200        N/A        1,295,200

Thomas H. Song

       485,700        83,200        568,900

Darren M. Rebelez

       566,522        226,512        793,034

John C. Cywinski

       850,000        166,400        1,016,400

Bryan R. Adel

       475,000        123,552        598,552

Greggory H. Kalvin

       300,325        61,776        362,101

 

    

For additional information on the amounts earned for 2018, see the section entitled “Performance- and Stock-Based Compensation” in the Compensation Discussion and Analysis section of this proxy statement.

 

(5)

The amounts in “All Other Compensation” for 2018 include amounts paid or reimbursed for the following:

 

Name

  Auto
Allowance
and
Expenses
($)
  401(k) Plan
Contributions
($)
  Relocation
Expenses
($)
 

Housing
and
Commuting
Expenses

($)

 

Life and
Disability
Insurance
Premiums

($)

  Annual
Physical
Exam
($)
  Airline
Club
($)
  Accrued
Vacation
Payout
($)
 

Total  

($)  

Stephen P. Joyce

      15,000                   253,082       6,851             570             275,503  

Thomas H. Song

      8,654             212,034 (6)             2,305       2,900                   225,893  

Darren M. Rebelez

      15,000       13,750                 4,811       3,250             33,869       70,680  

John C. Cywinski

      15,000       2,278       136,781 (7)             6,851                   13,524       174,434  

Bryan R. Adel

      15,000       13,750                   6,851       2,900             27,334       65,835  

Greggory H. Kalvin

      15,000       13,750                   6,851                   6,180       41,781  

 

    

Unless otherwise noted below, amounts for Mr. Joyce’s housing and commuting expenses and Mr. Song and Mr. Cywinski’s relocation expenses are based on amounts actually paid or reimbursed to the NEO or service provider, as applicable.

 

    

Accrued vacation payout amounts represent one-time payments made to NEOs for previously accrued but unused vacation resulting from the Corporation’s adoption of an unstructured vacation policy for certain senior-level employees, including the NEOs.

 

(6)

Mr. Song’s relocation benefits included $90,462 for relocation assistance in the form of expenses for temporary housing, house hunting, and moving and storage of household items and $98,542 related to assistance with the sale of Mr. Song’s residence. Mr. Song’s relocation benefits also include a tax gross-up payment in the amount of $23,030.

 

(7)

Mr. Cywinski’s relocation benefits included a lump sum allowance of $135,000 to assist with relocation and housing expenses for the period of September 1, 2018 through August 31, 2019. The remaining amount was related to reimbursement for other relocation expenses incurred in 2018. Mr. Cywinski’s relocation benefits also include a tax gross-up payment in the amount of $322 in connection with the above relocation benefits.

 

(8)

Represents Mr. Joyce’s sign-on bonus.

 

(9)

Includes sign-on performance- and time-based RSUs and time-based RSUs awarded to Mr. Joyce valued at $1,783,000 and $3,043,500, respectively.

 

(10)

Mr. Joyce was not a participant in the 2017 Annual Incentive Plan.

 

(11)

Mr. Song commenced service as our Chief Financial Officer on May 29, 2018.

 

(12)

Represents Mr. Song’s sign-on bonus which must be reimbursed to the Corporation if Mr. Song voluntarily leaves the Corporation within 12 months of his start date.

 

(13)

Includes sign-on RSAs awarded to Mr. Song valued at $1,000,002.

 

(14)

Includes a special retention grant of performance- and time-based RSUs valued at $920,995 and time-based RSAs valued at $561,864.

 

(15)

Includes a special retention grant of performance-and time-based NQSOs valued at $248,006.

 

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(16)

Includes a special retention grant of performance- and time-based RSUs valued at $2,046,999.

 

(17)

Represents Mr. Cywinski’s sign-on bonus.

 

(18)

Includes the sign-on RSAs awarded to Mr. Cywinski valued at $1,500,040 in 2017.

 

(19)

Represents a special recognition bonus of $50,000 paid to Mr. Adel in November 2018 and a special recognition bonus of $200,000 paid to Mr. Adel in March 2019.

 

(20)

Mr. Kalvin served as the Interim Chief Financial Officer from March 15, 2017 to May 29, 2018. Mr. Kalvin’s base salary includes a $5,500 monthly stipend provided to Mr. Kalvin during his service as Interim Chief Financial Officer.

 

(21)

Includes a special recognition award of cash-settled RSUs awarded to Mr. Kalvin valued at $200,061 for Mr. Kalvin’s service as Interim Chief Financial Officer. All of these awards vested in full on February 27, 2019 in connection with Mr. Kalvin’s separation from the Corporation except for the special recognition cash-settled RSUs which were forfeited upon Mr. Kalvin’s separation.

 

(22)

These NQSOs vested in full on February 27, 2019 in connection with Mr. Kalvin’s separation from the Corporation.

 

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  COMPENSATION TABLES

 

Grants of Plan-Based Awards in 2018

The following table provides information with respect to the plan-based awards granted by the Compensation Committee to the NEOs. Plan-based awards include annual incentive plan awards under the Corporation’s 2018 Annual Incentive Plan (“AIP”), RSAs, RSUs, NQSOs and cash LTIP awards under the 2016 Stock Incentive Plan. For additional information on the performance objectives and determination of threshold, target and maximum payouts for these awards, see the section entitled “Performance- and Stock-Based Compensation” in the Compensation Discussion and Analysis section of this proxy statement. For the actual amounts earned under the AIP awards, see the 2018 Summary Compensation Table in this proxy statement.

 

           

 

 

 

 

Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)

  Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
 

 

All Other
Stock
Awards:
Number of
Shares or
Stock

Units
(#)(2)

 

 

 

All Other
Option
Awards:
Number of
Securities
Underlying

Options
(#)(3)

 

 

Exercise
or Base
Price of
Option

Awards
($/Share)

 

 

Grant Date  

Fair Value  

of Stock and  

Option  

Awards  

($)(4)  

Name /

Type of Award

 

 

Grant
Date

 

 

Approval
Date

 

 

Threshold
($)

 

 

Target
($)

 

 

Maximum
($)

 

 

Threshold
($)

 

 

Target
($)

 

 

Maximum
($)

 

Stephen P. Joyce

                                               

  AIP

            2/13/2018       500,000       1,000,000       2,000,000                                          

Thomas H. Song

                                                     

  AIP

            4/25/2019       187,500       375,000       750,000                                          

  LTIP(5)

            4/25/2019       50,000       100,000       200,000                                          

  LTIP(6)

            4/25/2019       100,000       200,000       400,000                                          

  LTIP

            4/25/2019       99,000       198,000       396,000                                          

  RSA

      6/15/2018       4/25/2019                                           2,604                   198,008

  RSA(7)

      6/15/2018       4/25/2019                                           13,151                   1,000,002

  NQSO

      6/15/2018       4/25/2019                                                 13,935       76.04       204,042

Darren M. Rebelez

                                               

  AIP

            2/13/2018       248,890       497,779       995,558                                          

  LTIP

            2/13/2018       140,250       280,500       561,000                                          

  RSA

      2/22/2018       2/13/2018                                           4,078                   280,566

  RSA

      3/15/2018       2/13/2018                                           8,270                   561,864

  RSU(8)

      3/15/2018       2/13/2018                         6,839       26,670       26,670                         920,995

  NQSO

      2/22/2018       2/13/2018                                           24,554       68.80       289,055

  NQSO(9)

      3/15/2018       2/13/2018                         6,333       25,330       25,330                   67.94       248,006

John C. Cywinski

                                               

  AIP

            2/13/2018       236,900       473,800       947,600                                          

  LTIP

            2/13/2018       136,125       272,250       544,500                                          

  RSA

      2/22/2018       2/13/2018                                           3,958                   272,310

  RSU(10)

      12/6/2018       10/16/2018                         5,715       28,575       28,575                         2,046,999

  NQSO

      2/22/2018       2/13/2018                                                 23,832       68.80       280,555

Bryan R. Adel

                                               

  AIP

            2/13/2018       166,250       332,500       665,000                                          

  LTIP

            2/13/2018       90,750       181,500       363,000                                          

  RSA

      2/22/2018       2/13/2018                                           2,639                   181,563

  NQSO

      2/22/2018       2/13/2018                                                 15,888       68.80       187,037

Greggory H. Kalvin

                                               

  AIP(11)

            2/13/2018       115,938       231,875       463,750                                          

  LTIP(12)

            2/13/2018       41,250       82,500       165,000                                          

  RSA(13)

      2/22/2018       2/13/2018                                           1,200                   82,560

  RSU(14)

      6/15/2018       4/25/2018                                           2,631                   200,061

  NQSO(15)

      2/22/2018       2/13/2018                                                 7,222       68.80       85,019

 

(1)

Please see the section entitled “Performance- and Stock-Based Compensation” in the Compensation Discussion and Analysis section of this proxy statement for additional information regarding the AIP and cash LTIP.

 

(2)

Except where otherwise noted, RSAs reflected in this table cliff vest in full on the third anniversary of the date of grant.

 

(3)

Except where otherwise noted, NQSOs reflected in this table vest and become exercisable as to one-third of the shares subject to the NQSO on each of the first, second and third anniversaries of the date of grant.

 

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2019 PROXY STATEMENT  

 

 

COMPENSATION TABLES   

 

 

(4)

The amounts in this column represent the aggregate grant date fair value related to RSAs, RSUs and NQSO awards granted in 2018 computed in accordance with FASB ASC Topic 718. See Note 14 to Consolidated Financial Statements in the Corporation’s annual report on Form 10-K for the year ended December 31, 2018 for information regarding assumptions underlying the valuation of equity awards.

 

(5)

Represents participation in the 2016-2018 cash LTIP cycle.

 

(6)

Represents participation in the 2017-2019 cash LTIP cycle.

 

(7)

Represents sign-on RSAs awarded to Mr. Song in connection with the commencement of Mr. Song’s employment with the Corporation. These RSAs vest as to 20% on each of June 15, 2019, 2021 and 2022 and 40% on June 15, 2020.

 

(8)

Represents performance-and time-based RSUs which will vest on March 15, 2021 subject to Mr. Rebelez’s continued employment through such date and according to the attainment of certain stock price performance targets. Dividend equivalent rights accrue on the RSUs and vest proportionately with the RSUs to which they relate.

 

(9)

Represents performance- and time-based NQSOs which will vest on March 15, 2021 subject to Mr. Rebelez’s continued employment through such date and according to the attainment of certain stock price performance targets.

 

(10)

Represents performance-and time-based RSUs which will vest on March 1, 2022 subject to Mr. Cywinski’s continued employment through such date and according to the attainment of certain stock price performance targets. Dividend equivalent rights accrue on the RSUs and vest proportionately with the RSUs to which they relate.

 

(11)

Amounts under the AIP are pro-rated based on a target of 75% of base salary through May 2018 while Mr. Kalvin served as Interim Chief Financial Officer and a target of 60% of base salary for the remainder of the year.

 

(12)

Mr. Kalvin will be eligible to receive a payout based on actual performance during the performance period. Amounts due to Mr. Kalvin will be paid at the time such award would have been paid to Mr. Kalvin had he remained employed through the end of the performance period.

 

(13)

These RSAs vested in full on February 27, 2019 in connection with Mr. Kalvin’s separation from the Corporation on March 8, 2019.

 

(14)

Represents cash-settled RSUs which would have vested on June 15, 2021. These RSUs were forfeited in full in connection with Mr. Kalvin’s separation from the Corporation on March 8, 2019.

 

(15)

These NQSOs vested in full on February 27, 2019 in connection with Mr. Kalvin’s separation from the Corporation on March 8, 2019.

 

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  2019 PROXY STATEMENT

 

 

  COMPENSATION TABLES

 

Outstanding Equity Awards at 2018 Fiscal Year-End

The following table provides summary information regarding the outstanding equity awards for the Corporation’s NEOs at December 31, 2018.

 

    Option Awards     Stock Awards      
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Securities Underlying
Unexercised Options

   

Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned

Options (#)

 

   

Option
Exercise
Price

($)

 

   

Option
Expiration

Date

 

   

Number of
Shares or
Units of Stock
That Have
Not Vested

(#)

 

   

Market Value
of Shares or
Units of Stock
That Have
Not Vested

($)(1)

 

   

Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested

(#)

 

   

Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned  
Shares,
Units or
Other
Rights
That
Have Not
Vested

($)(1)

 

     

Name

 

 

Exercisable (#)

 

   

Unexercisable (#)

 

 

 

Stephen P. Joyce

 

 

 

 

 

 

 

 

 

 

  315,000(2)    

 

 

 

 

 

 

 

 

 

 

 

 

40.58

 

 

 

 

 

 

9/12/2027

 

 

    80,011 (4)   

 

 

 

5,387,942

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

 

 
          —               35,000 (3)      40.58       9/12/2027       168,023 (5)      11,314,678       18,669 (8)      1,257,186      
              1,343 (6)      90,443               
              2,180 (7)      146,792               

 

Thomas H. Song

 

 

 

 

 

 

 

 

 

 

  13,935(9)    

 

 

 

 

 

 

 

 

 

 

 

 

76.04

 

 

 

 

 

 

6/15/2028

 

 

 

 

 

 

2,604

 

(10) 

 

 

 

 

175,353

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

 

 
                              13,151 (11)      885,588             —      

 

Darren M. Rebelez

 

 

 

 

16,303

 

 

 

 

 

 

—        

 

 

 

 

 

 

 

 

 

 

 

 

95.81

 

 

 

 

 

 

5/15/2025

 

 

 

 

 

 

6,002

 

(17) 

 

 

 

 

404,175

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

 

 
    13,802       6,900(12)               90.90       2/26/2026       2,996 (18)      201,751             —      
    22,300       44,599(13)               53.49       3/3/2027       5,244 (19)      353,131             —      
          24,554(14)               68.80       2/22/2028       4,078 (20)      274,613             —      
          22,797(15)               67.94       3/15/2028       8,270 (21)      556,902             —      
          —               2,533 (16)      67.94       3/15/2028       24,620 (22)      1,657,899               
          —                                             2,736 (23)      184,211      

 

John C. Cywinski

 

 

 

 

19,625

 

 

 

 

 

 

39,250(24)  

 

 

 

 

 

 

 

 

 

 

 

 

54.82

 

 

 

 

 

 

3/15/2027

 

 

 

 

 

 

4,816

 

(26) 

 

 

 

 

324,309

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

 

 
          23,832(25)               68.80       2/22/2028       20,523 (27)      1,382,019             —      
          —                                 3,958 (28)      266,532             —      
          —                                             28,575 (29)      1,924,241      

 

Bryan R. Adel

 

 

 

 

6,990

 

 

 

 

 

 

—        

 

 

 

 

 

 

 

 

 

 

 

 

52.37

 

 

 

 

 

 

2/28/2022

 

 

 

 

 

 

1,634

 

(33) 

 

 

 

 

110,034

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

 

 
    4,723       —                     72.28       2/26/2023       2,777 (34)      187,003             —      
    6,607       —                     81.57       2/25/2024       2,639 (35)      177,710             —      
    5,210       —                     113.72       2/24/2025                         —      
    7,528       3,764(30)               90.90       2/26/2026                         —      
    11,806       23,611(31)               53.49       3/3/2027                         —      
      15,888(32)               68.80       2/22/2028                         —      

 

Greggory H. Kalvin

 

 

 

 

839

 

 

 

 

 

 

—        

 

 

 

 

 

 

 

 

 

 

 

 

81.57

 

 

 

 

 

 

2/25/2024

 

 

 

 

 

 

817

 

(39) 

 

 

 

 

55,017

 

 

 

 

 

 

 

 

 

 

 

 

—  

 

 

 
    2,895       —                     113.72       2/24/2025       1,234 (40)      83,098             —      
    3,764       1,882(36)               90.90       2/26/2026       3,654 (41)      246,060             —      
    5,247       10,494(37)               53.49       3/3/2027       1,200 (42)      80,808             —      
          7,222(38)               68.80       2/22/2028       2,675 (43)      180,141             —      

 

(1)

Per share value of stock awards is $67.34 based on the closing price of the Common Stock on the NYSE on December 31, 2018.

 

(2)

These NQSOs will become exercisable on February 1, 2021 subject to Mr. Joyce’s continued employment with the Corporation through such date. See Compensation Discussion Related to the Chief Executive Officer in this proxy statement for additional information regarding Mr. Joyce’s performance-contingent NQSOs.

 

(3)

These NQSOs will become exercisable on February 1, 2021 subject to Mr. Joyce’s continued employment with the Corporation through such date and in an amount to be determined based upon the achievement of certain stock price performance targets.

 

(4)

These RSUs will vest on February 1, 2021 subject to Mr. Joyce’s continued employment with the Corporation through such date.

 

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2019 PROXY STATEMENT  

 

 

COMPENSATION TABLES   

 

 

(5)

These RSUs will vest in full on February 1, 2021 subject to Mr. Joyce’s continued employment with the Corporation through such date. See Compensation Discussion Related to the Chief Executive Officer in this proxy statement for additional information regarding Mr. Joyce’s performance-contingent RSUs.

 

(6)

Represents RSUs granted to Mr. Joyce on February 26, 2016 in connection with Mr. Joyce’s service as a member of the Board of Directors. These RSUs vested in full on February 26, 2019.

 

(7)

Represents RSUs granted to Mr. Joyce on March 3, 2017 in connection with Mr. Joyce’s service as a member of the Board of Directors. These RSUs will vest in full on March 3, 2020.

 

(8)

These RSUs will vest in full on February 1, 2021 subject to Mr. Joyce’s continued employment with the Corporation through such date and in an amount to be determined based upon the achievement of certain stock price performance targets.

 

(9)

These NQSOs become exercisable as to one-third on each of June 15, 2019, 2020 and 2021.

 

(10)

These RSAs will vest in full on June 15, 2021.

 

(11)

These RSAs will vest as to 20% on each of June 15, 2019, 2021 and 2022 and 40% on June 15, 2020.

 

(12)

These RSAs vested in full on February 26, 2019.

 

(13)

These NQSOs became exercisable as to one-half on March 3, 2019 and will become exercisable as to one-half on March 3, 2020.

 

(14)

These NQSOs became exercisable as to one-third on February 22, 2019 and will become exercisable as to one-third on each of February 22, 2020 and 2021.

 

(15)

These NQSOs will vest in full on March 15, 2021 subject to Mr. Rebelez’s continued employment with the Corporation through such date. See Annual Long-Term Incentive or LTI Awards in this proxy statement for additional information regarding Mr. Rebelez’s performance-contingent NQSOs.

 

(16)

These NQSOs will become exercisable on March 15, 2021 subject to Mr. Rebelez’s continued employment with the Corporation through such date and in an amount to be determined based upon the achievement of certain stock price performance targets.

 

(17)

These RSAs will vest in full on May 15, 2019.

 

(18)

These RSAs vested in full on February 26, 2019.

 

(19)

These RSAs will vest in full on March 3, 2020.

 

(20)

These RSAs will vest in full on February 22, 2021.

 

(21)

These RSUs will vest in full on March 15, 2021 subject to Mr. Rebelez’s continued employment with the Corporation through such date.

 

(22)

These RSUs will vest on March 15, 2021 subject to Mr. Rebelez’s continued employment with the Corporation through such date. See Annual Long-Term Incentive or LTI Awards in this proxy statement for additional information regarding Mr. Rebelez’s performance-contingent RSUs.

 

(23)

These RSUs will vest on March 15, 2021 subject to Mr. Rebelez’s continued employment with the Corporation through such date and in an amount to be determined based on the achievement of certain stock price performance targets.

 

(24)

These NQSOs will become exercisable as to one-half on each of March 15, 2019 and 2020.

 

(25)

These NQSOs became exercisable as to one-third on February 22, 2019 and will become exercisable as to one-third on each of February 22, 2020 and 2021.

 

(26)

These RSAs will vest in full on March 15, 2020.

 

(27)

These RSAs will vest as to one-third on each of March 15, 2019, 2020 and 2021.

 

(28)

These RSAs will vest in full on February 22, 2021.

 

(29)

These RSUs will vest on March 1, 2022 subject to Mr. Cywinski’s continued employment with the Corporation through such date and in an amount to be determined based upon the achievement of certain stock price performance targets.

 

(30)

These NQSOs became exercisable on February 26, 2019.

 

(31)

These NQSOs became exercisable as to one-half on March 3, 2019 and will become exercisable as to one-half on March 3, 2020.

 

(32)

These NQSOs became exercisable as to one-third on February 22, 2019 and will become exercisable as to one-third on each of February 22, 2020 and 2021.

 

(33)

These RSAs vested in full on February 26, 2019.

 

(34)

These RSAs will vest in full on March 3, 2020.

 

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  COMPENSATION TABLES

 

 

(35)

These RSAs will vest in full on February 22, 2021.

 

(36)

These NQSOs became exercisable on February 26, 2019.

 

(37)

These NQSOs became exercisable as to one-half on March 3, 2019 and the remainder became exercisable on February 27, 2019 in connection with Mr. Kalvin’s separation from the Corporation.

 

(38)

These NQSOs became exercisable as to one-third on February 22, 2019 and the remainder became exercisable on February 27, 2019 in connection with Mr. Kalvin’s separation from the Corporation.

 

(39)

These RSAs vested in full on February 26, 2019.

 

(40)

These RSAs would have vested on March 3, 2020 and vested in full on February 27, 2019 in connection with Mr. Kalvin’s separation from the Corporation.

 

(41)

These RSAs would have vested on April 17, 2020 and vested in full on February 27, 2019 in connection with Mr. Kalvin’s separation from the Corporation.

 

(42)

These RSAs would have vested on February 22, 2021 and vested in full on February 27, 2019 in connection with Mr. Kalvin’s separation from the Corporation.

 

(43)

These cash-settled RSUs would have vested on June 15, 2021 and were forfeited in full in connection with Mr. Kalvin’s separation from the Corporation.

2018 Option Exercises and Stock Vested

The following table provides information on stock option exercises and vesting of stock awards by the NEOs during the fiscal year ended December 31, 2018.

 

    

 

Option Awards

 

 

Stock Awards

Name

   Number of
Shares Acquired
on Exercise
(#)
   Value
Realized on
Exercise
($)(1)
  Number of
Shares Acquired
on Vesting
(#)(2)
   Value
Realized on
Vesting
($)(3)

Stephen P. Joyce.

                    1,086        74,923(4)    

Thomas H. Song

                           —        

Darren M. Rebelez

                    9,101        641,985(5)    

John C. Cywinski

                    6,840        464,710(6)    

Bryan R. Adel

       10,488        338,657 (7)       1,306        90,101(8)    

Greggory H. Kalvin

                    726        50,087(9)    

 

(1)

Represents the difference between the market value of the stock on the exercise date and the exercise price times the number of NQSOs exercised.

 

(2)

Represents the lapsing of restrictions on and the release of RSAs and RSUs granted to the NEO.

 

(3)

Represents the product of the number of shares vested and the closing price of the Corporation’s Common Stock on the NYSE on the vesting date.

 

(4)

Value realized is based on a closing price of $68.99 per share on the February 23, 2018 vesting date.

 

(5)

Value realized is based on a closing price of $70.54 per share on the May 15, 2018 vesting date.

 

(6)

Value realized is based on a closing price of $67.94 per share on the March 15, 2018 vesting date.

 

(7)

NQSO value realized is based on a sell price of $89.50 minus the exercise price of $57.21 on the exercise date of September 6, 2018.

 

(8)

Value realized is based on a closing price of $68.99 per share on the February 23, 2018 vesting date.

 

(9)

Value realized is based on a closing price of $68.99 per share on the February 23, 2018 vesting date.

 

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2019 PROXY STATEMENT  

 

 

COMPENSATION TABLES   

 

2018 Nonqualified Deferred Compensation

Pursuant to the Deferred Compensation Plan, certain highly compensated employees can elect to defer up to 80% of their base salary, 100% of annual cash incentive and 100% of long-term incentive plan distributions instead of receiving these amounts as payments taxable in the year of receipt.

Under the Deferred Compensation Plan, participants may designate select investment options approved by the Compensation Committee administering the Deferred Compensation Plan in which the deferred compensation payments are deemed to be invested. These investment options are not publicly traded and are only available through variable insurance products. Participants have no ownership interest in the investment options they select, as the investment options are used principally to measure gains or losses. Amounts are credited or debited to participant’s account balance in accordance with deferral elections made by the participant. There is no guaranteed investment return on any deferred payment amounts.

The unfunded, nonqualified plan structure of the Deferred Compensation Plan is required in order to preserve the beneficial tax deferral treatment for the participants. Amounts in a participant’s deferral account represent unsecured claims against the Corporation’s assets. Deferred amounts together with any credited investment returns are paid out to participants in accordance with their advance written election either in a lump sum or annual installment payments commencing on the applicable benefit distribution date selected by the participant. No NEOs participated in the Deferred Compensation Plan during 2018 or had account balances as of December 31, 2018.

Employment Agreements and Equity Awards

The employment agreements for Mr. Joyce, Mr. Song, Mr. Rebelez and Mr. Cywinski and the employment offer letters and Amended and Restated Executive Severance and Change in Control Policy for Mr. Adel, and Mr. Kalvin prior to his separation from the Corporation, provide for severance benefits in the event of termination by the Corporation without “cause,” termination by the executive for “good reason” either prior to or following a “change in control,” termination upon a change in control only, termination due to death and termination due to disability.

The award agreements under our 2016 Stock Incentive Plan provide for certain treatment of unvested equity awards upon a recipient’s termination of employment. Our RSA and RSU agreements generally provide for the forfeiture of the entire RSA or RSU award if the recipient does not remain continuously employed through the vesting period, except in the case of (i) disability or death, in which case the recipient shall fully vest in the RSAs or RSUs, or (ii) upon a change in control, in which case the recipient shall fully vest in the RSAs or RSUs subject to certain conditions including a qualifying termination. Our NQSO agreement generally provides that NQSOs may not be exercised after a recipient ceases to be employed or engaged by the Corporation except in the case of (i) death or disability, in which case, the recipient shall fully vest in the NQSOs and shall have 12 months from the date of termination to exercise such NQSOs; (ii) retirement, in which case, the recipient shall fully vest in the NQSOs and shall have five years from the date of retirement to exercise such NQSOs; and (iii) a qualifying termination upon a change in control, in which case, the recipient is eligible to receive, subject to certain conditions, the payment of a lump sum amount in cash equal to the product of the excess of the fair market value of the option over the option exercise price and the number of unexercised option shares.

Employment Agreement with Stephen P. Joyce

The employment agreement between the Corporation and Mr. Joyce provides that, in the event of termination by the Corporation without “cause” or by Mr. Joyce for “good reason” prior to a “change in control,” upon executing a release of claims in favor of the Corporation, Mr. Joyce will be entitled to the following benefits:

 

   

any accrued base salary through the date of termination;

 

   

a lump sum payment equal to two times the sum of his annual base salary, plus the greater of (i) the average of his actual bonus attributable to the prior one, two or three years, depending on Mr. Joyce’s length of service and (ii) Mr. Joyce’s target bonus for the then current fiscal year;

 

   

the annual bonus payout for Mr. Joyce for the year of termination based on actual performance, prorated for the length of service during such year;

 

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  COMPENSATION TABLES

 

 

   

continued insurance coverage for a maximum of 18 months; and

 

   

up to $10,000 in outplacement assistance.

In addition, in the event that such termination is on or prior to September 12, 2019, Mr. Joyce will be entitled to:

 

   

pro-rata vesting based on length of service of all time-based RSUs granted to Mr. Joyce under his employment agreement; and

 

   

pro-rata vesting based on length of service of all performance- and time-based RSUs and performance- and time-based options granted under his employment agreement as to the portion of such equity awards for which performance criteria have been satisfied as of the date of termination pursuant to the terms of Mr. Joyce’s employment agreement.

In the event such termination is after September 12, 2019, then Mr. Joyce will be entitled to:

 

   

full vesting of all time-based RSUs granted to Mr. Joyce under his employment agreement; and

 

   

vesting of performance-based RSUs and performance-based options granted under his employment agreement as to the portion of such equity awards for which performance criteria have been satisfied as if Mr. Joyce remained employed through the end of the term of his employment agreement.

The employment agreement with Mr. Joyce also provides that, in the event of termination by the Corporation without “cause” or by Mr. Joyce for “good reason” within 24 months following a “change in control,” upon executing a release of claims in favor of the Corporation, Mr. Joyce will be entitled to the following benefits:

 

   

a lump sum payment equal to three times the sum of his base salary, plus the greater of (i) the average of his actual bonus attributable to the prior one, two or three years depending on Mr. Joyce’s length of service and (ii) Mr. Joyce’s target bonus for the then current fiscal year;

 

   

continued insurance coverage for a maximum of 18 months; and

 

   

full vesting of all time-based RSUs, performance- and time-based RSUs and performance- and time-based options granted to Mr. Joyce under his employment agreement.

Employment Agreement with Thomas H. Song

The employment agreement between the Corporation and Mr. Song provides that, in the event of termination by the Corporation without “cause” or by Mr. Song for “good reason” prior to a “change in control,” upon executing a release of claims in favor of the Corporation, Mr. Song will be entitled to the following benefits:

 

   

any accrued base salary through the date of termination;

 

   

a lump sum payment equal to the sum of his annual base salary, plus the average of his actual bonus attributable to the prior one, two or three years, depending on Mr. Song’s length of service;

 

   

continued insurance coverage for a maximum of 12 months;

 

   

with respect to equity awards granted to Mr. Song in connection with the commencement of Mr. Song’s employment, full vesting of any unvested time- or service-based stock options, SARs, and other equity-based awards;

 

   

with respect to all other annual equity awards granted to Mr. Song, full vesting of any unvested time- or service-based stock options, SARs, and other equity-based awards that would have vested during the 12-month period following the date of his termination;

 

   

with respect to Mr. Song’s participation in the 2017 – 2019 Cash LTIP and the 2016 – 2018 Cash LTIP, full vesting, with no pro-ration, based on actual performance during such performance periods;

 

   

pro rata vesting of any unvested equity-based or long-term cash-based awards subject to performance-based vesting conditions, other than as set forth above, that would have vested at the end of the performance period, based on actual performance during such performance period;

 

   

the right to exercise any vested stock options or SARs for up to 24 months; and

 

   

up to $10,000 in outplacement assistance.

 

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The employment agreement with Mr. Song also provides that, in the event of termination by the Corporation without “cause” or by Mr. Song for “good reason” within 3 months prior to 24 months following a “change in control,” upon executing a release of claims in favor of the Corporation, Mr. Song will be entitled to the following benefits:

 

   

a lump sum payment equal to two times the sum of his base salary, plus the average of his actual bonus attributable to the prior one, two or three years depending on Mr. Song’s length of service;

 

   

a lump sum payment equal to his prorated bonus for the year of termination based on actual performance through the date of termination;

 

   

continued insurance coverage for a maximum of 24 months;

 

   

full vesting of any unvested stock options, SARs, and other equity-based awards;

 

   

full vesting of any unvested equity-based or long-term cash-based awards subject to performance-based vesting conditions, based on actual performance; and

 

   

the right to exercise any vested stock options or SARs for up to 24 months.

Employment Agreement with Darren M. Rebelez

The employment agreement between the Corporation and Mr. Rebelez provides that, in the event of termination by the Corporation without “cause” or by Mr. Rebelez for “good reason” prior to a “change in control,” upon executing a release of claims in favor of the Corporation, Mr. Rebelez will be entitled to the following benefits:

 

   

any accrued base salary through the date of termination;

 

   

a lump sum payment equal to the sum of his annual base salary, plus the average of his actual bonus attributable to the prior one, two or three years, depending on Mr. Rebelez’s length of service;

 

   

continued insurance coverage for a maximum of 12 months; full vesting of any unvested time- or service-based stock options, SARs, and other equity-based awards that would have vested during the 12-month period following the date of his termination so long as such awards are not considered by the Corporation to be granted in connection with the commencement of Mr. Rebelez’s employment;

 

   

full vesting of any unvested time- or service-based stock options, SARs, and other equity-based awards that would have vested during the 12-month period following the date of his termination for awards that are considered by the Corporation to be granted in connection with the commencement of Mr. Rebelez’s employment so long as termination occurs following the second anniversary of Mr. Rebelez’s start date;

 

   

pro rata vesting of any unvested equity-based or long-term cash-based awards subject to performance-based vesting conditions that would have vested at the end of the performance period, based on actual performance during such performance period;

 

   

the right to exercise any vested stock options or SARs for up to 24 months; and

 

   

up to $10,000 in outplacement assistance.

The employment agreement with Mr. Rebelez also provides that, in the event of termination by the Corporation without “cause” or by Mr. Rebelez for “good reason” within 3 months prior to or 24 months following a “change in control,” upon executing a release of claims in favor of the Corporation, Mr. Rebelez will be entitled to the following benefits:

 

   

a lump sum payment equal to two times the sum of his base salary, plus the average of his actual bonus attributable to the prior one, two or three years depending on Mr. Rebelez’s length of service;

 

   

a lump sum payment equal to his prorated bonus for the year of termination based on actual performance through the date of termination;

 

   

continued insurance coverage for a maximum of 24 months;

 

   

full vesting of any unvested stock options, SARs, and other equity-based awards;

 

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full vesting of any unvested equity-based or long-term cash-based awards subject to performance-based vesting conditions, based on actual performance; and

 

   

the right to exercise any vested stock options or SARs for up to 24 months.

Employment Agreement with John C. Cywinski

The employment agreement between the Corporation and Mr. Cywinski provides that, in the event of termination by the Corporation without “cause” or by Mr. Cywinski for “good reason” prior to a “change in control,” upon executing a release of claims in favor of the Corporation, Mr. Cywinski will be entitled to the following benefits:

 

   

any accrued base salary through the date of termination;

 

   

a lump sum payment equal to the sum of his annual base salary, plus the average of his actual bonus attributable to the prior one, two or three years, depending on Mr. Cywinski’s length of service;

 

   

continued insurance coverage for a maximum of 12 months;

 

   

full vesting of any unvested time- or service-based stock options, SARs, and other equity-based awards that would have vested during the 12-month period following the date of his termination;

 

   

pro rata vesting of any unvested equity-based or long-term cash-based awards subject to performance-based vesting conditions that would have vested at the end of the performance period, based on actual performance during such performance period;

 

   

the right to exercise any vested stock options or SARs for up to 24 months; and

 

   

up to $10,000 in outplacement assistance.

The employment agreement with Mr. Cywinski also provides that, in the event of termination by the Corporation without “cause” or by Mr. Cywinski for “good reason” within 24 months following a “change in control,” upon executing a release of claims in favor of the Corporation, Mr. Cywinski will be entitled to the following benefits:

 

   

a lump sum payment equal to two times the sum of his base salary, plus the average of his actual bonus attributable to the prior one, two or three years depending on Mr. Cywinski’s length of service;

 

   

a lump sum payment equal to his prorated bonus for the year of termination based on actual performance through the date of termination;

 

   

continued insurance coverage for a maximum of 24 months;

 

   

full vesting of any unvested stock options, SARs, and other equity-based awards;

 

   

full vesting of any unvested equity-based or long-term cash-based awards subject to performance-based vesting conditions, based on actual performance; and

 

   

the right to exercise any vested stock options or SARs for up to 24 months.

Amended and Restated Executive Severance and Change in Control Policy

Pursuant to the terms of the employment offer letter for Mr. Adel and the Amended and Restated Executive Severance and Change in Control Policy, if the executive’s employment is involuntarily terminated by the Corporation without “cause” prior to a “change in control,” upon executing a release of claims in favor of the Corporation, the executive will be entitled to the following benefits:

 

   

an amount equal to 12 months’ base salary, plus pro rata bonus; and

 

   

up to $5,000 in outplacement assistance.

 

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The Amended and Restated Executive Severance and Change in Control Policy also provides that in the event the executive’s employment is involuntarily terminated by the Corporation without “cause” within 24 months following a “change in control” or the executive’s employment is voluntarily terminated for “good reason” within 24 months following a “change in control,” upon executing a release of claims in favor of the Corporation, the executive will be entitled to the following benefits:

 

   

an amount equal to 24 months’ base salary, plus the greater of (i) the target bonus for the year in which the termination occurs and (ii) the average of the executive’s actual bonus attributable to the prior three years;

 

   

full vesting of any unvested stock options, restricted stock, other unvested equity awards or grants, and unvested long-term cash-based awards subject to performance-based vesting conditions, based on actual performance;

 

   

up to $5,000 in outplacement assistance; and

 

   

continued insurance coverage for a maximum of 24 months.

Mr. Kalvin was subject to the same terms as Mr. Adel pursuant to the terms of the employment offer letter with Mr. Kalvin and the Amended and Restated Executive Severance and Change in Control Policy. See Compensation Decisions Related to Management Transitions above for more information on Mr. Kalvin’s separation package.

Section 280G of the Code

The employment agreements for Mr. Joyce, Mr. Song, Mr. Rebelez and Mr. Cywinski as well as the Amended and Restated Executive Severance and Change in Control Policy applicable to Mr. Adel provide that if any payment or benefit received by the executive would not be deductible by reason of Section 280G of the Code, then the payment or benefits will be reduced until no portion of such payment or benefits is not deductible by reason of Section 280G of the Code, provided, that no such reduction will be made unless the net after-tax benefit received by the executive after such reduction would exceed the net after-tax benefit received by the executive if no such reduction was made.

Potential Payments Upon Termination or Change in Control

The information below describes and estimates certain compensation that would become payable under existing plans and arrangements assuming the continuing NEO’s employment had terminated or a “change in control” had occurred on December 31, 2018, based on the Corporation’s closing stock price on December 31, 2018. These benefits are in addition to benefits available generally to salaried employees.

Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event and the Corporation’s stock price.

There can be no assurance that a termination or “change in control” would produce the same or similar results as those described if occurring on another date or at another price, or if any assumption used to prepare this information is not correct in fact. Please see “Employment Agreements and Change in Control Provisions” in the Compensation Discussion and Analysis section of this proxy statement for additional information.

 

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The following table presents payments for involuntary termination by the Corporation for reasons other than “cause” or, in the case of Mr. Joyce, Mr. Song, Mr. Rebelez and Mr. Cywinski, voluntary termination by the participant for “good reason” prior to a “change in control.”

 

Payments

   Joyce      Song      Rebelez      Cywinski      Adel      Kalvin  

Cash Severance

   $ 4,000,000      $ 500,000      $ 1,009,325      $ 863,938      $ 475,000      $ 350,000    

Pro-Rata Bonus Payment

   $ 1,295,200                           $ 500,047      $ 300,325    

Time-Vested NQSO Spread Value

                 $ 308,855      $ 245,705               —    

Time-Vested RSA and RSU Value

   $ 3,501,057      $ 885,588      $ 605,925      $ 460,673               —    

Cash LTIP Value

          $ 423,200      $ 607,992      $ 530,940               —    

Performance- and Time-Vested NQSO Spread Value

   $ 5,477,380                                    —    

Performance- and Time-Vested RSU Value

   $ 7,352,219             $ 1,657,899                      —    

Welfare Benefit Value

   $ 35,478      $ 12,204      $ 20,124      $ 23,532               —    

Outplacement

   $ 10,000      $ 10,000      $ 10,000      $ 10,000      $ 5,000      $ 5,000    

Aggregate Payments

   $ 21,671,334      $ 1,830,992      $ 4,220,120      $ 2,134,788      $ 980,047      $ 655,325    

The following table presents payments for involuntary termination by the Corporation for reasons other than “cause” or, in the case of Mr. Joyce, Mr. Song, Mr. Rebelez and Mr. Cywinski, voluntary termination by the participant for “good reason” following a “change in control” (“CIC”).

 

Payments

   Joyce      Song      Rebelez      Cywinski      Adel      Kalvin  

Cash Severance

   $ 6,000,000      $ 1,750,000      $ 2,018,649      $ 1,727,875      $ 1,282,500      $ 910,000    

Pro-Rata Bonus Payment

   $ 1,295,200      $ 485,700      $ 566,522      $ 850,000      $ 475,000      $ 300,325    

Time-Vested NQSO Spread Value due to CIC

                 $ 617,696      $ 491,410      $ 327,012      $ 145,342    

Time-Vested RSA and RSU Value due to CIC

   $ 5,625,177      $ 1,060,942      $ 1,790,571      $ 1,972,860      $ 474,747      $ 645,124    

Cash LTIP Value due to CIC

          $ 687,200      $ 1,079,232      $ 985,460      $ 640,992      $ 295,416    

Performance- and Time-Vested NQSO Spread value due to CIC

   $ 9,366,000                                    —    

Performance-and Time-Vested RSU Value due to CIC

   $ 12,571,865             $ 1,842,110      $ 1,924,241               —    

Welfare Benefit Value

   $ 35,478      $ 24,408      $ 40,248      $ 47,064      $ 48,000      $ 47,064    

Outplacement

   $ 10,000      $ 10,000      $ 10,000      $ 10,000      $ 5,000      $ 5,000    

Aggregate Payments

   $ 34,903,720      $ 4,018,250      $ 7,965,028      $ 8,008,910      $ 3,253,251      $ 2,348,271    

The following table presents payments upon a “change in control” only and no termination of employment.

 

Payments

   Joyce      Song      Rebelez      Cywinski      Adel      Kalvin  

Time-Vested NQSO Spread Value due to CIC

                 $ 617,696      $ 491,410      $ 327,012      $ 145,342    

Time-Vested RSA and RSU Value due to CIC

   $ 5,625,177      $ 1,060,942      $ 1,790,571      $ 1,972,860      $ 474,747      $ 645,124    

Cash LTIP Value due to CIC

          $ 687,200      $ 1,079,232      $ 985,460      $ 640,992      $ 295,416    

Performance-and Time-Vested NQSO Spread value due to CIC

                                        —    

Performance- and Time-Vested RSU Value due to CIC

                                        —    

Aggregate Payments

   $ 5,625,177      $ 1,748,142      $ 3,487,499      $ 3,449,730      $ 1,442,751      $ 1,085,882    

 

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The following table presents payments upon termination of employment due to disability or death.

 

Payments

   Joyce      Song      Rebelez      Cywinski      Adel      Kalvin  

Pro-Rata Bonus Payment

   $ 1,295,200      $ 485,700      $ 566,522      $ 850,000      $ 475,000      $ 300,325    

Time-Vested NQSO Spread Value due to Death or Disability

                 $ 617,696      $ 491,410      $ 327,012      $ 145,342    

Time-Vested RSA and RSU Value due to Death or Disability

   $ 5,625,177      $ 1,060,942      $ 1,790,571      $ 1,972,860      $ 474,747      $ 645,124    

Cash LTIP Value due to Death or Disability

          $ 353,867      $ 607,992      $ 530,940      $ 347,512      $ 162,536    

Performance- and Time-Vested NQSO Spread value due to Death or Disability

   $ 8,429,400                                    —    

Performance- and Time-Vested RSU Value due to Death or Disability

   $ 11,314,678             $ 1,657,899                      —    

Aggregate Payments

   $ 26,664,455      $ 1,900,509      $ 5,240,680      $ 3,845,210      $ 1,624,271      $ 1,253,327    

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following disclosure about the relationship of the annual total compensation of our employees to the annual total compensation of Stephen P. Joyce, our CEO. Consistent with the Compensation Committee’s approach to our executive compensation program, we set compensation using a market-based approach. Accordingly, we strive to create a competitive global compensation program in terms of both the position and the geographic location in which the employee is located. As a result, our compensation program varies amongst each local market in order to allow us to provide a competitive compensation package.

Ratio

For 2018,

 

   

The median of the annual total compensation of all of our employees, other than Mr. Joyce, was $132,375.

 

   

Mr. Joyce’s annual total compensation was $2,589,262. The total used for purposes of the CEO pay ratio differs from the amount reported in the Total column of the 2018 Summary Compensation Table due to the inclusion of the company-paid portion of health insurance premiums, which are excluded for Summary Compensation Table purposes.

 

   

Based on this information, the ratio of the annual total compensation of Mr. Joyce to the median of the annual total compensation of all employees is estimated to be 20 to 1.

Identification of Median Employee

As permitted under the SEC executive compensation disclosure rules, we are electing to use the same median employee that we used for purposes of preparing our 2017 pay ratio disclosure. Since December 31, 2017 (the date used to select the 2017 median employee), there have been no changes in the Corporation’s employee population or employee compensation arrangements that we believe would significantly impact the pay ratio disclosure. As of the December 31, 2017 median employee identification date, we had 501 employees, with 487 employees based in the United States and 14 employees located outside of the United States. The pay ratio disclosure rules provide an exemption for companies to exclude non-U.S. employees from the median employee calculation if non-U.S. employees in a particular jurisdiction account for five percent or less of the Corporation’s total number of employees. The Corporation applied this de minimis exemption when identifying the median employee by excluding 14 employees in the UAE (4 employees), Mexico (8 employees), Canada (1 employee) and the Philippines (1 employee). In determining the median employee, 487 employees in the United States and no employees located outside of the United States were used for the de minimis calculation. In addition, as permitted under the SEC executive compensation disclosure rules, the Corporation excluded from the CEO 2018 pay ratio disclosure 2,765 employees hired in connection with the Corporation’s acquisition of 69 Applebee’s restaurants in December 2018 from a former franchisee.

 

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For purposes of identifying the 2017 median employee from our employee population base, we considered the annual total sum of salary and target bonus, as compiled from our human resources records. We selected these compensation measures as they represent the principal forms of compensation delivered to all of our employees and this information is readily available. In addition, we measured compensation for purposes of determining the median employee using the 12-month period ending December 31, 2017.

Using this methodology, we determined that our median employee was a full-time, salaried employee located in Glendale, California. In determining the annual total compensation of the median employee, such employee’s compensation was calculated in accordance with Item 402(c)(2)(x) of Regulation S-K, as required pursuant to the SEC executive compensation disclosure rules except that we elected to include the company-paid portion of health insurance premiums, which are normally excluded from the calculation of total compensation for purposes of the Summary Compensation Table.

Securities Authorized for Issuance Under Equity Compensation Plans

During 2018, the Corporation issued equity securities pursuant to the 2016 Stock Incentive Plan.

Equity Compensation Plan Information

The following table provides information as of December 31, 2018 about Common Stock that may be issued under the 2016 Stock Incentive Plan.

 

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