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DEF 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)  

Proposed maximum aggregate value of transaction:

 

  (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 2020 Annual Meeting

and Proxy Statement

 

 

 


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2020 PROXY STATEMENT  

 

 

   

 

LOGO

450 North Brand Boulevard

Glendale, California 91203

(866) 995-DINE

April 1, 2020

Dear Fellow Stockholders:

We are pleased to invite you to attend the 2020 Annual Meeting of Stockholders of Dine Brands Global, Inc., which will be held on Tuesday, May 12, 2020, 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) elect the four Class I directors and the three Class II directors identified in this proxy statement (continuing with our phased approach to declassify the Board of Directors); (ii) ratify the appointment of Ernst & Young LLP as our independent auditor for 2020; (iii) approve, on an advisory basis, the compensation of our named executive officers, and (iv) consider a stockholder proposal requesting that the Board of Directors engage an investment banking firm to effectuate a spin-off of our IHOP business unit, if properly presented.

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 election of each of the Class I and Class II 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 AGAINST the stockholder proposal requesting that the Board of Directors engage an investment banking firm to effectuate a spin-off of our IHOP business unit.

As part of our precautions regarding the coronavirus, or COVID-19, we currently expect that the Annual Meeting may be held by means of remote communications. If we take this step, we will announce the decision to do so in advance, and details on how to participate in the meeting will be issued by press release and filed with the SEC as additional proxy material.

Thank you for your continued support of and interest in Dine Brands Global, Inc. We look forward to seeing you on May 12th.

Sincerely yours,

 

LOGO   

LOGO

 

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

 

      


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  2020 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 12, 2020

April 1, 2020

To the Stockholders of Dine Brands Global, Inc.:

NOTICE IS HEREBY GIVEN that the 2020 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 12, 2020, at 8:00 a.m., Local Time, for the following purposes as more fully described in the accompanying proxy statement:

 

  (1)

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

 

  (2)

To ratify the appointment of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ending December 31, 2020;

 

  (3)

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

 

  (4)

To consider a stockholder proposal requesting that the Board of Directors engage an investment banking firm to effectuate a spin-off of the Corporation’s IHOP business unit, if properly presented.

Only stockholders of record at the close of business on March 18, 2020, 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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2020 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 12, 2020

The notice of the Annual Meeting, proxy statement and 2019 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.

 

      


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2020 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 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

     9  

Other Public Corporation Directorships

     9  

Certain Relationships and Related Person Transactions

     9  

Board of Directors Committees and Their Functions

     9  

Board of Directors Nominations

     14  

Stockholder Nominations

     14  

Environmental, Social and Governance Highlights

     14  
Director Compensation      16  

 

Stock Ownership Guidelines

     16  

Director Compensation Table for 2019

     17  
Security Ownership of Certain Beneficial Owners and Management      18  
Executive Compensation      21  

 

Compensation Committee Report

     21  

Compensation Discussion and Analysis

     21  

Compensation Tables

     38  

2019 Summary Compensation Table

     38  

Grants of Plan-Based Awards in 2019

     40  

Outstanding Equity Awards at 2019 Fiscal Year-End

     41  

2019 Option Exercises and Stock Vested

     43  
     Page  

2019 Nonqualified Deferred Compensation

     43  

Employment Agreements

     44  

Potential Payments Upon Termination or Change in Control

     47  

CEO Pay Ratio

     49  

Securities Authorized for Issuance Under Equity Compensation Plans

     50  

Equity Compensation Plan Information

     50  

Compensation Committee Interlocks and Insider Participation

     51  

Executive Officers of the Corporation

     52  
Audit-Related Matters      53  

 

Report of the Audit and Finance Committee

     53  

Independent Auditor Fees

     54  

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

     55  
Matters to Be Voted Upon at the Annual Meeting      56  

 

PROPOSAL ONE: ELECTION OF FOUR CLASS I DIRECTORS AND THREE CLASS II DIRECTORS

     56  

Continuing Directors

     58  

PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG  LLP AS THE CORPORATION’S INDEPENDENT AUDITOR FOR THE 2020 FISCAL YEAR

     59  

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

     59  

PROPOSAL FOUR: A STOCKHOLDER PROPOSAL REQUESTING THAT THE BOARD OF DIRECTORS ENGAGE AN INVESTMENT BANKING FIRM TO EFFECTUATE A SPIN-OFF THE CORPORATION’S IHOP BUSINESS UNIT

     60  
Proposals of Stockholders      62  
Other Business      64  
Appendix A      A1  

 

Reconciliation of Non-GAAP Financial Measures

     A1  
 

 

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2020 PROXY STATEMENT  

 

 

PROXY STATEMENT FOR THE 2020 ANNUAL MEETING OF STOCKHOLDERS   

 

LOGO

450 North Brand Boulevard

Glendale, California 91203

(866) 995-DINE

PROXY STATEMENT FOR THE 2020 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 2020 Annual Meeting of Stockholders (“Annual Meeting”) to be held on Tuesday, May 12, 2020, 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, 2020. 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 2019 annual report to stockholders, which contains the annual report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission (“SEC”) on February 24, 2020.

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

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

Proposal One: The election of the four Class I and three Class II directors identified in this proxy statement.

Proposal Two: The ratification of the appointment of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ending December 31, 2020.

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

Proposal Four: A stockholder proposal requesting that the Board of Directors engage an investment banking firm to effectuate a spin-off of the Corporation’s IHOP business unit.

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

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

 

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

 

    “FOR” the ratification of the appointment of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ending December 31, 2020;

 

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

 

    “AGAINST” the stockholder proposal requesting that the Board of Directors engage an investment banking firm to effectuate a spin-off of the Corporation’s IHOP business unit.
 

 

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  2020 PROXY STATEMENT

 

 

   PROXY STATEMENT FOR THE 2020 ANNUAL MEETING OF STOCKHOLDERS

 

Q: Who is entitled to vote?

A: Only stockholders of record at the close of business on March 18, 2020 (the “Record Date”) will be entitled to receive notice of, and to vote at, the Annual Meeting. As of the Record Date, there were 16,593,808 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 11, 2020. 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 11, 2020. 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. The Corporation is actively monitoring the coronavirus (COVID-19) and is sensitive to the public health and travel concerns stockholders may have as well as the protocols that federal, state, and local governments have imposed. The Corporation currently anticipates that the Annual Meeting may be held by means of remote communication. If we take this step, we will announce alternative arrangements for the meeting as promptly as practicable and will issue a press release with details on how to participate in the meeting and inspect a list of stockholders of record. The press release will be filed with the SEC as additional proxy material. If you are planning to attend the Annual Meeting, please check the Corporation’s website, http://www.dinebrands.com, prior to the meeting date. 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 11, 2020.

 

 

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2020 PROXY STATEMENT  

 

 

PROXY STATEMENT FOR THE 2020 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 election of the four individuals nominated to serve as Class I directors and the three individuals nominated to serve as Class II directors;

 

    “FOR” the ratification of the appointment of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ending December 31, 2020;

 

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

 

    “AGAINST” the stockholder proposal requesting that the Board of Directors engage an investment banking firm to effectuate a spin-off of the Corporation’s IHOP business unit.

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 Two—ratification of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ended December 31, 2020) but cannot vote on non-routine matters (such as Proposal One—the election of the Corporation’s Class I and Class II directors, Proposal Three—the approval, on an advisory basis, of the compensation of the Corporation’s named executive officers, and Proposal Four—stockholder proposal requesting that the Board of Directors engage an investment banking firm to effectuate a spin-off of the Corporation’s IHOP business unit). 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 seven 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 One) 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 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.

 

 

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  2020 PROXY STATEMENT

 

 

   PROXY STATEMENT FOR THE 2020 ANNUAL MEETING OF STOCKHOLDERS

 

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 Two, the ratification of Ernst & Young LLP as the Corporation’s independent auditor for the fiscal year ending December 31, 2020, Proposal Three, the approval, on an advisory basis, of the compensation of the Corporation’s named executive officers, and Proposal Four, the stockholder proposal requesting that the Board of Directors engage an investment banking firm to effectuate a spin-off of the Corporation’s IHOP business unit. 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, 2020. The Notice contains instructions on how to access the Corporation’s proxy materials, including this proxy statement and the Corporation’s 2019 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.

In addition, the Corporation has retained Kingsdale Shareholder Services, U.S. Inc. to assist in the distribution and solicitation of proxies. The Corporation has agreed to pay Kingsdale Shareholder Services, U.S. Inc. a fee of approximately $37,500 plus other solicitation-related expenses.

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, 2020. 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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2020 PROXY STATEMENT  

 

 

CORPORATE GOVERNANCE   

 

CORPORATE GOVERNANCE

Current Board of Directors

At the 2019 annual meeting of stockholders, stockholders approved an amendment to the Corporation’s Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors for one-year terms, commencing upon the expiration of a director’s current term. Stockholders approved a phased-in approach whereby Class I and Class II directors would stand for election at the Annual Meeting, and Class I, Class II and Class III directors would stand for election at the 2021 annual meeting (in each case, until their respective successors are duly elected and qualified). As such, all directors will stand for election beginning at the 2021 annual meeting.

There are currently 10 members of the Board of Directors. We are continuing to refer to directors by class until all directors are declassified following the 2021 annual meeting:

 

Class I

  Class II   Class III

 

Howard M. Berk

 

 

Susan M. Collyns

 

 

Richard J. Dahl

Daniel J. Brestle   Larry A. Kay   Stephen P. Joyce

Caroline W. Nahas

Gilbert T. Ray

 

  Douglas M. Pasquale   Lilian C. Tomovich

Susan M. Collyns was appointed as a director effective August 1, 2019. Ms. Collyns was recommended as a nominee by a non-management director of the Corporation.

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 and Restated 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;

 

   

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; and

 

   

serving as an advisor to management on investor relations matters as necessary and appropriate.

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 of Risk Management, who reports regularly to the Audit Committee and the Board of Directors.

The Audit Committee assists the Board of Directors with oversight of the Corporation’s policies with respect to risk assessment and risk management. In addition, the Audit Committee oversees and evaluates the management of risks associated with accounting, auditing, financial reporting, internal controls over financial reporting, food safety, quality assurance and cybersecurity. The Audit 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 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, Susan M. Collyns, 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, Ms. Nahas, and Ms. Tomovich, 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’ former position as the Vice Chair of Korn/Ferry International (“Korn/Ferry”), her current position as Senior Advisor of 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 $443,680 in 2019 and $362,173 in 2018 for such services. 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.

 

   

Ms. Tomovich’s former position as the Chief Experience Officer and Chief Marketing Officer for MGM Resorts International and the fact that IHOP held its 2019 global franchise conference at the Aria Hotel and Casino, part of the MGM Resorts International portfolio. The Corporation paid Aria Hotel and Casino a total of $902,285 in 2019 in connection with the 2019 global franchise conference and other smaller business meetings held in the ordinary course of business. This amount does not include additional amounts paid directly from vendors and suppliers to the Aria Hotel and Casino in connection with the 2019 global franchise conference. The Board of Directors considered the facts that Ms. Tomovich did not have any direct or indirect involvement with the Corporation’s decision to hold the 2019 global franchise conference at the Aria, Ms. Tomovich did not have a direct or indirect interest in the business relationship between the Corporation and Aria Hotel and Casino, and as of December 2019, Ms. Tomovich is no longer employed by MGM Resorts International.

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 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 Committee; and request from the General Counsel any waivers of the Code of Ethics, which shall be publicly disclosed if required by applicable law.

 

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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 Committee, and any such waiver shall be promptly disclosed to the Corporation’s stockholders. The Board of Directors and the Audit Committee review whether such waivers are in the best interests of the Corporation and its stockholders, taking into account all relevant factors. In 2019, 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.

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 2019 annual meeting of stockholders. The Board of Directors held ten meetings during 2019. During 2019, 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

 

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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, 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.

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 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 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 Committee. The Nominating and Corporate Governance Committee considers 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 Committee provides that it will review any related party transactions and, in doing so, consider the business rationale for the transaction and whether appropriate disclosures should be made. Since January 1, 2019, 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 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.

 

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In August 2019, each of the three standing committees conducted a comprehensive review of their charters and adopted certain meaningful changes to conform with best practices in corporate governance, including the addition of the following responsibilities:

 

   

Audit Committee

 

   

Added the responsibility to review risk assessments from management with respect to food safety and quality assurance.

 

   

Added the responsibility to review and discuss the Corporation’s information technology program, including quality and investment levels, and overall trends in technology applicable to the Corporation.

 

   

Compensation Committee

 

   

Added the responsibility to maintain visibility into, assist with the development of, and monitor progress of programs regarding the Corporation’s organizational culture, including diversity and inclusion.

 

   

Nominating and Corporate Governance Committee

 

   

Added the requirement to consider diversity of gender, race and ethnicity as important factors in developing criteria to be considered in identifying and evaluating director candidates.

 

   

Added the responsibility to review and oversee the Corporation’s actions on issues related to corporate social responsibility, sustainability, philanthropy and other matters associated with the Corporation’s participation as a global corporate citizen.

 

   

Added the responsibility to review and oversee public policy issues to ensure alignment with the Corporation’s long-term strategy and values.

The Audit 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 2019. 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 Committee

Douglas M. Pasquale, Chair

Howard M. Berk

Susan M. Collyns

Richard J. Dahl

Gilbert T. Ray

  

 

•  Appoint and oversee the work of the independent auditor in preparing or issuing an audit report or performing other audit, review or attest services for the Corporation.

 

•  Review and discuss annual audited financial statements and quarterly financial statements, as well as Form 10-Ks and Form 10-Qs. Review and discuss earnings press releases and financial information and earnings guidance provided to analysts and rating agencies.

 

•  Discuss the Corporation’s policies with respect to risk assessment and risk management and review and evaluate the guidelines and policies developed and implemented by management with respect to risk assessment and risk management. Oversee and review with the Board of Directors risk and risk mitigation associated with the Committee’s purpose and areas of responsibility, including accounting, auditing, financial reporting and internal controls over financial reporting. Review and discuss with the Board of Directors, at least annually and at the Board of Directors’ request, issues relating to the assessment and mitigation of major financial risks affecting the Corporation.

 

 

Meetings in 2019

 

  

•  Review risk assessments from management with respect to cybersecurity and oversee the

Seven Meetings

  

   Corporation’s cybersecurity risk management processes. Review risk assessments from

   management with respect to food safety and quality assurance.

 

•  Review the scope, progress and results of the internal audit program, including significant findings and recommendations and management’s responses.

 

•  Review the Corporation’s program to monitor compliance with the Corporation’s Global Code of Conduct. Review any requests for waivers.

 

•  Review and discuss the Corporation’s information technology program and overall trends in technology.

 

•  Prepare the report required by the rules of the Securities and Exchange Commission to be included in the Corporation’s annual proxy statement.

 

•  Review and approve all related party transactions (as defined under Item 404 of Regulation S-K and under the standards of the Public Company Accounting Oversight Board).

 

 

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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

  

 

•  Review and approve the Corporation’s overall compensation philosophy and related compensation and benefits programs, policies and practices.

 

•  Review and recommend for approval by the Board of Directors equity incentive compensation and other stock-based plans.

 

•  Review and approve the performance goals and objectives for the Chief Executive Officer’s compensation and evaluate the Chief Executive Officer’s performance in light of these performance goals and objectives in order to determine and approve the Chief Executive Officer’s compensation package. Based on recommendations from the Chief Executive Officer, evaluate the performance of the other executive officers of the Corporation (which shall be the Corporation’s Section 16 officers under applicable Securities and Exchange Commission rules) and approve the compensation for such executive officers.

 

 

Meetings in 2019

 

  

•  Review and approve any changes to perquisites or other personal benefits provided to

Seven Meetings

  

    executive officers of the Corporation.

 

•  Review and approve a peer group of companies against which to compare the Corporation’s executive compensation.

 

•  Review compliance of each director and executive officer with the Corporation’s stock ownership guidelines and take any appropriate action in connection therewith.

 

•  Review and approve any severance or termination arrangements to be made with any executive officer of the Corporation.

 

•  Review the compensation package for non-employee directors and recommend any changes for approval by the Board of Directors.

 

•  Oversee and review with the Board of Directors risk and risk mitigation associated with the Committee’s purpose and areas of responsibility, including with respect to the Corporation’s compensation policies and practices. In doing so, consider and confirm that the Corporation’s compensation policies and practices do not encourage unnecessary risk taking.

 

•  Assist the Board of Directors in developing and evaluating potential candidates for executive management positions, including the Chief Executive Officer, and oversee the development of executive succession plans.

 

•  Maintain visibility into, assist with the development of, and monitor progress of programs regarding the Corporation’s organizational culture, including diversity and inclusion.

 

•  Review and approve the Compensation Discussion and Analysis to be included in the Corporation’s annual proxy statement.

 

 

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Name of Committee and

Membership

   Principal Functions and Responsibilities

 

Nominating and Corporate

Governance Committee

Caroline W. Nahas, Chair

Richard J. Dahl

Larry A. Kay

Lilian C. Tomovich

  

 

•  Oversee succession planning for the Board of Directors and consider the size and composition of the Board of Directors as a whole. Make appropriate recommendations regarding such matters to the Board of Directors for approval.

 

•  Identify and evaluate qualified director candidates, including any candidates validly nominated by the Corporation’s stockholders, and recommend director nominees for approval by the Board of Directors.

 

•  Determine the skills and qualifications required for directors and develop criteria to be considered in identifying and evaluating director candidates. In developing such criteria, the Committee should consider diversity of experience, skills, background, gender, race and ethnicity as important factors.

 

•  Consider the suitability of existing directors for continued service on the Board of Directors when his or her term expires and when he or she has a change in status, including changes to employment and outside board of directors service, and make appropriate recommendations regarding such matters to the Board of Directors for approval.

 

 

Meetings in 2019

 

  

•  Develop and review the Corporation’s Corporate Governance Guidelines and recommend

Five Meetings

  

    any changes to the Corporate Governance Guidelines for approval by the Board of Directors.

 

•  Consider and recommend for approval by the Board of Directors matters pertaining to committees of the Board of Directors, including with respect to structure, member qualifications, composition, committee chairs and committee reporting to the Board of Directors.

 

•  Consider and recommend for approval by the Board of Directors the Chairman of the Board of Directors.

 

•  Review the Code of Conduct for Non-Employee Directors and the Corporation’s Global Code of Conduct and recommend any changes for approval by the Board of Directors.

 

•  Oversee and review with the Board of Directors risk and risk mitigation associated with the Committee’s purpose and areas of responsibility, including Board of Directors’ organization, membership and structure, succession planning, director independence, Board of Directors effectiveness and other corporate governance matters.

 

•  Work with the Chairman of the Board of Directors to oversee the evaluation of the performance and effectiveness of the Board of Directors and each committee of the Board of Directors.

 

•  Coordinate an annual corporate governance training for the Board of Directors.

 

•  Review and oversee the Corporation’s actions on issues related to corporate social responsibility, sustainability, philanthropy, and other matters associated with the Corporation’s participation as a global corporate citizen.

 

•  Review and oversee the Corporation’s political activities and contributions and other public policy issues to ensure alignment with the Corporation’s long-term strategy and values.

 

 

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Board of Directors Nominations

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 important factors in identifying directors who will bring diverse viewpoints, opinions and areas of expertise that will benefit the Board of Directors as a whole. To further demonstrate its commitment to seeking diversity of race, gender and ethnicity in its consideration of director candidates, the Nominating and Corporate Governance Committee added these important factors to its charter in August 2019 as criteria to be considered in identifying and evaluating director candidates. 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.”

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 2020 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, Gilbert T. Ray, Larry A. Kay, Douglas M. Pasquale and Susan M. Collyns 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, Gilbert T. Ray, Larry A. Kay, Douglas M. Pasquale and Susan M. Collyns 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.

Environmental, Social and Governance Highlights

In executing on the Corporation’s strategic priorities, we recognize our responsibility to drive long-term stockholder value through ethical business practices that make sense for our business, our guests and our communities. Pursuant to its charter, our Nominating and Corporate Governance Committee has the responsibility to review and oversee the Corporation’s actions on issues related to corporate social responsibility, sustainability, philanthropy and other matters associated with the Corporation’s participation as a global corporate citizen. Our corporate social responsibility efforts are organized into the following categories: supporting our neighborhoods, caring for the environment and valuing our team members.

 

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Supporting our neighborhoods.

We value the neighborhoods in which we do business. Together with our franchisees and team members, we make a difference by giving back to the communities where we operate. Every year, we support hundreds of fundraisers and events taking place across the country through our charitable foundation, volunteering, and team member donations. Some highlights include:

 

   

Alex’s Lemonade Stand: Since 2005, Applebee’s franchisees have raised nearly $10.2 million in support of research to help in the fight against childhood cancer.

 

   

National Pancake Day: An annual IHOP event which has raised over $30 million to-date in support of Children’s Miracle Network Hospitals and other local charities. National Pancake Day is also celebrated at IHOPs in Mexico, Canada, Guam, and Puerto Rico.

 

   

Veteran’s Day: Since 2008, more than 9.8 million free meals have been donated by Applebee’s to veteran and active military personnel in recognition and gratitude for their service.

We also seek to engage our team members in community-investment and development initiatives that serve the communities where we live and operate. An annual Philanthropic Day provides paid time off for our team members, giving them an opportunity to volunteer a full day to support a philanthropic effort of their choice.

Caring for the environment.

Animal Welfare

Animal welfare is an issue of critical importance for us and we are continuing to work with our suppliers, animal welfare experts and others both in and outside the industry to align on solutions and best practices that are supported by science and rigorous research. We are committed to an animal welfare policy that is rooted in sustainable progress and accountability. For example, we ask our chicken and pork suppliers to prohibit the routine use of medically important antibiotics as defined by the World Health Organization, including prohibiting the use of these antibiotics for disease prevention. We also undertake an annual internal compliance review of our animal protein suppliers’ established animal handling procedures, including by requesting relevant third-party farm and plant animal audits, to facilitate informed sourcing decisions. We are working towards using shelled and liquid eggs in the U.S. that are derived 100% from hens housed in a cage-free environment.

Environmental

We are focused on identifying ways to reduce our impact on the environment through improvements in how we supply, design, build and maintain our restaurants. In addition, our IHOP® and Applebee’s® Restaurant Support Center is housed in a LEED Platinum Certified building.

We source a large amount of paper and plastic goods for our restaurants. We are working towards reducing the amount of polystyrene used in our “to go” orders and replacing these packaging products with recyclable packaging.

We continue working to reduce the energy consumption in our restaurants and our restaurant support center. For example, nearly all offices in our in non-restaurant facilities have motion-activated light switches that automatically lower or turn off the lights if no movement is detected after a period of time. We have also been aggressive about replacing traditional lighting with compact florescent lighting wherever practicable.

Valuing our team members.

We operate under a cultural framework based on shared values and strategic pillars which define who we are and how we work. We value, encourage and recognize the diversity and inclusion of our workforce and the benefits that an array of backgrounds, cultures and thinking styles bring to our organization. We are committed to creating an environment that accepts, includes and engages everyone in our workforce and encourages open dialogue. Substantially all of our restaurant support center team members undertake a comprehensive diversity and inclusion training seminar. Our Chief Executive Officer, Stephen P. Joyce, has taken the CEO Action for Diversity and Inclusion Pledge.

We are focused on identifying diverse director candidates as demonstrated by the addition of race, gender and ethnicity as important factors for the Nominating and Corporate Governance Committee to consider when identifying director candidates. In 2019, the Compensation Committee also added the responsibility to oversee the Corporation’s organizational culture, including diversity and inclusion, to its committee charter.

 

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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 serving as a member of the Board of Directors 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 2019, 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 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 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 Corporation’s equity 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 2019, 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. Annual equity awards granted to non-employee directors from 2019 forward are subject to a one-year cliff vesting from the date of grant, while annual RSU grants to non-employee directors prior to 2019 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 and committee 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 2019, all directors met, were on track to meet, or exceeded the ownership guidelines.

 

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2020 PROXY STATEMENT  

 

 

DIRECTOR COMPENSATION   

 

Director Compensation Table for 2019

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 2019. Mr. Joyce did not receive any additional compensation for his service as a director in 2019. Please see the 2019 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

       92,500          105,007        197,507  

Daniel J. Brestle

       92,500          105,007        197,507  

Susan M. Collyns(3)

       34,413          105,050        139,463  

Richard J. Dahl

     212,257          105,007        317,264  

Larry A. Kay

       77,500          105,007        182,507  

Caroline W. Nahas(4)

       95,000          105,007        200,007  

Douglas M. Pasquale

     100,500          105,007        205,507  

Gilbert T. Ray

       82,500          105,007        187,507  

Lilian C. Tomovich

       77,500          105,007        182,507  

 

(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, 2019 for information regarding assumptions underlying the valuation of equity awards.

 

(2)

The following table sets forth the number of RSUs held by each non-employee director during 2019 and which were outstanding at December 31, 2019.

 

Name

   Stock Awards
Outstanding at
December 31, 2019
(#)
 

Howard M. Berk

     4,958             

Daniel J. Brestle

     4,958             

Susan M. Collyns(3)

     1,262             

Richard J. Dahl

     4,958             

Larry A. Kay

     4,958             

Caroline W. Nahas

     4,958             

Douglas M. Pasquale

     4,958             

Gilbert T. Ray

     4,958             

Lilian C. Tomovich

     4,271             

 

(3)

Ms. Collyns was appointed as a director on August 1, 2019. Ms. Collyns’ retainer fees were prorated for the period of time Ms. Collyns served as a director.

 

(4)

Ms. Nahas elected to defer all of her 2019 director cash compensation and annual non-employee director equity awards pursuant to the Deferred Compensation Plan.

 

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  2020 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, 2020, as noted below. The percentages of Common Stock ownership have been calculated based upon 16,593,808 shares of Common Stock outstanding as of March 18, 2020.

 

    

Shares of Common
Stock Beneficially
Owned

 

 

Name and Address of Beneficial Owner

 

  

Number

 

    

Percent

 

 

BlackRock, Inc.

55 East 52nd Street

New York, NY 10055

     2,473,956 (1)       15.01

The Vanguard Group

100 Vanguard Blvd.

Malvern, PA 19355

     2,112,747 (2)       12.81

Capital Research Global Investors

333 South Hope Street

Los Angeles, CA 90071

     2,039,724 (3)       12.37

Wells Fargo & Company

420 Montgomery Street

San Francisco, CA 94163

     1,470,361 (4)       8.92

 

(1)

Based solely upon on a Schedule 13G/A filed with the SEC on February 4, 2020 by BlackRock, Inc. reporting beneficial ownership as of December 31, 2019. BlackRock, Inc. reported that it possessed sole power to vote or direct the vote with respect to 2,441,677 of these shares and sole power to dispose or direct the disposition of 2,473,956 of these shares.

 

(2)

Based solely upon on a Schedule 13G/A filed with the SEC on February 11, 2020 by The Vanguard Group reporting beneficial ownership as of December 31, 2019. The Vanguard Group reported that it possessed sole power to vote or direct the vote with respect to 26,131 shares, shared power to vote or direct the vote with respect to 2,901 shares, sole power to dispose or direct the disposition of 2,085,732 shares and shared power to dispose or to direct the disposition of 27,015 of these shares.

 

(3)

Based solely upon a Schedule 13G/A filed with the SEC on February 14, 2020 by Capital Research Global Investors reporting beneficial ownership as of December 31, 2019. 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 February 4, 2020 by Wells Fargo & Company reporting beneficial ownership as of December 31, 2019. Wells Fargo & Company reported that it possessed the sole power to vote or direct the vote with respect to 23,086 shares, shared power to vote or direct the vote with respect to 241,895 shares, sole power to dispose or direct the disposition of 23,086 shares and shared power to dispose or direct the disposition of 1,447,275 of these shares.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT   

 

Security Ownership of Management

The following table sets forth, as of March 18, 2020, 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, 2020, 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 16,593,808 shares of Common Stock outstanding as of March 18, 2020.

 

    

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

     30,487 (3)(4)             27,651        *        

Daniel J. Brestle

     24,487 (3)             21,651        *        

Susan M. Collyns

                         *        

Richard J. Dahl

     77,079 (3)(5)            74,243        *        

Larry A. Kay

     25,445 (3)(6)            22,609        *        

Caroline W. Nahas

     31,187 (3)             29,982        *        

Douglas M. Pasquale

     12,645 (3)(7)            9,809        *        

Gilbert T. Ray

     14,555 (3)             11,719        *        

Lilian C. Tomovich

     2,672              2,672        *        

Stephen P. Joyce

     10,775              10,775        *        

Thomas H. Song

     9,983       18,489        28,472        *        

Jay D. Johns

     19,344 (8)     15,680        35,024        *        

John C. Cywinski

     98,865       17,503        116,368        *        

Bryan R. Adel

     45,330       7,290        52,620        *        

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

     402,854       58,962        461,816        2.75%         

 

*

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

 

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   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, 2020, as follows:

 

Name

 

  

Shares Subject to  

Options  

 

Howard M. Berk

   —  

Daniel J. Brestle

   —  

Susan M. Collyns

   —  

Richard J. Dahl

   47,000  

Larry A. Kay

   —  

Caroline W. Nahas

   —  

Douglas M. Pasquale

   —  

Gilbert T. Ray

   —  

Lilian C. Tomovich

   —  

Stephen P. Joyce

   —  

Thomas H. Song

   8,263  

Jay D. Johns

   12,392  

John C. Cywinski

   79,285  

Bryan R. Adel

   42,000  

All directors and executive officers as a group (15 persons)

   191,128  

 

(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)

Includes unvested RSUs for Mr. Berk 2,836; Mr. Brestle 2,836; Mr. Dahl 2,836; Mr. Kay 2,836; Ms. Nahas 1,205; Mr. Pasquale 2,836; and Mr. Ray 2,836. Each RSU represents a contingent right to receive one share of common stock. There are no voting rights associated with RSUs. 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, 2020. The amounts of RSUs held by non-employee directors as of December 31, 2019 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.

 

(4)

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.

 

(5)

The amount for Mr. Dahl includes 24,687 shares of Common Stock held by the Richard J. Dahl Revocable Living Trust dated 1/20/1995, of which Mr. Dahl serves as Trustee.

 

(6)

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

 

(7)

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

 

(8)

The amount for Mr. Johns includes 6,952 shares of Common Stock held by the Jay D. Johns Revocable Trust created on 9/20/2013.

 

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2020 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 2019.

The following executive officers were NEOs in 2019:

 

   

Chief Executive Officer, Stephen P. Joyce;

 

   

Chief Financial Officer, Thomas H. Song;

 

   

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

 

   

President of the IHOP Business Unit, Jay D. Johns, who was promoted to President of the IHOP Business Unit as of June 13, 2019; and

 

   

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

 

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   EXECUTIVE COMPENSATION

 

Executive Summary

2019 Fiscal Year Performance Highlights and Link to Pay Decisions

Our compensation decisions for 2019 were driven by our overarching goal of creating long-term stockholder value and linking pay with performance. 2019 performance was defined by several significant achievements but with mixed results in certain key metrics:

 

LOGO STOCK PRICE APPRECIATION   LOGO EARNINGS PER SHARE   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 2019 compared to the same period of 2018 for domestic restaurants operated during both years and open for at least 18 months

 

   

Adjusted Earnings Per Share (AEPS) for fiscal 2019 increased 29.4% year-over-year to $6.95. Similarly, net income available to common stockholders, as reported pursuant to U.S. GAAP (GAAP EPS) increased from $4.37 in 2018 to $5.85 in 2019, a 33.9% year-over-year increase.

 

   

The Corporation returned over $156 million to our stockholders, comprised of $109.7 million in the form of stock repurchases and $46.9 million in cash dividends, with cash dividends reflecting a 10% increase in our quarterly dividend to $0.69 per share, effective with the dividend declared in the first quarter 2019.

 

   

The Corporation refinanced $1.3 billion of fixed rate senior notes.

 

   

Cash flows from operating activities for fiscal 2019 increased 10.6% to $155.2 million.

 

   

IHOP signed the largest multi-unit development agreement in its history, calling for the development, with TravelCenters of America, of nearly 100 IHOP restaurants over the next five years.

 

   

IHOP operating profit performance exceeded target levels under our 2019 annual cash incentive plan while Dine Brands and Applebee’s operating profit performance fell below target.

 

   

IHOP and Applebee’s same-restaurant sales underperformed internal targets and industry benchmarks in 2019; IHOP same-restaurants-sales achieved positive growth for the eighth consecutive quarter.

 

   

For fiscal years 2017 through 2019, the Corporation’s Total Shareholder Return was 20.4%, achieving a percentile rank of 54.5% relative to an index of publicly-traded restaurant companies.

 

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EXECUTIVE COMPENSATION   

 

We believe that the Corporation’s 2019 compensation results were commensurate with the Corporation’s performance in 2019, demonstrating a commitment to a pay-for-performance philosophy.

 

   

With respect to our NEOs, the Corporation’s 2019 annual cash incentive plan paid out at approximately 78.0% of target for Dine Brands, 63.5% of target for the Applebee’s Business Unit and 80.6% of target for the IHOP Business Unit. The Dine Brands target is applicable to Mr. Joyce, Mr. Song, and Mr. Adel, while the Applebee’s Business Unit target and IHOP Business Unit Target are applicable to Mr. Cywinski and Mr. Johns, respectively.

 

LOGO Annual Cash Incentive Payout

 

   

The long-term cash incentive plan for fiscal years 2017 through 2019 paid out at 111.3% of target for 2017 – 2019 due to a relative total stockholder return (“TSR”) percentile rank of 54.5% relative to an index of publicly traded restaurant companies (compared to a percentile rank of 44.3% for 2016 – 2018).

 

LOGO Cash LTIP Payout (as a percentage of target)

 

 

For complete information regarding the Corporation’s 2019 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 2019 annual report on Form 10-K filed with the SEC on February 24, 2020, which is being made available to stockholders with this proxy statement.

 

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  2020 PROXY STATEMENT

 

 

   EXECUTIVE COMPENSATION

 

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 2019 of the Corporation’s compensation policies and practices as they apply to all employees, including the 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 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, RSUs, 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 with the 2018-2020 cycle, 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.

 

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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.

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;

 

   

maintains visibility into, assists with the development of, and monitors progress of programs regarding the Corporation’s organizational culture, including diversity and inclusion; 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.

 

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   EXECUTIVE COMPENSATION

 

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 2019, 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 2019, Exequity performed the following services:

 

   

Provided executive compensation benchmarking data (as described below);

 

   

Provided analysis and advice regarding annual incentive plan design;

 

   

Provided analysis and advice regarding LTI plan design;

 

   

Assisted with stock plan modeling and design in connection with the proposal to approve the Dine Brands Global, Inc. 2019 Stock Incentive Plan (“2019 Stock Incentive Plan”) included in the Corporation’s 2019 proxy statement;

 

   

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.

Exequity did not provide any additional services to the Corporation during 2019 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, with only 8 of 15 peers having more than 85% of their restaurants franchised. We believe our significantly franchised business model (approximately 98% franchised as of fiscal year end 2019) 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 more 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. As compared to the NEO Peer Group, the Corporation ranked

 

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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 2019 compensation decisions consisted of the companies set forth below. The NEO Peer Group for 2019 remained unchanged from 2018 except that Sonic Corp. was removed during 2019 because it was acquired in December 2018.

 

•  Bloomin’ Brands Inc.

  

•  Cracker Barrel Old Country Store, Inc.

  

•  Papa John’s International, Inc.

•  BJ’s Restaurants, Inc.

  

•  Denny’s Corporation

  

•  Red Robin Gourmet Burgers, Inc.

•  Brinker International, Inc.

  

•  Domino’s Pizza, Inc.

  

•  Texas Roadhouse, Inc.

•  The Cheesecake Factory Incorporated

  

•  Dunkin’ Brands Group, Inc.

  

•  The Wendy’s Company

•  Choice Hotels International, Inc.

  

•  Jack in the Box Inc.

  

•  Wyndham Hotels and Resorts, 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 2019 AON Hewitt US Total Compensation by Industry Survey, which provided general industry pay data on executive positions for companies with comparable sales.

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. During 2019, the Corporation reached out to stockholders representing a majority of outstanding shares to discuss key executive compensation and other governance topics. The Corporation incorporates stockholder feedback into its compensation and governance policies. At the Corporation’s annual meeting of stockholders held in May 2019, approximately 72% 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 2019 proxy statement. The Compensation Committee believes that the Corporation’s approach to executive compensation, including the one-time grants of RSUs and NQSOs made to Mr. Joyce in 2017 in connection with his appointment as Chief Executive Officer with no subsequent equity grants made or contemplated to be made throughout the term of his current employment agreement, is reasonable considering market conditions and is consistent with the Corporation’s pay-for-performance philosophy and overarching goal of creating long-term stockholder value.

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 with no subsequent equity grants made or contemplated to be made throughout the term of his current employment agreement;

 

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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 with no subsequent equity grants made or contemplated to be made throughout the term of his current employment agreement; 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 equity awards granted to Mr. Joyce at his time of hire are tied to stock price performance hurdles that represent a rigorous performance standard and directly align his compensation with the interests of our stockholders.

The performance contingent NQSOs and RSUs were granted at a price of $40.58 and earned in increments based on nine different stock price performance hurdles, 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 line with the sustained improvement in stock price performance since Mr. Joyce joined as Chief Executive Officer, 100% of the performance conditions tied to Mr. Joyce’s performance-contingent equity awards have been satisfied. As of December 31, 2019, the final stock price hurdle of $90 was achieved, representing 221% 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 2019 Fiscal Year-End Table in this proxy statement for additional information.

2019 Compensation Decisions

The Compensation Committee did not approve any increase to Mr. Joyce’s base salary for 2019 or 2020. 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. Mr. Joyce’s base salary and target opportunity under the annual cash incentive plan remain at the levels established when he joined the Corporation. 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 2019 and did not participate in, or receive any payouts under, the Corporation’s cash LTIP for performance periods covering 2019. 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.

Please see Elements of the Compensation Program For NEOs section below for additional information regarding Mr. Joyce’s 2019 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 over an annual performance period. Generally, no payouts are made under the annual incentive plan unless these objectives are achieved.

 

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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 2017 – 2019 cash LTIP cycle 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. Beginning with the 2018 – 2020 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 when performance meets or exceeds pre-established performance goals over the three-year performance period.

 

   

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 by using a holistic approach that considers various individual factors as well as relevant benchmark data. Such individual factors include performance, experience level, criticality, scarcity of skill set, internal equity and external competitiveness. Rather than striving for a single market reference point, the Compensation Committee believes that this broader holistic approach provides appropriate flexibility in tailoring award opportunities.

The TDCO for 2019, as reviewed and approved by the Compensation Committee for the NEOs on February 12, 2019, is listed in the following table. TDCO differs from the total compensation amounts reported in the 2019 Summary Compensation Table in that it includes the base salary and target annual cash incentive opportunity in effect following such approval, while the 2019 Summary Compensation Table includes the amounts actually earned for base salary and under the 2019 Annual Incentive Plan. Further, TDCO does not include amounts set forth in the “All Other Compensation” column of the 2019 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 2019 Summary Compensation Table includes the actual value earned, if any, based upon performance under the cash LTIP after the completion of the performance period.

2019 Total Direct Compensation Opportunity

 

Name

   2019
Base
Salary
($)
   2019 Annual Cash
Target Incentive
($)
   2019 Long-
Term
Incentive
($)
   2019 Total
Direct Compensation  
Opportunity
($)

Stephen P. Joyce

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

Thomas H. Song

     $ 510,000      $ 382,500      $ 700,080      $ 1,592,580

John C. Cywinski

     $ 615,940      $ 492,752      $ 875,019      $ 1,983,711

Jay D. Johns(1)

     $ 428,400      $ 214,240      $ 325,028      $ 967,749

Bryan R. Adel

     $ 500,000      $ 350,000      $ 600,035      $ 1,450,035

 

(1)

The TDCO for Mr. Johns represents his target total direct compensation as of March 2019 relating to his role as Senior Vice President, Operations of the IHOP Business Unit and excludes a special one-time long-term incentive award granted in connection with his promotion to President of the IHOP Business Unit on June 13, 2019. Upon his promotion, Mr. Johns’ Base Salary was increased to $525,000 and Mr. Johns’ Annual Cash Target Incentive was increased from 50% of Base Salary to 75% of Base Salary. Mr. Johns’ 2019 Annual Cash Target Incentive was pro-rated at 50% through June 2019 and 75% for the remainder of 2019, resulting in a target of $328,125.

 

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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 2019, and Mr. Johns, who was promoted to President of the IHOP Business Unit as of June 13, 2019, an average of 68% of 2019 TDCO was linked to performance and/or increasing stockholder value.

See the section entitled “Compensation Decisions Made in 2019” in this proxy statement for additional information regarding the elements of compensation for NEOs.

The chart below illustrates the 2019 pay mix for the NEOs, excluding Mr. Joyce and Mr. Johns:

 

LOGO NEO Average Pay Mix

Compensation Decisions Made in 2019

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 survey 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 2019, the Compensation Committee set annual base salaries for 2019 as follows:

 

Name

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

Percentage  

Increase  

Stephen P. Joyce

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

Thomas H. Song

       500,000        510,000       2.0 %

John C. Cywinski

       592,250        615,940       4.0 %

Jay D. Johns

       412,000        428,480 (1)       4.0 %

Bryan R. Adel

       475,000        500,000       5.3 %

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

 

(1)

Mr. Johns’ base salary increase in February 2019 related to his former role as our Senior Vice President, Operations of the IHOP Business Unit. He received an additional salary increase in June 2019 upon his promotion to President of the IHOP Business Unit. At that time, the Compensation Committee set Mr. Johns’ base salary at $525,000, an increase of 22.5%, after considering internal and external benchmarking data, the compensation paid to the previous President of the IHOP Business Unit, and Mr. Johns’ skill set and qualifications relative to those desired by the Corporation.

 

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Performance- and Stock-Based Compensation

Annual Cash Incentives

In early 2019, the Compensation Committee approved the 2019 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.

Pursuant to the 2019 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 2019 threshold, target, and maximum payout amounts for each NEO are provided in the Grants of Plan-Based Awards in 2019 table. The 2019 threshold, target and maximum percentages of base salary for each of the NEOs under the Corporation’s 2019 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 %

John C. Cywinski

       40 %       80 %       160 %

Jay D. Johns

       31.25 %       62.5 %       125 %

Bryan R. Adel

       35 %       70 %       140 %

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. Johns’ 2019 target was 50% of base salary through June 2019 while serving and Senior Vice President, Operations of the IHOP Business Unit and was raised to 75% of base salary for the remainder of the year, following his promotion to President of the IHOP Business Unit, after considering internal and external benchmarking data, the compensation paid to the previous President of the IHOP Business Unit, and Mr. Johns’ skill set and qualifications relative to those desired by the Corporation

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, Same Restaurant Sales, and Traffic. The Compensation Committee focused the 2019 annual incentive metrics entirely on financial and operating performance metrics to drive an emphasis on delivering results and improving performance. The Compensation Committee incorporated Same Restaurant Sales with a Traffic modifier in order to encourage the brands to drive improved Same Restaurant Sales performance based on guests visiting the restaurants rather than solely by increases to average check. Overall, the Compensation Committee believes the 2019 annual cash incentive metrics reflect the appropriate balance between profitability (70-80%) and growth (20-30%). 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, excluding the impact of extraordinary, unusual, infrequently occurring, non-recurring and unanticipated events. “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. “Same Restaurant Sales” is a growth performance indicator used by the Corporation and the restaurant industry and provides a measure of the change in restaurant sales by comparing the sales performance of the same restaurants from period to period. “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 by comparing the number of guests visiting the same restaurants from period to period. Based on Traffic performance, the Same Restaurant Sales metric is increased or decreased by up to 20% for a given measurement period.

 

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The table below outlines the annual cash incentive metrics and weighting for each of the NEOs for 2019:

 

Name

   Dine Brands
AEPS
  Dine Brands/
IHOP /
Applebee’s
Business Unit
Operating Profit(1)
 

Same  

Restaurant  

Sales with  

Traffic  

Modifier(2)  

Stephen P. Joyce

       50 %       30 %       20 %

Thomas H. Song

       50 %       30 %       20 %

John C. Cywinski

       40 %       40 %       20 %

Jay D. Johns

       40 %       30 %       30 %

Bryan R. Adel

       50 %       30 %       20 %

 

(1)

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

 

(2)

Same Restaurant Sales and Traffic performance for Mr. Joyce, Mr. Song, and Mr. Adel was based 50% on Applebee’s Business Unit performance and 50% on IHOP Business Unit performance, while Same Restaurant Sales and Traffic performance for Mr. Cywinski and Mr. Johns was based entirely on their respective Business Units.

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

     $ 6.05     $ 7.12     $ 7.83     $ 6.95       97.6 %       90 %

Dine Brands Operating Profit

     $ 199.8     $ 229.7     $ 248.1     $ 228.9       99.7 %       94 %

IHOP Business Unit Operating Profit

     $ 152.1     $ 174.8     $ 188.8     $ 175.7       100.5 %       100 %

Applebee’s Business Unit Operating Profit

     $ 120.1     $ 138.0     $ 149.0     $ 128.1       92.8 %       69 %

IHOP Same Restaurant Sales

       0.0 %       3.0 %       4.5 %       1.1 %       37.3 %       69 %

Applebee’s Same Restaurant Sales

       0.5 %       3.5 %       5.0 %       -0.7 %       0 %       0 %

Payout as a Percentage of an Executive’s Target

       50 %       100 %       200 %                  

Traffic growth for the domestic IHOP Business Unit fell short of its target, which reduced the IHOP Same Restaurant Sales payout from 69% to 49%. Traffic growth for the domestic Applebee’s Business Unit fell short of its target which would have reduced the Applebee’s Same Restaurant Sales payout if performance had been above the threshold.

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.

The final annual cash incentive amounts under the 2019 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. The final annual cash incentive amount approved by the Compensation Committee and payable to Mr. Joyce under the 2019 Annual Incentive Plan was reduced by $324,000 to reflect leadership and individual performance considerations. At the end of 2019, 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 no individual performance modifiers for Mr. Song, Mr. Cywinski, Mr. Johns, or Mr. Adel.

 

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The amounts in the table below represent the annual cash incentive paid to each of the NEOs pursuant to the 2019 Annual Incentive Plan and are calculated by multiplying the NEO’s base salary by the target percentage, the percentage of incentive target achieved, and adjusting for performance as set forth above.

 

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 %       45.6 %     $ 455,948

Thomas H. Song

     $ 510,000        75 %       78.0 %     $ 298,330

John C. Cywinski

     $ 615,940        80 %       63.5 %     $ 312,898

Jay D. Johns

     $ 525,000        62.5 %       80.6 %     $ 264,500

Bryan R. Adel

     $ 500,000        70 %       78.0 %     $ 272,982

Mr. Johns’ 2019 target while serving and Senior Vice President, Operations of the IHOP Business Unit through June 2019 was 50% of base salary, which increased to 75% of base salary for the remainder of the year following his promotion to President of the IHOP Business Unit. In August 2019, Mr. Song received a special recognition bonus of $250,000 for his leadership in successfully completing a securitization refinancing transaction.

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 changes in the Corporation’s stock price. The 2017 – 2019 cash LTIP cycle provides payment between zero and 200% of the target award based on the Corporation’s relative TSR performance. The 2018 – 2020 and 2019 – 2021 cash LTIP cycles provide 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.

For the 2017 – 2019 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 2019 – 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
2019 – 2021

   Percentage of Target AEPS Growth Units Earned  

<7.5%

       0 %

7.5%

       50 %

15%

       100 %

³30%

       200 %

 

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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 (prior to the adoption of the 2019 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 2019 (additional detail regarding long-term incentive awards granted in 2019 can be found in the Grants of Plan-Based Awards in 2019 table in this proxy statement):

 

Name

   Stock Options    Restricted Stock    Cash LTIP at Target   

Total Long-Term  

Incentive Opportunity  

Thomas H. Song

     $ 237,985      $ 231,095      $ 231,000      $ 700,080

John C. Cywinski

     $ 297,475      $ 288,794      $ 288,750      $ 875,019

Jay D. Johns

     $ 110,495      $ 107,283      $ 107,250      $ 325,028

Bryan R. Adel

     $ 203,996      $ 198,039      $ 198,000      $ 600,035

 

   

The LTI award for Mr. John’s was granted in February 2019 while serving in the role of Senior Vice President, Operations of the IHOP Business Unit. In June 2019, the Compensation Committee granted a one-time special recognition award of 10,556 RSAs, with a grant date fair value of $1,000,075, to Mr. Johns in connection with his promotion to President of the IHOP Business Unit. These RSAs will vest on the third anniversary of grant, subject to continued service.

 

   

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 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, 2019, 40% of the performance conditions tied to Mr. Cywinski’s performance-contingent equity awards were satisfied based on achievement of stock price hurdles of $85 and $90.

2017—2019 Cash LTIP Payout

Demonstrating the Corporation’s pay-for-performance philosophy and the direct link between pay and the Corporation’s stock price performance, the Cash LTIP payout as a percentage of the target has varied significantly over the past three performance periods based on relative TSR performance relative to the companies included in the index of publicly-traded restaurant companies. Performance and payouts under the 2017-2019 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  

2015 - 2017

       -40.3 %       2.7 %       0 %

2016 - 2018

       -8.5 %       44.3 %       83.2 %

2017—2019

       20.4 %       54.5 %       111.3 %

 

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EXECUTIVE COMPENSATION   

 

For the 2017-2019 cash LTIP cycle, the Corporation’s TSR performance achieved a percentile rank of 54.5% 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 2017-2019 cash LTIP. Mr. Joyce is not eligible to participate in the cash LTIP and did not participate in the 2017-2019 cash LTIP cycle.

 

Name

   2017 - 2019
Target Award
  

2017 - 2019  

Payout  

(111.3% of Target)  

Thomas H. Song

     $ 200,000      $ 222,600

John C. Cywinski

     $ 264,000      $ 293,832

Jay D. Johns

     $ 107,250      $ 119,369

Bryan R. Adel

     $ 148,500      $ 165,281

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 that are not subject to performance goals that have not been achieved. 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 years from becoming subject to the guidelines. Based upon its October 2019 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        24.1        Meets Guideline  

Thomas H. Song(2)

       4        2.9        On Schedule  

John C. Cywinski

       4        8.2        Meets Guideline  

Jay D. Johns(3)

       4        3.3        On Schedule  

Bryan R. Adel

       2        2.9        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, 2018 to October 1, 2019.

 

(2)

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

 

(3)

Mr. Johns has until June 13, 2024 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

 

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   EXECUTIVE COMPENSATION

 

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.

Hedging and Pledging Restrictions

Under the Corporation’s Insider Trading Policy, all officers, employees and directors of the Corporation are prohibited from engaging in short sales of the Corporation’s common stock or in taking positions on the Corporation’s publicly traded call and put options or otherwise using financial instruments to engage in hedging transactions to lock in the value of the Corporation’s securities by preventing a decrease and/or increase in value.

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

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 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. Adel and Mr. Johns are parties to employment offer letters with the Corporation, effective as of August 2, 2010 and June 13, 2019, respectively.

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.

 

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Amended and Restated Executive Severance and Change in Control Policy

Mr. Adel and Mr. Johns participate 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 “2019 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.

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.

Restaurant Dining Expenses. The Corporation reimburses each of the NEOs for amounts spent dining at Applebee’s and IHOP restaurants.

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

See the 2019 Summary Compensation Table for additional details on these perquisites.

 

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  2020 PROXY STATEMENT

 

 

   COMPENSATION TABLES

 

COMPENSATION TABLES

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

2019 Summary Compensation Table

The following 2019 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, 2019, and, to the extent required under applicable SEC disclosure rules, the fiscal years ended December 31, 2018 and 2017.

 

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

    2019       1,000,000                          455,948       297,810       1,753,758    

Chief Executive Officer

    2018       1,000,000                          1,295,200       275,503       2,570,703  
    2017       284,615       750,000 (6)      4,826,500 (7)      1,076,000        (8)      76,328       7,013,443  

Thomas H. Song

    2019       508,461       250,000 (9)      231,095       237,985        520,930       38,197       1,786,668    

Chief Financial Officer

    2018       286,538       200,000 (10)      1,198,010 (11)      204,042        568,900       225,893       2,683,383  

John C. Cywinski

    2019       612,295             288,794       297,475        606,730       34,871       1,840,165    

President, Applebee’s Business Unit

    2018       589,596             2,319,309 (12)      280,555        1,016,400       174,434       4,380,294  
    2017       457,788       150,000 (13)      1,764,053 (14)      272,003        271,688       631,758       3,547,290  

Jay D. Johns

President, IHOP Business Unit

    2019       476,803             1,107,358 (15)      110,495        383,869       38,984       2,117,509    

Bryan R. Adel

    2019       496,154             198,039       203,996        438,263       38,201       1,374,652    

Senior Vice President, Legal, General

    2018       475,000       250,000 (16)      181,563       187,037        598,552       65,835       1,757,987  
    2017       445,461             148,542       153,001        256,757       36,463       1,040,224  

 

(1)

Represents 26 bi-weekly pay periods during the fiscal years ended December 31, 2017, 2018 and 2019, respectively.

 

(2)

The amounts reported in this column for 2019 represent the aggregate grant date fair value related to the RSAs that were granted as part of the 2019 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 reports on Form 10-K for the years ended December 31, 2019 and 2018, and Note 13 to the Consolidated Financial Statements in the Corporation’s annual report on Form 10-K for the year ended December 31, 2017 for information regarding assumptions underlying the valuation of equity awards granted in 2019, 2018 and 2017.

 

(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 reports on Form 10-K for the years ended December 31, 2019 and 2018, and Note 13 to the Consolidated Financial Statements in the Corporation’s annual report on Form 10-K for the year ended December 31, 2017 for information regarding assumptions underlying the valuation of equity awards granted in 2019, 2018 and 2017.

 

(4)

The amounts in the “Non-Equity Incentive Plan Compensation” column for 2019 include payouts under the 2019 Annual Incentive Plan and the cash LTIP for the 2017 – 2019 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

       455,948        N/A        455,948

Thomas H. Song

       298,330        222,600        520,930

John C. Cywinski

       312,898        293,832        606,730

Jay D. Johns

       264,500        119,369        383,869

Bryan R. Adel

       272,982        165,281        438,263

 

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COMPENSATION TABLES   

 

 

For additional information on the amounts earned for 2019, 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 2019 include amounts paid or reimbursed for the following:

 

Name

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

Dine Brands
Restaurant
Dining
Expenses

($)

 

Housing
and
Commuting

Expenses
($)

  Life and
Disability
Insurance
Premiums
($)
  Annual
Physical
Exam
($)
  Airline
Club
($)
 

Total  

($)  

Stephen P. Joyce

      15,000       14,000       157       262,887       5,766                   297,810  

Thomas H. Song

      15,000       14,000       2,337             2,910       3,400       550       38,197  

John C. Cywinski

      15,000       14,000       105             5,766                   34,871  

Jay D. Johns

      15,000       14,000       818             5,766       3,400             38,984  

Bryan R. Adel

      15,000       14,000       535             5,766       2,900             38,201  

 

 

Amounts for Mr. Joyce’s housing and commuting expenses are based on amounts actually paid or reimbursed to Mr. Joyce or service provider, as applicable.

 

(6)

Represents Mr. Joyce’s sign-on bonus.

 

(7)

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.

 

(8)

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

 

(9)

Represents a special recognition bonus paid to Mr. Song in August 2019.

 

(10)

Represents Mr. Song’s sign-on bonus.

 

(11)

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

 

(12)

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

 

(13)

Represents Mr. Cywinski’s sign-on bonus.

 

(14)

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

 

(15)

Includes special recognition RSAs awarded to Mr. Johns valued at $1,000,075 in connection with his promotion to President of the IHOP Business Unit.

 

(16)

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.

 

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   COMPENSATION TABLES

 

Grants of Plan-Based Awards in 2019

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 2019 Annual Incentive Plan (“AIP”), RSAs, NQSOs and cash LTIP awards under the 2016 Stock Incentive Plan and 2019 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 2019 Summary Compensation Table in this proxy statement.

 

              

 

 

 

 

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

  

 

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
($)

 

Stephen P. Joyce

                                            

  AIP

              2/12/2019        500,000        1,000,000        2,000,000                            

Thomas H. Song

                                            

  AIP

              2/12/2019        191,250        382,500        765,000                            

  LTIP

              2/12/2019        115,500        231,000        462,000                            

  RSA

       2/25/2019        2/12/2019                             2,335                      231,095

  NQSO

       2/25/2019        2/12/2019                                    10,853        98.97        237,985

John C. Cywinski

                                            

  AIP

              2/12/2019        246,376        492,752        985,504                            

  LTIP

              2/12/2019        144,375        288,750        577,500                            

  RSA

       2/25/2019        2/12/2019                             2,918                      288,794

  NQSO

       2/25/2019        2/12/2019                                    13,566        98.97        297,475

Jay D. Johns

                                            

  AIP(5)

              2/12/2019        164,063        328,125        656,250                            

  LTIP

              2/12/2019        53,625        107,250        214,500                            

  RSA

       2/25/2019        2/12/2019                             1,084                      107,283

  RSA(6)

       6/13/2019        6/3/2019                             10,556                  1,000,075

  NQSO

       2/25/2019        2/12/2019                                    5,039        98.97        110,495

Bryan R. Adel

                                            

  AIP

              2/12/2019        175,000        350,000        700,000                            

  LTIP

              2/12/2019        99,000        198,000        396,000                            

  RSA

       2/25/2019        2/12/2019                             2,001                      198,039

  NQSO

       2/25/2019        2/12/2019                                    9,303        98.97        203,996

 

(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)

RSAs reflected in this table cliff vest in full on the third anniversary of the date of grant.

 

(3)

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.

 

(4)

The amounts in this column represent the aggregate grant date fair value related to RSAs and NQSO awards granted in 2019 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, 2019 for information regarding assumptions underlying the valuation of equity awards.

 

(5)

Amounts under the AIP are pro-rated based on a target of 50% of base salary through June 2019 prior to Mr. Johns’ promotion to President of the IHOP Business Unit and a target of 75% of base salary for the remainder of the year following such promotion.

 

(6)

Represents special recognition RSAs granted to Mr. Johns on June 13, 2019 in connection with his promotion to President of the IHOP Business Unit. These RSAs vest in full on the third anniversary of the grant date subject to Mr. Johns’ continued employment through such date, or earlier upon an involuntary termination without cause.

 

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COMPENSATION TABLES   

 

Outstanding Equity Awards at 2019 Fiscal Year-End

The following table provides summary information regarding the outstanding equity awards for the Corporation’s NEOs at December 31, 2019.

 

    Option Awards   Stock Awards    
   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Securities Underlying
Unexercised 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

   

 

 

 

 

   

 

 

 

  350,000(2)    

 

 

   

 

 

 

40.58

 

   

 

 

 

9/12/2027

 

      82,676 (3)    

 

 

 

6,905,125

 

   

 

 

 

 

   

 

 

 

 

 
                      192,911 (4)       16,111,958              
                      2,252 (5)       188,127              

 

Thomas H. Song

   

 

 

 

4,645

 

   

 

 

 

  9,290(6)    

 

 

   

 

 

 

76.04

 

   

 

 

 

6/15/2028

 

   

 

 

 

2,604

 

(7)

   

 

 

 

217,486

 

   

 

 

 

 

   

 

 

 

 

 
          10,853(8)             98.97       2/25/2029       10,521 (9)       878,714              
                      2,335 (10)       195,019              

 

John C. Cywinski

   

 

 

 

39,250

 

   

 

 

 

19,625(11)  

 

 

   

 

 

 

54.82

 

   

 

 

 

3/15/2027

 

   

 

 

 

4,816

 

(12)

   

 

 

 

402,232

 

   

 

 

 

 

   

 

 

 

 

 
      7,944       15,888(13)           68.80       2/22/2028       13,682 (14)       1,142,721              
            13,566(15)           98.97       2/25/2029       3,958 (16)       330,572              
            —                            2,918 (17)       243,711          
                      11,811 (18)       986,434       17,716 (19)       1,479,651  

 

Jay D. Johns

   

 

 

 

3,184

 

   

 

 

 

—       

 

 

   

 

 

 

113.72

 

   

 

 

 

2/24/2025

 

   

 

 

 

2,006

 

(20)

   

 

 

 

167,541

 

   

 

 

 

 

   

 

 

 

 

 
      7,528       —                90.90       2/26/2026       1,200 (21)       100,224              
            8,526(22)           53.49       3/3/2027       1,084 (23)       90,536              
            4,814(24)           68.80       2/22/2028       10,556 (25)       881,637              
            5,039(26)           98.97       2/25/2029                          

 

Bryan R. Adel

   

 

 

 

4,723

 

   

 

 

 

—       

 

 

   

 

 

 

72.28

 

   

 

 

 

2/26/2023

 

   

 

 

 

2,777

 

(27)

   

 

 

 

231,935

 

   

 

 

 

 

   

 

 

 

 

 
      6,607       —                81.57       2/25/2024       2,639 (28)       220,409              
      5,210       —                113.72       2/24/2025       2,001 (29)       167,124              
      11,292       —                90.90       2/26/2026                          
            11,805(30)           53.49       3/3/2027                          
      5,296       10,592(31)           68.80       2/22/2028                          
          9,303(32)           98.87       2/25/2029                          

 

(1)

Per share value of stock awards is $83.52 based on the closing price of the Common Stock on the NYSE on December 31, 2019.

 

(2)

These NQSOs were granted subject to both performance-based and service-based vesting conditions. As noted in the CD&A, the performance-based vesting conditions associated with these NQSOs were satisfied as of December 31, 2019, although these NQSOs remain subject to service-based vesting conditions and 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 these performance-contingent NQSOs.

 

(3)

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

 

(4)

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.

 

(5)

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 vested in full on March 3, 2020.

 

(6)

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

 

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(7)

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

 

(8)

These NQSOs became exercisable as to one-third on February 25, 2020 and will become exercisable as to one-third on each of February 25, 2021 and 2022.

 

(9)

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

 

(10)

These RSAs will vest in full on February 25, 2022.

 

(11)

These NQSOs became exercisable on March 15, 2020.

 

(12)

These RSAs vested in full on March 15, 2020.

 

(13)

These NQSOs became exercisable as to one-half on February 22, 2020 and will become exercisable as to one-half on February 22, 2021.

 

(14)

These RSAs vested as to one-half on March 15, 2020 and will vest as to one-half on March 15, 2021.

 

(15)

These NQSOs became exercisable as to one-third on February 25, 2020 and will become exercisable as to one-third on each February 25, 2021 and 2022.

 

(16)

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

 

(17)

These RSAs will vest in full on February 25, 2022.

 

(18)

These RSUs will vest on March 1, 2022 subject to Mr. Cywinski’s continued employment with the Corporation through such date.

 

(19)

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.

 

(20)

These RSAs vested in full on March 3, 2020.

 

(21)

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

 

(22)

These NQSOs became exercisable on March 3, 2020.

 

(23)

These RSAs will vest in full on February 25, 2022.

 

(24)

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

 

(25)

These RSAs will vest in full on June 15, 2022.

 

(26)

These NQSOs became exercisable as to one-third on February 25, 2020 and will become exercisable as to one-third on each February 25, 2021 and 2022.

 

(27)

These RSAs vested in full on March 3, 2020.

 

(28)

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

 

(29)

These RSAs will vest in full on February 25, 2022.

 

(30)

These NQSOs became exercisable on March 3, 2020.

 

(31)

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

 

(32)

These NQSOs became exercisable as to one-third on February 25, 2020 and will become exercisable as to one-third on each February 25, 2021 and 2022.

 

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2019 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, 2019.

 

    

 

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.

                    1,355        131,692(4)    

Thomas H. Song

                    2,630        254,558(5)    

John C. Cywinski

                    6,841        595,030(6)    

Jay D. Johns

       15,182        522,774 (7)       1,090        105,937(8)  

Bryan R. Adel

       30,602        1,328,518 (9)       1,634        158,808(10)  

 

(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 $97.19 per share on the February 26, 2019 vesting date.

 

(5)

Value realized is based on a closing price of $96.79 per share on the June 15, 2019 vesting date.

 

(6)

Value realized is based on a closing price of $86.98 per share on the March 15, 2019 vesting date.

 

(7)

NQSO value realized on is based on the following transactions: 472 options exercised on February 27, 2019 at $72.28 and sold at a price of $96.59; 3,776 options exercised on February 27, 2019 at $81.57 and sold at a price of $96.65; 8,526 options exercised on February 27, 2019 at $81.57 and sold at a price of $96.74; and 2,408 options exercised on March 4, 2019 at $53.49 and sold at a price of $98.89.

 

(8)

Value realized is based on a closing price of $97.19 per share on the February 26, 2019 vesting date.

 

(9)

NQSO value realized on is based on the following transactions: 6,990 options exercised on February 21, 2019 at $52.37 and sold at a price of $99.50; 11,806 options exercised on February 28, 2019 at $53.49 and sold at a price of $97.20; 6,000 options exercised on July 5, 2019 at $53.49 and sold at a price of $103.50; and 5,806 options exercised on December 12, 2019 at $53.49 and sold at a price of $85.00.

 

(10)

Value realized is based on a closing price of $97.19 per share on the February 26, 2019 vesting date.

2019 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

 

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applicable benefit distribution date selected by the participant. No NEOs participated in the Deferred Compensation Plan during 2019 or had account balances as of December 31, 2019.

Employment Agreements and Equity Awards

The employment agreements for Mr. Joyce, Mr. Song, and Mr. Cywinski and the employment offer letters and Amended and Restated Executive Severance and Change in Control Policy for Mr. Adel and Mr. Johns 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 2019 Stock Incentive Plan and 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 three years or such shorter time as he has been employed 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;

 

   

continued insurance coverage for a maximum of 18 months;

 

   

up to $10,000 in outplacement assistance;

 

   

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 three years or such shorter time as he has been employed and (ii) Mr. Joyce’s target bonus for the then current fiscal year;

 

   

continued insurance coverage for a maximum of 18 months; and

 

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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 three years or such shorter time as he has been employed;

 

   

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;

 

   

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.

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 or 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 three years or such shorter time as he has been employed;

 

   

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 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 three years or such shorter time as he has been employed;

 

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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 three years or such shorter time as he has been employed;

 

   

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 letters for Mr. Adel and Mr. Johns 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.

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.

 

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Section 280G of the Code

The employment agreements for Mr. Joyce, Mr. Song, and Mr. Cywinski as well as the Amended and Restated Executive Severance and Change in Control Policy applicable to Mr. Adel and Mr. Johns 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 NEO’s employment had terminated or a “change in control” had occurred on December 31, 2019, based on the Corporation’s closing stock price on December 31, 2019. 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. In addition, the employment agreements for Mr. Joyce, Mr. Song, and Mr. Cywinski as well as the Amended and Restated Executive Severance and Change in Control Policy applicable to Mr. Adel and Mr. Johns provide that if the payments and benefits to a Named Executive Officer under his or her respective employment agreement or policy or another plan, arrangement or agreement would subject the Named Executive Officer to the excise tax imposed by Section 4999 of the Internal Revenue Code, then such payments will be reduced by the minimum amount necessary to avoid such excise tax, if such reduction would result in the Named Executive Officer receiving a higher net after-tax amount. The amounts reflected in this table do not reflect the application of any reduction in compensation or benefits pursuant to the terms of the applicable employment agreement or policy.

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.

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 and Mr. Cywinski, voluntary termination by the participant for “good reason” prior to a “change in control.”

 

Payments

   Joyce      Song      Johns      Cywinski      Adel  

Cash Severance

   $ 4,600,000      $ 753,750      $ 525,000      $ 1,113,797      $ 500,000    

Pro-Rata Bonus Payment

   $ 455,948      $ 0      $ 264,500      $ 0      $ 272,982    

Time-Vested NQSO Spread Value

     0      $ 34,745      $ 0      $ 680,173      $ 0    

Time-Vested RSA and RSU Value

   $ 6,682,520      $ 878,714      $ 881,637      $ 973,593      $ 0    

Cash LTIP Value

     0      $ 504,227      $ 0      $ 667,783      $ 0    

Performance- and Time-Vested NQSO Spread Value

   $ 15,029,000      $ 0      $ 0      $ 0      $ 0    

Performance- and Time-Vested RSU Value

   $ 15,592,548      $ 0      $ 0      $ 970,210      $ 0    

Welfare Benefit Value

   $ 24,175      $ 15,842      $ 0      $ 15,482      $ 0    

Outplacement

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

Aggregate Payments

   $ 42,394,191      $ 2,197,278      $ 1,676,137      $ 4,431,037      $ 777,982    

 

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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 and Mr. Cywinski, voluntary termination by the participant for “good reason” following a “change in control” (“CIC”).

 

Payments

   Joyce      Song      Johns      Cywinski      Adel  

Cash Severance

   $ 6,900,000      $ 1,785,000      $ 1,443,750      $ 2,227,593      $ 1,350,000    

Pro-Rata Bonus Payment

   $ 455,948      $ 298,330      $ 264,500      $ 312,988      $ 272,982    

Time-Vested NQSO Spread Value due to CIC

   $ 0      $ 69,489      $ 326,898      $ 797,109      $ 510,418    

Time-Vested RSA and RSU Value due to CIC

   $ 6,864,582      $ 1,291,219      $ 1,239,938      $ 2,119,236      $ 619,468    

Cash LTIP Value due to CIC

   $ 0      $ 800,710      $ 373,271      $ 1,015,545      $ 679,223    

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

   $ 15,029,000      $ 0      $ 0      $ 0      $ 0    

Performance-and Time-Vested RSU Value due to CIC

   $ 15,592,548      $ 0      $ 0      $ 2,425,525      $ 0    

Welfare Benefit Value

   $ 24,175      $ 31,683      $ 22,334      $ 30,963      $ 32,684    

Outplacement

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

Aggregate Payments

   $ 44,876,253      $ 4,286,431      $ 3,675,691      $ 8,974,959      $ 3,469,775    

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

 

Payments

   Joyce      Song      Johns      Cywinski      Adel  

Time-Vested NQSO Spread Value due to CIC

   $ 0      $ 69,489      $ 326,898      $ 797,109      $ 510,418    

Time-Vested RSA and RSU Value due to CIC

   $ 6,864,582      $ 1,291,219      $ 1,239,938      $ 2,119,236      $ 619,468    

Cash LTIP Value due to CIC

   $ 0      $ 800,710      $ 373,271      $ 1,051,545      $ 679,223    

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

   $ 0      $ 0      $ 0      $ 0      $ 0    

Performance- and Time-Vested RSU Value due to CIC

   $ 0      $ 0      $ 0      $ 0      $ 0    

Aggregate Payments

   $ 6,864,582      $ 2,161,418        1,940,107      $ 3,967,890      $ 1,809,109    

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

 

Payments

   Joyce      Song      Johns      Cywinski      Adel  

Pro-Rata Bonus Payment

   $ 455,948      $ 298,330      $ 264,500      $ 312,988      $ 272,982    

Time-Vested NQSO Spread Value due to Death or Disability

   $ 0      $ 69,489      $ 326,898      $ 797,109      $ 510,418    

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

   $ 6,864,582      $ 1,291,219      $ 1,239,938      $ 2,119,236      $ 619,468    

Cash LTIP Value due to Death or Disability

   $ 0      $ 503,270      $ 239,731      $ 667,783      $ 418,578    

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

   $ 15,029,000      $ 0      $ 0      $ 0      $ 0    

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

   $ 15,592,548      $ 0      $ 0      $ 970,210      $ 0    

Aggregate Payments

   $ 37,942,078      $ 2,162,308      $ 2,071,067      $ 4,867,326      $ 1,821,446    

 

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COMPENSATION TABLES   

 

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 2019,

 

   

The median of the annual total compensation of all of our employees, other than Mr. Joyce, was $16,466.

 

   

Mr. Joyce’s annual total compensation was $1,783,248. The total used for purposes of the CEO pay ratio differs from the amount reported in the Total column of the 2019 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 108 to 1.

 

   

The 2019 pay ratio calculation includes 2,987 restaurant employees that became our employees as a result of the December 2018 acquisition of 69 Applebee’s restaurants. For comparison to our 2018 pay ratio, if these employees had been excluded from the 2019 pay ratio calculation, the median of the annual total compensation of all of our employees, other than Mr. Joyce, would have been $109,829 and the ratio of annual total compensation of Mr. Joyce to the median would have been estimated to be 16 to 1. This supplemental pay ratio should not be viewed as a substitute for the pay ratio calculated in accordance with Item 402 of Regulation S-K as set forth above.

Identification of Median Employee

As of the December 31, 2019 median employee identification date, we had 3,547 employees, with 3,531 employees based in the United States and 16 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 16 employees in the UAE (4 employees), Mexico (9 employees), and Canada (3 employees). In determining the median employee, 3,531 employees in the United States and no employees located outside of the United States were used for the pay ratio calculation. This employee total includes 2,987 restaurant employees that became our employees as a result of our acquisition of 69 Applebee’s restaurants in December 2018.

For purposes of identifying the 2019 median employee from our employee population base, we considered the annual total sum of base salary, wages, overtime, tips, and target bonus, as applicable, 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, 2019 and annualized the compensation of any employee who was employed by us for less than the entire year.

Using this methodology, we determined that our median employee was a full-time, hourly employee located in Leland, North Carolina. 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.

 

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   COMPENSATION TABLES

 

Securities Authorized for Issuance Under Equity Compensation Plans

During 2019, the Corporation issued equity securities pursuant to the 2016 Dine Brands Global, Inc. Stock Incentive Plan and the 2019 Stock Incentive Plan. The 2019 Stock Incentive Plan was approved by stockholders at the Corporation’s 2019 Annual Meeting of Stockholders and replaced the Dine Brands Global, Inc. 2016 Stock Incentive Plan.

Equity Compensation Plan Information

The following table provides information as of December 31, 2019 about Common Stock that may be issued under the 2019 Stock Incentive Plan.

 

     (a)    (b)    (c)

Plan Category

  

Number of

Securities to
be Issued Upon

Exercise
of Options,
Warrants
and Rights (#)

   Weighted- Average
Exercise Price of
Outstanding Options,
Warrants and
Rights ($) /Share
  

Number of Securities  

Remaining Available for  

Future Issuance under

Equity  

Compensation Plans  

(Excluding Securities  

Reflected in Column  

(a)) (#)  

Equity Compensation Plans approved by security holders

       1,217,438        66.43        2,427,518

Equity Compensation Plans not approved by security holders

                    

Total

       1,217,438        66.43        2,427,518

 

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION    

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The following members of the Board of Directors served on the Compensation Committee during 2019: Daniel J. Brestle (Chairman), Howard M. Berk, and Caroline W. Nahas. None of the Corporation’s executive officers or directors served on the board of directors of any entities whose directors or officers served on the Compensation Committee of the Board of Directors. No current or past executive officers or employees of the Corporation serve on the Compensation Committee and no Compensation Committee member had a relationship during 2019 that would require disclosure pursuant to Item 404 of Regulation S-K.

 

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   EXECUTIVE OFFICERS OF THE CORPORATION

 

EXECUTIVE OFFICERS OF THE CORPORATION

General. The following table sets forth certain information with respect to each person who is currently an executive officer of the Corporation:

 

Name

   Age    Position and Offices with the Corporation

Stephen P. Joyce

   60    Chief Executive Officer

Thomas H. Song

   48    Chief Financial Officer

John C. Cywinski

   57    President, Applebee’s

Jay D. Johns

   59    President, IHOP

Bryan R. Adel

   57    Senior Vice President, Legal, General Counsel and Secretary

Executive officers of the Corporation are appointed by, and serve at the discretion of, the Board of Directors.

Biographical information for Mr. Joyce is provided in the section entitled “Proposal One: Election of Four Class I Directors and three Class II Directors – Continuing Directors.” Certain biographical information for the other executive officers is set forth below.

Mr. Song was appointed to the position of Chief Financial Officer in May 2018. Mr. Song served as Senior Vice President, Corporate Development and Innovation at Choice Hotels International, Inc. from September 2013 to May 2018. Previously, Mr. Song was Vice President, Corporate Development and Strategy for Hanover Insurance Group, Inc. from 2010 to August 2013.

Mr. Cywinski was appointed to the position of President, Applebee’s Business Unit in March 2017. Mr. Cywinksi served as Executive Vice President of Strategic Innovation and Marketing at Brinker International, Inc. from March 2016 to March 2017. Mr. Cywinski was previously with Yum! Brands, Inc. in several roles from August 2010 to April 2014, including as President, KFC Corporation U.S. from November 2011 to April 2014.

Mr. Johns was appointed to the position of President, IHOP in June 2019. Mr. Johns served as the Senior Vice President, Operations for IHOP from April 2017 to June 2019. Mr. Johns has been with the Corporation in various operations leadership roles since February 2009, including serving as the Senior Vice President, Strategic Operations Implementation from November 2013 to April 2017.

Mr. Adel was appointed to the position of Senior Vice President, Legal, General Counsel and Secretary of the Corporation in August 2010. Mr. Adel served as senior vice president, general counsel and corporate secretary for Viant Holdings, Inc., a provider of healthcare payment solutions, from 2007 to 2010. Mr. Adel also spent over ten years at McDonald’s Corporation in various legal and business roles. Mr. Adel served on the board of directors of Chipotle Mexican Grill, Inc. from 2001 to 2003.

 

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AUDIT-RELATED MATTERS   

 

AUDIT-RELATED MATTERS

REPORT OF THE AUDIT COMMITTEE

The Board of Directors has determined that:

 

   

each Audit Committee member is “independent” under the corporate governance listing standards of the NYSE and is or will become “financially literate,” as defined by the NYSE, within a reasonable period of time after appointment to the Audit Committee;

 

   

each member of the Audit Committee satisfies the “financial management expertise” standard, as required by the NYSE; and

 

   

Douglas M. Pasquale, Chairman of the Audit Committee, is an “audit committee financial expert,” as defined by the SEC.

Management is responsible for the preparation of financial statements and the financial reporting process, including the system of internal controls over financial reporting. Ernst & Young LLP (“Ernst & Young”), the Corporation’s independent auditor, is responsible for performing an independent audit of the Corporation’s consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and for issuing a report thereon. The Audit Committee is responsible for assisting the Board of Directors in monitoring:

 

   

the integrity of the Corporation’s financial statements;

 

   

the Corporation’s compliance with legal and regulatory requirements;

 

   

the Corporation’s independent auditor’s qualifications and independence; and

 

   

the performance of the Corporation’s independent auditor and the Corporation’s internal audit function.

It is the Audit Committee’s policy to review and approve in advance all proposed audit and non-audit services to be provided by the Corporation’s independent auditor.

During 2019, the Audit Committee met seven times and held separate discussions with management, the Corporation’s internal auditors and Ernst & Young. The Audit Committee reviewed and discussed the Corporation’s interim financial information contained in each quarterly earnings announcement with the Corporation’s Chief Executive Officer, Chief Financial Officer, General Counsel and Ernst & Young prior to public release. The Audit Committee reviewed the Corporation’s quarterly financial statements with management and Ernst & Young.

Management has represented to the Audit Committee that the Corporation’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The Audit Committee reviewed and discussed with management and Ernst & Young the Corporation’s fiscal year ended December 31, 2019 annual consolidated financial statements. The Audit Committee has also discussed the following with Ernst & Young:

 

   

the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (United States) and the SEC which include, among other items, matters related to the conduct of the audit of the Corporation’s annual consolidated financial statements;

 

   

the critical accounting policies and practices used in the preparation of the Corporation’s annual consolidated financial statements, alternative treatments of financial information within generally accepted accounting principles that Ernst & Young discussed with management, the ramifications of using such alternative treatments, and the treatment preferred by Ernst & Young; and

 

   

other written communications between Ernst & Young and management.

In addition, the Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young the firm’s independence from the Corporation and management, including all relationships between Ernst & Young and the Corporation.

 

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   AUDIT-RELATED MATTERS

 

The Audit Committee has considered whether the provision of non-audit services by Ernst & Young in the fiscal year ended December 31, 2019 is compatible with maintaining the auditors’ independence and determined that the provision of non-audit services by Ernst & Young is compatible with maintaining the auditors’ independence. The Audit Committee discussed with the Corporation’s internal auditors, Ernst & Young and management the overall scope and plans for their respective audits. The Audit Committee met with the internal auditors and Ernst & Young, with and without management present, to discuss the results of their respective audits, the evaluations of the Corporation’s internal controls over financial reporting, and the overall quality of the Corporation’s financial reporting. The Audit Committee also discussed with Ernst & Young whether there were any audit problems or difficulties, and management’s response. In addition, the Audit Committee monitored the Corporation’s compliance activities relating to the Sarbanes-Oxley Act of 2002.

Based on the reviews and discussions described above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, for filing with the SEC.

The Audit Committee also selected Ernst & Young as the Corporation’s independent auditor for the fiscal year ending December 31, 2020. The Board of Directors is recommending that stockholders ratify this appointment at the Annual Meeting.

THIS REPORT IS SUBMITTED BY THE

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

Douglas M. Pasquale (Chairman)

Howard M. Berk

Susan M. Collyns

Richard J. Dahl

Gilbert T. Ray

Independent Auditor Fees

The following table sets forth information concerning Ernst & Young’s fees for the fiscal years ended December 31, 2019 and 2018. All of the fees shown in the table were approved by the Audit Committee in conformity with its pre-approval process.

 

Type of Fee

   2019      2018  

Audit Fees

   $ 1,643,800      $ 1,674,724  

Audit-Related Fees

     5,300        0  

Tax Fees

     137,433        54,340  

All Other Fees

     202,000        2,000  

Total

   $ 1,988,533      $ 1,731,064  

Audit Fees comprise fees for professional services necessary to perform an audit or review in accordance with the standards of the Public Company Accounting Oversight Board, including services rendered for the audit of the Corporation’s annual financial statements (including services incurred in rendering an opinion under Section 404 of the Sarbanes-Oxley Act of 2002) and review of quarterly financial statements. Audit fees also include fees for services that are normally incurred in connection with statutory and regulatory filings or engagements, such as comfort letters, statutory audits, attest services, consents, and review of documents filed with the SEC.

Audit-Related Fees comprise fees for services that are reasonably related to the performance of the audit or review of the Corporation’s financial statements, including the support of business acquisition and divestiture activities, independent assessment of controls related to outsourcing services, and review of retirement and other benefit-related programs.

Tax Fees comprise fees for tax compliance, tax planning, and tax advice, including the provision of such services in connection with business acquisition and divestiture activities.

 

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All Other Fees consists of fees relating to other non-audit and non-tax services.

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

The Audit Committee reviews and, as appropriate, approves in advance the independent auditor’s annual engagement letter, including the proposed fees contained therein. The Audit Committee also reviews all audit and permitted non-audit engagements and relationships between the Corporation and its independent auditor, and approves in advance all of the fees related thereto. These services may include audit services, audit-related services, tax services, and other specifically designated non-audit services.

 

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   MATTERS TO BE VOTED UPON AT THE ANNUAL MEETING

 

MATTERS TO BE VOTED UPON AT THE ANNUAL MEETING

PROPOSAL ONE: ELECTION OF FOUR CLASS I DIRECTORS AND THREE CLASS II DIRECTORS

At the 2019 annual meeting of stockholders, stockholders approved an amendment to the Corporation’s Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors for one-year terms, commencing upon the expiration of a director’s current term. Stockholders approved a phased-in approach whereby Class I and Class II directors would stand for election at the Annual Meeting, and Class I, Class II and Class III directors would stand for election at the 2021 annual meeting (in each case, until their respective successors are duly elected and qualified). As such, all directors will stand for election beginning at the 2021 annual meeting. We are continuing to refer to directors by class until all directors are declassified following the 20201 annual meeting.

Based on the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors has designated the four nominees listed below for election as Class I directors and the three nominees listed below as Class II directors of the Corporation, each to serve for a term of one year that will expire at the Corporation’s 2021 annual meeting of stockholders. The Board of Directors has also designated Richard J. Dahl to serve as the independent Chairman of the Board of Directors.

Your proxy will be voted as specified thereon or, if no instructions are given, for the Board of Directors nominees; however, the persons designated to vote proxies reserve full discretion to vote the shares represented by the proxies for the election of any substitute nominee or nominees designated by the Board of Directors in the event the nominee who would otherwise receive the votes is unavailable or unable to serve as a candidate for election as a director. The Board of Directors has no reason to believe that any of the nominees, each of whom currently serves on the Board of Directors, will be unavailable or unable to serve if elected.

The Board of Directors believes that each of the director nominees and continuing directors is well qualified to serve on the Board of Directors, and each of the nominees brings his or her particular business, industry and financial experience and expertise to the Board of Directors. The Board of Directors believes that the backgrounds and qualifications of all of the directors, considered as a group, provide a complementary blend of diversity, experience, knowledge and abilities.

The following paragraphs give the name and age of each director nominee, as well as each nominee’s business experience over the last five years or more. Immediately following the description of each nominee’s business experience is a description of the particular experience, skills and qualifications that were instrumental in the Nominating and Corporate Governance Committee’s determination that the nominee should serve as a director of the Corporation.

Class I Directors—Terms to Expire in 2020

Howard M. Berk (age 55). Mr. Berk has served on the Corporation’s Board of Directors since 2009. Since 2002, Mr. Berk has been a partner at MSD Capital, L.P., a private investment firm. From 1998 to 2002, Mr. Berk was managing director of TG Capital Corp., an investment group that manages the capital of a single family and acquires and invests in both public and private companies. From 1995 to 1998, Mr. Berk was with The Stenbeck Group, acquiring and managing businesses in multiple countries. Prior to that, he was with Goldman, Sachs & Co., where he worked in the principal investment area, as well as the mergers and acquisitions department. Mr. Berk’s qualifications to sit on the Corporation’s Board of Directors include his experience in dealing with public company boards of directors from a public investor perspective and his experience in finance and managing and investing private capital.

Daniel J. Brestle (age 74). Mr. Brestle has served on the Corporation’s Board of Directors since 2009. Mr. Brestle has served as a Senior Advisor to GF Capital Management & Advisors, LLC, a private equity and real estate investment company, since 2009. Previously, Mr. Brestle served as vice chairman and president of Estee Lauder Companies Inc. North America, a manufacturer and marketer of cosmetics products. Mr. Brestle held this position until he retired in 2009 after spending more than 30 years in leadership positions within the Estee Lauder organization and its family of brands. During his tenure, he held numerous positions including chief operating officer and group president of Estee Lauder’s high growth specialty brands. Prior to these positions, he was president of the Estee Lauder, Clinique and Prescriptives brands. Prior to Estee Lauder, Mr. Brestle held various positions of increasing responsibility in distribution, manufacturing and operations at

 

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Johnson & Johnson and served in the United States Air Force. Mr. Brestle served on the board of directors of Abercrombie & Fitch from 2005 to 2007. Mr. Brestle’s qualifications to sit on the Corporation’s Board of Directors include his experience in senior management at a multi-national consumer products public company, including experience in operations, manufacturing, marketing and brand-building, and his experience on the boards of directors of public companies.

Caroline W. Nahas (age 71). Ms. Nahas has served on the Corporation’s Board of Directors since 1992. She has served as Senior Advisor of Korn Ferry, an organizational and people advisory firm, since September 2019 and previously served as Vice Chair of Korn Ferry from January 2015 to September 2019. From 1998 to 2015, she held the position of managing director, Southern California, or similar positions, at Korn/Ferry International. She also served as a member of the executive committee of Korn/Ferry International from 1995 until 1998. Ms. Nahas is the former chairman of the board of directors and currently serves on the board of the United Way of Greater Los Angeles. Ms. Nahas is also vice chairman and an executive committee member of the UCLA Anderson School of Management-Board of Advisors. She previously served as a director of the Los Angeles Chamber of Commerce and Town Hall Los Angeles. Ms. Nahas’ qualifications to sit on the Corporation’s Board of Directors include her experience in a senior executive position with a professional services firm, her expertise in executive recruiting, human resources and compensation matters, and her experience on for-profit and not-for-profit boards of directors.

Gilbert T. Ray (age 75). Mr. Ray has served on the Corporation’s Board of Directors since 2004. He retired as a partner of the law firm of O’Melveny & Myers LLP in 2000. Mr. Ray practiced corporate law and has extensive experience with conventional corporate and tax-exempt transactions, as well as international finance. He served as counsel in connection with numerous securities offerings, acquisitions, dispositions and mergers. In addition, Mr. Ray has been a member of the board of directors of DiamondRock Hospitality Company since 2004. He formerly served on the board of directors of three other publicly-traded companies. Mr. Ray is also a trustee of the Seasons Series Trust, the SunAmerica Series Trust and The John Randolph Haynes and Dora Haynes Foundation. Mr. Ray’s qualifications to sit on the Corporation’s Board of Directors include his years of extensive experience in the legal industry as an advisor, his valuable insights with respect to compensation and corporate governance matters and his perspective in board deliberations drawing from lessons learned from his service on the boards of directors of public and private companies and non-profit organizations.

Class II Directors—Terms to Expire in 2020

Susan M. Collyns (age 53). Ms. Collyns is the President and Chief Financial Officer of Beachbody, LLC, a health, fitness and nutrition company, and joined the company in August 2014. Previously, Ms. Collyns served as the Chief Financial Officer of Dun and Bradstreet Credibility Corp., a financial data subscription business, from July 2012 to August 2014. From 2001 to 2011, Ms. Collyns served as Chief Financial Officer and Chief Operating Officer of California Pizza Kitchen, Inc. Ms. Collyns has served on the board of directors of Waitr Holdings Inc. since May 2019 and is a member of its compensation committee and the chair of its audit committee. Ms. Collyns previously served on the board of directors and audit committee of Potbelly, Inc. from May 2018 to May 2019. Ms. Collyns also served on the board of directors of Zoe’s Kitchen, Inc. from February 2014 to November 2018, where she served as the chair of the audit committee and was a member of the nominating and governance committee. Ms. Collyns’ qualifications to sit on the Corporation’s Board of Directors include her deep and pertinent restaurant and food service industry insight and her expertise in accounting, finance and operations.

Larry A. Kay (age 72). Mr. Kay has served on the Corporation’s Board of Directors since 1987, before the Corporation went public. Mr. Kay served as the Lead Director of the Board of Directors of the Corporation from 2006 to 2009. He served as Chairman of the Board of Directors of the Corporation from 2003 to 2006. From 1978 to 1993, Mr. Kay was employed by the Corporation in a variety of capacities, including general counsel and executive vice president, administration. Mr. Kay served as chief executive officer and managing member of BSG Technologies, LLC, a sound technology licensing company, from 2008 to 2016. Mr. Kay was a private consultant and investor from 1994 to 2008. He served as a director of Design Center Solutions, Inc. dba Bridgeway Media Group and was an honorary member of the board of directors of the New Century Chamber Orchestra. Mr. Kay’s qualifications to sit on the Corporation’s Board of Directors include his prior experience as the Corporation’s Chairman of the Board of Directors and Lead Director, his experience as a consultant and private investor, his prior experience in senior management of the Corporation and his service on the boards of directors of private companies and non-profit organizations.

Douglas M. Pasquale (age 65). Mr. Pasquale has served on the Corporation’s Board of Directors since March 2013. He has served as chief executive officer of Capstone Enterprises Corporation, an investment and consulting firm, since January 2012.

 

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Mr. Pasquale served as Nationwide Health Properties’ chairman of the board of directors from 2009 to 2011, president and chief executive officer from 2004 to 2011 and executive vice president and chief operating officer from 2003 to 2004. Mr. Pasquale served as a director of Nationwide Health Properties from 2003 to 2011. He also served on the board of directors of Ventas, Inc. from 2011 to May 2017. Mr. Pasquale has served on the board of directors of Alexander & Baldwin, Inc. since 2005, Terreno Realty Corporation since 2010 and Sunstone Hotel Investors, Inc. since 2011. Mr. Pasquale’s qualifications to sit on the Corporation’s Board of Directors include his prior experience in senior executive positions at public and private companies, his experience in management, accounting, finance, mergers, acquisitions and strategic planning, and his service on the boards of directors of public and private companies.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION

OF ALL OF THE DIRECTOR NOMINEES.

Continuing Directors

Class III Directors—Terms to Expire in 2021

Richard J. Dahl (age 68). Mr. Dahl serves as the Corporation’s independent Chairman of the Board of Directors, a position he has held since September 2017. From March 2017 to September 2017, Mr. Dahl served as the Chairman of the Board of Directors and Interim Chief Executive Officer of the Corporation. He also served briefly as Interim President, Applebee’s Business Unit in March 2017 prior to Mr. Cywinski’s appointment to that role. He has served on the Corporation’s Board of Directors since 2004 and served as the Corporation’s Lead Director from January 2010 to March 2017. Mr. Dahl served on the board of directors of the James Campbell Company LLC, a privately-held, nationally diversified real estate company, from 2010 to May 2019 and previously served as the president and chief executive officer of James Campbell Company LLC from August 2010 to December 2016 and the chairman of the board of directors from 2010 to May 2018. He has been a member of the board of directors of Hawaiian Electric Industries, Inc. since January 2017 and served as a member of the board of directors of its subsidiary, Hawaiian Electric Company, Inc., from January 2017 to May 2019. He has been a member of the boards of directors of IDACORP, Inc. and its principal subsidiary, Idaho Power Company, since 2008 and has been chairman of the boards since May 2019. He served as a member of the board of directors of International Rectifier Corporation from February 2008 to January 2015 and as chairman of the board from May 2008 to January 2015. Mr. Dahl also served on the board of directors and as president and chief operating officer of Dole Food Company, Inc. from 2004 to 2007. Mr. Dahl’s qualifications to sit on the Corporation’s Board of Directors include his experience in senior management of public and private companies, including service as chairman, president, chief executive officer, chief operating officer and chief financial officer, his experience on the boards of directors of public companies, including service as the former chairman of the Audit Committee of the Corporation and on the audit committees of other public companies and his experience as a certified public accountant.

Stephen P. Joyce (age 60). Mr. Joyce serves as the Corporation’s Chief Executive Officer, a position he has held since September 2017. He has also served on the Corporation’s Board of Directors since February 2012. Mr. Joyce served as president and chief executive officer of Choice Hotels International, Inc., a publicly-traded lodging franchisor, from 2008 to September 2017 and as a director from 2008 to September 2017. From 1982 to 2008, Mr. Joyce was with Marriott International, Inc., where he attained the role of executive vice president, global development/owner and franchise services, in addition to holding other leadership positions. Mr. Joyce’s qualifications to sit on the Corporation’s Board of Directors include his experience in senior management of public companies, including service as president, chief executive officer and chief operating officer, and his experience on the boards of directors of public and private companies and not-for-profit organizations.

Lilian C. Tomovich (age 52). Ms. Tomovich has served on the Corporation’s Board of Directors since January 2017. She served as the Chief Experience Officer and Chief Marketing Officer for MGM Resorts International, a global hospitality company, from July 2014 to December 2019. Ms. Tomovich served as the Senior Vice President, US Consumer Marketing for MasterCard Worldwide, a global payments solutions company, from 2013 to 2014 and was the country head of Marketing for Canada from 2010 to 2013. Ms. Tomovich’s qualifications to sit on the Corporation’s Board of Directors include her 25 years of marketing experience across all channels in the hospitality, retail, financial services and telecom industries.

 

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PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE CORPORATION’S INDEPENDENT AUDITOR FOR THE 2020 FISCAL YEAR

Ernst & Young LLP served as the Corporation’s independent auditor for the fiscal year ended December 31, 2019 and the Audit Committee has unanimously selected Ernst & Young LLP to serve as the Corporation’s independent auditor for the fiscal year ending December 31, 2020.

Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. Unless otherwise indicated thereon, the persons named in the proxy card will vote all proxies in favor of ratifying the appointment of Ernst & Young LLP as the Corporation’s independent auditors. If stockholders do not approve this proposal, the Audit Committee will reconsider the appointment of Ernst & Young LLP as the Corporation’s independent auditor.

THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE “FOR” THE

RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE CORPORATION’S INDEPENDENT

AUDITOR FOR THE 2020 FISCAL YEAR.

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

Pursuant to Section 14A of the Exchange Act, the Board of Directors provides stockholders with the opportunity to cast an advisory vote on the Corporation’s executive compensation. Pursuant to an advisory vote at our 2017 annual meeting, our stockholders elected to hold such advisory votes on an annual basis until the next vote regarding the frequency of future advisory votes which will occur at the annual meeting in 2023.

The core of the Corporation’s executive compensation policies and practices continues to be to pay-for-performance. Our executive officers are compensated in a manner consistent with our strategy, competitive practice, sound corporate governance principles, and stockholder interests and concerns. The Board of Directors believes the Corporation’s compensation programs and policies are strongly aligned with the long-term interests of the stockholders of the Corporation.

Stockholders are urged to read the “Compensation Discussion and Analysis” section of this proxy statement for additional details on executive compensation, including the Corporation’s compensation philosophy and objectives and the 2019 compensation of the Corporation’s NEOs.

The Board of Directors recommends that stockholders indicate their support for the compensation of the Corporation’s NEOs and the Corporation’s compensation philosophy as described in this proxy statement by approving the following resolution:

“RESOLVED, that the stockholders hereby approve, on an advisory basis, the compensation paid to the named executive officers, as disclosed in the Corporation’s proxy statement for the 2020 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the 2019 Summary Compensation Table, other compensation tables, narrative discussion and related disclosure.”

Although this vote is advisory and therefore non-binding on the Corporation, the Board of Directors and the Compensation Committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our NEOs.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL,

ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE CORPORATION’S NAMED

EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.

 

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PROPOSAL FOUR: A STOCKHOLDER PROPOSAL REQUESTING THAT THE BOARD OF DIRECTORS ENGAGE AN INVESTMENT BANKING FIRM TO EFFECTUATE A SPIN-OFF THE CORPORATION’S IHOP BUSINESS UNIT

The Corporation received from JCP Investment Partnership, LP (“JCP”) the following stockholder proposal (for purposes of this section, the “JCP Proposal”) for action at the Annual Meeting. JCP is located at 1177 West Loop South, Suite 1320, Houston, TX 77027. JCP has indicated that it has held at least $2,000 in market value of the Corporation’s securities entitled to be voted on the JCP Proposal for at least one year, and confirmed JCP’s intention to continue to hold those securities through the date of the Annual Meeting.

The JCP Proposal will be voted on at the Annual Meeting upon proper presentation by JCP. The following text of the JCP Proposal and supporting statement appears exactly as received by the Corporation. All statements contained in the JCP Proposal are the sole responsibility of JCP.

JCP Proposal

RESOLVED, that the stockholders of Dine Brands Global, Inc. (the “Company”) hereby request that the Board of Directors (the “Board”) and management act expeditiously, consistent with effective tax considerations, to engage an investment banking firm to effectuate a spin-off of the Company’s IHOP business segment (“IHOP”) into a separately traded public company.

Supporting Statement:

We believe that the market significantly undervalues the Company due to its segments, IHOP and Applebee’s Grill & Bar (“Applebee’s”), having vastly different growth opportunities. Based on the Company’s 2018 Annual Report filed on Form 10-K, the Key Performance Indicators of IHOP’s same store sales and net unit growth have outpaced those of Applebee’s by a material amount over the last 5 years.

Based on its performance metrics, we believe that a standalone IHOP would be valued and classified as a growth company, which would allow IHOP to trade at a materially higher multiple than the Company currently trades. Today, the Company’s valuation multiple is significantly discounted relative to its peers. Separating the IHOP and Applebee’s businesses would allow the market to value each business as a “pure play” in line with peer trading multiples in their respective sectors and allow the respective management teams to focus on each company’s growth. We believe that the valuation increase and potential earnings increase for IHOP would vastly outweigh the existing synergies associated with keeping IHOP and Applebee’s together.

At the JP Morgan Gaming, Lodging, Restaurant & Leisure Conference on March 14, 2019, the Company acknowledged that its valuation differs from peers.

Even if improvements in operating metrics were to materialize, we believe the Company would still trade at a discount relative to its potential value due to the widely divergent growth opportunities of its businesses.

Further, a spin-off of IHOP would be similar to actions taken by a number major restaurant companies over the last decade, including Brinker International’s sale of On the Border and Darden Restaurants’ sale of Red Lobster. Notably, both companies have experienced significant share price appreciation since such dispositions.

We believe that a spin-off of IHOP into a separately traded public company could create significant stockholder value and urge stockholders to vote FOR this proposal.

THE BOARD OF DIRECTORS’ RESPONSE TO THE STOCKHOLDER PROPOSAL

The Board of Directors recommends that you vote AGAINST this proposal.

For the reasons set forth below, the Board of Directors has determined that a spin-off of the Company’s IHOP business unit is not in the best interests of the Company and its stockholders at this time.

The Board of Directors and management regularly evaluate the optimal business portfolio composition and allocation of capital to generate stockholder value, including capital expenditures, acquisitions, divestitures and returning capital to stockholders in the form of dividends and share repurchases. The Board remains open to considering all alternatives that

 

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could create value for our stockholders, although the Board does not believe that a spin-off of IHOP is recommended at this time. In addition, the Board believes that a spin-off of IHOP would materially affect the Company’s ability to continue engaging in share repurchases and dividends at current levels.

Further, the Board strongly believes that it should be free to evaluate and pursue the strategies and opportunities that have the greatest potential to maximize stockholder value. In contrast, the proposal requests the Board to engage an investment banking firm solely to effectuate a spin-off without accounting for whether another strategy would be likely to create more value. In so doing, the proposal may preclude the Board from considering other value-enhancing strategies and transactions. The Board believes it is not in the best long-term interests of stockholders to limit the Board’s flexibility in making decisions regarding the optimal business portfolio and capital allocation policy of the Company.

The Board will continue to evaluate the Company’s strategy and structure on a regular basis to ensure it is well-positioned to create value for stockholders for the future, including the consideration of a spin-off of IHOP.

FOR THESE REASONS, THE BOARD OF DIRECTORS RECOMMENDS

THAT STOCKHOLDERS VOTE AGAINST THIS PROPOSAL.

 

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   PROPOSALS OF STOCKHOLDERS

 

PROPOSALS OF STOCKHOLDERS

The Board of Directors will make provision for presentation of proposals of stockholders at the 2021 annual meeting of stockholders provided such proposals are submitted by eligible stockholders who have complied with the Bylaws of the Corporation and/or the relevant regulations of the SEC. In order for any such proposals to be considered for inclusion in the proxy materials for the 2021 annual meeting of stockholders, the proposal should be mailed to Dine Brands Global, Inc., Attn: Office of the Secretary, 450 North Brand Boulevard, Glendale, California 91203, and must be received no later than December 2, 2020.

Stockholders who intend to present a proposal at the 2021 annual meeting of stockholders without inclusion of such proposal in the Corporation’s proxy materials or to nominate a director to stand for election at the 2021 annual meeting of stockholders are required to provide notice of such proposal or nomination to the Corporation no earlier than February 11, 2021 and no later than March 13, 2021. The Corporation reserves the right to reject, rule out of order, or take other appropriate action with respect to any proposal or nomination that does not comply with these and other applicable requirements.

 

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HOUSEHOLDING OF PROXY MATERIALS   

 

HOUSEHOLDING OF PROXY MATERIALS

The SEC permits us to deliver a single copy of the notice, proxy statement and annual report to stockholders who have the same address and last name, unless we have received contrary instructions from such stockholders. Each stockholder will continue to receive a separate proxy card. This procedure, called “householding,” will reduce the volume of duplicate information you receive and reduce our printing and postage costs. We will promptly deliver a separate copy of the notice, proxy statement and annual report to any such stockholder upon written or oral request. A stockholder wishing to receive a separate notice, proxy statement or annual report can notify us at Dine Brands Global, Inc., Investor Relations, 450 North Brand Boulevard, 7th Floor, Glendale, CA 91203, telephone: (866) 995-DINE. Similarly, stockholders currently receiving multiple copies of these documents can request the elimination of duplicate documents by contacting us as described above.

 

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   OTHER BUSINESS

 

OTHER BUSINESS

As of the date of this proxy statement, the management of the Corporation is not aware of any other matters to be brought before the Annual Meeting. However, if any other matters are properly brought before the Annual Meeting, the persons named in the enclosed form of Proxy will have discretionary authority to vote all proxies with respect to such matters in accordance with their best judgment.

By Order of the Board of Directors,

 

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Bryan R. Adel

Senior Vice President, Legal, General Counsel and Secretary

April 1, 2020

Glendale, California

 

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APPENDIX A   

 

Appendix A

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)

This proxy statement includes references to the Corporation’s non-GAAP financial measures “adjusted net income available to common stockholders per diluted share (AEPS or adjusted EPS).” Management may use non-GAAP financial measures along with the corresponding U.S. GAAP measures to evaluate the performance of the business and to make certain business decisions. Additionally, adjusted EPS is one of the metrics used in determining payouts under the Corporation’s annual cash incentive plan. Management believes that non-GAAP financial measures provide additional meaningful information that should be considered when assessing the business and the Corporation’s performance compared to prior periods and the marketplace. Adjusted EPS is supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.

Reconciliation of net income available to common stockholders to net income available to common stockholders, as adjusted for the following items: Amortization of intangible assets; loss on extinguishment of debt; non-cash interest expense; administrative reorganization costs; closure and impairment charges; debt refinancing costs; business acquisition costs; nonrecurring restaurant costs; gain or loss on disposition of assets; the combined tax effect of the preceding adjustments, and income tax adjustments considered unrelated to the respective current period operations, as well as related per share data:

 

    

 

Twelve Months Ended
December 31,

 
     2019     2018  

Net income available to common stockholders, as reported

   $ 100,814     $ 77,643  

Amortization of intangible assets

     11,702       10,105  

Loss on extinguishment of debt

     8,276        

Non-cash interest expense

     3,369       3,792  

Administrative reorganization costs

     1,606        

Closure and impairment charges

     1,487       2,107  

Debt refinancing costs

           2,523  

Business acquisition costs

           1,114  

Nonrecurring restaurant costs

     385        

(Gain) loss on disposition of assets

     (332     (625

Net income tax provision for above adjustments

     (6,888     (4,944

Income tax adjustments(1)

           4,434  

Net income allocated to unvested participating restricted stock

     (673     (631

Net income available to common stockholders, as adjusted

   $ 119,746     $ 95,518  

 

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   APPENDIX A

 

    

 

Twelve Months Ended
December 31,

 
     2019     2018  

Diluted net income available to common stockholders per share:

    

Net income available to common stockholders, as reported

   $ 5.85     $ 4.37  

Amortization of intangible assets

     0.50       0.42  

Loss on extinguishment of debt

     0.36        

Non-cash interest expense

     0.14       0.16  

Administrative reorganization costs

     0.07        

Closure and impairment charges