DEF 14A 1 def14a0321_fiestarestaurant.htm PROXY STATEMENT

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

__________________

Filed by the Registrant    S

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))

S

 

Definitive Proxy Statement

£

 

Definitive Additional Materials

£

 

Soliciting Material under §240.14a-12

FIESTA RESTAURANT GROUP, 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):

S

 

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:

       

 

    

 

Table of Contents

2021

Annual Meeting of Shareholders

Notice and Proxy Statement
April 28, 2021
10:00 A.M. (EDT)

Exclusively Live Via Webcast At
www.virtualshareholdermeeting.com/FRGI2021

 

Table of Contents

Chairman’s Letter

Fellow Shareholders:

We are pleased to present you with the 2021 Proxy Statement of Fiesta Restaurant Group, Inc. (“Fiesta”) and cordially invite you to attend Fiesta’s 2021 annual meeting of shareholders, which will be held at 10:00 a.m., Eastern time, on Wednesday, April 28, 2021. This meeting will be entirely virtual in response to the recommendations of public health officials during the COVID-19 pandemic. The virtual format will give more shareholders the opportunity to participate in the meeting, while ensuring everyone’s health and safety.

This past year presented unprecedented challenges for all of us. Here at Fiesta, our Board, together with our management team, focused on a number core principles in the face of the COVID-19 global pandemic. We immediately instituted measures to ensure the safety of our guests and employees. Then, as a team, we assessed the volatile environment, met it head on and adjusted our business processes and strategic approach. While focusing on the operations of our core business during this time, we also endeavoured to maximize liquidity through a number of business initiatives designed to increase restaurant margins and enhance working capital efficiency. We made important investments in our digital platform and took advantage of the opportunity to grow off-premise sales channels, particularly through the drive-thru and technology enabled ordering and delivery platforms.

Despite the barriers posed by the pandemic, our management team continued to engage with shareholders virtually on a regular basis through available communications technology. We continue to utilize the valuable input we receive from our shareholders as we develop the initiatives, actions and strategy that will guide us through the current environment challenges and into the future.

Our current Board is made up of diverse individuals who hold a broad set of skills, experience, and expertise particularly appropriate for our business and the current environment. We are proud to have added four new independent board members during the past four years, many of whom, along with our executive team, bring significant restaurant and retail industry operating experience.

We appreciate the willingness of our shareholders to engage with us on these matters. We look forward to continuing to evolve our board, governance, compensation, and sustainability practices as part of the overall revitalization of Fiesta.

Sincerely,

Stacey Rauch
Chairman of the Board
Fiesta Restaurant Group, Inc.

 

Table of Contents

FIESTA RESTAURANT GROUP, INC.
14800 Landmark Boulevard, Suite 500
Dallas, Texas 75254

__________________

You are invited to attend the 2021 Annual Meeting of Shareholders, which we refer to as the “2021 Annual Meeting”, of FIESTA RESTAURANT GROUP, INC., a Delaware corporation, which we refer to as “we”, “us”, “our”, the “Company”, “Fiesta Restaurant Group”, and “Fiesta”.

Date and Time:

Wednesday, April 28, 2021, at 10:00 A.M. (EDT)

Place:

Exclusively Via Live Webcast at www.virtualshareholdermeeting.com/FRGI2021

Record Date:

March 1, 2021

Notice and Voting:

Only shareholders of record as of the record date are entitled to receive notice of, and to vote at, the 2021 Annual Meeting, and at any adjournment or postponement thereof. You are entitled to one vote per proposal for each share of common stock held by you.

To Fiesta Restaurant Group Shareholders:

At the meeting, shareholders will be asked to consider and vote upon the following proposals:

(1)    To elect the eight directors named in the Proxy Statement to serve until the next Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified;

(2)    To adopt, on an advisory basis, a non-binding resolution approving the compensation of the Company’s Named Executive Officers, as described in the Proxy Statement under “Executive Compensation”;

(3)    To approve the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan;

(4)    To ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2021 fiscal year; and

(5)    To consider and act upon such other matters as may properly come before the 2021 Annual Meeting.

A list of our shareholders as of the close of business on March 1, 2021 will be available for inspection during business hours for ten days prior to the 2021 Annual Meeting at our principal executive offices located at 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254. You may also examine our shareholder list during the 2021 Annual Meeting by following the instructions provided on the meeting website during the 2021 Annual Meeting.

Only shareholders of the Company or their duly authorized proxies may attend the 2021 Annual Meeting. Shareholders may attend the virtual annual meeting at www.virtualshareholdermeeting.com/FRGI2021. The meeting will only be conducted via webcast; there will be no physical meeting location. To participate in the virtual annual meeting, shareholders will need the 16-digit control number that appears on your proxy card or the instructions that accompanied the proxy materials. If you would like to attend the virtual meeting and you have your control number, please go to www.virtualshareholdermeeting.com/FRGI2021 prior to the start of the meeting to log in. Online access to the webcast will open approximately 15 minutes prior to the start of the 2021 Annual Meeting to allow time for our shareholders to log in and test their devices’ audio system.

We are taking advantage of the Securities and Exchange Commission rule that allows us to deliver our proxy materials (which include the Proxy Statement included with this notice, our 2020 annual report and form of proxy card) to shareholders via the Internet. As a result, our shareholders will receive a mailing containing only a notice of the meeting instead of paper copies of our proxy materials.

 

Table of Contents

Your vote is important. Whether or not you plan to attend the virtual Annual Meeting via live webcast, please review our proxy materials and request a proxy card to sign, date and return or submit your proxy by telephone or through the Internet. If you attend the virtual Annual Meeting in person via live webcast, you may, if you desire, revoke your proxy and choose to vote in person at the virtual Annual Meeting via live webcast even if you had previously sent in your proxy card or voted by telephone or the Internet.

 

Very truly yours,

     
   

Louis DiPietro

   

Senior Vice President, Chief Legal and People Officer, General Counsel & Secretary

Miami, Florida

March 19, 2021

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021 ANNUAL MEETING TO BE HELD ON APRIL 28, 2021: THE PROXY STATEMENT FOR THE 2021 ANNUAL MEETING AND OUR 2020 ANNUAL REPORT ARE AVAILABLE FREE OF CHARGE AT WWW.PROXYVOTE.COM.

The approximate date on which the “Important Notice Regarding the Availability of Proxy Materials” was first sent or given to shareholders was on or about March 19, 2021.

 

Table of Contents

EXECUTIVE SUMMARY

2021 Annual Meeting Information

Date

 

Time

 

Place

 

Record Date

Wednesday,
April 28, 2021

 

10:00 A.M.
(EDT)

 

Exclusively Via Live Webcast at
www.virtualshareholdermeeting.com/FRGI2021

 

March 1, 2021

For additional information about our Annual Meeting, see the section titledQuestions and Answers About the 2021 Annual Meeting.

Matters to be Voted on at Our 2021 Annual Meeting

BALLOT ITEMS

 

BOARD RECOMMENDATION

 

PAGE

Proposal 1. Election of the eight directors named in the Proxy Statement to serve until the next Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified

 

FOR each director

 

7

Proposal 2. Adoption, on an advisory basis, of a non-binding resolution approving the compensation of the Company’s Named Executive Officers, as described in the Proxy Statement under “Executive Compensation”

 

FOR

 

50

Proposal 3. To approve the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan

 

FOR

 

51

Proposal 4. Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2021 fiscal year

 

FOR

 

59

Proposal 5. To consider and act upon such other matters as may properly come before the 2021 Annual Meeting

       

How to Cast Your Vote

Shareholders of record can vote by any of the following methods:

 

Via Internet by visiting www.proxyvote.com.

•   Before the Annual Meeting — You may submit your proxy online via the Internet by following the instructions provided on the enclosed proxy card. Internet voting facilities will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on April 27, 2021.

•   During the Annual Meeting — You may attend the meeting via the Internet at www.virtualshareholdermeeting.com/FRGI2021 and vote during the meeting by following the instructions provided on the enclosed proxy card.

 

Via telephone by calling 1-800-690-6903.

 

Via mail (if you received your proxy materials by mail), you can vote by marking, dating, signing and timely returning the proxy card in the postage-paid envelope

•        If you hold your shares beneficially in “street name” through a broker, bank or other nominee, you may be able to complete your proxy and authorize your vote by proxy, by telephone or the Internet as well as by mail. You must follow the instructions provided by your broker or other nominee to vote your shares.

•        If you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares of our common stock for you, your shares will not be voted with respect to Proposals 1, 2, 3 and 5, as we do not believe such proposals qualify for discretionary voting treatment by a broker.

•        If you are a beneficial owner holding your shares in “street name” and you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares of our common stock for you, your shares of common stock will not be voted with respect to any proposal for which the shareholder of record does not have “discretionary” authority to vote.

 

Table of Contents

i

Table of Contents

FIESTA RESTAURANT GROUP, INC.
14800 Landmark Boulevard, Suite 500
Dallas, Texas 75254

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL
28, 2021

This Proxy Statement is furnished in connection with the solicitation of proxies by the board of directors of FIESTA RESTAURANT GROUP, INC., a Delaware corporation, to be used at the Annual Meeting of Shareholders, which we refer to as the “2021 Annual Meeting” or the “meeting”, of the Company which will be exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021 on Wednesday, April 28, 2021, at 10:00 A.M. (EDT), and at any adjournment or adjournments thereof. Only shareholders of record at the close of business on March 1, 2021, which we refer to as the “record date”, will be entitled to vote at the 2021 Annual Meeting. The approximate date on which the “Important Notice Regarding the Availability or Proxy Materials” was first sent or given to shareholders was on or about March 19, 2021.

Holders of our common stock at the close of business on March 1, 2021 will be entitled to vote at the 2021 Annual Meeting exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021. As of March 1, 2021, 26,282,446 shares of our common stock, $0.01 par value per share, were outstanding and each entitled to one vote. Shareholders are entitled to one vote for each share of common stock held. A majority, or 13,141,224 of these shares, present in person via live webcast or represented by proxy at the 2021 Annual Meeting, will constitute a quorum for the transaction of business.

This Proxy Statement and our 2020 Annual Report are also available at www.proxyvote.com.

All references in this Proxy Statement to “Fiesta Restaurant Group”, the “Company”, “we”, “us” and “our” refer to Fiesta Restaurant Group, Inc. References to the “board of directors” or “board” refer to the board of directors of Fiesta Restaurant Group.

1

Table of Contents

QUESTIONS AND ANSWERS ABOUT THE 2021 ANNUAL MEETING

Why did I receive an “Important Notice Regarding the Availability of Proxy Materials”?

Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission, which we refer to as the “SEC”, instead of mailing a printed proxy card or printed materials, we have elected to provide access to our proxy materials (which include this Proxy Statement, our 2020 annual report and form of proxy card) via the Internet. A Notice of Internet Availability of Proxy Materials, which we refer to as the “notice” will be mailed to our shareholders of record and beneficial owners (shareholders who own their stock through a nominee such as a bank or broker). The document will instruct shareholders on how to access the proxy materials on a secure website referred to in the notice or how to request printed copies.

In addition, by following the instructions in the notice, shareholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. Choosing to receive your future proxy materials by e-mail will save us the cost of printing and mailing documents to you. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.

What are the proposals that will be voted at the meeting?

At the 2021 Annual Meeting, the Company asks you to vote on five proposals:

Proposal 1: to elect the eight directors named in the Proxy Statement to serve until the next Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified;

Proposal 2: to adopt, on an advisory basis, a non-binding resolution approving the compensation of the Company’s Named Executive Officers, as described in the Proxy Statement under “Executive Compensation”;

Proposal 3: to approve the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan;

Proposal 4: to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2021 fiscal year; and

Proposal 5: to consider and act upon such other matters as may properly come before the 2021 Annual Meeting.

The board may also ask you to participate in the transaction of any other business that is properly brought before the 2021 Annual Meeting in accordance with the provisions of our Restated Certificate of Incorporation, as amended, which we refer to as the “Restated Certificate of Incorporation” and Amended and Restated Bylaws, as amended, which we refer to as the “Bylaws”.

THE BOARD UNANIMOUSLY RECOMMENDS VOTING
FOR THE ELECTION OF EACH OF THE BOARD’S NOMINEES ON PROPOSAL 1 AND FOR PROPOSALS
2, 3 AND 4.

When will the 2021 Annual Meeting be held?

The 2021 Annual Meeting is scheduled to be held at 10:00 A.M. (EDT), on Wednesday, April 28, 2021 exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021.

How can I attend the 2021 Annual Meeting?

Only shareholders of the Company or their duly authorized proxies may attend the 2021 Annual Meeting. Shareholders may attend the virtual annual meeting at www.virtualshareholdermeeting.com/FRGI2021. The meeting will only be conducted via webcast; there will be no physical meeting location. To participate in the virtual annual meeting, shareholders will need the 16-digit control number that appears on your proxy card or the instructions that accompanied the proxy materials. If you would like to attend the virtual meeting and you have your control number,

2

Table of Contents

please go to www.virtualshareholdermeeting.com/FRGI2021 prior to the start of the meeting to log in. Online access to the webcast will open approximately 15 minutes prior to the start of the 2021 Annual Meeting to allow time for our shareholders to log in and test their devices’ audio system.

What if I am having technical difficulties?

If you are experiencing technical difficulties accessing the 2021 Annual Meeting, you may call the technical support numbers posted on the log-in page of the virtual meeting platform.

How can I submit a question at the 2021 Annual Meeting?

As part of the 2021 Annual Meeting, we will hold a live question and answer session during which we intend to answer all questions properly submitted during the 2021 Annual Meeting in accordance with the 2021 Annual Meeting Rules of Conduct that are pertinent to the Company and the 2021 Annual Meeting matters and as time permits. The 2021 Annual Meeting Rules of Conduct will be made available on the virtual meeting platform. Questions that we determine do not conform with the 2021 Annual Meeting Rules of Conduct, are not otherwise directly related to the business of the Company and are not pertinent to the 2021 Annual Meeting matters will not be answered. Each stockholder will be limited to one question so as to allow us to respond to as many stockholder questions as possible in the allotted time. We will address substantially similar questions, or questions that relate to the same topic, in a single response.

We ask that all stockholders provide their name and contact details when submitting a question through the virtual meeting platform so that we may address any individual concerns or follow up matters directly. If you have a question of personal interest that is not of general concern to all stockholders, or if a question posed at the 2021 Annual Meeting was not otherwise answered, we encourage you to contact us separately after the 2021 Annual Meeting by visiting https://www.frgi.com/investor-relations/investor-resources/investor-contacts/default.aspx.

Once you login to the virtual meeting platform at www.virtualshareholdermeeting.com/FRGI2021, you may select the “Q&A” button on the bottom right side of the virtual meeting platform interface and then type your question into the “Submit a Question” field and click “Submit”.

Please note that stockholders will need their valid 16-digit control number to ask questions at the 2021 Annual Meeting. See “How can I attend the 2021 Annual Meeting?” above for information on how to obtain your 16-digit control number. If you are a “beneficial owner,” also known as a “street name” holder, please see “How do I vote if my common shares are held in “street name”?’ below for more information.

Who is soliciting my vote?

In this Proxy Statement, the board is soliciting your vote.

How does the board recommend that I vote?

The board unanimously recommends that you vote by proxy using the proxy card with respect to the proposals, as follows:

•        FOR the election of the eight named director nominees as directors;

•        FOR on an advisory basis, the approval of the non-binding resolution on the compensation of the Company’s Named Executive Officers as described in the Proxy Statement under “Executive Compensation”;

•        FOR the approval of the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan; and

•        FOR the ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2021 fiscal year.

3

Table of Contents

Why is the board recommending FOR Proposals 1, 2, 3 and 4?

We describe all proposals and the board’s reasons for supporting Proposals 1, 2, 3 and 4 in detail beginning at page 7 of this Proxy Statement.

Who can vote?

Holders of our common stock at the close of business on March 1, 2021, the record date, may vote at the 2021 Annual Meeting.

As of March 1, 2021, there were 26,282,446 shares of our common stock outstanding, each entitled to one vote.

How do I vote if I am a record holder?

You can vote by attending the 2021 Annual Meeting and voting in person exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021, or you can vote by proxy. If you are the record holder of your stock, you can vote in the following three ways:

•        By Internet: You may vote by submitting a proxy over the Internet. Please refer to the notice, proxy card or voting instruction form provided to you by your broker for instructions of how to vote by Internet.

•        Before the Annual Meeting — You may submit your proxy online via the Internet by following the instructions provided on the enclosed proxy card. Internet voting facilities will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on April 27, 2021.

•        During the Annual Meeting — You may attend the meeting via the Internet at www.virtualshareholdermeeting.com/FRGI2021 and vote during the meeting by following the instructions provided on the enclosed proxy card.

•        By Telephone: Shareholders located in the United States may vote by submitting a proxy by telephone by calling the toll-free telephone number on the notice, proxy card or voting instruction form and following the instructions.

•        By Mail: If you received proxy materials by mail, you can vote by submitting a proxy by mail by marking, dating, signing and returning the proxy card in the postage-paid envelope.

How do I vote if my common shares are held in “street name”?

If you hold your shares beneficially in street name through a nominee (such as a bank or broker), you may be able to complete your proxy and authorize your vote by proxy by telephone or the Internet as well as by mail. You should follow the instructions you receive from your nominee to vote these shares.

If you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares of our common stock for you, your shares will not be voted with respect to Proposals 1, 2, 3 and 5 as we do not believe such proposals qualify for discretionary voting treatment by a broker. We therefore encourage you to provide voting instructions on a proxy card or a provided voting instruction form to the bank, broker, trustee or other nominee that holds your shares by carefully following the instructions provided in their notice to you.

How many votes do I have?

Shareholders are entitled to one vote per proposal for each share of common stock held.

How will my shares of common stock be voted?

The shares of common stock represented by proxies will be voted in accordance with the directions you make thereon at the 2021 Annual Meeting, but if no direction is given and you do not revoke your proxy, your proxy will be voted: FOR the election of the eight named director nominees (Proposal 1); FOR, on an advisory basis, the approval of the non-binding resolution on the compensation of the Company’s Named Executive Officers as described in the

4

Table of Contents

Proxy Statement under “Executive Compensation,” (Proposal 2); FOR the approval of the Fiesta Restaurant Group, Inc. 2021 Stock Incentive Plan (Proposal 3); and FOR the ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the 2021 fiscal year (Proposal 4).

What vote is required with respect to the proposals?

Proposal 1 will be decided by the affirmative vote of a majority of the shares of common stock voting with respect to such nominee. Proposals 2, 3, 4 and 5 will be decided by the affirmative vote of a majority of the votes present in person or represented by proxy. A shareholder over the Internet, by telephone, or by mail can vote “FOR,” “AGAINST” or “ABSTAIN” on Proposals 1, 2, 3, 4 and 5. Each of Proposals 1, 2, 3, 4 and 5 will pass if the total votes cast “for” a given proposal exceed the total number of votes cast “against” and “abstain” on such given proposal.

What is the effect of abstentions and broker non-votes on voting?

Abstentions and broker “non-votes” are included in the determination of the number of shares present at the 2021 Annual Meeting for quorum purposes. Abstentions count as a vote against the proposals. Broker “non-votes” are not counted in the tabulations of the votes cast or present at the 2021 Annual Meeting and entitled to vote on any of the proposals and therefore will have no effect on the outcome of the proposals. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner. We anticipate that only Proposal 4 presented at the 2021 Annual Meeting will allow nominees to exercise discretionary voting power.

If I have already voted by proxy against the proposals, can I still change my mind?

Yes. To change your vote by proxy, simply sign, date and return the proxy card or voting instruction form in the accompanying postage-paid envelope, or vote by proxy by telephone or via the Internet in accordance with the instructions in the notice, proxy card or voting instruction form. We strongly urge you to vote by proxy FOR Proposals 1, 2, 3 and 4. Only your latest dated proxy will count at the 2021 Annual Meeting.

Will my shares be voted if I do nothing?

If your shares of our common stock are registered in your name, you must sign and return a proxy card, vote over the Internet or by telephone or attend the 2021 Annual Meeting and vote in person exclusively via live webcast at www.virtualshareholdermeeting.com/FRGI2021 in order for your shares to be voted.

If your shares of common stock are held in “street name,” that is, held for your account by a broker, bank or other nominee, and you do not instruct your broker or other nominee how to vote your shares, then, because Proposals 1, 2, 3 and 5 are “non-routine matters,” your broker or other nominee would not have discretionary authority to vote your shares on such proposals. If your shares of our common stock are held in “street name,” your broker, bank or nominee has enclosed a proxy card or voting instruction form with this Proxy Statement. We strongly encourage you to authorize your broker or other nominee to vote your shares by following the instructions provided on the proxy card or voting instruction form.

Please return your proxy card or voting instruction form to your broker or other nominee by proxy, simply sign, date and return the enclosed proxy card or voting instruction form in the accompanying postage-paid envelope, or vote by proxy by telephone or via the Internet in accordance with the instructions in the proxy card or voting instruction form. Please contact the person responsible for your account to ensure that a proxy card or voting instruction form is voted on your behalf.

We strongly urge you to vote by proxy FOR Proposals 1, 2, 3 and 4 by proxy over the Internet using the Internet address on the notice or proxy card, by telephone using the toll-free number on the notice or proxy card or by signing, dating and returning a proxy card by mail. If your shares are held in “street name,” you should follow the instructions on your proxy card or voting instruction form provided by your broker or other nominee and provide specific instructions to your broker or other nominee to vote as described above.

5

Table of Contents

What constitutes a quorum?

A majority of the outstanding shares of common stock, present in person or represented by proxy, will constitute a quorum for the transaction of business at the 2021 Annual Meeting. Votes withheld, abstentions and broker non-votes will be counted as present or represented for purposes of determining the presence or absence of a quorum for this meeting. In the absence of a quorum, the 2021 Annual Meeting may be adjourned by a majority of the votes entitled to be cast represented either in person or by proxy.

Whom should I call if I have questions about the 2021 Annual Meeting?

If you have any questions or you need additional copies of the proxy materials, please contact Louis DiPietro, Senior Vice President, Chief Legal and People Officer, General Counsel & Secretary by mail at 7255 Corporate Center Drive, Suite C, Miami, Florida 33126 or by telephone at (305) 671-1257.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021 ANNUAL MEETING TO BE HELD ON APRIL 28, 2021: THE PROXY STATEMENT FOR THE 2021 ANNUAL MEETING AND OUR 2020 ANNUAL REPORT ARE AVAILABLE FREE OF CHARGE AT WWW.PROXYVOTE.COM.

6

Table of Contents

PROPOSAL 1 — ELECTION OF DIRECTORS

Our current directors are Stacey Rauch, Nicholas Daraviras, Stephen P. Elker, Brian P. Friedman, Sherrill Kaplan, Andrew V. Rechtschaffen, Nicholas P. Shepherd, Richard C. Stockinger and Paul E. Twohig. Eight directors will be elected at the 2021 Annual Meeting. Brian P. Friedman is not being renominated as a director at the 2021 Annual Meeting. Following the 2021 Annual Meeting, the size of the Company’s board of directors will be reduced to eight directors.

The election of a director requires the affirmative vote of a majority of the shares of common stock voting with respect to such nominee (excluding abstentions and non-votes). Each proxy received will be voted FOR the election of the eight directors named below unless otherwise specified in the proxy. Proxies cannot be voted for a greater number than the nominees named below.

On February 5, 2020, the Company entered into a Cooperation Agreement (the “Cooperation Agreement”) with AREX Capital Management, LP and certain of its affiliates (collectively, “AREX”). Pursuant to the Cooperation Agreement, the Company agreed to increase the size of the board of directors by one director seat and appointed Andrew Rechtschaffen (the “AREX Director”), an affiliate of AREX, to the board of directors and the Corporate Governance and Nominating Committee effective February 13, 2020. Pursuant to the Cooperation Agreement, Mr. Rechtschaffen will serve a term beginning February 13, 2020 and expiring at the 2020 Annual Meeting. We have further agreed to nominate Mr. Rechtschaffen for election at the 2021 Annual Meeting, with a term expiring at the 2022 annual meeting of stockholders (the “2021 Annual Meeting”). From the Appointment Date until the Termination Date (as defined below), upon the death or disability of the AREX Director, AREX Capital Management, LP shall have right to identify, and the board of directors shall appoint, a replacement director with relevant financial and business experience, who qualifies as independent under the SEC and NASDAQ rules and whose qualifications are substantially similar to Mr. Rechtschaffen.

With respect to each annual or special meeting of the Company’s stockholders, during the term of the Cooperation Agreement, AREX has agreed to vote the shares of the Company’s common stock then held by it in accordance with the board of directors’ recommendations on director election proposals and any other proposals submitted by the Company or a stockholder, except that AREX may vote in its discretion on Extraordinary Transactions (as defined in the Cooperation Agreement) and, other than with respect to director election or removal proposals, in accordance with the recommendations of Institutional Shareholder Services Inc. or Glass, Lewis & Co., LLC if either of them recommends differently from the board of directors.

AREX has also agreed to certain customary standstill provisions prohibiting it from, among other things, (i) making certain announcements regarding the Company’s transactions, (ii) soliciting proxies, (iii) acquiring, in the aggregate, beneficial ownership of more than 14.9% of the outstanding shares of the Company’s common stock, (iv) selling securities of the Company resulting in any third party owning more than 4.9% of the outstanding shares of the Company’s common stock (subject to certain exceptions set forth in the Cooperation Agreement), (v) taking actions to change or influence the board of directors, Company management or the direction of certain Company matters, and (vi) exercising certain stockholder rights.

Consistent with the terms of the Cooperation Agreement, in December 2020, the Company and AREX agreed to re-nominate Mr. Rechtschaffen for election at the 2021 Annual Meeting. As such, the term of the Cooperation Agreement was automatically extended until the date that is 30 days prior to the deadline under the Company’s amended and restated bylaws, as amended, for director nominations and stockholder proposals for the 2022 annual meeting of stockholders. Each of the Company and AREX has the right to terminate the Cooperation Agreement earlier if the other party commits a material breach of the Agreement and such breach is not cured within 15 days after notice or, if such breach is not curable within 15 days, the breaching party has not taken any substantive action to cure within such 15-day period.

At this time, our board of directors knows of no reason why the Company’s eight nominees would be unable to serve. There are no arrangements or understandings between any nominee and any other person pursuant to which such person was selected as a nominee.

Our Corporate Governance and Nominating Committee has reviewed the qualifications of the eight director nominees and has recommended the election of the eight directors recommended by the board.

7

Table of Contents

Director Nominees’ Principal Occupations, Business Experience, Qualifications and Directorships

Name of Nominee

 

Committee Membership

 

Principal Occupation

 

Age

 

Director Since

Stacey Rauch

 

Compensation, Corporate Governance and Nominating (Chair)

 

Chair of the Board of Directors of Fiesta Restaurant Group; Non-Executive director of Land Securities Group, PLC, and Heidrick & Struggles, Inc.

 

62

 

2012

Sherrill Kaplan

 

Audit

 

Global Marketing Advisor at Advent International; Director of Fiesta Restaurant Group

 

43

 

2018

Nicholas Daraviras

 

Corporate Governance and Nominating

 

Co-President of Leucadia Asset Management, a unit of Jefferies Financial Group Inc., Managing Director of Jefferies Financial Group Inc., and Director of Fiesta Restaurant Group

 

47

 

2011

Stephen P. Elker

 

Audit (Chair), Corporate Governance and Nominating

 

Director of Fiesta Restaurant Group; Director of various private-held companies in the finance and payments industries

 

69

 

2012

Nicholas P. Shepherd

 

Compensation, Audit

 

Board of Directors and a member of the Nominating & Corporate Governance Committee and the Compensation Committee of Spirit Realty Capital, Inc., Director of Fiesta Restaurant Group

 

62

 

2017

Paul E. Twohig

 

Compensation (Chair), Audit

 

Director of Fiesta Restaurant Group

 

67

 

2017

Andrew V. Rechtschaffen

 

Corporate Governance and Nominating

 

Director of Golden Arrow Merger Corp.; Director of JRC-NY, Inc.; Director of UJA Federation of New York; Director of Wharton Executive; Director of the Ramaz School; Director of Met Council;

Director of Fiesta Restaurant Group

 

43

 

2020

Richard C. Stockinger

 

None

 

Chief Executive Officer, President and Director of Fiesta Restaurant Group

 

62

 

2017

Stacey Rauch (Chair)
Director since 2012
Age: 62

 

With her public company board experience and distinguished career working with retailers, wholesalers and manufacturers during her 24 years at McKinsey & Company, Inc., Ms. Rauch brings to our board substantial expertise in business strategy, marketing, merchandising and operations in the retail industry.

Committee Membership:

 

Biography:

•   Compensation

•   Corporate Governance and Nominating (Chair)

 

Stacey Rauch has served as the non-executive Chairman of the board of directors of Fiesta Restaurant Group since February 2017 and as a director of Fiesta Restaurant Group since 2012. Ms. Rauch is a Director (Senior Partner) Emeritus of McKinsey & Company, Inc. from which she retired in September 2010. Ms. Rauch was a leader in McKinsey’s Retail and Consumer Goods Practices, served as the head of the North American Retail and Apparel Practice, and acted as the Global Retail Practice Convener. A 24-year veteran of McKinsey, Ms. Rauch led engagements for a wide range of retailers, apparel wholesalers, and consumer goods manufacturers in the United States and internationally. Ms. Rauch is also a non-Executive director of Land Securities Group, PLC, the UK’s largest commercial property company, where she sits on its Audit, Nomination and Remuneration Committees and Heidrick & Struggles, Inc., a premier provider of senior-level executive search and leadership consulting services, where she sits on the Audit and Finance Committee.

8

Table of Contents

Nicholas Daraviras
Director since 2011
Age: 47

 

Mr. Daraviras brings significant experience with the strategic, financial and operational issues of retail and consumer companies in connection with his service on the boards of a number of his firm’s portfolio companies over time.

Committee Membership:

 

Biography:

•   Corporate Governance and Nominating

 

Nicholas Daraviras has served as a director of Fiesta Restaurant Group since April 2011. Mr. Daraviras has been a Managing Director of Jefferies Financial Group f/k/a Leucadia National Corporation (“Jefferies”) since 2014. From 1996 through 2014, Mr. Daraviras was employed with Jefferies Capital Partners LLC (“Jefferies Capital Partners”) or its predecessors. He was recently appointed Co-President of Leucadia Asset Management, a unit of Jefferies Financial Group Inc. He also serves on several boards of directors of private portfolio companies of Jefferies and he is also an officer of certain Jefferies related entities.

Stephen P. Elker
Director since 2012
Age: 69

 

Mr. Elker, with over 36 years of experience with KPMG LLP, brings to our board of directors extensive knowledge of accounting and tax practices that strengthens our board of directors’ collective knowledge, capabilities and experience.

Committee Membership:

 

Biography:

•   Audit (Chair)

•   Corporate Governance and Nominating

 

Stephen P. Elker has served as a director of Fiesta Restaurant Group since May 7, 2012. Until 2009, Mr. Elker spent over 36 years with KPMG LLP, the U.S. member firm of KPMG International, beginning in its Washington D.C. office, and then with offices in Rochester, New York and Orlando, Florida. In 1999, Mr. Elker was appointed as managing partner of the Orlando office and served as partner in charge of the Florida business tax practice from 2001 to 2009. Mr. Elker also served as a member of the Nominating Committee and Strategy Committee of KPMG. During his career with KPMG, Mr. Elker led engagements for several hospitality and retail clients including large, multi-unit restaurant companies. Mr. Elker is a certified public accountant and recently served as an independent director and Chairman of the Audit Committee of CNL Growth Properties, Inc., a public, non-traded real estate investment trust. Mr. Elker also serves on the board of directors of a privately held company in the payments industry.

Sherrill Kaplan
Director since 2018
Age: 43

 

With her broad experience as a marketing executive at Zipcar and Dunkin’ Brands, Ms. Kaplan brings substantial retail and restaurant expertise in marketing and digital strategy, innovation, brand management and product development, particularly with respect to social media, loyalty management, CRM and mobile and digital payments, to our board of directors.

Committee Membership:

 

Biography:

•   Audit

•   Corporate Governance and Nominating (served until February 2020)

 

Sherrill Kaplan has served as a director of Fiesta Restaurant Group since November 2018. Ms. Kaplan has served as the Global Marketing Advisor of Advent International since May 2020. Ms. Kaplan served as the Head of Marketing and Sales at Zipcar, Inc., a subsidiary of Avis Budget Group, Inc., from August 2018 to March 2020 and Vice President, Digital Marketing and Innovation at Dunkin’ Brands Group, Inc. from June 2011 to June 2018. Ms. Kaplan has also served as a member of the Consumer Advisory Board of American Express Company since March 2015.

9

Table of Contents

Nicholas P. Shepherd
Director since 2017
Age: 62

 

Mr. Shepherd, as former President and Chief Executive Officer of TGI Friday’s, Inc., brings significant leadership, management, operational, financial, marketing, franchising, brand management and public company board experience to the Board.

Committee Membership:

 

Biography:

•   Compensation

•   Audit

 

Nicholas P. Shepherd has served as a director of Fiesta Restaurant Group since April 2017. Mr. Shepherd served as Chief Executive Officer and President of TGI Friday’s, Inc. (formerly known as Carlson Restaurants Worldwide Inc.) from 2009 until 2015. From 2008 until 2009, Mr. Shepherd served as Chief Executive Officer and Chairman of the Board of Directors of Sagittarius Brands, Inc., a private restaurant holding company, which owned and operated the Del Taco and Captain D’s restaurant brands. From 1995 until 2007, Mr. Shepherd served in several capacities at Blockbuster, Inc., including serving as Chief Operating Officer during 2007, President of Blockbuster North American from 2004 to 2007, Executive Vice President and Chief Marketing and Merchandising Officer from 2001 until 2004, Senior Vice President International from 1998 until 2001 and Vice President and General Manager from 1995 until 1999. Mr. Shepherd currently serves on the Board of Directors and as a member of the Nominating & Corporate Governance Committee and the Compensation Committee of Spirit Realty Capital, Inc., a publicly traded real estate investment trust.

Paul E. Twohig
Director since 2017
Age: 67

 

With over 30 years of experience in the restaurant industry, Mr. Twohig brings to our board of directors significant leadership, management, operational, financial, marketing and franchising experience.

Committee Membership:

 

Biography:

•   Audit

•   Compensation (Chair)

 

Paul E. Twohig has served as a director of Fiesta Restaurant Group since February 2017. Mr. Twohig is a global retail and food service senior executive with demonstrated success leading some of the world’s most prominent brands. Mr. Twohig served as President of MOD Super Fast Pizza Holdings, LLC (“MOD Pizza”) from October 2018 to January 2020 after previously serving as Chief Operating Officer of MOD Pizza from July 2017 until October 2018. From 2009 until 2017, Mr. Twohig served as President of Dunkin Donuts, U.S. and Canada. He was a member of the senior executive team that completed Dunkin Donuts’ initial public offering in 2011. Previously, Mr. Twohig held several senior executive roles with Starbucks Corporation, including Vice President and General Manager, U.K., and Senior Vice President, Eastern Division. Additionally, Mr. Twohig served as Chief Operating Officer and Executive Vice President at Panera Bread Company. His governance experience includes serving as a member of the Board of Directors for Dentistry for Children from 2011 to 2014, and for Solantic Urgent Care, Inc. from 2007 to 2011.

Andrew V. Rechtschaffen
Director since 2020
Age: 43

 

With 20 years of experience in the investment industry, Mr. Rechtschaffen brings to our board of directors expertise in mergers and acquisitions, financial statement analysis, corporate governance, and corporate strategy.

Committee Membership:

 

Biography:

•   Corporate Governance and Nominating

 

Andrew V. Rechtschaffen has served as a director of Fiesta Restaurant Group since February 2020. Mr. Rechtschaffen founded and has been the managing partner and portfolio manager of AREX Capital Management, LP, and its affiliated funds, a value-oriented investment firm since 2017. Prior to AREX Capital Management, LP, Mr. Rechtschaffen worked as

10

Table of Contents

•   

 

an analyst at Greenlight Capital (“Greenlight”) from 2011 through 2017, where he became a partner in January 2014. Earlier, he was the founder and portfolio manager of Obrem Capital from 2008 until 2010, a managing director in the Principal Strategies Group at Citadel Investment Group from 2005 until 2006, and with Greenlight from 2002 through 2005, where he became a Partner in 2005. Mr. Rechtschaffen has also served as a Director of Golden Arrow Merger Corp since March 2021. Golden Arrow Merger Corp. is a publicly traded special-purpose acquisition company initially focused on identifying a prospective target business in the healthcare or healthcare-related infrastructure industries in the United States and other developed countries. He has also served on the boards of JRC-NY, Inc., since July 2019, UJA Federation of New York since July 2014, Wharton Executive since July 2019, the Ramaz School since September 2014 and Met Council since January 2018.

Richard C. Stockinger
Director since 2017
Age: 62

 

Mr. Stockinger, as Chief Executive Officer and President of Fiesta Restaurant Group, and with over three decades of experience as a senior executive officer and as a director of several restaurant companies, brings significant leadership, management, operational, financial, marketing, franchising, brand management and public company board experience to the Board. In particular, Mr. Stockinger brings valuable experience in brand revitalization and shareholder value creation.

Committee Membership:

 

Biography:

None

 

Richard “Rich” Stockinger has served as a director of Fiesta Restaurant Group since April 2017 and has been Chief Executive Officer and President of Fiesta Restaurant Group since February 2017. Previously, he served as President and Chief Executive Officer of Benihana, Inc. (“Benihana”) from 2009 until 2014, as a member of the Board of Directors of Benihana from 2008 until 2014, as a member of the Audit Committee of Benihana from 2008 until 2009, and as Chairman of the Board of Directors of Benihana from 2010 until 2012. Mr. Stockinger has significant experience in successful strategic turnarounds and shareholder value creation. During his tenure as President and CEO of Benihana, the stock of Benihana rose from $1.88 per share to $16.30 per share over a period of three years. Prior to joining Benihana, Mr. Stockinger spent more than two decades at The Patina Restaurant Group, LLC in New York and its predecessor, Restaurant Associates, Inc. (“RA”), during which time he served in various senior executive capacities, including as President from 2003 until 2008 and as a director from 1998 until 2006. In addition to his roles at Patina and RA, Mr. Stockinger was involved in the turnaround of several other successful restaurant companies including Au Bon Pain, California Pizza Kitchen, Acapulco Restaurants, El Torito Restaurants, Smith & Wollensky and Chevy’s. Most recently, Mr. Stockinger served as a consultant to Bruckmann, Rosser, Sherrill & Co., a private equity firm, from 2014 until 2017, and Not Your Average Joes, a private restaurant company where Mr. Stockinger also serves as a member of its board of directors.

Your board unanimously recommends a vote FOR the election of our eight named director nominees to your board of directors, Stacey Rauch, Nicholas Daraviras, Stephen P. Elker, Sherrill Kaplan, Andrew V. Rechtschaffen, Nicholas P. Shepherd, Richard C. Stockinger and Paul E. Twohig. Proxies received in response to this solicitation will be voted FOR the election of the eight named director nominees to our board of directors unless otherwise specified in the proxy.

11

Table of Contents

Board Skills Assessment

The Board Skills assessment below illustrates the key skills that our board has identified as particularly valuable to the effective oversight of the Company and our strategy. This highlights the depth and breadth of skills possessed by current directors.

12

Table of Contents

Information Regarding Executive Officers

Name of Officer

 

Age

 

Position

Richard Stockinger

 

62

 

Chief Executive Officer and President

Dirk Montgomery

 

57

 

Senior Vice President, Chief Financial Officer and Treasurer

Louis DiPietro

 

49

 

Senior Vice President, Chief Legal and People Officer, General Counsel and Secretary

Hope Diaz

 

44

 

Senior Vice President and Chief Marketing Officer

Patricia Lopez-Calleja

 

50

 

Senior Vice President and Chief Experience Officer

Eladio (Willie) Romeo

 

55

 

Senior Vice President, Operations, Pollo Tropical

Ulyses Camacho

 

47

 

Senior Vice President, Operations, Taco Cabana

Richard C. Stockinger
Age: 62

 

Biography:

Chief Executive Officer and President

 

For biographical information regarding Richard C. Stockinger, please see page 11 of this Proxy Statement.

Dirk Montgomery
Age: 57

 

Biography:

Senior Vice President, Chief Financial Officer and Treasurer

 

Dirk Montgomery has been Senior Vice President, Chief Financial Officer and Treasurer of Fiesta Restaurant Group since September 9, 2019. Mr. Montgomery served as Chief Financial Officer of Hooters International from August 2016 until September 2019. Mr. Montgomery also served as Chief Financial Officer of European Wax Centers from April 2015 until July 2016, Chief Financial Officer of Health Insurance Innovations from September 2014 until March 2015, Executive Vice President and Chief Financial Officer of Ascena Retail Group, Inc. from January 2013 until August 2014 and Chief Financial Officer and Global Productivity Executive (2005-2011) and Chief Value Chain Officer (2012-2013) of Bloomin’ Brands, Inc.

Louis DiPietro
Age: 49

 

Biography:

Senior Vice President, Chief Legal and People Officer, General Counsel and Secretary

 

Louis DiPietro has served as Senior Vice President, Chief Legal Officer, General Counsel and Secretary of Fiesta Restaurant Group since December 2018 and Chief People Officer of Fiesta Restaurant Group since September 1, 2020. Mr. DiPietro served as Senior Vice President, General Counsel and Corporate Secretary of Panera Bread Company (“Panera”) from November 2014 until October 2018. Prior to serving as General Counsel, Mr. DiPietro served as VP, Deputy General Counsel from January 2008 to November 2014. During Mr. DiPietro’s 12-year career at Panera, he held several roles of increasing responsibility in the legal department.

Hope Diaz
Age: 44

 

Biography:

Senior Vice President and Chief Marketing Officer

 

Hope Diaz has served as Senior Vice President and Chief Marketing Officer of Fiesta Restaurant Group since September 16, 2019. Prior to joining Fiesta Restaurant Group, Ms. Diaz held a variety of leadership roles within the quick service restaurant industry from 2007 to 2019, including, but not limited to, serving as the Global Chief Marketing Officer at Popeyes from October 2017 to August 2019, Head of Global Innovation & Guest Understanding for Burger King from August 2014 to October 2017 and Head of Marketing Communications for Burger King North America from July 2013 to August 2014, along with other roles within Burger King marketing, beginning in October 2007. Prior to entering the Quick Service Restaurant industry, she held a variety of Research and Strategic Planning roles during her 9-year tenure at MTV and Nickelodeon Latin America.

13

Table of Contents

Patricia Lopez-Calleja
Age: 50

 

Biography:

Senior Vice President, Chief Experience Officer

 

Patricia Lopez-Calleja has served as Senior Vice President and Chief Experience Officer of Fiesta Restaurant Group since April 1, 2020. Previously, Ms. Lopez-Calleja served as Senior Vice President, Guest Engagement of Fiesta Restaurant Group from September 2019 to March 2020, Vice President, Guest Engagement from August 2018 to August 2019, Director of Customer Relations of Pollo Tropical from September 2017 to July 2018 and Director of Guest Relations for Pollo Tropical from July 2016 to August 2017. During her tenure at Pollo Tropical, which began in November 1996, Ms. Lopez-Calleja held numerous positions within the organization with increased levels of responsibility that included building the catering infrastructure and guest engagement platforms.

Eladio (Willie) Romeo
Age: 55

 

Biography:

Senior Vice President, Operations, Pollo Tropical

 

Eladio Romeo has served as Senior Vice President, Operations, Pollo Tropical since March 2019. Previously, Mr. Romeo served as Vice President of Restaurant Operations from February 2018 to February 2019. Mr. Romeo served as Director of Off-Premise of Pollo Tropical from January 2016 to February 2018. From March 2014 to January 2016, Mr. Romeo served as Director of Franchise of Pollo Franchise, Inc., a subsidiary of Fiesta Restaurant Group. He also served as Senior Operating Manager of Dunkin Brands from September 2013 to March 2014.

Ulyses Camacho
Age: 47

 

Biography:

Senior Vice President, Operations, Taco Cabana

 

Ulyses Camacho has served as Senior Vice President, Operations, Taco Cabana since November 11, 2020. Previously, Mr. Camacho served as Vice President, Operations, Taco Cabana from September 2018 to November 2020. Mr. Camacho served as Regional Director of Taco Cabana from August 2016 to August 2018 and Sr. District Manager of Taco Cabana from August 2014 to July 2016. He also served as District Manager of Taco Cabana from July 2012 to July 2014.

Information Regarding the Board of Directors and Committees

Director Attendance

During the fiscal year ended January 3, 2021, our board of directors met or acted by unanimous consent on 21 occasions. During the fiscal year ended January 3, 2021, each of the directors who were on the board attended more than 95% of the aggregate number of meetings of the board of directors and of any committees of the board of directors on which they served. We do not have a policy on attendance by directors at our Annual Meeting of Shareholders. All of our directors attended our 2020 Annual Meeting of Shareholders.

Independence of Directors

As required by the listing standards of NASDAQ, a majority of the members of our board of directors must qualify as “independent,” as affirmatively determined by our board of directors. Our board of directors determines director independence based on an analysis of such listing standards and all relevant securities and other laws and regulations regarding the definition of “independent.”

Consistent with these considerations, after review of all relevant transactions and relationships between each director, any of his or her family members, and us, our executive officers and our independent registered public accounting firm, the board of directors has affirmatively determined that, other than Mr. Stockinger, all of the members of our board of directors including as nominees for director at the Annual Meeting are independent pursuant to NASDAQ.

14

Table of Contents

Committees of the Board

The standing committees of our board of directors consist of an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee. Our board of directors may also establish from time to time any other committees that it deems necessary or advisable.

Audit Committee

 

Members: Elker, Twohig, Kaplan and Shepherd

Chair:

 

Key Responsibilities:

Stephen P. Elker
(Financial Expert)

   
   

•   Reviews our annual and interim financial statements and reports to be filed with the SEC;

   

•   Monitors our financial reporting process and internal control system;

   

•   Appoints and replaces our independent outside auditors from time to time, determines their compensation and other terms of engagement and oversees their work;

   

•   Oversees the performance of our internal audit function;

   

•   Conducts a review of all related party transactions for potential conflicts of interest and approves all such related party transactions;

   

•   Establishes procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and the confidential anonymous submission by employees of concerns regarding questionable accounting or auditing matters; and

   

•   Oversees our compliance with legal, ethical and regulatory matters.

All of the current members of the Audit Committee satisfy the independence requirements of Rule 10A-3 of the Exchange Act and Rule 5605 of the NASDAQ listing standards. Each member of our Audit Committee is financially literate. In addition, Mr. Elker serves as our Audit Committee “financial expert” within the meaning of Item 407 of Regulation S-K of the Securities Act and has the financial sophistication required under the NASDAQ listing standards.

The Audit Committee has the sole and direct responsibility for appointing, evaluating and retaining our independent registered public accounting firm and for overseeing their work. All audit services to be provided to us and all permissible non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm are approved in advance by our Audit Committee. During the fiscal year ended January 3, 2021, the Audit Committee met or acted by unanimous consent on five occasions. The Audit Committee has adopted a formal written Audit Committee charter that complies with the requirements of the Exchange Act and the NASDAQ listing standards. A copy of the Audit Committee charter is available on the investor relations section of our website at www.frgi.com.

Audit Committee Report

The Company’s management has the primary responsibility for the financial statements and the reporting process, including the Company’s system of internal controls and disclosure controls and procedures. The independent registered public accounting firm audits the Company’s financial statements and expresses an opinion on the financial statements based on their audit. The Audit Committee oversees on behalf of the board (i) the accounting, financial reporting, and internal control processes of the Company, and (ii) the audits of the financial statements and internal controls of the Company. The Audit Committee operates under a written charter adopted by the board.

The Audit Committee reviews and approves the internal audit plan once a year and receives periodic updates of internal audit activity in meetings held at least quarterly throughout the year. Updates include discussions of audit project results, as well as quarterly assessments of internal controls.

15

Table of Contents

The Audit Committee has met and held discussions with management and Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm. Management represented to the Audit Committee that the Company’s financial statements for the year ended January 3, 2021 were prepared in accordance with generally accepted accounting principles. The Audit Committee reviewed and discussed the financial statements with both management and Deloitte. The Audit Committee reviewed with Deloitte such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards including the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301 “Communication with Audit Committees”. In addition, the Audit Committee discussed with Deloitte the auditor’s independence from management and the Company including the matters in the written disclosures and the letter from the independent auditors required by applicable requirements of the PCAOB regarding independent accountant’s communication with the audit committee concerning independence.

The Audit Committee also discussed with Deloitte the overall scope and plans for the audit. The Audit Committee met with Deloitte both with and without management, to discuss the results of their examination, the evaluation of the Company’s internal controls and the overall quality of the Company’s financial reporting.

Management has completed its annual documentation, testing, and evaluation of the Company’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee continues to oversee the Company’s efforts related to its internal controls.

Based on the foregoing, we recommended to the board of directors that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended January 3, 2021, for filing with the Securities and Exchange Commission.

 

Audit Committee

   

Stephen P. Elker, Chairman

   

Paul Twohig

   

Nicholas P. Shepherd

   

Sherrill Kaplan

Compensation Committee

 

Members: Rauch, Friedman (until October 19, 2020), Shepherd and Twohig

Chair:

 

Key Responsibilities:

Paul Twohig

   
   

•   Provides oversight on the development and implementation of the compensation programs for our executive officers and outside directors and disclosure relating to these matters; and

   

•   Reviews and approves the compensation of our Chief Executive Officer and our executive officers

The processes and procedures by which the Compensation Committee considers and determines executive officer compensation and outside directors’ compensation are described in the Compensation Discussion and Analysis included in this Proxy Statement. During the 2020 fiscal year, the Compensation Committee again retained Pearl Meyer & Partners, LLC, which we refer to as “Pearl Meyer”, to review the Company’s compensation policies, plans, and amounts for the CEO and other executive officers, including the Named Executive Officers. The role of Pearl Meyer in determining or recommending the amount or form of executive and director compensation, the nature and scope of Pearl Meyer’s assignment and the material elements of the instructions or directions given to Pearl Meyer with respect to the performance of their duties under the engagement are described in the Compensation Discussion and Analysis included in this Proxy Statement. We believe that the use of an independent compensation consultant provides additional assurance that our compensation programs are reasonable and consistent with our goals and objectives. The Compensation Committee may form one or more subcommittees, each of which shall take such actions as shall be delegated by the Compensation Committee. All of the members of our Compensation Committee are “independent” as defined under Rule 5605 of the NASDAQ listing standards. The Compensation Committee has adopted a formal, written Compensation Committee charter that complies with SEC rules and regulations and the NASDAQ listing

16

Table of Contents

standards. During the fiscal year ended January 3, 2021, the Compensation Committee met or acted by unanimous consent on twelve occasions. A copy of the Compensation Committee charter is available on the investor relations section of our website at www.frgi.com.

Corporate Governance and Nominating Committee

 

Members: Rauch, Elker, Daraviras and Rechtschaffen

Chair:

 

Key Responsibilities:

Stacey Rauch

   
   

•   Establishes criteria for board and committee membership and recommends to our board of directors proposed nominees for election to the board of directors and for membership on committees of the board of directors;

   

•   Makes recommendations regarding proposals submitted by our shareholders; and

   

•   Makes recommendations to our board of directors regarding corporate governance matters and practices.

All of the members of our Corporate Governance and Nominating Committee are “independent” as defined under Rule 5605 of the NASDAQ listing standards. The Corporate Governance and Nominating Committee has adopted a formal written Corporate Governance and Nominating Committee charter that complies with SEC rules and regulations and the NASDAQ listing standards. During the fiscal year ended January 3, 2021, the Corporate Governance and Nominating Committee met or acted by unanimous consent on four occasions. A copy of the Corporate Governance and Nominating Committee charter is available on the investor relations section of our website at www.frgi.com.

Nominations for the Board of Directors

The Corporate Governance and Nominating Committee of the board of directors considers director candidates based upon a number of qualifications. The qualifications for consideration as a director nominee vary according to the particular area of expertise being sought as a complement to the existing composition of the board. At a minimum, however, the Corporate Governance and Nominating Committee seeks candidates for director who possess:

•        the highest personal and professional ethics, integrity and values;

•        the ability to exercise sound judgment;

•        the ability to make independent analytical inquiries;

•        willingness and ability to devote adequate time, energy, and resources to diligently perform board and board committee duties and responsibilities; and

•        a commitment to representing the long-term interests of the shareholders.

In addition to such minimum qualifications, the Corporate Governance and Nominating Committee takes into account the following factors when considering a potential director candidate:

•        whether the individual possesses specific industry expertise and familiarity with general issues affecting our business; and

•        whether the person would qualify as an “independent” director under SEC and NASDAQ rules.

The Corporate Governance and Nominating Committee has not adopted a specific diversity policy with respect to identifying nominees for director. However, the Corporate Governance and Nominating Committee takes into account the importance of diversified board membership in terms of the individuals involved and their various experiences and areas of expertise.

The Corporate Governance and Nominating Committee shall make every effort to ensure that the board and its committees include at least the required number of independent directors, as that term is defined by applicable standards promulgated by NASDAQ and/or the SEC. Backgrounds giving rise to actual or perceived conflicts of interest are undesirable. In addition, prior to nominating an existing director for election to the board, the Corporate

17

Table of Contents

Governance and Nominating Committee will consider and review such existing director’s board and committee attendance and performance, independence, experience, skills, and the contributions that the existing director brings to the board.

The Corporate Governance and Nominating Committee has relied upon third-party search firms to identify director candidates and may continue to employ such firms in the future if so desired. The Corporate Governance and Nominating Committee also relies upon, receives and reviews recommendations from a wide variety of contacts, including current executive officers, directors, and shareholders as a source for potential director candidates. The board retains complete independence in making nominations for election to the board.

The Corporate Governance and Nominating Committee will consider qualified director candidates recommended by shareholders in compliance with our procedures and subject to applicable inquiries. The Corporate Governance and Nominating Committee’s evaluation of candidates recommended by shareholders does not differ materially from its evaluation of candidates recommended from other sources. Pursuant to our Bylaws, any shareholder may recommend nominees for director not less than 90 days nor more than 120 days in advance of the anniversary date of the immediately preceding annual meeting of shareholders (provided that if the date of the current year’s annual meeting of shareholders is advanced by more than 30 days, or delayed by more than 70 days from the anniversary date of the immediately preceding annual meeting of shareholders, any shareholder may recommend nominees for director not more than 120 days in advance of the date of the current year’s annual meeting of shareholders and not less than the close of business on the later of the 90th day prior to the date of the current year’s annual meeting of shareholders or the 10th day following the date of the public announcement of the date of the current year’s annual meeting of shareholders), by writing to Louis DiPietro, Senior Vice President, Chief Legal and People Officer, General Counsel and Secretary, Fiesta Restaurant Group, Inc., 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254, giving the name, Company stockholdings and contact information of the person making the nomination, the candidate’s name, address and other contact information, any direct or indirect holdings of our securities by the nominee, any information required to be disclosed about directors under applicable securities laws and/or stock exchange requirements, information regarding related party transactions with us, the nominee and/or the shareholder submitting the nomination, any actual or potential conflicts of interest, the nominee’s biographical data, current public and private company affiliations, employment history and qualifications and status as “independent” under applicable securities laws and/or stock exchange requirements. All of these communications will be reviewed by our Secretary and forwarded to Stacey Rauch, the Chairman of the Corporate Governance and Nominating Committee, or her successor, for further review and consideration in accordance with this policy. Any such shareholder recommendation should be accompanied by a written statement from the candidate of his or her consent to be named as a candidate and, if nominated and elected, to serve as a director.

Board Leadership Structure and Role in Risk Oversight

Board Leadership

Our board of directors believes that our current model of separate individuals serving as Chairman of the board of directors and as Chief Executive Officer is the appropriate leadership structure for us at this time. The board of directors believes that each of the possible leadership structures for a board has its particular advantages and disadvantages, which must be considered in the context of the specific circumstances, culture and challenges facing a company. The Company does not have a member of our board of directors who is formally identified as the “lead independent director.” However, the board of directors has determined that having an independent director serve as Chairman of the board of directors is in the best interest of our shareholders at this time. This structure ensures a greater role for the independent directors in the oversight of Fiesta Restaurant Group, active participation of the independent directors in setting agendas and establishing the board of directors’ priorities and procedures, including with respect to our corporate governance.

Risk Oversight

Our board administers its risk oversight function directly and through its Audit Committee and receives regular reports from members of senior management and third parties engaged by the Company perform duties related to its internal audit reviews on areas of material risk to the Company, including operational, financial, legal and regulatory, strategic and reputational risks. Our Audit Committee regularly discusses with management our major risk exposures, their potential financial impact on our Company and the steps we take to manage them. In addition, our Compensation

18

Table of Contents

Committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs and succession planning for our executive officers. Our Corporate Governance and Nominating Committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for our directors and corporate governance.

Some risks, particularly those relating to potential operating liabilities, the protection against physical loss or damage to our facilities, cybersecurity and the possibility of business interruption resulting from a large loss event, are contained and managed by legal contracts of insurance. Our insurance contracts are reviewed, managed and procured by our Risk Management and Legal departments along with our Chief Financial Officer to optimize their completeness and efficacy.

Risk Considerations in Executive Compensation

Our Compensation Committee regularly considers risk as it relates to our compensation programs, including our executive compensation program, and our Compensation Committee does not believe that our compensation programs encourage excessive or inappropriate risk taking. As described more fully below in “Compensation Discussion and Analysis,” we structure our executive compensation program to consist of both fixed and variable compensation. The fixed (or salary) portion of compensation is designed to provide a steady income regardless of our stock price performance so that executives do not feel pressured to focus exclusively on stock price performance to the detriment of other important business metrics. The variable (cash bonus and equity) portions of compensation are designed to reward both intermediate- and long-term corporate performance and generally are tied to the achievement of company-wide and, in some instances, brand-specific goals. We believe that applying company-wide metrics encourages decision-making by our executives that is in the best long-term interest of our Company and stockholders. Further, we believe that these variable elements of compensation constitute a sufficient portion of overall compensation to motivate our executives to produce short-, intermediate- and long-term corporate results, while the fixed element of compensation is sufficient that our executives are not encouraged to take unnecessary or excessive risks in doing so.

Codes of Ethics

We have adopted written codes of ethics applicable to our directors, officers, and employees in accordance with the rules of the SEC and the NASDAQ listing standards. With respect to our Code of Ethics for Executives and Principal Financial Employees, our policy requires covered employees to execute an annual certification confirming that they understand and will comply with the Code. We make our codes of ethics available on the investor relations section of our website at www.frgi.com. We will disclose on our website amendments to, or waivers from, our codes of ethics in accordance with all applicable laws and regulations.

Delinquent Section 16 Reports

Based upon a review of the filings furnished to us pursuant to Rule 16a-3(e) promulgated under the Exchange Act, and on representations from our executive officers and directors and persons, if any, who beneficially own more than 10% of our common stock, all filing requirements of Section 16(a) of the Exchange Act were complied with in a timely manner during the fiscal year ended January 3, 2021.

Employee, Officer Director Hedging Policy

Our Insider Trading Policy and Management Insider Trading Policy prohibit directors and executive officers from purchasing securities or other financial instruments, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s securities or diminish the full ownership risks and rewards of their direct or indirect Company stock holdings, including without limitation “costless collars,” forward sale contracts, equity swaps, and exchange funds.

19

Table of Contents

Shareholder Communications with the Board of Directors

Any shareholder or other interested party who desires to communicate with our Chairman of the board of directors or any of the other members of the board of directors may do so by writing to: Board of Directors, c/o Stacey Rauch, Chairman of the Board of Directors, Fiesta Restaurant Group, Inc., 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254. Communications may be addressed to the Chairman of the board, an individual director, a board committee, the non-management directors, or the full board. Communications will then be distributed to the appropriate directors unless the Chairman determines that the information submitted constitutes “spam,” offensive or inappropriate material, and/or communications offering to buy or sell products or services.

20

Table of Contents

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table provides information regarding beneficial ownership of our common stock as of March 1, 2021 by:

•        each person known by us to beneficially own more than 5% of all outstanding shares of our common stock;

•        each of our directors, nominees for director, and Named Executive Officers (as set forth in “Executive Compensation-Summary Compensation Table” herein) individually; and

•        all of our directors and executive officers as a group.

26,282,446 shares of our common stock were outstanding on March 1, 2021.

Except as otherwise indicated, to our knowledge, all persons listed below have sole voting power and investment power and record and beneficial ownership of their shares, other than to the extent that authority is shared by spouses under applicable law.

The information contained in this table reflects “beneficial ownership” as defined in Rule 13d-3 of the Exchange Act. Except as otherwise indicated, the address for each beneficial owner is c/o Fiesta Restaurant Group, Inc., 14800 Landmark Boulevard, Suite 500, Dallas, Texas 75254.

Name and Address of Beneficial Owner

 

Amount and Nature of Beneficial Ownership

 

Percent of
Class

Jefferies Financial Group Inc.(1)

 

5,262,189

 

20.0

%

T. Rowe Price Associates, Inc.(2)

 

4,581,900

 

17.4

%

BlackRock, Inc.(3)

 

2,740,631

 

10.4

%

AREX Capital Master Fund, LP(4)

 

2,505,292

 

9.5

%

AREX Capital GP, LLC

       

 

AREX Capital Management, LP

       

 

AREX Capital Management GP, LLC

       

 

Andrew Rechtshaffen

       

 

Private Capital Management, LLC(5)

 

1,479,054

 

5.6

%

Dimensional Fund Advisors LP(6)

 

1,398,217

 

5.3

%

Richard C. Stockinger

 

265,046

 

*

 

Dirk Montgomery

 

141,039

 

*

 

Louis DiPietro

 

92,732

 

*

 

Hope Diaz

 

71,873

 

*

 

Eladio Romeo

 

63,948

 

*

 

Stacey Rauch

 

43,498

 

*

 

Nicholas P. Shepherd

 

25,611

 

*

 

Paul E. Twohig

 

31,034

 

*

 

Stephen P. Elker

 

36,766

 

*

 

Brian P. Friedman(7)

 

82,853

 

*

 

Nicholas Daraviras

 

33,113

 

*

 

Sherrill Kaplan

 

19,533

 

*

 

Andrew V. Rechtschaffen(8)

 

18,090

 

*

 

All directors and executive officers as a group(9)

 

1,022,859

 

3.9

%

____________

*        Less than one percent

(1)      Information was obtained from a Schedule 13D/A filed on February 28, 2020 with the SEC. Jefferies owns our shares as follows: (a) Sole Voting Power: 5,262,189, (b) Shared Voting Power: 0, (c) Sole Dispositive Power: 5,262,189 and (d) Shared Dispositive Power: 0. The address for Jefferies is 520 Madison Avenue, New York, New York.

21

Table of Contents

(2)      Information was obtained from a Schedule 13G/A filed on February 16, 2021 with the SEC. T. Row Price Associates, Inc. (“T. Rowe Price Associates”) beneficially owns our shares as follows: (a) Sole Voting Power: 1,026,784, (b) Shared Voting Power: 0, (c) Sole Dispositive Power: 4,581,900 and (d) Shared Dispositive Power: 0. The address of the principal office of T. Rowe Price Associates is 100 E. Pratt Street, Baltimore, Maryland 21202.

(3)      Information was obtained from a Schedule 13G/A filed on January 27, 2021 with the SEC. BlackRock Inc. owns our shares as follows: (a) Sole Voting Power: 2,720,700, (b) Shared Voting Power: 0, (c) Sole Dispositive Power: 2,740,631, and (d) Shared Dispositive Power: 0. The address for BlackRock Inc. is 55 East 52nd Street, New York, New York 10055.

(4)      Information was obtained from a Schedule 13D/A filed on February 7, 2020 with the SEC. AREX Capital Master Fund, LP (“AREX Master”) owns our shares as follows: (a) Sole Voting Power: 0, (b) Shared Voting Power: 1,180,000, (c) Sole Dispositive Power: 0 and (d) Shared Dispositive Power: 1,180,000. AREX Capital GP, LLC (“AREX Capital GP”) owns our shares as follows: (a) Sole Voting Power: 0, (b) Shared Voting Power: 1,180,000, (c) Sole Dispositive Power: 0 and (d) Shared Dispositive Power: 1,180,000. AREX Capital Management, LP (“AREX Management”) owns our shares as follows: (a) Sole Voting Power: 0, (b) Shared Voting Power: 2,505,292, (c) Sole Dispositive Power: 0 and (d) Shared Dispositive Power: 2,505,292. AREX Capital Management GP, LLC (“AREX Management GP”) owns our shares as follows: (a) Sole Voting Power: 0, (b) Shared Voting Power: 2,505,292, (c) Sole Dispositive Power: 0 and (d) Shared Dispositive Power: 2,505,292. Andrew Rechtschaffen owns our shares as follows: (a) Sole Voting Power: 0, (b) Shared Voting Power: 2,505,292, (c) Sole Dispositive Power: 0 and (d) Shared Dispositive Power: 2,505,292. Securities owned directly by AREX Master and held in certain accounts (the “AREX Managed Accounts”) managed by AREX Management, which also acts as the investment advisor to AREX Master. Mr. Rechtschaffen solely by virtue of his position as the managing member of each of AREX Capital GP, the general partner of AREX Master, and AREX Management GP, the general partner of AREX Management, may be deemed to beneficially own the securities owned directly by AREX Master and held in the AREX Managed Accounts for purposes of Section 16 of the Exchange Act. Mr. Rechtschaffen expressly disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. The address for AREX Master, AREX Capital GP, AREX Management, AREX Management GP and Mr. Rechtschaffen is 250 West 55th Street, 15th Floor, New York, NY 10019.

(5)      Information was obtained from a Schedule 13G/A filed on February 5, 2021 with the SEC. Private Capital Management, LLC owns our shares as follows: (a) Sole Voting Power: 486,621, (b) Shared Voting Power: 992,433, (c) Sole Dispositive Power: 486,621, and (d) Shared Dispositive Power: 992,433. The address for Private Capital Management, LLC is 8889 Pelican Bay Boulevard, Suite 500, Naples, FL 34108.

(6)      Information was obtained from a Schedule 13G/A filed on February 12, 2021 with the SEC (the “Dimensional Fund Advisors Schedule 13G”). Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Dimensional Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Dimensional Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Company that are owned by the Dimensional Funds and may be deemed to be the beneficial owner of the shares of the Company held by the Dimensional Funds. However, all securities reported in the Dimensional Fund Advisors Schedule 13G are owned by the Dimensional Funds. Dimensional disclaims beneficial ownership of such securities. In addition, the filing of the Dimensional Fund Advisors Schedule 13G shall not be construed as an admission that the reporting person or any of its affiliates is the beneficial owner of any securities covered by this Schedule 13G for any other purposes than Section 13(d) of the Securities Exchange Act of 1934. Subject to footnote (6), Dimensional Fund Advisers LP owns our shares as follows: (a) Sole Voting Power: 1,317,397, (b) Shared Voting Power: 0, (c) Sole Dispositive Power: 1,398,217 and (d) Shared Dispositive Power: 0. The address for Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, Texas, 78746.

(7)      Includes 28,668 shares of our common stock held by 2055 Partners L.P., which we refer to as “2055 Partners”, and 54,185 shares of our common stock held directly by Mr. Friedman. Mr. Friedman is the President and a director of Jefferies. Mr. Friedman disclaims beneficial ownership over our shares held by Jefferies. Mr. Friedman is the general partner of 2055 Partners and, in such capacity, may be deemed to beneficially own the 28,668 shares of our common stock beneficially owned by 2055 Partners. The address of Mr. Friedman is c/o Jefferies, 520 Madison Avenue, New York, New York 10022.

(8)      Information was obtained from a Statement of Changes in Beneficial Ownership on Form 4/A filed on May 18, 2020 with the SEC. Securities owned directly by AREX Master and held in AREX Managed Accounts managed by AREX Management, which also acts as the investment advisor to AREX Master. Mr. Rechtschaffen solely by virtue of his position as the managing member of each of AREX Capital GP, the general partner of AREX Master, and AREX Management GP, the general partner of AREX Management, may be deemed to beneficially own the securities owned directly by AREX Master and held in the AREX Managed Accounts for purposes of Section 16 of the Exchange Act. Mr. Rechtschaffen expressly disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. The address of Mr. Rechtschaffen is 250 West 55th Street, 15th Floor, New York, NY 10019.

(9)      Includes 28,668 shares of our common stock held by 2055 Partners as reported in footnote (7), 53,310 shares held of our common stock by Patricia Lopez-Calleja and 44,413 shares held of our common stock by Ulyses Camacho.

22

Table of Contents

Equity Compensation Plan

The following table summarizes our 2012 Stock Incentive Plan, as amended, which is the equity compensation plan under which our common stock may be issued as of January 3, 2021. Our shareholders have approved the Plan.

 

Number of
securities to
be issued upon
exercise of
outstanding
options,
warrants, and
rights

 

Weighted-
average
exercise price
of outstanding
options

 

Number of
securities
remaining
available for
future issuance
under equity
compensation
plans

Equity compensation plans approved by security holders

 

 

 

676,853

Equity compensation plans not approved by security holders

 

 

 

Total

 

 

 

676,853

23

Table of Contents

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Transaction Procedures

The board of directors has assigned responsibility for reviewing related party transactions to our Audit Committee. The board of directors and the Audit Committee have adopted a written policy pursuant to which certain transactions between us or our subsidiaries and any of our directors or executive officers must be submitted to the Audit Committee for consideration prior to the consummation of the transaction as required by the rules of the SEC. The Audit Committee reports to the board of directors on all related party transactions considered.

The Company, after a competitive process, engaged Jefferies LLC (“Jefferies LLC”), an affiliate of, Messrs. Friedman and Daraviras, two of the members of Fiesta’s board of directors and a subsidiary of Jefferies Financial Group, Inc, a holder of more than 20 percent of the total outstanding shares of the Company, in connection with a refinancing of the Company’s former amended senior credit facility and other advisory services. Jefferies Finance LLC served as lead arranger and sole bookrunner under the Credit Agreement (the “Senior Credit Facility”) dated November 23, 2020 among the Company, Fortress Credit Corp., as administrative agent and collateral agent, and the lenders party thereto. The engagement of Jefferies LLC and the corresponding engagement letter was approved by the Audit Committee in accordance with the Company’s Related Party Transaction Policy as described on page 15 of this proxy statement. The Company paid fees of $1.7 million to Jefferies LLC and reimbursed Jefferies LLC for reasonable out of pocket and ancillary expenses of less than $0.1 million in 2020.

Family Relationships

There are no family relationships between any of our executive officers or directors.

24

Table of Contents

CORPORATE GOVERNANCE

Recent Corporate Governance Initiatives

Over the last few years, we adopted multiple structures to strengthen our board’s independence, ensure robust risk oversight and enhance our Company’s governance and executive compensation programs. The following table of corporate governance highlights is indicative of our commitment to shareholders and desire to ensure Fiesta implements best-in-class corporate governance features, appropriate for our evolving company.

Corporate Governance Highlights

•        Board Declassification

•        Mandatory Director Retirement Age

•        Independent Chair

•        Highly Independent Board

•        Majority Voting in Uncontested Elections

•        Board Tenure — Average of approximately 5 ½ years

•        Board Refreshment — Two new Independent Directors in 2017; One new Independent Director in 2018; One new Independent Director in 2020

Shareholder Engagement Initiatives

The Company’s board of directors, Compensation Committee, and management value the opinions of our shareholders. We are committed to being transparent with shareholders on all topics, including our business strategy, governance and compensation programs, and responsive to shareholder feedback provided.

Based on feedback received during these meetings, as well as historical voting outcomes, we believe our shareholders are generally supportive of the Company’s governance and compensation programs. Nevertheless, we believe these conversations with shareholders are invaluable and will continue to seek shareholder input on similar topics when making future board decisions.

Board Declassification

In 2018, our Board, with the approval of our shareholders, declassified our Board. This enhancement to our governance program became effective at the 2019 Annual Meeting.

Majority Voting

In response to strong shareholder support, in 2017, our Board, with the approval of our shareholders, adopted a majority vote standard in uncontested director elections. This enhancement to our governance program has been effective since the 2018 Annual Meeting and we believe this feature will provide shareholders with a more meaningful role in the outcome of uncontested director elections and encourage increased director accountability and oversight.

Mandatory Director Retirement Age

Our Board of directors also adopted in 2018 a mandatory retirement policy, which provides that a person is not eligible for election as a director if they are older than 75 years of age. The policy also imposes a mandatory retirement age for incumbent directors, which precludes an incumbent director from seeking nomination for re-election to our board of directors if they have exceeded the age limit. We believe this policy will promote director refreshment and ensure the Fiesta board continues to enjoy the benefits associated with fresh, thoughtful perspectives.

Board Recruitment

Our Board conducted a national search for a Board member with skills which would complement the existing membership of the Board and which would provide the Company with valuable experience relevant for its Business. In November 2018, we appointed Sherrill Kaplan, an experienced marketing professional with experience in the restaurant and retail industries and with a focus on digital.

25

Table of Contents

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The purpose of this Compensation Discussion & Analysis, which we refer to as the “CD&A”, is to provide relevant information to shareholders regarding the Company’s executive compensation processes, procedures, plan designs, and practices with respect to its executive officers named in the Summary Compensation Table, which we refer to each as a “Named Executive Officer” or “NEO”, for 2020. The following are the Company’s NEOs for 2020:

 

2020 Named Executive Officers

Mr. Richard C. Stockinger

 

Chief Executive Officer and President; Director

Mr. Dirk Montgomery

 

Senior Vice President, Chief Financial Officer and Treasurer

Mr. Louis DiPietro

 

Senior Vice President, Chief Legal and People Officer, General Counsel and Secretary

Ms. Hope Diaz

 

Senior Vice President and Chief Marketing Officer

Mr. Eladio (Willie) Romeo

 

Senior Vice President, Operations, Pollo Tropical

Executive Compensation: Context and Overview

Introduction

The Compensation Committee is committed to designing an executive compensation program that pays for delivering performance in a straightforward manner and promotes the recruitment and retention of our executives. Accordingly, the majority of the compensation for our NEOs is variable and based primarily on the Company’s performance. Our Company incentivizes performance through a compensation program structure that reflects an appropriate mix of short-term and long-term vehicles. Accordingly, our executives will receive larger rewards when performance objectives are exceeded and conversely, will receive lower, or no rewards, when performance falls below targeted levels. The Compensation Committee continues to place a priority on refining our executive compensation program to align with Fiesta’s business and feedback received from our shareholders, as appropriate.

The Role of Shareholder Feedback and Vote Results

The Company’s board of directors, Compensation Committee, and management value the opinions of the Company’s shareholders. The Company is open to receiving feedback from shareholders, and currently provides shareholders with the opportunity to cast an advisory vote to approve NEO compensation every year, or Say-on-Pay. The Compensation Committee considers any feedback it receives from shareholders, as well as the outcome of the vote, when making compensation decisions for NEOs. For the Say-on-Pay proposal at the 2020 Annual Meeting, approximately 99% of the shares cast on the proposal were voted in favor of the proposal. The Compensation Committee believes that this evidences the Company’s shareholders’ support for its approach to executive compensation. The Compensation Committee will continue to consider shareholder feedback and the outcome of the Company’s Say-on-Pay votes when making future compensation decisions for its NEOs.

2020 Financial Performance, COVID-19 Response and Progress Against Strategic Initiatives

In the face of the COVID-19 global pandemic, we responded quickly and not only met the unprecedented challenges presented to us and minimized the disruption to our business and protected the well-being of our employees and guests, but also, particularly in the last six months of 2020, we experienced a number of financial and operational successes. With respect to our accomplishments relative to the health and well-being of all of our employees during the COVID-19 pandemic, we provided a number of incremental COVID-19 benefits, including:

•        Introduced paid time off for employees required to quarantine or who faced illness due to COVID-19;

•        Sponsored employer paid COVID-19 testing for employees;

•        Embarked on a communication plan to ensure that associates are aware of our Employee Assistance Program coverage with a focus on mental health support for employees and their families;

26

Table of Contents

•        Increased all hourly base wages during the second quarter of 2020 when we were most impacted by the global pandemic;

•        Provided a special bonus for our salaried restaurant managers;

•        Instituted protocols on wearing masks and gloves, conducting employee screenings and temperature checks, and using enhanced cleaning measures;

•        Implemented work from home for each of our support centers;

•        Initiated a program for providing employees with the necessary tools and resources to educate themselves about the benefits of the vaccine to enable employees to make the best decision for themselves; and

•        Provided employees with an additional two hours of paid time off for each COVID-19 vaccine shot (up to a total of 4 hours).

In addition to this response, we also achieved a number of accomplishments relative to our overall business operations and results, including:

•        Restaurant-level Adjusted EBITDA margins, a non-GAAP financial measure, of 19.5% and 12.4% in 2020 for Pollo Tropical and Taco Cabana, respectively1;

•        Consolidated Adjusted EBITDA margins, a non-GAAP financial measure, of 8.1% for 2020, a moderate decrease from prior year levels1;

•        Grew Consolidated Adjusted EBITDA, a non-GAAP financial measure, in the third and fourth quarters of 2020 above 2019 levels1.

•        Generated cash flow from operating and investing activities totalling $48.7 million, significantly above prior year levels;

•        Completed the sale of 13 owned properties over a six-month period generating $26.8 million in cash flow;

•        Experienced sequential improvement in consolidated comparable restaurant sales in the third and fourth quarters of 2020;

•        Introduced new digital application platforms for both brands; and

•        Fully implemented or initiated a number of best-in-class digital initiatives such as curbside delivery, integration of geofencing technology for customer pickup, and speed of service improvements for our drive thrus enabled by technology.

We accomplished these milestones while continuing to make significant progress against our strategic initiatives. While reviewing the rapidly evolving and volatile economic environment throughout the year, the Compensation Committee ultimately determined that it would not revise, or otherwise update, the Company’s short term incentive bonus program metrics for 2020 given the extreme difficulty in establishing new performance metrics in the context of such significant and unprecedented uncertainty. Alternatively, the Compensation Committee determined to review management’s performance following the end of 2020 and make its assessment based upon the accomplishments of the Company overall and in the face of the COVID-19 global pandemic.

In large part due to the fact that the Compensation Committee approved the 2020 short-term incentive bonus program metrics prior to the full impact of the global pandemic being felt by the broader economy, we failed to achieve the threshold levels for the key metrics established under our short-term incentive program, namely Adjusted EBITDA (50%) and comparable restaurant sales (SRS) (50%) metrics.

However, in recognition of the significant results and accomplishments noted above, the Compensation Committee determined to pay a discretionary cash bonus to its CEO and NEOs, at a level below target. Additionally, the market-based performance stock units previously issued to our CEO and one of our NEOs did not vest in 2020 given that the underlying stock price hurdles were not met.

____________

1          For further details regarding non-GAAP financial measures and a reconciliation to their most comparable GAAP measure, please see the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021.

27

Table of Contents

2020 CEO Compensation

For 2020, our CEO’s compensation is set forth below:

Compensation Element

 

2020 CEO
Compensation
Awards

     

Long-Term Incentive

Base Salary

 

$

650,000

     

Onboard Grant

 

$

750,000

(1)

Short-Term Incentive

 

$

650,000

     

2020 Annual Grant

 

$

661,600

(2)

Long-Term Incentive

 

$

2,386,600

     

2020 Retention Grant

 

$

975,000

(3)

____________

(1)      Pursuant to Mr. Stockinger’s Employment Agreement, Mr. Stockinger received a sign-on grant of restricted common stock of the Company pursuant to the Company’s 2012 Stock Incentive Plan with a target value of $3,000,000, which consisted of 50% time-based restricted stock of the Company granted on March 6, 2017 vesting 25% on each anniversary date over four years and 50% performance based restricted stock units of the Company granted on June 2, 2017. The sign-on grant is intended to represent awards for fiscal years 2017-2020.

(2)      Represents a grant of time-based restricted stock of the Company granted on April 29, 2020 vesting on each anniversary date over four years.

(3)      Represents a special one-time retention award of restricted stock of the Company granted on November 11, 2020 vesting 100% on the second anniversary of the vesting date.

Pay for performance is the most significant structural element of Fiesta’s executive compensation program. As shown below for 2020, nearly 65% of targeted CEO compensation was at risk and subject to performance or variable based upon our stock price.

Our 2020 performance and corresponding CEO short-term incentive bonus and long-term incentive achievement illustrates how our financial results are closely aligned with CEO compensation. Specifically, while our board and Compensation Committee recognized the continued, significant positive contributions from our CEO in the face of the COVID-19 global pandemic, including the Company’s ability’s to improve its SRS sequentially throughout the year and improved Restaurant-level Adjusted EBITDA and Consolidated Adjusted EBITDA, particularly during the final six months of 2020 and the progress we made against our key strategic initiatives, our CEO only received a modest discretionary cash bonus representing only a portion of his annual incentive bonus target, given that we did not achieve the performance levels established by our Compensation Committee pursuant to the short-term cash incentive program. Additionally, the threshold stock price for the initial performance stock unit tranche scheduled to vest in March 2020 was not met and all underlying Awards did not vest and were forfeited in March 2021.

28

Table of Contents

Executive Compensation Philosophy

Fiesta’s compensation philosophy is designed to strike an appropriate balance between aligning executive compensation with financial performance and promoting retention. We strongly believe that our compensation program is aligned with this compensation philosophy and that the at-risk compensation components have delivered value and encouraged sustainable shareholder value creation.

Our executive compensation program is designed to achieve the following key objectives:

•        Motivate executives to enhance long-term shareholder value;

•        Reinforce Fiesta’s pay for performance culture by aligning executive compensation with Fiesta’s business objectives and financial performance;

•        Provide competitive market compensation that allows Fiesta to attract and retain talented high-quality executives; and

•        Use incentive compensation to promote desired behavior without encouraging unnecessary or excessive risk-taking.

Executive Compensation Components

Base Salary

The Compensation Committee reviews and considers salary increases of our NEOs on an annual basis, taking into consideration factors such as the Company’s compensation philosophy and strategy, the Company’s performance, individual executive performance and tenure, internal equity among executives, and competitive market pay levels.

Executive

 

2019
Annual Base
Salary

 

2020
Annual Base
Salary
(1)

 

% Increase

Richard Stockinger

 

$

650,000

 

$

650,000

 

 

Dirk Montgomery

 

$

475,000

 

$

475,000

 

 

Louis DiPietro(2)

 

$

365,000

 

$

400,000

 

9.6

%

Hope Diaz

 

$

325,000

 

$

325,000

 

 

Eladio (Willie) Romeo(3)

 

$

240,000

 

$

250,000

 

4.2

%

____________

(1)      During the second quarter of 2020, the base salary of each of Messrs. Stockinger, Montgomery, DiPietro and Romeo and Ms. Diaz was temporarily reduced by 35%, 30%, 25%, 20% and 25%, respectively, and was fully restored to prior levels in the beginning of the third quarter of 2020.

(2)      Mr. DiPietro’s base salary was increased to $400,000, effective September 1, 2020.

(3)      Mr. Romeo’s base salary was increased to $250,000, effective October 1, 2020.

The board and the Compensation Committee approved a salary increase for Mr. DiPietro in connection with his appointment as Chief Legal and People Officer and in recognition of his increased responsibilities for the Company’s human resources function and for Mr. Romeo in connection with a rebalancing of his base salary and short term incentive bonus target in an effort to remain competitive with companies with which we compete for executive talent and attract the essential executive talent we believe is necessary for us to achieve our goals and objectives.

Short-Term Incentive

Beginning in 2018, the Company implemented a new short-term cash incentive program pursuant to which annual incentives were entirely formulaic based on financial results. The key metrics considered for purposes of determining whether an award is earned are Adjusted EBITDA (50%) and SRS metrics (50%).

29

Table of Contents

For fiscal 2020, the performance measures comprising our short-term cash incentive bonus, our actual achievement during the performance period performance outcome for each measure (as reported in our Annual Report on Form 10-K) for the 2020 fiscal year were as follows:

Performance Measure

 

Threshold

 

Target

 

2020 Results

 

% Payout

Consolidated Adjusted EBITDA(1)

 

$

56,880

 

 

$

66,920

 

 

$

44,980

 

 

0

%

Company SRS

 

 

1.70

%

 

 

2.00

%

 

 

(14.5

)%

 

0

%

Pollo Tropical Adjusted EBITDA

 

$

46,560

 

 

$

54,780

 

 

$

36,517

 

 

0

%

Pollo Tropical SRS

 

 

3.32

%

 

 

3.90

%

 

 

(14.7

)%

 

0

%

Taco Cabana Adjusted EBITDA

 

$

10,340

 

 

$

12,170

 

 

$

8,463

 

 

0

%

Taco Cabana SRS

 

 

(0.60

)%

 

 

(0.50

)%

 

 

(14.4

)%

 

0

%

____________

(1)      Consolidated Adjusted EBITDA is a non-GAAP financial measure. For further details regarding non-GAAP financial measures and a reconciliation to their most comparable GAAP measure, please see the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021.

As a result, the bonus payout achievement attributed to our annual incentive bonus program was scored at 0% of the target level. In 2020, while the annual performance metrics scored below threshold, the Compensation Committee determined that this outcome did not appropriately reflect management’s overall performance for 2020. To recognize the Company’s overall performance in the context of the broader challenges presented by the COVID-19 global pandemic, including the Company’s ability to improve its SRS sequentially throughout the year, improved Consolidated Adjusted EBITDA in the third and fourth quarters of 2020 compared 2019, particularly for the final six months of 2020, and the progress made against key strategic initiatives the Compensation Committee made the decision to apply discretion.

The following annual discretionary cash incentive bonuses were paid to each of our NEOs for fiscal 2020 performance. All awards are equal to 50% of each NEOs target based upon their base salary at year-end, consistent with the determination of the Compensation Committee as described above:

Executive

 

2020
Annual Incentive
Bonus

Richard Stockinger

 

$

325,000

Dirk Montgomery

 

$

118,750

Louis DiPietro

 

$

100,000

Hope Diaz

 

$

97,500

Eladio (Willie) Romeo

 

$

62,500

Long-Term Incentive

The Company has adopted a long-term incentive program that provides the opportunity for annual equity grants to the NEOs pursuant to the 2012 Stock Incentive Plan, as amended, which we refer to as the “Plan”. The purpose of the long-term incentive program is to align long-term pay with long-term performance goals by providing stock-based compensation that will reward executives for creating sustainable shareholder value. Additionally, in order to meet the Company’s executive officer retention goals, in November 2020 the Compensation Committee approved a special, one-time retention grant to its NEOs.

In early 2020, the Compensation Committee reviewed the grant mix for its executive officers and initially determined that a mix of 50% performance-based awards and 50% time-based awards was appropriate. Grants are determined pursuant to the target long-term incentive grant date value and typically granted annually in February or March on a grant date which is generally five business days following the announcement of the Company’s financial results for the prior fiscal year with annual vesting dates linked to the grant date. For 2020 only, however, given the uncertainty created by the COVID-19 global pandemic, and the extreme difficulty in properly determining appropriate performance metrics, the Compensation Committee determined to grant the Long-Term Incentive Awards entirely in restricted stock. Further, while the grants were not made until April 29, 2020, for purposes of calculating the award target value, the Compensation Committee utilized the closing price of the Company’s stock according to its prior

30

Table of Contents

precedent of reflecting a grant date five days following the release of the Company’s financial results for prior fiscal year. The Compensation Committee further determined as a matter of fairness and equity that this approach was appropriate given that the Company’s stock price had decreased from $8.91 on March 4, 2020 to $7.86 on April 29, 2020.

The measurement of the value of any restricted stock grant or performance stock unit grant has been and would be based upon the price of our common stock at the close of business on such grant date as noted above. Given that the Compensation Committee’s policy is to grant restricted stock and performance stock units on a fixed date, the Compensation Committee may have previously, or may in the future, grant restricted stock at a time when it, as well as the senior management, may be aware of material non-public information that, once made public, could either have a positive or negative effect on the price of our common stock.

In 2018, the performance stock unit portion of the annual equity grants to the NEOs (excluding the CEO) were structured to align with the CEO’s remaining closing price performance conditions. None of the closing conditions of this award were met and, as a result, were forfeited on March 6, 2021.

Annual Restricted Stock Grants

The use of restricted stock creates stock ownership opportunities and retention strength. On April 29, 2020, the restricted stock grants were made to the following NEOs employed on such date: Messrs. Stockinger, Montgomery, DiPietro and Romeo and Ms. Diaz were granted 84,175, 53,311, 28,676, 18,855 and 25,533 shares of restricted stock, respectively. The restricted stock awards granted on April 29, 2020 vest 25% on each anniversary date over four years. The annual grants were calculated at 70% of each executive’s annual base salary at the time of the grant and, as noted above, for consistency and fairness, the share price used to determine the number of shares subject to the awards was determined according to its prior precedent of reflecting a grant date and stock price of $7.86, five days following the release of the Company’s financial results for 2019. The following sets forth the target annual long-term grant date value (based on the closing price of the common stock on the date of grant for each NEO):

Executive

 

Target
Long-Term
Incentive
$ Value

Richard Stockinger

 

$

661,600

Dirk Montgomery

 

$

419,000

Louis DiPietro

 

$

225,400

Hope Diaz

 

$

200,700

Eladio (Willie) Romeo

 

$

148,200

Performance Stock Units

The use of performance stock units creates alignment between long-term pay and long-term company performance. Prior to 2020, each NEO was generally granted market-based performance stock units during the first 12 months following the date on which such NEO joins the Company. Commencing in 2021, the Compensation Committee will grant performance stock units as a material component to its NEOs long-term incentive awards. Such performance awards will vest based upon the achievement of certain long-term financial goals, initially over three-years, and comprise one-half of the annual long-term incentive award value.

As noted above, we did not grant performance units in 2020 due to the lack of visibility and difficulty in goal-setting.

Special Retention Restricted Stock Grant

Given the significant strategic initiatives underway by the Company and the value that the Board and Compensation Committee placed on the current executive leadership, the Compensation Committee reviewed, with the assistance of its compensation consultant, the retention value of the current outstanding awards held by its executive officers. Following such review, the Compensation Committee determined that the current outstanding

31

Table of Contents

awards were insufficient to provide the appropriate retention value desired by the Board for management, in each case representing a total value below or only slightly above such executive’s annual salary. In keeping with the intent to retain the executive team and the importance of consistency in leadership to manage through these unprecedented times, the Compensation Committee awarded to its executive officers, including the NEOs, restricted stock awards equal to one and one half times each recipient’s annual base salary valued at the closing market price of the Company’s common stock on November 11, 2020. Messrs. Stockinger, Montgomery, DiPietro and Romeo and Ms. Diaz were granted 92,681, 67,728, 57,034, 35,646 and 46,340 shares of restricted stock, respectively. The awards will vest in their entirety on the second anniversary of the date of grant to align with the timeline for many of the Company’s planned key strategic initiatives and, as a condition to the issuance of the awards, Mr. Montgomery, Mr. DiPietro, Ms. Diaz and Mr. Romeo were required to enter into an agreement to not compete with the Company for a period ending one year after such recipient’s termination of employment with the Company. The following sets forth the target long-term grant date value for the special retention awards (based on the closing price of the common stock on the date of grant) for each NEO:

Executive

 

Target
Long-Term
Incentive
$ Value

Richard Stockinger

 

$

975,000

Dirk Montgomery

 

$

712,500

Louis DiPietro

 

$

600,000

Hope Diaz

 

$

487,500

Eladio (Willie) Romeo

 

$

375,000

Additional Compensation Policies and Practices

Compensation Governance Highlights

•        Strong pay-for-performance alignment

•        Fully independent Compensation Committee

•        Fully independent compensation advisor reporting directly to the Compensation Committee

•        Compensation Clawback Policy in the event of a financial restatement

•        Executive and Outside Director stock ownership requirements

•        Prohibition on hedging and pledging of company stock

Executive Stock Ownership Guidelines

Executives of the Company are expected to acquire and continue to hold shares of the Company’s common stock having an aggregate market value which equals or exceeds a multiple of base salary as outlined below within five years of being named an executive.

The following sets forth the minimum stock ownership level for each NEO:

Executive

 

Salary
Multiple

Richard Stockinger

 

3x

Dirk Montgomery

 

1x

Louis DiPietro

 

1x

Hope Diaz

 

1x

Eladio (Willie) Romeo

 

1x

Only actual shares owned by each executive, including direct and indirect ownership as reported to the SEC, count toward compliance with these guidelines.

32

Table of Contents

Compensation Clawback Policy

The Company has adopted a compensation clawback policy. The NEOs are covered by the policy, which enables the board of directors to seek repayment of incentive compensation that was paid based on financial results that are subsequently restated whereby the amount of incentive compensation that would have been awarded or earned based on the restated financial results is lower than what was paid based on the original financial results. This policy will be reviewed from time to time to ensure that it is compliant with any SEC requirements.

Executive Compensation Roles and Responsibilities

Compensation Committee

The Compensation Committee establishes the overall compensation philosophy and strategy for the NEOs, determines the Chief Executive Officer’s compensation, and reviews and approves compensation levels, plan designs, policies, and practices that it believes are aligned with this philosophy and strategy and that are in the best interests of the Company and its shareholders. Although the Compensation Committee receives input from the Chief Executive Officer (particularly with respect to the other NEOs), executive leadership, and its independent compensation advisor, the Compensation Committee makes its own independent determinations regarding executive compensation.

Chief Executive Officer

The Chief Executive Officer attends portions or all of certain Compensation Committee meetings and makes specific recommendations to the Compensation Committee with respect to each NEO’s compensation other than his own. This information is reviewed and considered by the Compensation Committee along with all other relevant factors and circumstances. The Chief Executive Officer is never present when the Compensation Committee meets in executive sessions to discuss the compensation of the NEOs.

Executive Leadership

Various members of executive leadership provide information from time to time either to the Chief Executive Officer or to the Compensation Committee directly. For example, the Chief Financial Officer provides information regarding financial performance and payouts under the short-term incentive program and the Chief Legal and People Officer provides information regarding executive compensation policies and practices such as stock ownership requirements.

Independent Compensation Advisor

The Compensation Committee has the authority to retain a compensation advisor. Since 2012, the Compensation Committee has annually chosen to retain Pearl Meyer as its compensation advisor. In selecting Pearl Meyer, the Compensation Committee considered the SEC’s independence criteria and concluded that Pearl Meyer is independent per the criteria and that the work of Pearl Meyer did not raise any conflicts of interest. Pearl Meyer reports directly to the Compensation Committee and provides no other services to the Company. Pearl Meyer’s services to the Compensation Committee include providing periodic data and information regarding market pay practices and trends, as well as assisting in the development of appropriate compensation program designs and policies, and the preparation of the CD&A. The Compensation Committee has been satisfied with Pearl Meyer’s services.

Change of Control Agreements

The Stockinger Employment Agreement provides for certain potential enhanced benefits upon a termination of employment following a change of control of the Company which is further described on pages 42 and 43 of this Proxy Statement.

During 2020, the Company did not have change of control agreements with any of its other NEOs.

33

Table of Contents

The Plan and individual award agreements for awards of restricted stock and performance stock units contain a change of control provision. Under the Plan and individual award agreements for restricted stock, in the event of a change of control of the Company, the vesting provisions on all outstanding unvested restricted shares shall be accelerated and such shares will become fully vested and free of all restrictions. With regard to performance stock units, in the event of a change of control, if the performance stock unit awards (i) are not continued by the Compensation Committee, or not assumed or replaced in an equitable manner to the holder by the successor entity or company after a change in control, then a portion of such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest, and (ii) are continued by the Compensation Committee, or are assumed or replaced in an equitable manner to the holder by the successor entity or company after a change of control and if the holder of such performance stock unit award is terminated by the Company for reasons other than cause (as defined under the Plan) or the result of a voluntary termination by the holder, or employment is terminated by the holder for good reason (as defined under the Plan) within one year of the date of the change of control, a portion of such performance stock unit award that would have vested as of the scheduled vesting date if the Company were to achieve the target performance level for the performance period shall immediately vest.

The Role of Benchmarking

The Compensation Committee periodically requests data and information regarding the pay practices and program designs of other, similar companies. However, the Compensation Committee does not benchmark or target a specified pay level or percentile, nor does it follow the practices of similar companies. Instead, the Compensation Committee considers this information along with all other relevant facts and circumstances facing the Company and the executives. Such factors include Company performance, individual executive performance, internal equity, succession planning, affordability, return on investment, accounting expense, tax deductibility and shareholder dilution. During 2020, the Compensation Committee did not request such data and information.

Retirement Benefits

The Company provides and maintains a 401(k) Savings Plan, which we refer to as the “401(k) Plan”, and a Deferred Compensation Plan, which we refer to as the “Deferred Compensation Plan”, which are intended to provide the Company’s team members with a competitive tax-deferred long-term savings vehicle. The 401(k) Plan is a qualified 401(k) plan and the Deferred Compensation Plan is a non-qualified deferred compensation plan. The NEOs were not eligible to participate in a qualified 401(k) plan once they have been excluded as “highly compensated” employees (as defined under the Code). Under the Deferred Compensation Plan, eligible employees may elect to voluntarily defer portions of their base salary and annual bonus. An eligible employee may elect, with a deferral agreement, to defer all or a specified amount or percentage of base salary and, if applicable, all or a specified amount or percentage of cash bonuses. All amounts deferred by the participants earn interest at 8% per annum. The Company does not provide any matching contributions to the Deferred Compensation Plan.

Executive Perquisites

In December 2018, the Compensation Committee approved a monthly housing allowance to be paid to Mr. DiPietro in the amount of $1,500. Total housing allowance payments to Mr. DiPietro in 2020 totalled $18,692. In August 2019, the Compensation Committee approved a monthly housing allowance to be paid to Mr. Montgomery in the amount of $1,500. Total housing allowance payments to Mr. Montgomery in 2020 totalled $18,692.

34

Table of Contents

Tax Implications

The Compensation Committee has considered the impact of Section 162(m) of the Code. This section disallows a tax deduction for any publicly-held corporation for individual compensation to certain executives of such corporation exceeding $1,000,000 in any taxable year, unless compensation is performance-based. It is the intent of the Company and the Compensation Committee to maximize the deductibility of our executives’ compensation whenever possible. However, the Compensation Committee does not believe that compensation decisions should be based solely upon the amount of compensation that is deductible for federal income tax purposes. Accordingly, the Compensation Committee reserves the right to award compensation that is or could become non-deductible when it believes that such compensation is consistent with our strategic goals and in our best interests.

Compensation Committee Report

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Company’s board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

Respectfully submitted,

     
   

COMPENSATION COMMITTEE

   

PAUL E. TWOHIG (Chairman)

   

NICHOLAS P. SHEPHERD

   

STACEY RAUCH

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee for the fiscal year ended January 3, 2021 were Paul Twohig, Stacey Rauch, Nicholas P Shepherd and Brian P. Friedman (until October 19, 2020). None of the members of the Compensation Committee were, during such year, an officer of the Company or any of our subsidiaries or had any relationship with us other than serving as a director except that Mr. Friedman is employed by an affiliate of Jefferies LLC which provided advisory services to the Company as described above and Jefferies Finance LLC who served as lead arranger and sole bookrunner under the Company’s Senior Credit Facility as described above. In addition, no executive officer served as a director or a member of the compensation committee of any other entity, other than any subsidiary of the Company, and which such other entity’s (other than any subsidiary of the Company) executive officers served as a director of the Company or on our Compensation Committee. None of the members of our Compensation Committee had any relationship required to be disclosed under this caption under the rules of the SEC.

35

Table of Contents

Summary Compensation Table

The following table summarizes historical compensation awarded, paid to or earned by the NEOs for the fiscal year ended January 3, 2021, December 29, 2019 and December 30, 2018.

Name and Principal Position

 

Year

 

Salary
($)

 

Bonus(1)
($)

 

Stock
Awards
(2)
($)

     

Option
Awards
($)

 

Non-Equity
Incentive Plan
Compensation

($)

 

Nonqualified
Deferred
Compensation
Earnings
($)

 

All Other
Compensation
(3)
($)

 

Total
($)

Richard C. Stockinger

 

2020

 

$

593,125

 

$

325,000

 

$

1,636,600

(4)

                     

$

2,554,725

Chief Executive Officer

 

2019

 

$

575,000

 

$

115,000