UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b), (c) On May 17, 2023 and following a nationwide search, the Board of Directors (the “Board”) of Texas Roadhouse, Inc., a Delaware corporation (the “Company”), appointed David Christopher Monroe, age 56, as Chief Financial Officer of the Company, effective as of June 28, 2023. In this role, Mr. Monroe will be responsible for overseeing the Company’s accounting, financial reporting, investor relations, tax, treasury, internal audit, and financial analysis functions, as well as serving as the Company’s principal financial officer.
Mr. Monroe joined Southwest Airlines in September 1991, where he served in various positions, including Director of Corporate Finance, Assistant Treasurer and Vice President Treasurer, until his promotion in 2017 to Senior Vice President of Finance and Treasurer. As Senior Vice President of Finance and Treasurer, he oversaw the overall capital strategy, planning and structure for Southwest Airlines with responsibility for corporate insurance and risk management, as well as supply chain management and corporate sustainability. Mr. Monroe has over 34 years of finance experience.
Keith V. Humpich will continue to serve as the Company’s interim Chief Financial Officer until June 28, 2023. As described in the Current Report on 8-K dated January 6, 2023, Mr. Humpich has served as the interim Chief Financial Officer and principal accounting officer since January 4, 2023. Mr. Humpich will continue to serve as the Company’s principal accounting officer.
Neither Mr. Monroe nor Mr. Humpich has any direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Chief Financial Officer Employment Agreement
In connection with his appointment as the Company’s Chief Financial Officer, we entered into an employment agreement with Mr. Monroe on May 17, 2023. The employment agreement has an effective date of June 28, 2023 and an initial term expiring on January 7, 2024. Thereafter, the term will automatically renew for successive one-year terms unless either party elects not to renew by providing written notice to the other party at least 60 days before expiration.
Base Salary. The employment agreement establishes an annual base salary of $500,000. During the term of his employment agreement, base salary increases are at the discretion of the Compensation Committee.
Incentive Bonus. The employment agreement also provides an annual short-term cash incentive opportunity with a base target bonus of $400,000 (which amount shall be prorated based on his 2023 fiscal year service commencing on June 28, 2023 and continuing to and through December 26, 2023), with increases in the target bonus amount at the discretion of the Compensation Committee. During the term of his employment agreement, the performance criteria and terms of bonus awards are at the discretion of the Compensation Committee. The targets are currently based upon earnings per share growth and pre-tax profits. Depending on the level of achievement of the goals, the bonus may be reduced to a minimum of $0 or increased to a maximum of two times the base target amount under the current incentive compensation policy of the Compensation Committee of the Board.
Signing Bonus. The employment agreement also provides that he will receive a one-time signing bonus in the amount of $500,000. The signing bonus will be paid in two equal installments of $250,000 each in the following manner: (i) the first installment will be due and payable on or before July 1, 2023, and (ii) the second installment will be due and payable on or before January 1, 2024. If he resigns or is terminated for Cause (as defined in the employment agreement) on or before June 27, 2024, then he will be obligated to reimburse the Company for a prorated portion of such signing bonus (which amounts shall be prorated on a day-for-day basis).
Stock Awards. The employment agreement provides that the Compensation Committee of the Board may grant stock awards to Mr. Monroe during the term of his employment agreement. The amount, performance criteria and terms of equity awards are at the discretion of the Compensation Committee of the Board. In connection with the same, on May 17, 2023, the Compensation Committee authorized the grant of service based restricted stock units with a grant date of June 28, 2023, for his partial 2023 fiscal year service under the employment agreement to be calculated in the manner described in this paragraph. The number of service based restricted stock units will be calculated by dividing $250,000 by the per share closing sales price of the Company’s common stock on the Nasdaq Global Select Market on the trading day immediately preceding the grant date, with such quotient being rounded up or down to the nearest 100 shares. The $250,000 value of his service based restricted stock units reflects a prorated amount of the service based restricted stock units that he would have otherwise received to the extent he had served as the Company’s Chief Financial Officer for the entire 2023 fiscal year. These service based restricted stock units will vest on December 31, 2024, provided he is still employed as of the vesting date.
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Additionally, on May 17, 2023, the Compensation Committee authorized the grant of performance based restricted stock units with a grant date of June 28, 2023, for his partial 2023 fiscal year service under the employment agreement to be calculated in the manner described in this paragraph. The number of these performance based restricted stock units will be calculated by dividing $150,000 by the per share closing sales price of the Company’s common stock on the Nasdaq Global Select Market on the trading day immediately preceding the grant date, with such quotient being rounded up or down to the nearest 100 shares. The $150,000 value of his performance based restricted stock units reflects a prorated amount of the performance based restricted stock units that he would have otherwise received to the extent he had served as the Company’s Chief Financial Officer for the entire 2023 fiscal year. Additionally, these performance based restricted stock units will vest on January 8, 2024, subject to the achievement of defined goals established by the Compensation Committee of the Board. The performance targets are based upon earnings per share growth and pre-tax profits. Depending on the level of achievement of the goals, the number of performance based restricted stock units may be reduced to zero or increased to a maximum of two times the target amount shown above.
Separation and Change in Control Arrangements. Mr. Monroe’s employment agreement generally provides that if his employment is terminated during the term of the employment agreement for a Qualifying Reason (as defined in the employment agreement), the Company will pay the officer three months of base salary, unless the termination occurs within 12 months following a Change in Control (as defined in the employment agreement), in which case an amount equal to Mr. Monroe’s current base salary remaining for the then existing term of his employment agreement will be paid. In addition, if his termination occurs for a Qualifying Reason within 12 months following a Change in Control, then he shall be paid any incentive bonus earned but not yet paid for any fiscal year ended before the date of termination, plus an incentive bonus for the year in which the date of termination occurs, equal to his target bonus for that year, prorated based on the number of days in the fiscal year elapsed before the date of termination.
The employment agreement also provides for the reduction of Change in Control payments to the maximum amount that could be paid to Mr. Monroe without giving rise to the excise tax imposed by Section 4999 of the Internal Revenue Code. For purposes of his employment agreement, termination for a Qualifying Reason is generally defined to be attributable to one of the following: (i) the result of Mr. Monroe having submitted to the Company his resignation in accordance with a request by the Board or the chief executive officer, provided that such request is not based on the Company’s finding that Cause for termination exists, (ii) a termination for Good Reason (as defined in the employment agreement) within 12 months of a Change in Control, or (iii) a termination by the Company for any reason other than Cause or as a result of death or disability which entitles Mr. Monroe to benefits under the Company’s long-term disability plan. The severance payments are generally contingent upon his execution of a full release of claims against the Company and continued compliance with the non-competition, non-solicitation, confidentiality and other restrictive covenants. If his employment is terminated for any reason other than a Qualifying Reason (such as his death, disability or for Cause), then the Company will pay only the base salary accrued for the last period of actual employment and any accrued paid time off, in accordance with policies of the Company in effect from time to time.
Non-competition and other Restrictions. Mr. Monroe has agreed not to compete with us during the term of his employment and for a period of two years following the termination of his employment agreement. The employment agreement also contains confidentiality, non-solicitation, and non-disparagement provisions. The employment agreement contains a "clawback" provision that any compensation paid or payable pursuant to the employment agreement or any other agreement or arrangement with the Company shall be subject to recovery or reduction in future payments in lieu of recovery pursuant to any Company clawback policy in effect from time to time, whether adopted before or after the date of the employment agreement.
The foregoing description of Mr. Monroe’s compensation arrangements is qualified in its entirety by reference to his employment agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Principal Accounting Officer Compensation
In connection with Mr. Humpich’s continued service as the Company’s principal accounting officer after June 28, 2023, he will continue to receive a $100,000 stipend per fiscal quarter (or portion thereto) in which he continues to serve in such position, which amount will be paid in arrears. In the event Mr. Humpich only serves as the principal accounting officer for a portion of any given fiscal quarter, then the $100,000 per quarter stipend will be prorated on a month-to-month basis.
Item 7.01. Regulation FD Disclosure.
On May 17, 2023, the Company issued a press release announcing the appointment of David Christopher Monroe as the Company’s Chief Financial Officer. A copy of the press release is furnished with this Current Report on Form 8-K as Exhibit 99.1.
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| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
| 99.1 | Press Release dated May 18, 2023 | |
| 104 | Cover Page Interactive File (the cover page XBRL tags are embedded within the Inline XBRL document) |
The information in this Current Report on Form 8-K at Item 7.01 and Exhibit 99.1 attached hereto shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Such information will not be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TEXAS ROADHOUSE, INC. | |||
| Date: May 18, 2023 | By: | /s/ Gerald L. Morgan | |
| Gerald L. Morgan | |||
| Chief Executive Officer | |||
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