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 x☒ Filed by a Party other than the Registrant ¨☐
Check the appropriate box:
| Preliminary Proxy Statement | ||
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
| Definitive Proxy Statement | ||
| Definitive Additional Materials | ||
| Soliciting Material Pursuant to §240.14a-12 | ||
WINGSTOP INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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LETTER TO OUR STOCKHOLDERS
WINGSTOP INC.
5501 LBJ Freeway, 5th Floor,
Dallas, Texas 75240
March 23, 201622, 2018
Dear Stockholder:
We cordially invite you to attend the 20162018 Annual Meeting of Stockholders of Wingstop Inc. to be held on Wednesday, May 4, 2016,2, 2018, at 2.00 p.m. eastern10:00 a.m. central time at the offices of King & Spalding LLPWingstop’s conference facility located at 1180 Peachtree St NE, 16th5501 LBJ Freeway, 4th Floor, Atlanta, GA 30309.Dallas, Texas 75240.
The items of businessEnclosed are listed in the following Notice of Annual Meeting of Stockholders and are more fully addressed inProxy Statement, which describe the Proxy Statement.business that will be acted upon at the meeting, as well as our 2017 Annual Report, which includes our audited financial statements.
We are pleased toFor your convenience, we will take advantage of the Securities and Exchange Commission rule allowing companies to furnish proxy materials to stockholders over the Internet. We believe that thise-proxy process expedites stockholders’ receipt of proxy materials, while also lowering the costs and reducing the environmental impact of our Annual Meeting. On or about March 23, 2016,22, 2018, we began mailing a Notice of Internet Availability of Proxy Materials containing instructions on how to access our Proxy Statement and annual report2017 Annual Report and how to vote over the Internet or how to request and return a proxy card by mail. For information on how to vote your shares, please refer to the Notice of Internet Availability of Proxy Materials, proxy materials email, or proxy card you receive to assure that your shares will be represented and voted at the Annual Meeting even if you cannot attend. Copies of the Notice of Internet Availability of Proxy Materials, Proxy Statement, and 2017 Annual Report are available at www.proxydocs.com/WING.
Your vote is important. To be sure your shares are voted at the meeting, even Even if you plan to attend the meeting in person, please follow the instructions provided to you and vote your shares today. This will not prevent you from voting your shares in person if you are able to attend.
On behalf of your board of directors, thank you for your continued support of and interest in Wingstop Inc.
Sincerely,
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Charles R. Morrison
Chairman and Chief Executive Officer
WINGSTOP INC.
5501 LBJ Freeway, 5th Floor,
Dallas, Texas 75240
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 4, 2016TO BE HELD MAY 2, 2018
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Date: | May | |||
Place: |
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Record Date: | Stockholders of record at the close of business on March | |||
Purpose: | (1) | Elect two Class III directors nominated by the Board of Directors for a term that expires at the | ||
| (2) | Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year | |||
| (3) | Approve, on an advisory basis, the compensation of our named executive officers; | |||
| (4) | Approve, on an advisory basis, the frequency of future advisory votes on named executive officer compensation; and
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| (5) | Consider and act upon such other business as may properly come before the | |||
Stockholders Register: | A list of the stockholders entitled to vote at the annual meeting may be examined during regular business hours at our executive offices, 5501 LBJ Freeway, 5th Floor, Dallas, Texas 75240, during theten-day period preceding the meeting. | |||
| Voting: | Your vote is important. Whether or not you plan to attend the Annual Meeting, we encourage you to read this Proxy Statement and submit your proxy or voting instructions as soon as possible. Please sign, date, and return the proxy card in the enclosed business reply envelope, or vote by telephone or electronically through the Internet to ensure your representation at the Annual Meeting. | |||
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING TO BE HELD ON MAY 2, 2018
This notice and the accompanying Proxy Statement, proxy card and 2017 Annual Report are available at
www.proxydocs.com/WING.
By order of the Board of Directors,
Darryl R. Marsch
Senior Vice President, General Counsel & Secretary
March 22, 2018
March 23, 2016
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| PROPOSAL 4—ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION | 31 | |||
| EXECUTIVE OFFICERS | 32 | |||
| COMPENSATION DISCUSSION AND ANALYSIS | 34 | |||
Highlights for the Fiscal | 34 | |||
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| EXECUTIVE COMPENSATION | 49 | |||
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| NEXT ANNUAL MEETING—STOCKHOLDER PROPOSALS | 59 | |||
i
WINGSTOP INC.
| PROXY STATEMENT SUMMARY |  | |
WINGSTOP INC. 5501 LBJ Freeway, 5th Floor, Dallas, Texas 75240 |
5501 LBJ Freeway, 5th Floor,
Dallas, Texas 75240
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. Unless the context indicates otherwise, references to “Wingstop,” “we,” “our,” “us,” or the “Company” are to Wingstop Inc. and its consolidated subsidiaries. References to the “Board” or the “Board of Directors” are to the Board of Directors of Wingstop Inc.
Annual Meeting Information
| Time and Date: | May 2, 2018 at 10:00 a.m. central time | |
| Location: | Wingstop’s conference facility located at 5501 LBJ Freeway, 4th Floor, Dallas, Texas 75240 | |
| Record Date: | March 13, 2018 | |
Proxy Materials Distribution Date: | On or around March 22, 2018 | |
Items of Business and Voting Recommendations
| Agenda Items | Board’s Voting Recommendation | Page Reference (for more detail) | |||||
1. Election of two Class III directors (the “Director Election Proposal”)* | FOR the election of each director nominee | 8 | |||||
2. Ratification of the appointment of Ernst & Young LLP (the “Auditor Ratification Proposal”) | FOR | 27 | |||||
3. Approval, on an advisory basis, of named executive officer compensation (the“Say-on-Pay Proposal”) | FOR | 30 | |||||
4. Approval, on an advisory basis, of the frequency of future advisory votes on named executive officer compensation (the“Say-on-Frequency Proposal”) | 1 YEAR | 31 | |||||
| * | Pursuant to our Corporate Governance Guidelines, each of the director nominees has tendered an irrevocable resignation that becomes effective if such nominee fails to receive more “FOR” votes than “WITHHELD” votes in an uncontested election of directors at an annual meeting and the Board accepts such resignation. For additional information concerning this policy, see “Proposal 1 — Election of Directors — Vote Required; Director Resignation Policy for Failure to Receive Majority Vote in Election” beginning on page 8. |
 | WINGSTOP INC. 2018 PROXY STATEMENT | 1 |
PROXY STATEMENT SUMMARY
HIGHLIGHTS FOR THE FISCAL YEAR 2017 COMPARED TO THE FISCAL YEAR 2016 (on a52-Week Basis) |
ItemsHighlights of BusinessWingstop’s performance during fiscal 2017 include, among other things:
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Fiscal year 2016 contained an extra week in the fourth quarter, which resulted in incremental revenues of $1.6 million and incremental net income of $0.2 million. Unless otherwise noted, all amounts presented for the prior year period are on a53-week basis.
Recent Corporate Governance Highlights
Recent highlights of enhancements to Wingstop’s corporate governance practices include, among other things:
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| 2 | WINGSTOP INC. 2018 PROXY STATEMENT | |
PROXY STATEMENT SUMMARY
Recent Compensation Highlights
Highlights of Wingstop’s executive compensation practices during fiscal 2017 include, among other things:
| • | we implemented “double trigger”change-in-control provisions in our equity incentive plan; |
| • | we amended our equity incentive plan to capnon-employee director equity awards at $400,000 per fiscal year; and |
| • | we retained Frederic W. Cook & Co., Inc. (“FW Cook”) as our Compensation Committee’s independent compensation consultant to advise on determining a peer group and establishing compensation best practices. |
| WINGSTOP INC. 2018 PROXY STATEMENT | 3 |
PROXY STATEMENT SUMMARY
Compensation Best Practices
The table below summarizes the Company’s key executive compensation practices, including practices the Company has implemented that the Compensation Committee believes will help to drive corporate performance, as well as those practices that the Company has chosen not to implement because the Company believes they do not serve its stockholders’ interests.
| What We Do | What We DON’T Do | |||||
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| × | Repricing.Stock option exercise prices are set equal to the grant date market price and may not be repriced, except for certain adjustments that may be made in connection with extraordinary transactions, such as dividend equivalency adjustments. | |||
| Excess golden parachute agreements.Our executive employment agreements do not provide termination payments exceeding three times base salary and target bonus. | |||||
| Taxgross-ups.None of our executive employment agreements or equity award agreements provide for excise taxgross-ups. | |||||
| ✓ | Clawback policy.Our incentive-based compensation recoupment policy provides that, if we are required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under the federal securities laws, we may seek to recover any payment received by any current or former executive officer made in settlement of an equity or incentive award during the three-year period preceding the accounting restatement. The amount to be recovered will be based on the excess of the amount paid under the award over the amount that would have been paid under the award if the financial statements had been correct. | × | Share Recycling.We do not recycle shares withheld for taxes, shares settled in cash, or other liberal share-counting features. | |||
| ✓ | Independent compensation consultant.The Compensation Committee uses FW Cook, an independent compensation consultant, to assist in designing its compensation policies. | × | Hedging or pledging shares.Our insider trading compliance policy prohibits our directors and named executive officers from any hedging or pledging of Company securities. | |||
| ✓ | Double trigger termination rights.Our employment agreements and equity plan require both achange-in-control and a termination of employment for severance rights to be triggered. | × | Perquisites.We do not provide our executives with perquisites that differ materially from those available to employees generally. | |||
| 4 | WINGSTOP INC. 2018 PROXY STATEMENT | |
PROXY STATEMENT SUMMARY
Proposal 1—Director Election Proposal
Director Nominees
The Board of Directors (the “Board”) of Wingstop Inc. (“we,” “our,” “us,” the “Company,” or “Wingstop”) is asking you to elect the two nominees for director named below as Class III directors for terms that expire at the 20192021 annual meeting of stockholders. The following table provides summary information about the two director nominees. The directors will be elected by a plurality vote. For more information about the director nominees, see page 7.9.
| Name | Occupation | Experience/Qualifications | Independence Status | Board Committees | End of Term | ||||||||
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| Corporate Governance, Diversity, Executive Management, Marketing, Operations, Retail Industry, | Independent | Corporate Governance | FY | |||||||||
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Continuing Directors
The following table provides summary information about the four continuing directors whose terms expire at the 2017 and 2018 annual meetings. For more information about the continuing directors, see page 8.
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Charles R. Morrison | Chairman of the Board, Chief Executive Officer, and President, Wingstop Inc. | Not
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RatificationVote Required
The election of the Appointmentdirector nominees will be determined by a plurality of the Independent Registered Public Accounting Firmvotes cast at the 2018 Annual Meeting of Stockholders (the “Annual Meeting”). However, pursuant to our Corporate Governance Guidelines, each of the director nominees has tendered an irrevocable resignation that becomes effective if such nominee fails to receive more “FOR” votes than “WITHHELD” votes in an uncontested election of directors at an annual meeting and the Board accepts such resignation. For additional information concerning this policy, see “Proposal 1—Election of Directors—Vote Required; Director Resignation Policy for Failure to Receive Majority Vote in Election” beginning on page 8.
Proposal 2—Auditor Ratification Proposal
Auditor Ratification
The Board is asking you to ratify the selection of Ernst & Young LLP (“E&Y”) as our independent registered public accounting firm for the fiscal year ending December 30, 2016.29, 2018. Set forth belowon page 29 is summary information with respect to the fees for services provided to us during the fiscal years ended December 26, 201530, 2017 and December 27, 2014.31, 2016.
Vote Required
The approval of the Auditor Ratification Proposal requires the affirmative vote of the holders of a majority in voting power of the shares of our common stock that are present in person or by proxy and entitled to vote at the Annual Meeting.
Proposal3—Say-on-Pay Proposal
Pursuant to Section 14A(a)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are asking our stockholders to approve, on an advisory ornon-binding basis, the compensation of our named executive officers as disclosed in this proxy statement. For more informationa detailed description of our executive compensation program, see “Compensation Discussion and Analysis” beginning on page 22.34.
Vote Required
The approval of theSay-on-Pay Proposal requires the affirmative vote of the holders of a majority in voting power of the shares of our common stock that are present in person or by proxy and entitled to vote at the Annual Meeting.
| Fiscal Year 2015 | Fiscal Year 2014 | |||||||
Fees Billed: | ||||||||
Audit Fees | $ | 565,000 | $ | 1,427,000 | ||||
Audit-Related Fees | 2,000 | — | ||||||
Tax Fees | 91,000 | — | ||||||
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Total | $ | 658,000 | $ | 1,427,000 | ||||
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| WINGSTOP INC. 2018 PROXY STATEMENT | 5 |
2017
PROXY STATEMENT SUMMARY
Proposal4—Say-on-Frequency Proposal
Pursuant to Section 14A(a)(1) of the Exchange Act, we are asking our stockholders to recommend, on an advisory basis ornon-binding basis, whether the advisory stockholder vote on the compensation of our named executive officers should occur every one, two, or three years.
Vote Required
The approval of theSay-on-Frequency Proposal requires the affirmative vote of the holders of a majority in voting power of the shares of our common stock that are present in person or by proxy and entitled to vote at the Annual Meeting.
Voting Procedures
Voting Rights of the Stockholders
Each share of our common stock is entitled to one vote per share on each matter to be acted upon at the Annual Meeting. Our stockholders are not entitled to cumulative voting rights, and dissenters’ rights are not applicable to the matters being voted upon.
Only owners of record of shares of common stock at the close of business on March 13, 2018, the record date, are entitled to vote at the Annual Meeting, or at any adjournments, postponements, or recess thereof. There were 29,156,292 shares of Stockholderscommon stock issued and outstanding on the record date.
StockholderWith respect to each of the proposals submitted for inclusion in the proxy statement for our annual meeting of stockholders expected to be held in May or June 2017 pursuant to SEC Rule 14a-8 must be received by us by November 23, 2016. Director nominations or other business to be brought beforeacted upon at the 2017 Annual Meeting, by a stockholder, other than Rule 14a-8 proposals described above, must be received by us between January 4, 2017you may vote as follows:
PROXY STATEMENT
The board of directors is furnishing this information in connection with the solicitation of proxies for the annual meeting of stockholders to be held on May 4, 2016. We anticipate that the Notice of Internet Availability of Proxy Materials containing instructions on how to access our Proxy Statement and annual report and how to vote over the InternetYEARS,” or how to request and return a proxy card by mail will first be mailed to our stockholders on or about March 23, 2016.
All properly executed written proxies, and all properly completed proxies submitted by the Internet or telephone, that are delivered pursuant to this solicitation will be voted at the meeting in accordance with directions given in the proxy, unless the proxy is revoked prior to completion of voting at the meeting.
Only ownersQuorum
The presence, in person, by a duly authorized representative in the case of recorda corporation or other legal entity, or through representation by proxy, of the holders of a majority of the combined voting power of the issued and outstanding shares of common stock entitled to vote at the Annual Meeting (including abstentions and brokernon-votes) is necessary to constitute a quorum to transact business at the Annual Meeting.
Effect of Votes Withheld, Abstentions and BrokerNon-Votes
Abstentions and brokernon-votes withheld are included in the number of shares of common stock present for determining a quorum for all proposals.
The election of directors will be determined by a plurality of votes cast. As a result, votes withheld will have no impact with respect to the election of directors, except that pursuant to our Corporate Governance Guidelines, each of the Companydirector nominees has tendered an irrevocable resignation that becomes effective if such nominee fails to receive more “FOR” votes than “WITHHELD” votes in an uncontested election of directors at an annual meeting and the closeBoard accepts such resignation. For additional information concerning this policy, see “Proposal 1—Election of businessDirectors—Vote Required; Director Resignation Policy for Failure to Receive Majority Vote in Election” beginning on March 15, 2016,page 8.
| 6 | WINGSTOP INC. 2018 PROXY STATEMENT | |
PROXY STATEMENT SUMMARY
Pursuant to our Bylaws, all matters other than the record date,election of directors are determined by the affirmative vote of the holders of a majority in voting power of the shares of our common stock that are present in person or by proxy and entitled to vote at the meeting, orAnnual Meeting. An abstention is not an “affirmative vote,” but an abstaining stockholder is considered “entitled to vote” at any adjournments or postponementsthe Annual Meeting. Accordingly, an abstention will have the effect of a vote against the meeting. Each ownerAuditor Ratification Proposal, theSay-on-Pay Proposal, and theSay-on-Frequency Proposal, as applicable.
Under applicable stock exchange rules, brokers who hold shares on behalf of record onbeneficial owners have the record date is entitled to one vote for each share of common stock held. There were 28,584,452 shares of common stock issued and outstanding on the record date.
QUESTIONS RELATING TO THIS PROXY STATEMENT
What is a proxy?
It is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. We have designated two of our officers as proxies for the 2016 Annual Meeting of Stockholders (the “Annual Meeting”). These officers are Charles R. Morrison and Michael F. Mravle.
What is a proxy statement?
It is a document that Securities and Exchange Commission (“SEC”) regulations require us to give you when we ask you to vote designating Charles R. Morrison and Michael F. Mravle as proxiesauthority to vote on your behalf.certain proposals when they have not received instructions from the beneficial owners. A brokernon-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that item under applicable stock exchange rules and has not received voting instructions from the beneficial owner.
What is the difference between a stockholder of record and a stockholder who holds stock in street name?
If your shares are registered in your name with our transfer agent, Computershare Trust Company, N.A., you are a stockholder of record. If your shares are held in the name of your bank,Your broker or other nominee, your shares are held in street name.
What is the record date and what does it mean?
March 15, 2016 is the record date for the Annual Meeting to be held on May 4, 2016. The record date is established by the board of directors as required by the Delaware General Corporation Law (“Delaware Law”). Owners of record of our common stock at the close of business on the record date are entitled to receive notice of the meeting and vote at the meeting and any adjournments or postponements of the meeting.
How do I vote as a stockholder of record?
As a stockholder of record, you may vote by one of the four methods described below:
By the Internet. Over the Internet at the web address noted in the Notice of Internet Availability of Proxy Materials, proxy materials email or proxy card you receive (if younot have access to the Internet, we encourage you to vote in this manner). The Internet voting procedure is designed to verify the votingdiscretionary authority of stockholders. You will be able to vote your shares bycommon stock with respect to the Internet and confirm that your vote has been properly recorded.
By Telephone. By telephone throughDirector Election Proposal, the number notedSay-on-Pay Proposal, or theSay-on-Frequency Proposal in the proxy card you receive (if you request and receiveabsence of specific instructions from you. Where a proxy card). The telephone voting procedure is designed to verify the votingbroker does not have discretionary authority of stockholders. The procedure allows you to vote your shares andcommon stock, such broker is not considered “entitled to confirm that your vote has been properly recorded.
By Mail. You may sign and date your proxy card (if you request and receive a proxy card) and mail it in the prepaid and addressed envelope enclosed therewith.
In Person. You may vote in personvote” at the annual meeting.Annual Meeting. Accordingly, a brokernon-vote will have no effect on the Director Election Proposal, theSay-on-Pay Proposal, or theSay-on-Frequency Proposal. Brokernon-votes are not applicable to the Auditor Ratification Proposal because your broker has discretionary authority to vote your common stock with respect to such proposal.
Please follow the directions in the Notice of Internet AvailabilityRevocability of Proxy Materials,
Your proxy materials email or proxy card you received carefully.
How do I vote as a street name stockholder?
If your shares are held in “street name” through a bank, broker or other nominee, you should receive information from the bank, broker or other nominee about your specific voting options. If you have questions about voting your shares, you should contact your bank, broker or other nominee. The availability of telephone and Internet voting depends on the voting processes of your bank, broker or other nominee.
If you wish to vote in person at the annual meeting, you will need to bring a legal proxy to the meeting. You must request a legal proxy through your bank, broker or other nominee. Please note that if you request a legal proxy, any previously executed proxy will be revoked and your vote will not be counted unless you appear at the meeting and vote in person, or legally appoint another proxy to vote on your behalf.
What if I sign and return a proxy card, but do not provide voting instructions?
Proxies that are properly executed and delivered, and not revoked, will be voted as specified on the proxy card. If no direction is specified on the proxy card, the proxy will be voted as follows:
What if I change my mind after I return my proxy?
You may revoke your proxy and change your voterevocable at any time before the polls close at the Annual Meeting. You may do this by:If you wish to revoke your proxy and change your vote, you may:
2019 Annual Meeting of Stockholders
Stockholder proposals submitted for inclusion in the proxy statement for our annual meeting.
What ismeeting of stockholders expected to be held in May or June 2019 pursuant to SECRule 14a-8 must be received by us by November 22, 2018. Director nominations or other business to be brought before the 2019 Annual Meeting by a quorum?stockholder, other thanRule 14a-8 proposals described above, must be received by us between January 2, 2019 and February 1, 2019. For more information, see “Next Annual Meeting—Stockholder Proposals” on page 59.
The presenceSolicitation Matters
Proxies are being solicited by the Board of Directors on behalf of the holdersCompany. We have hired Innisfree M&A Inc. (“Innisfree”) to help us send out the proxy materials and to solicit proxies. Innisfree has agreed to provide us with consulting and analytic services and solicitation services for banks, brokers, institutional investors, and individual shareholders. Innisfree’s fee for these services is $17,500, plus reimbursement of a majorityreasonableout-of-pocket expenses. We have agreed to indemnify Innisfree against certain liabilities and expenses, including liabilities under the federal securities laws.
Our officers, directors, and employees may also solicit proxies personally or in writing, by telephone,e-mail, or otherwise. These officers and employees will not receive additional compensation but will be reimbursed forout-of-pocket expenses. Brokerage houses and other custodians, nominees, and fiduciaries, in connection with shares of the outstandingcommon stock registered in their names, will be asked to forward solicitation material to the beneficial owners of shares of common stock entitled to vote atstock. We will reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonableout-of-pocket expenses for forwarding solicitation materials and collecting voting instructions.
| WINGSTOP INC. 2018 PROXY STATEMENT | 7 |
Our business and affairs are managed under the Annual Meeting, present in person or represented by proxy, is necessary to constitute a quorum. The inspector of elections appointed for the meeting will tabulate votes cast by proxy and in person at the meeting and determine the presence of a quorum.
Will my shares be voted if I do not vote by the Internet, vote by telephone, sign and return a proxy card, or attend the Annual Meeting and vote in person?
If you are a stockholder of record and you do not vote by the Internet, vote by telephone, sign and return a proxy card or attend the Annual Meeting and vote in person, your shares will not be voted and will not count in deciding the matters presented for stockholder consideration in this proxy statement.
If your shares are held in “street name” through a bank, broker or other nominee and you do not provide voting instructions before the Annual Meeting, your bank, broker or other nominee may vote your shares on your behalf under certain circumstances. Brokerage firms have the authority under certain rules to vote shares for which their customers do not provide voting instructions on “routine” matters.
The ratification of the appointmentdirection of our independent registered public accounting firmBoard. Pursuant to our Certificate of Incorporation and our Bylaws, our Board is considered a “routine” matter under these rules. Therefore, brokerage firms are allowedrequired to vote their customers’ shares on this matter if the customers do not provide voting instructions. If your brokerage firm votes your shares on this matter because you do not provide voting instructions, your shares will be counted for purposesconsist of establishing a quorum to conduct business at the meetingbetween three (3) and in determiningfifteen (15) directors divided into three classes, with the number of shares voted for or against the routine matter.
When a matter is not a routine matter and the brokerage firm has not received voting instructions from the beneficial ownerdirectors serving in each class to consist, as nearly as possible, ofone-third of the shares with respect to that matter, the brokerage firm cannot vote the shares on that matter. This is called a “broker non-vote.” Only the ratification of the appointment of our independent registered public accounting firm is considered a “routine” matter for this Proxy Statement. The election of director nominees is not considered a routine matter. Because the election of director nominees is not considered a “routine” matter for stockholder consideration, the brokers will not have discretionary authority to vote your shares with respect to such matter and if you do not instruct your bank or broker how to vote your shares, no votes will be cast on your behalf with respect to such matter.
We encourage you to provide instructions to your brokerage firm by voting your proxy. This action ensures your shares will be voted at the meeting in accordance with your wishes.
How may I vote for each proposal?
ForProposal 1—Election of Directors, you may votefor all nominees,withhold from all nominees orwithhold from individual nominees.
ForProposal 2—Ratification of the Appointment of our Independent Registered Public Accountants, you may votefor,against orabstain from voting.
How are votes tabulated?
According to our By-Laws, each of the proposed items will be determined as follows:
Proposal 1—Election of Directors: The electiontotal number of directors will be determined by a plurality of votes cast. If you do not vote on such proposal or cast a withhold vote, it will have no effect on such proposal.
Proposal 2—Ratification ofconstituting the Appointment of our Independent Registered Public Accountants: entire Board. The ratification of the appointment of our independent registered public accountants will be determined by a majority of votes cast affirmatively or negatively. If you abstain from voting on such proposal or your broker is unable to vote your shares, it will have the same effect as a vote against such proposal.
Any other matters: The voting results of any other matters are determined by a majority of votes cast affirmatively or negatively, except as may otherwise be required by law.
No cumulative voting rights are authorized, and dissenters’ rights are not applicable to the matters being voted upon.
How are proxies solicited and what is the cost?
We will bear all expenses incurred in connection with the solicitation of proxies. We will reimburse brokers, fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of common stock. Our directors officers and employees may solicit proxies by mail, telephone and personal contact. They will not receive any additional compensation for these activities. In addition, we have retained Broadridge Financial Solutions, Inc. (“Broadridge”) to assist in the solicitation of proxies with respect to shares of our common stock held of record by brokers, nominees and institutions and, in certain cases, by other holders. Such solicitation may be made through the use of mail, by telephone or by personal calls. The anticipated cost of the services of Broadridge is $10,000 plus expenses.
Where can I find the voting results of the Annual Meeting?
We expect to announce preliminary voting results at the Annual Meeting. We will publish the final results in a current report on Form 8-K within four business days of the Annual Meeting. We will file that report with the SEC, and you can get a copy from:
How can I obtain a copy of the 2015 Annual Report to Stockholders and the Annual Report on Form 10-K for the year ended December 26, 2015?
Our 2015 Annual Report to Stockholders which includes our Annual Report on Form 10-K for the year ended December 26, 2015, is available at www.proxypush.com/WING. If you receive the printed proxy materials, the Annual Report is included with the proxy materials. However, the Annual Report forms no part of the material for the solicitation of proxies.
This report may also be accessed through our website atwww.wingstop.comby clickingeach class serve on the Investor Relations link, followed by the Financials link. In addition, our Annual Report on Form 10-KBoard for the year ended December 26, 2015, is available from the SEC’s website atwww.sec.gov.At the written request of any stockholder who owns common stock as of the close of business on the record date, we will provide, without charge, paper copies of our Annual Report on Form 10-K, including the financial statements and financial statement schedule, as filed with the SEC, except exhibits thereto. If requested by eligible stockholders, we will provide copies of the exhibits for a reasonable fee. You can request copies of our Annual Report on Form 10-K by mailing a written request to:
5501 LBJ Freeway, 5th Floor,
Dallas, Texas 75240
Attention: Corporate Secretary
How do I obtain directions to attend the Annual Meeting and vote in person?
Directions to the Annual Meeting are located at www.wingstop.com.
PROPOSAL 1—ELECTION OF DIRECTORSstaggered three-year terms.
Currently, our Board of Directors consists of six directors, in three classes, with two directors in Class I, one director in Class II and three directors in Class III.
each class. The three director classes will initially serveare as follows:
Directors hold office until their successor is duly elected and qualified or until their earlier death, resignation, or removal. Our directors may only be removed for cause by the affirmative vote of the holders of at leastsixty-six andtwo-thirds percent (66 2/3%) of our voting stock at a meeting of the stockholders called for that purpose.
Board Nominees for Election at the Annual Meeting
The terms of Sidney J. FeltensteinMessrs. Madati and Michael J. Hislop,Morrison, each a Class IIII director, expire at the Annual Meeting. Upon the recommendation of our Nominating and Corporate Governance Committee, Messrs. FeltensteinMadati and HislopMorrison have been nominated forre-election at the Annual Meeting. If elected, Messrs. FeltensteinMadati and HislopMorrison will hold office for a three-year term until the annual meeting of stockholders to be held in 2019.
In addition, at the annual meeting of stockholders2021. Each director nominee has consented to be heldbeing named in 2017, the Class II directors will be elected forthis Proxy Statement and to serve as a three-year term expiring at the annual meeting of stockholders to be held in 2020, and at the annual meeting of stockholders to be held in 2018, the Class III directors will be elected for a three-year term expiring at the annual meeting of stockholders to be held in 2021. Mr. Romaniello is our current Class II director and Messrs. Aronson, Morris and Morrison are our current Class III directors. In addition, Lawrence P. Molloy resigned from our board of directors effective March 15, 2016. We thank Mr. Molloy for his service on our board of directors.if elected.
The persons named in the accompanying proxy, or their substitutes, will vote for the election of the two nominees listed hereafter, except to the extent authority to vote for anyone or allboth of the nominees is withheld. No proposed nominee is being elected pursuant to any arrangement or understanding between the nominee and any other person or persons. All nominees have consented to stand for election at this meeting. If either of the nominees becomes unable or unwilling to serve, the persons named as proxies in the accompanying proxy, or their substitutes, shall have full discretion and authority to vote or refrain from voting for any substitute nominees in accordance with their judgment. We do not know of any nominee of the board of directorsBoard who would be unable to serve as a director if elected. Directors will
Vote Required; Director Resignation Policy for Failure to Receive Majority Vote in Election
To be elected byas a director, each director nominee must receive a plurality of the votes castpresent in person or represented by proxy at the Annual Meeting.
BothMeeting and entitled to vote on the election of directors. Nonetheless, pursuant to our Corporate Governance Guidelines, each of the director nominees listed below are currentlyhas tendered an irrevocable resignation that becomes effective if such nominee fails to receive more “FOR” votes than “WITHHELD” votes in an uncontested election of directors at an annual meeting and the Board accepts such resignation.
The Nominating and Corporate Governance Committee must consider the resignation and recommend to the Board the action to be taken with respect to the resignation. The director whose resignation is under consideration shall not participate in the Nominating and Corporate Governance Committee’s recommendation with respect to the resignation. The Board is required to consider and act on the recommendation within ninety (90) days following certification of the Company. The followingstockholder vote and will publicly disclose its decision whether to accept the resignation offer.
A copy of our Corporate Governance Guidelines is a brief summaryavailable on the investor relations section of each director nominee’s business experience and qualifications and other public company directorships held currently or in the last five years.our website at http://ir.wingstop.com.
| 8 | WINGSTOP INC. 2018 PROXY STATEMENT | |
PROPOSAL 1 ELECTION OF DIRECTORS
Director Nominees for Terms Expiring at the 20192021 Annual Meeting
Sidney J. Feltenstein
KILANDIGALU (KAY) M. MADATI | ||
| Director Since 2017 Age: 45 Independent Nominating and Corporate Governance Committee | |
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Kay Madati has been a member of our boardBoard since March 2017. Kay currently serves as Head of directors since July 2010. Sid has had a successful career as a corporate executive and entrepreneur, including as the Chief Executive OfficerContent Partnerships of Yorkshire Global Restaurants,Twitter, Inc., a company formed under his leadership through the acquisitions of A&W and Long John Silver, until it was sold to YUM! Brands in 2002. Sid also Kay previously served as Executive Vice President and Chief Digital Officer of BET Networks, a subsidiary of Viacom, Inc., that operates the leading cable channel targeting young African-American audiences from 2014 to late 2017. Prior to that, Kay was Head, Entertainment & Media, Global Marketing Solutions for Facebook, an online social media and social networking service, since 2011. Prior to that, Kay was Vice President, Audience Experience & Engagement, at CNN Worldwide, Marketinga television news channel, since 2008, where he helped build the network’s digital presence and served as a change agent for Burger Kinghow the organization functioned and spent 19 years at Dunkin’ Donutsinteracted with its audience. Prior to that, Kay served in both operationsvarious leadership roles with Community Connect, a social-networking company, Octagon Worldwide, a leader in sports entertainment marketing, and marketing positions, most recently as its Chief Marketing Officer. Sid isBMW of North America, a past chairman of the International Franchise Association (IFA) and a former chairman of the IFA Educational Foundation. He is also a member of the IFA Hall of Fame and a past recipient of the IFA’s Entrepreneur of the Year Award. Sid also serves on the board of directors of Tutor Perini Corporation.worldwide automaker.
Sid’sDirector Qualifications
Kay’s experience as a head of content partnerships, chief executivedigital officer, and other senior marketing executive officer in the restaurant industryleadership roles working with media companies across a broad spectrum of industries, and vast knowledge of franchise operationscomplex marketing and audience engagement matters provide him with valuable and relevant experience in brand management, consumer strategy, advertisingdigital media, strategic planning, marketing, and leadership of complex organizations, as well as extensive industry knowledge, and providesprovide him with the qualifications and skills to serve as a director.
CHARLES R. MORRISON | ||
| Director Since 2012 Age: 49 Not Independent | |
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Charlie Morrison has served as our President and Chief Executive Officer since June 2012, as our Chairman since March 2017, and a member of our Board since September 2012. Prior to joining Wingstop, Charlie was Chief Executive Officer of Rave Restaurant Group, a publicly traded international pizza chain, from January 2007 to June 2012. Charlie has also held multiple senior leadership positions during his more than 20 years of restaurant experience, including serving as President of Steak & Ale and The Tavern Restaurants for Metromedia Restaurant Group, as well as various management positions at Kinko’s, Boston Market, and Pizza Hut.
Director Qualifications
Michael J. HislopCharlie’s extensive experience in the restaurant industry, including as a chief executive officer of a publicly traded restaurant company, and his service as our Chief Executive Officer, provide him with significant knowledge and understanding of the industry and our business.
The Board of Directors recommends that you voteFOR each director nominee. |
| WINGSTOP INC. 2018 PROXY STATEMENT | 9 |
PROPOSAL 1 ELECTION OF DIRECTORS
Continuing Directors with Terms Expiring at the 2019 or 2020 Annual Meetings
The directors listed below will continue in office for the remainder of their terms and until their successor is duly elected and qualified or until their earlier death, resignation, or removal.
LYNN CRUMP-CAINE | ||
| Director Since 2017 Age: 61 Lead Independent Director Compensation Committee (Chair) | |
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Lynn Crump-Caine, is our Lead Independent Director and has been a member of our Board since January 2017. Lynn is the founder and Chief Executive Officer of OutsideIn Consulting, an organizational performance and strategy development consulting firm. Lynn previously served as Executive Vice President of the Worldwide Operations for McDonald’s until 2004, where her responsibility also included global supply chain, real estate development, and innovation worldwide. She previously held numerous executive level positions including Executive Vice President U.S., Restaurant Systems and Operations. Ms. Crump-Caine brings substantial public-company governance experience with her current directorships at Thrivent Financial and Advocate Health Care and her former directorships at G&K Services and Krispy Kreme Doughnuts, Inc., where she chaired the Compensation Committee.
Director Qualifications
Lynn’sfar-reaching operational experience, including in various senior positions with McDonald’s Corporation, provides her with valuable and relevant experience in understanding complex operating systems, training, and brand development, as well as extensive industry knowledge. In addition, public company board service provides her with the experience, qualifications, and skills to serve as a director.
Lynn’s term will expire at the annual meeting of directorsstockholders to be held in 2020.
DAVID L. GOEBEL | ||
| Director Since 2017 Age: 67 Independent Audit and Nominating and Corporate Governance Committees | |
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Dave Goebel has been a member of our Board since November 2017. Dave currently serves as Lead Director of Jack In the Box Inc., and as a board member of QuickChek, a privately held gas/convenience food company. He has been a partner and faculty member for Merryck & Co. Ltd., a worldwide firm that providespeer-to-peer mentoring services for senior business executives, since May 2008. In 2008, Dave became the founding principal and President of Santoku, Inc., a private company that operates sandwich shops under the name Goodcents Deli Fresh Subs, catering and cafeteria operations under the nameY-Leave Cafe, and a fast-casual pizza concept under the name Pie Five Pizza Company. Dave also served as acting President and Chief Executive Officer of Mr. Goodcents Franchise Systems, Inc., the franchisor of Goodcents Deli Fresh Subs, from 2010 until December 2014. From 2001- 2007, he served in various executive positions at Applebee’s International, Inc., including as President and Chief Executive Officer in 2006-2007, during which time it operated nearly 2,000 restaurants in the United States and abroad. Prior to that, Dave was President of Summit Management, Inc., a consulting group specializing in executive development and strategic planning. Prior to that, Dave was the Chief Operating Officer of Finest Foodservice, LLC, a Boston Chicken/Boston Market franchise that he founded andco-owned, which was responsible for developing 80 restaurants within a seven state area from 1994-1998.
Director Qualifications
Dave’s more than 40 years of experience in the retail, food service, and hospitality industries provides him with extensive business, operational, management, and leadership development experience, as well as unique insights into restaurant operations, restaurant and concept development, supply chain management, franchising, executive development, risk assessment, risk management, succession planning, executive compensation, and strategic planning that qualify him to serve as a director.
Dave’s term will expire at the annual meeting of stockholders to be held in 2019.
| 10 | WINGSTOP INC. 2018 PROXY STATEMENT | |
PROPOSAL 1 ELECTION OF DIRECTORS
MICHAEL J. HISLOP | ||
| Director Since 2011 Age:63 Independent Audit, Compensation and Nominating and Corporate Governance (Chair) Committees | |
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Mike Hislop has been a member of our Board since October 2011. Mike currently serveshas served as ChairmanChief Executive Officer of Corner Bakery, a national bakery-cafe chain, and previously served as Chief Executive Officer fromsince February 2006 until October 2015.2006. In addition, Mike has been the Chairman of Il Fornaio since 2015, was Chairman and Chief Executive Officer of Il Fornaio fromsince 2001 to October 2015 and, prior to that, served as President and Chief Operating Officer of Il Fornaio since 1995. Prior to Il Fornaio, Mike was Chairman and Chief Executive Officer for Chevys Mexican Restaurants, where he built the company’s infrastructure in preparation for taking it public. He has also served in a number of operating positions at El Torito Mexican Restaurants and T.G.I. Friday’s. In 2010, Mike was recognized by the International Foodservice Manufacturers Association with the Silver Plate award, which pays tribute to the most outstanding and innovative talents in foodservice operations, and in 2013, he received Nation’s Restaurant News’ Golden Chain Award, an honor bestowed on those representing the very best that the restaurant industry has to offer.
Director Qualifications
Mike’s experience as a chief executive officer and chief operating officer in the restaurant industry and vast knowledge of franchise operations provide him with valuable and relevant experience in operations, brand management, consumer strategy, and leadership of complex organizations, as well as extensive industry knowledge, and providesprovide him with the qualifications and skills to serve as a director.
The board of directors recommends that you vote FOR the two director nominees.
Continuing Directors with Terms ExpiringMike’s term will expire at the 2017 or 2018 Annual Meetings
The directors listed below will continueannual meeting of stockholders to be held in office for the remainder of their terms in accordance with our By-Laws.2019.
WESLEY S. MCDONALD | ||
| Director Since 2016 Age: 55 Independent Audit (Chair) and Nominating and Corporate Governance Committees | |
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Charles R. Morrisonhas served as our President and Chief Executive Officer since June 2012, and a member of our board of directors, since September 2012. Prior to joining Wingstop, Charlie was Chief Executive Officer of Rave Restaurant Group, a publicly traded international pizza chain, from January 2007 to June 2012. Charlie has also held multiple senior leadership positions during his more than 20 years of restaurant experience, including serving as President of Steak & Ale and The Tavern Restaurants for Metromedia Restaurant Group, as well as various management positions at Kinko’s, Boston Market and Pizza Hut.
As a result of Charlie’s extensive experience in the restaurant industry, including as a chief executive officer of a public restaurant company, and his service as our Chief Executive Officer, Charlie brings to the board, among other skills and qualifications, his significant knowledge and understanding of the industry and our business and his extensive operating experience.
Neal K. Aronson is Chairman of our board of directors andWes McDonald has been a member of our boardBoard since May 2016. From 2003 to 2017, Wes served as an officer of directors since February 2015. Neal founded Roark Capital Group, or Roark,Kohl’s Corporation, where he oversaw financial planning and serves as its Managing Partner, a position he has held since 2001. Prioranalysis, investor relations, financial reporting, accounting operations, tax, treasury,non-merchandise purchasing, credit, and capital investment. He was promoted to founding Roark, Neal was Co-Founder andSenior Executive Vice President, Chief Financial Officer for U.S. Franchise Systems, Inc., or USFS, a franchisorin 2010 and to the principal officer position of hotel chains.Chief Financial Officer in 2015. Prior to USFS, Neal was a private equity professional at Rosecliff (a successor company to Acadia Partners), Odyssey Partnersjoining Kohl’s, Mr. McDonald served as Chief Financial Officer and Acadia Partners (now Oak Hill). Neal beganVice President of Abercrombie & Fitch Co. Earlier in his career, in the corporate finance departmenthe held several positions of increasing responsibility at Drexel, Burnham, Lambert Inc.Target Corporation.
Neal’sDirector Qualifications
Wes’s experience as a private equity partner, chief financial officer and in other senior executive leadership roles working with franchisepublicly traded consumer products companies, in the restaurant, retail, consumer and business services industries, and knowledge of complex financial matters provide him with valuable and relevant experience in franchisecorporate administration, strategic planning, corporate finance, financial reporting, mergers and acquisitions, and leadership of complex organizations, and providesprovide him with the qualifications and skills to serve as a director.
Erik O. Morris has been a memberWes’s term will expire at the annual meeting of our board of directors since April 2010. Erik has been affiliated with Roark since 2007 and is currently a Managing Director. Priorstockholders to joining Roark, Erik was a Partner at Grotech Capital Group concentratingbe held in the restaurant and franchise industries. Prior to joining Grotech, Erik worked in the investment banking division of Deutsche Bank and its predecessor entities, where he focused primarily on the industrial, environmental, and business services sectors.2020.
| WINGSTOP INC. 2018 PROXY STATEMENT | 11 |
Erik’s involvement with his respective firms’ investments in many branded consumer companies over the past 15 years, including investments in the restaurant industry, in-depth knowledge and industry experience, coupled with his skills in private financing and strategic planning, provides him with the qualifications and skills to serve as a director.
| CORPORATE GOVERNANCE | |
Steven M. Romaniellohas been a member of our board of directors since April 2010. Steve currently serves as a Managing Director at Roark, a position he has held since 2008. Prior to joining Roark, Steve served in executive positions at FOCUS Brands, a franchisor and operator of ice cream shoppes, bakeries, restaurants and cafes in the United States, most recently as Chief Executive Officer. Prior to his tenure at FOCUS Brands, Steve was President and Chief Operating Officer of USFS. Prior to joining USFS, Steve has also held various management positions in franchise services, support and training at Holiday Inn Worldwide and Days Inn of America. Steve is the immediate past Chairman of the IFA.
Steve’s experience as a chief executive officer and chief operating officer in the restaurant and hospitality industries and vast knowledge of franchise operations provide him with valuable and relevant experience in franchise management, operations and leadership of complex organizations, as well as extensive industry knowledge, and provides him with the qualifications and skills to serve as a director.
Board Composition and Director Independence
Our amended and restated bylaws provide thatThe following table provides information about each director currently serving on our boardBoard of directors shall consist of suchDirectors, including the director nominees.
Committee Memberships | ||||||||||||||
Name | Director | Director Class | Independent | Audit | Compensation | Nominating | ||||||||
Lynn Crump-Caine | 2017 | Class II (2020) | ✓ |  | ||||||||||
David L. Goebel | 2017 | Class I (2019) | ✓ | ✓ | ✓ | |||||||||
Michael J. Hislop | 2011 | Class I (2019) | ✓ | ✓ | ✓ | | ||||||||
Kilandigalu (Kay) M. Madati | 2017 | Class III (2018) | ✓ | ✓ | ||||||||||
Wesley S. McDonald | 2016 | Class II (2020) | ✓ | | ✓ | |||||||||
Charles R. Morrison | 2012 | Class III (2018) | ||||||||||||
 Audit Committee Financial Expert |  Chair | ✓ Member |
There were a number of directorschanges in the composition of our Board during 2017. In January 2017, our Board appointed Lynn Crump-Caine as determined from timea Class II director. In March 2017, prior to time by resolution adopted by a majorityour 2017 annual meeting of stockholders, Neal K. Aronson, our former Chairman of the total number of directors then in office. Our board of directors currently consists of six members, Charles R. Morrison,Board, as well as Erik O. Morris Michael J. Hislop,and Steven M. Romaniello, resigned from our Board following Roark Capital Group’s sale of all of its holdings of Wingstop’s common stock. The Board elected Charlie Morrison, our Chief Executive Officer and President, to the position of Chairman of the Board, and appointed Lynn Crump-Caine as our Lead Independent Director. In addition, the Board appointed Kay Madati as a Class III director at that time. At the beginning of November 2017, the Board appointed Dave Goebel to serve as a Class I director, and
subsequently, in late November 2017, Sidney J. Feltenstein, Neal K. Aronson and Steven M. Romaniello. Our amended and restated certificatewho began his Wingstop Board service in 2010, prior to our initial public offering, resigned from our Board. Each of incorporation providesthe members of our Board that our board of directors is divided into three classes, with each director serving a three-year term. Following their initial terms, each class of directors will be elected for a three-year term. Our directors may be removed onlywere appointed in 2017 were recommended by the affirmative vote of at least 66 2⁄3% of our then outstanding common stockNominating and onlyCorporate Governance Committee based on an extensive search for cause.qualified independent director candidates.
We follow the director independence standards set forth in The Nasdaq Stock Market or Nasdaq,(“Nasdaq”) corporate governance standards and the federal securities laws.
The board of directorsBoard has reviewed and analyzed the independence of each director based on this criteria and director nominee. The purposeaffirmatively determined that each of Lynn Crump-Caine, Dave Goebel,
| 12 | WINGSTOP INC. 2018 PROXY STATEMENT | |
CORPORATE GOVERNANCE
Mike Hislop, Kay Madati, and Wes McDonald qualify as “independent.” In making this determination, the review was to determine whether any particular Board considered:
As a resultdisclosure, of this review, the board of directors affirmatively determined that Messrs. Feltenstein and Hislopwhich there were none.
There are “independent” for purposes of serving on the board of directors and meet the requirements set forth in Nasdaq corporate governance standards.
Upon completionno family relationships between any of our initial public offering, Roark controlled a majoritydirectors or executive officers.
Director Skills and Experience
Our Nominating and Corporate Governance Committee regularly evaluates the skills, qualifications, and competencies identified as important for directors to provide effective oversight to our Company. The matrix bellow shows the areas of experience and expertise that our Nominating and Corporate Governance Committee have identified that our directors bring the voting power of our outstanding common stock. As a result, we were a “controlled company” under Nasdaq corporate governance standards. As a controlled company, exemptions under the standards freed us from the obligation to comply with certain corporate governance requirements, including the requirements:Board.
| Lynn Crump-Caine | Dave Goebel | Mike Hislop | Wes McDonald | Kay Madati | Charlie Morrison | |||||||||||
Corporate Governance experience supports our goals of strong accountability, transparency, and shareholder-value protection | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Diversityis an important value that enhances the Board’s decision making | ✓ | ✓ | ||||||||||||||
Executive Management experience is important for leadership ability and talent development | ✓ | ✓ (CEO) | ✓ (CEO) | ✓ | ✓ | ✓ (CEO) | ||||||||||
Financial & Accounting experience is important for overseeing our financial reporting and internal controls and for evaluating our capital structure | ✓ | ✓ | ✓ (CFO) | ✓ (CFO) | ||||||||||||
International experience is valuable as the Company continues to extend its presence outside the U.S. | ✓ | ✓ | ✓ | |||||||||||||
Marketing experience is important in maintaining brand relevance and consumer engagement | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Operations experience is important for ensuring best practices and executing initiatives | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Restaurant Industry experience is important because it is the Company’s core business | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Retail Industry experience is relevant for understanding consumer behavior | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Risk Management experience is important for overseeing risks facing the Company | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Strategy is especially important for competing in a dynamic market | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Technology experience is important for enhancing consumer experience and internal operations | ✓ | ✓ | ||||||||||||||
| WINGSTOP INC. 2018 PROXY STATEMENT | 13 |
CORPORATE GOVERNANCE
These exemptions did not modify the independence requirements for our audit committee, and we intend to comply with the requirements of Rule 10A-3 of the Exchange Act and Nasdaq rules within the applicable time frame.
However, upon completion of the recent public offering of our common stock by certain of our stockholders on March 14, 2016, Roark beneficially owned less than 50% of the total voting power of our common stock and we are no longer able to avail ourselves of the “controlled company” exemptions under Nasdaq rules.
Accordingly, we are required to have a majority of independent directors on our board of directors and a compensation committee and a nominating and corporate governance committee composed entirely of independent directors as defined under Nasdaq rules, subject to a phase-in period of one year following the loss of our controlled company status. Under Nasdaq rules, a company that ceases to be a controlled company must comply with the independent board committee requirements as they relate to the nominating and corporate governance and compensation committees on the following phase-in schedule: (1) one independent committee member at the time it ceases to be a controlled company, (2) a majority of independent committee members within 90 days of the date it ceases to be a controlled company and (3) all independent committee members within one year of the date it ceases to be a controlled company. Additionally, Nasdaq rules provide a 12-month phase-in period from the date a company ceases to be a controlled company to comply with the majority independent board requirement. The loss of our controlled company status does not modify the independence requirements for the audit committee under the phase-in period following our initial public offering. We intend to comply with the requirements of Rule 10A-3 of the Exchange Act and Nasdaq rules within the applicable time frame.
Mr. Aronson has been electedOur Board is led by our board of directors to serve as the Chairman of the Board, and the Board also has a Lead Independent Director. Our Bylaws provide that the Board appoints the Chairman of the Board to preside at all meetings of the Board and stockholders and perform such other duties and exercise such powers as our board of directors.Bylaws or the Board may prescribe. Our Bylaws and Corporate Governance Guidelines currentlyeach provide that the Chairman may also hold the position of Chief Executive Officer. The Board selects its Chairman and our Chief Executive Officer will not serve asin the manner it considers to be in the best interests of the Company. In accordance with our Corporate Governance Guidelines, the Board considers from time to time whether it is in the best interests of the Company to have the same person occupy the offices of Chairman of the Board and Chief Executive Officer, using its business judgment after considering all relevant circumstances.
Charlie Morrison has served as our boardPresident and Chief Executive Officer since June 2012 and as Chairman of directors. Whilethe Board since March 2017. The Board currently has combined the positions of Chairman and Chief Executive Officer. The Board believes, at this time, that this structure is appropriate and in the best interests of the Company and its stockholders. Specifically, the Board acknowledges that Mr. Morrison has significant experience managing the Company’s business operations and the Board wants to preserve this continuity. Although the Board believes that this current leadership structure is appropriate at this time, the Board believes that there is no specific leadership structure that applies to all companies, nor is there one specific leadership structure that would permanently suit our Company. As a result, the decision as to whether to combine or separate the positions of Chairman and Chief Executive Officer may vary from time to time, as conditions and circumstances warrant.
The Company’s Corporate Governance Guidelines provide that, the board of directors will periodically review its leadership structure to ensure that it continues to meet the Company’s needs and may in the future determine thatevent the Chief Executive Officer may serveof the Company also serves as Chairman of the board, we believe that having Mr. Aronson serveBoard, the Company will appoint a Lead Independent Director, who will preside over each executive session of thenon-management directors. The primary role of the Lead Independent Director is to ensure independent leadership of the Board, as well as to act as a non-employee Chairman is preferable at this time. Our Chairman provides leadership to ensure thatliaison between the board functions in an independent, cohesive fashion.
We believenon-management directors and our Chief Executive Officer should be principally responsibleOfficer. The Lead Independent Director also assists the Chairman of the Board and the remainder of the Board in assuring effective governance in overseeing the direction and management of the Company. The Board believes that the Lead Independent Director serves an important
corporate governance function by providing separate leadership for runningthenon-management directors.
Lynn Crump-Caine has served as Lead Independent Director since March 2017. Pursuant to the Company’s Corporate Governance Guidelines, thenon-management directors meet in executive session at least twice each year without anynon-independent directors or members of management being present. Ms. Crump-Caine presides at these meetings of ournon-management directors and provides significant outside perspective and leadership. In 2017, thenon-management directors met in executive sessions at each regularly scheduled meeting of the Board without any members of management being present.
A copy of our Corporate Governance Guidelines is available on the investor relations section of our website at http://ir.wingstop.com.
Our Board leadership structure was the result of substantial succession planning efforts. Our Board has worked to recruit highly qualified directors and establish a board structure that meets the needs of the Company whileand its stockholders. As described above, each of Lynn Crump-Caine, Dave Goebel, and Kay Madati joined the Board in 2017. As a result of the Board’s succession planning efforts, our ChairmanBoard is responsible for runningnow comprised entirely of independent members, with the board. The board of directors has considered the time that is requiredexception of Mr. Morrison who serves as President, Chief Executive Officer, and believes that by having another director serve as ChairmanChairman. The restructuring of the board, Mr. Morrison is ableBoard included resignations from Neal Aronson, Steve Romaniello, and Erik Morris, each affiliated, directly or indirectly, with Roark Capital Group, as well as Sidney Feltenstein. The Board wishes to focus his entire energythank each of its former directors for their leadership, dedication, and service to the Company.
The Board has overall responsibility for executive officer succession planning, and discusses and reviews succession planning on running Wingstop. Undera regular basis.
Meetings of the Board of Directors
During the fiscal year ended December 30, 2017, our Corporate Governance GuidelinesBoard met six (6) times. All of our directors attended 100% of the total meetings held by the Board and our bylaws, our Chairman:any committee on which the director served during the period of the fiscal year that the director was a member of the Board. Each member of the Board attended the annual meeting of stockholders in 2017, and we expect that each director will attend the Annual Meeting, absent a valid reason, despite no formal policy requiring attendance at annual meetings.
| 14 | WINGSTOP INC. 2018 PROXY STATEMENT | |
CORPORATE GOVERNANCE
Our Chairman also has access to management and financial and other information as he deems appropriate from time-to-time to assist him and the board of directors in discharging their responsibilities.
The board of directors determines its leadership structure from time to time. As part of the annual board self-evaluation process, the Nominating and Corporate Governance Committee and the board evaluate the board’s leadership structure to ensure that the structure is appropriate for Wingstop and its stockholders. We recognize that different board leadership structures may be appropriate for Wingstop in the future, depending upon applicable circumstances. However, the board of directors believes the current leadership structure, with Mr. Morrison as Chief Executive Officer and Mr. Aronson as Chairman of the board, is the appropriate structure for Wingstop at this time.
Board Committees and Membership
Our board of directorsBoard has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Each of the committeescommittee reports to the board of directorsBoard as they deemit deems appropriate and as the boardBoard may request. The composition, duties, and responsibilities of these committees are described below. The table below sets forth the current membership of each of the committees:
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Audit Committee
The Audit Committee is responsible for, among other matters: (i) the integrity of our annual and interim financial statements; (ii) our internal financial reporting and compliance with our financial, accounting, and disclosure controls and procedures; (iii) the qualifications, engagement, compensation, independence, and performance of our independent registered public accounting firm; (iv) our independent registered public accounting firm’s annual audit of our financial statements and approving all audit and permissiblenon-audit services; (v) the performance of our internal audit function; (vi) our legal and regulatory compliance; (vii) reviewing press releases, financial information, and (vii)earnings guidance provided to analysts and rating agencies; (viii) the approval of related party transactions.
The SEC rulestransactions and Nasdaq rules require us to have all independent(ix) annually reviewing the charter of the Audit Committee members within one yearand the performance of the date of the completion of our initial public offering. We intend to comply with these independence requirements for all members of the audit committee within the time periods specified under such rules. Audit Committee.
Our board of directorsBoard has affirmatively determined that Messrs. FeltensteinMcDonald, Goebel, and Hislop meet the definition of “independent director” for purposes of serving on an Audit Committee under applicable SEC and Nasdaq rules. In addition, Mr. MorrisMcDonald qualifies and has been designated as an “audit committee financial expert,” as such term is defined in Item 401(h)407(d)(5) ofRegulation S-K.
Our board of directorsBoard has adopted a written charter for the Audit Committee.Committee, a copy of which is available on the investor relations section of our website at http://ir.wingstop.com. The Audit Committee held twofour (4) meetings during the 20152017 fiscal year.
Compensation Committee
The Compensation Committee is responsible for, among other matters: (i) setsetting the overall compensation philosophy, strategy, and policies for our executive officers and directors; (ii) reviewreviewing and approveapproving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other key employees and evaluateevaluating performance in light of those goals and objectives; (iii) reviewreviewing and determinedetermining the compensation of our directors, Chief Executive Officer, and
other executive officers; (iv) makemaking recommendations to the board of directors with respect to our incentive and equity-based compensation plans; (v) reviewing and (v) review and approveapproving employment agreements and other similar arrangements between us and our executive officers.officers and (vi) annually reviewing the charter of the Compensation Committee and the performance of the Compensation Committee.
Our board of directorsBoard has affirmatively determined that Messrs. FeltensteinMs. Crump-Caine and Mr. Hislop meet the definition of an “independent director” for purposes of serving on a compensation committee under applicable SEC and Nasdaq rules. Upon completionrules, as well as the definition of“non-employee director” for purposes of Rule16b-3 promulgated under the Exchange Act and the definition of “outside director” for purposes of Section 162(m) of the recent public offeringInternal Revenue Code of our common stock by certain of our stockholders on March 14, 2016, we are no longer able to avail ourselves of the “controlled company” exemption and will be required to have a compensation committee composed entirely of independent directors within the specified phase-in period. See “—Controlled Company.”1986, as amended (the “Code”).
Our board of directorsBoard has adopted a written charter for the Compensation Committee.Committee, a copy of which is available on the investor relations section of our website at http://ir.wingstop.com. The Compensation Committee held one meetingfive (5) meetings during the 20152017 fiscal year.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is responsible for, among other matters: (i) recommendrecommending to the board of directors for approvalBoard the qualifications, qualities, skills, and expertise required for board of directorsBoard membership; (ii) identifyidentifying potential members of the board of directorsBoard consistent with the criteria approved by our board of directorsBoard and selectselecting and recommendrecommending to the board of directorsBoard the director nominees for election at annual meetings of stockholders or to otherwise fillfilling vacancies; (iii) evaluateevaluating and makemaking recommendations regarding the structure, membership, and governance of the committees of the board of directors;Board; (iv) developdeveloping and makemaking recommendations to the board of directorsBoard with regard to our corporate governance policies and principles, including development of a set of corporate governance guidelines and principles applicable to us; and (v) overseeoverseeing the annual review of the boardBoard’s performance and (vi) annually reviewing the charter of directors’ performance.the Nominating and Corporate Governance Committee and the performance of the Nominating and Corporate Governance Committee.
Our board of directorsBoard has affirmatively determined that Mr.Messrs. Goebel, Hislop, meetsMadati, and McDonald meet the definition of an “independent director” for purposes of serving on a nominating and corporate governance committee under applicable SEC and Nasdaq rules. Upon completion of the recent public offering of our common stock by certain of our stockholders on March 14, 2016, we are no longer able to avail ourselves of the “controlled company” exemption and will be required to have a nominating and corporate governance committee composed entirely of independent directors within the specified phase-in period. See “—Controlled Company.”
| WINGSTOP INC. 2018 PROXY STATEMENT | 15 |
CORPORATE GOVERNANCE
Our board of directorsBoard has adopted a written charter for the Nominating and Corporate Governance Committee.Committee, a copy of which is available on the investor relations section of our website at http://ir.wingstop.com. The Nominating and Corporate Governance Committee held one meetingfour (4) meetings during the 20152017 fiscal year.
Board Oversight of Long-Term Growth Strategy
Our Board is responsible for overseeing our Company’s strategy for creating long-term growth. The Board recognizes that the restaurant industry is extremely competitive and rapidly evolving and that to generate long-term growth our strategy must allow us to quickly adapt to meet the demands of our customers. Our growth strategy, which was reviewed by our Board and was designed with significant input and oversight from our Board, consists of, among other things:
Our management team and the Board regularly review and adjust our strategy to ensure that it is designed to accomplish long-term growth.
Our board of directorsBoard is responsible for overseeing our risk management.management, including risks related to cybersecurity. The boardBoard focuses on our general risk management strategy and the most significant risks facing us, and ensures that appropriate risk mitigation strategies are implemented by management. The boardOur management is alsoresponsible forday-to-day risk management, including identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial, operational, compliance, and reporting levels. Management keeps the Board apprised of particular risk management matters in connection with its general oversight and approval of
corporate matters and significant transactions. In addition to the broad risk-oversight functions performed by the Board as a whole, the Board has tasked certain of its committees with the responsibility of evaluating risks associated with specific elements of the Company’s business, operations, or governance, or with evaluating management’s assessments of these risks. Each committee regularly reports to the full Board, among other things, important risk-management matters considered by that committee.
Audit Committee
Our boardBoard has delegated to the Audit Committee primary responsibility with respect to risk assessment and risk management.management and the appropriate disclosure of risk factors in the Company’s public filings. Pursuant to its charter, the Audit Committee discusses with management and the Company’s independent auditor the Company’s policies with respect to risk assessment and risk management, the Company’s significant financial risk exposures and the actions management has taken to limit, monitor, or control such exposures. Our other board committees will also consider and address risk as they perform their respective committee responsibilities. All committees will report to the full board as appropriate, including when a matter rises to the level of a material or enterprise level risk.
Our managementCompensation Committee
The Compensation Committee is responsible for day-to-day risk management. This oversight includes identifying, evaluating,overseeing the management of risks related to the Company’s compensation policies and addressing potential risks that may exist atpractices and for overseeing the enterprise, strategic, financial, operational, compliance and reporting levels. We believe that the leadership structure of our board of directors supports its effective oversightevaluation of the Company’s executive management. The Compensation Committee accomplishes this duty by assessing the risks associated with each of the compensation plans used by the Company, including not only those plans applicable to executive officers, but also plans applicable to other employees. The Compensation Committee also receives advice from FW Cook, its independent compensation consultant, regarding compensation-based risk management.issues.
Committee ChartersNominating and Corporate Governance GuidelinesCommittee
The charters of each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee and our Corporate Governance Guidelines may be accessed on our website atwww.wingstop.comby clicking onmanages risks associated with the Investor Relations link, followed by the Corporate Governance link, and are available in print upon request from our Corporate Secretary.
Codes of Business Conduct and Ethics
We have a Code of Business Conduct and Ethics, which is applicable to all directors and employees, including our executive and financial officers. The Code of Business Conduct and Ethics is available on our website atwww.wingstop.comby clicking on the Investor Relations link, followed by the Corporate Governance link, and is available in print upon request from our Corporate Secretary. Any amendments to, or waiversindependence of the CodeBoard and oversees the annual self-evaluation of Business Conductthe Board and Ethics with respect to one executive officers or directors will be disclosed on our website promptly following the date of such amendment or waiver.its committees.
Selection of Director Nominees
General Criteria and Process
It is the Nominating and Corporate Governance Committee’s responsibility to review and recommend to the board of directorsBoard nominees for director and to identify one or more
| 16 | WINGSTOP INC. 2018 PROXY STATEMENT | |
CORPORATE GOVERNANCE
candidates to fill any vacancies that may occur on the board of directors.Board. As expressed in our Corporate Governance Guidelines, we do not set specific criteria for directors, but the Company seeks to align boardBoard composition with the Company’s strategic direction so that the boardBoard members bring skills, experience, and backgrounds that are relevant to the key strategic and operational issues that they will oversee and approve.
The Company is committed to fostering an environment of diversity and inclusion, including among its Board members. Therefore, in considering director nominees, the Nominating and Corporate Governance committee considers candidates who represent a mix of backgrounds, diversity of race, ethnicity, gender, age, skills, and professional experiences that enhance the quality of the deliberations and decisions of the Board, in the context of the perceived needs of the structure of the Board at that point in time. Two of our six board members are black, and one board member is a woman.
Directors are selected for their integrity, character, independent judgment, breadth of experience, insight, knowledge, and business acumen. As shown in the matrix under “Director Skills and Experience” above, the Nominating and Corporate Governance Committee also considers a director’s experience with corporate governance, executive management, finance and accounting matters, international operations, marketing, restaurant operations and the restaurant and retail industries, risk management, strategy, and technology. Leadership skills, and executive experience, expertise in retail or restaurants, franchise knowledge, familiarity with issues affecting global businesses, financial and accounting knowledge, prior experience in the Company’s geographic markets, and expertise in capital markets, strategic planning and marketing expertise, among others, may also be among the relevant selection criteria. In addition, the Company strives to maintain a board of directorsBoard that reflects a diversity of experience and personal backgrounds. These criteria will vary over time depending on the needs of the board of directors.Board. Accordingly, the board of directorsBoard may adopt new criteria and amend or abandon existing criteria as and when it determines such action to be appropriate.
Under theits charter, of the Nominating and Corporate Governance Committee , the Nominating and Corporate Governance Committee is responsible for determining criteria and qualifications for board nominees to be used in reviewing and selecting director candidates, including those described in the Corporate Governance Guidelines.
For each of the nominees to the board of directors,Board, the biographies included in this Proxy Statement highlight the experiences and qualifications that were among the most important to the Nominating and Corporate Governance Committee in
concluding that the nominee should serve as a director. The Nominating and Corporate Governance Committee also believes that directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serve on the board of directorsBoard for an extended period of time.time, and the Nominating and Corporate Governance Committee will evaluate a Board candidate’s other commitments as part of its selection criteria.
In developing recommendations for new director candidates, the Nominating and Corporate Governance Committee identifies potential individuals whose qualifications and skills reflect those desired by the board of directors,Board, and evaluates and recommends to the board of directorsBoard all nominees for boardBoard membership as specified in the committee’s charter.
Stockholder Recommendation of Director Candidates for Director
StockholdersPursuant to our policy on stockholder nominees, stockholders wishing to recommend candidates to be nominated for election to the Company’s board of directorsBoard may do so by sending to the attention of the General CounselSecretary at the address provided in this Proxy Statement a statement setting forth the information required by the advance notice provision in the Company’s bylaws.Bylaws. Stockholder recommendations provided to the General CounselSecretary and received in accordance with the advance notice provision in the Company’s bylawsBylaws will be considered and evaluated by the Nominating and Corporate Governance Committee in the same manner as candidates recommended from other sources. Our Nominating and Corporate Governance Committee has not established a minimum number of shares of common stock that a stockholder must own, or a minimum length of time during which the stockholder must own its shares of common stock, in order to recommend a director candidate for consideration.
For information regarding stockholder nominations of directors and stockholder proposals, please see the “Next Annual Meeting—Stockholder Proposals” section of this Proxy Statement.
Meetings of the Board of Directors
During the fiscal year ended December 26, 2015, the board of directors met two times. All of our directors attended 100% of the total meetings held by the board of directors and any committee on which the director served during the period of the fiscal year that the director was a member of the board. This is our first annual meeting of stockholders since we became a public company, and beginning with our 2016 annual meeting of stockholders we expect that each continuing director will attend the annual meeting of stockholders, absent a valid reason.
Executive Sessions ofNon-Management Directors
The independent directors meet in executive session, without anynon-independent directors or members of management present, at least twice each year. SinceBecause the Chairman of the board of directorsBoard is not an independent director, the independent directors elect on an annual basis a presiding director to presideour Lead Independent Director presides at such sessions.
| WINGSTOP INC. 2018 PROXY STATEMENT | 17 |
CORPORATE GOVERNANCE
Board and Committee Self-Evaluation
The Board believes a rigorous self-evaluation process is important to the ongoing effectiveness of the Board. To that end, each year the Board conducts a self-evaluation of its performance. As part of this process, each director individually completes an evaluation form on specific aspects of the Board, including the Board’s composition, the culture of the Board, committee structure, the Board’s relationship with management, Board meetings, and the Board’s oversight of strategy, risk, and other aspects of the Company’s business. The collective responses are then reviewed by the chair of the Nominating and Corporate Governance Committee. As part of the evaluation, the Board assesses the progress in the areas targeted for improvement a year earlier, and develops actions to be taken to enhance the Board’s effectiveness over the next year. Additionally, each committee conducts an annual self-evaluation of its performance through a similar process. Further, individual Board members evaluate themselves and each other based on the criteria set forth in the matrix under “Director Skills and Experience” on page 13. Dave Goebel joined our Board in November 2017, and, as a result, did not participate in the 2017 self-evaluation process.
Code of Business Conduct and Ethics
We have a Code of Business Conduct and Ethics, which is applicable to all directors and employees, including our
executive and financial officers, and constitutes a “code of ethics” for purposes of Item 406(b) of RegulationS-K. The Code of Business Conduct and Ethics is available on our website at http://ir.wingstop.com and is available in print upon request from our Corporate Secretary. To the extent required by law, any amendments to, or waivers of, the Code of Business Conduct and Ethics with respect to one of our executive officers or directors will be disclosed on our website promptly following the date of such amendment or waiver.
Insider Trading Compliance Policy; Prohibition on Hedges and Pledges
We have an insider trading compliance policythat prohibits the purchase or sale of our securities while being aware of material,non-public information about the Company as well as the disclosure of such information to others who may trade in securities of the Company. Our insider trading compliance policy also prohibits our directors, executive officers, and employees from engaging in hedging activities or other short-term or speculative transactions in the Company’s securities such as prepaid variable forwards, equity swaps, collars, and exchange funds. In addition, our insider trading compliance policy prohibits certain senior officers and all of our directors from pledging our stock or using it as loan collateral or as part of a margin account.
Stock Ownership Guidelines for Directors and Officers
In March 2017, we adopted meaningful stock ownership guidelines that apply to our directors and officers, which provide that each officer must own a multiple of annual base salary in our common stock or qualifying derivatives and each independent director must own a multiple of the annual cash director retainer in our common stock or qualifying derivatives. The following table summarizes the requirements of our stock ownership guidelines:
Title | Stock Ownership Requirement | |
Chief Executive Officer | Five (5) times annual base salary | |
Independent Director | Four (4) times annual cash director retainer | |
Executive and Senior Vice Presidents | Two (2) times annual base salary | |
Vice President | One (1) times annual base salary | |
| 18 | WINGSTOP INC. 2018 PROXY STATEMENT | |
CORPORATE GOVERNANCE
We maintain a robust clawback policy for incentive compensation paid to current or former executive officers. Our 2015 Omnibus Equity Incentive Plan authorizes the Compensation Committee to provide for the forfeiture or recoupment of a participant’s awards in certain situations, such as the termination of the participant’s employment for cause, serious misconduct, breach of noncompetition, confidentiality or other restrictive covenants, or other activity detrimental to our business, reputation, or interests. If we are required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under the federal securities laws, we may seek to recover from any current or former executive officer any payment in settlement of an award earned or accrued during the three-year period preceding the accounting restatement. The amount to be recovered will be based on the excess of the amount paid under the award over the amount that would have been paid under the award if the financial statements had been correct.
Compensation Committee Interlocks and Insider Participation
The directors serving on the Compensation Committee of the board of directorsBoard during the fiscal year ended December 26, 201530, 2017 were Steven M. Romaniello (Chairman)Lynn-Crump Caine (Chair), Neal K. Aronson,Mike Hislop, and Sidney J. Feltenstein, Michael J. Hislop and Erik O. Morris.Feltenstein. None of these individuals is or has at any time during the past year been an officer or employee of ours. During the 20152017 fiscal year, none of our executive officers served as a director of any corporation for which any of these individuals served as an executive officer and there were no other Compensation Committee interlocks or relationships with the companies with which these individuals or our other directors are affiliated.
Communications with the Board of Directors
Any stockholder or other interested partiesparty who have concerns that they wishdesires to make knowncommunicate with the Board of Directors, a committee of the Board of Directors, thenon-management/independent directors, the Lead Independent Director, or other individual director may do so by writing to the Company’s non-management directors, should send any such communication the boarddirector or group of directors as a group or the non-management directors as a group in care of the Company’s registered office atat: 5501 LBJ Freeway, 5th Floor, Dallas, Texas 75240 to the attention of the General Counsel or send an emailSecretary.
The communication must prominently display the legend “BOARD COMMUNICATION” in order to indicate to the boardSecretary that it is a communication for the Board of directorsDirectors. Upon receiving such a communication, the Secretary will promptly forward the communication to the relevant individual or group to which it is addressed. The Board of Directors has requested that certain items that are unrelated to its duties and responsibilities be excluded, such as spam, junk mail and mass mailings, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements.
The Secretary will not forward any communication determined in its good faith belief to be frivolous, unduly hostile, threatening, illegal, or similarly unsuitable. The Secretary will maintain a group orlist of each communication that was not forwarded because it was determined to be frivolous. Such list is delivered to the non-management directors as a groupBoard of the Directors at a specified email address providedits quarterly meetings. In addition, each communication subject to this policy that was not forwarded because it was determined by the Company onSecretary to be frivolous is retained in our website. The General Counsel shall review all writtenfiles and emailed correspondence received from stockholders and other interested parties and forwardmade available at the request of any member of the Board of Directors to whom such correspondence periodically to the directors. Advertisements, solicitations for business, requests for employment, requests for contributions or other inappropriate material will not be forwarded to the directors.communication was addressed.
| WINGSTOP INC. 2018 PROXY STATEMENT | 19 |
CORPORATE GOVERNANCE
In May 2016, our Board, acting on the recommendation of the Compensation Committee and FW Cook, adopted anon-employee director compensation policy consisting of both a cash and equity component. In May 2017, our Board amended thenon-employee director compensation policy to include an additional cash retainer for the Lead Independent Director based on the recommendation of the Compensation Committee and FW Cook. The following table sets forth the cash component of ournon-employee director compensation policy:
| Recipient(s) | Annual Cash Compensation ($) | |||
Non-employee directors | 50,000 | |||
Lead independent director | 15,000 | |||
Audit committee chair | 15,000 | |||
Audit committee members (excluding chair) | 2,500 | |||
Compensation committee chair | 10,000 | |||
Compensation committee members (excluding chair) | 2,500 | |||
Nominating and corporate governance committee chair | 5,000 | |||
Nominating and corporate governance committee members (excluding chair) | 2,500 | |||
In addition to the annual cash retainers set forth above, each of ournon-employee directors is entitled to receive an annual equity award consisting of a number of shares of restricted stock having a total fair market value of $50,000 on the date of grant, with the date of grant being the date of our annual meeting of stockholders, and such shares of restricted stock vesting in equal installments over a three (3) year period. Effective August 3, 2017, we amended the Wingstop Inc. 2015 Omnibus Incentive Compensation
Plan to capnon-employee director equity awards at $400,000 per fiscal year.
Under ournon-employee director compensation policy, we will also reimburse directors for all reasonableout-of-pocket expenses incurred in connection with the performance of their duties as directors, including travel expenses in connection with Board and committee meetings.
| 20 | WINGSTOP INC. 2018 PROXY STATEMENT | |
CORPORATE GOVERNANCE
The following table sets forth information concerning the fiscal year 20152017 compensation of ournon-employee directors that served during any part of 2015:2017. Because Charlie Morrison serves as our President and Chief Executive Officer, he did not receive additional compensation for his service as Chairman of the Board or as a director during 2017. See “Executive Compensation—Summary Compensation Table” for information concerning the compensation paid to Charlie Morrison during 2017.
Name | Fees earned or paid in cash ($)(1) | Stock / option awards ($)(2) | Total ($) | |||||||||
Neal K. Aronson | — | — | — | |||||||||
Sidney J. Feltenstein | 38,000 | — | 38,000 | |||||||||
Michael J. Hislop | 38,000 | — | 38,000 | |||||||||
Lawrence P. Molloy(3) | — | — | — | |||||||||
Erik O. Morris | — | — | — | |||||||||
Charles R. Morrison | — | — | — | |||||||||
Steven M. Romaniello | — | — | — | |||||||||
Name | Fees Earned or Paid in Cash | Stock Awards(1)(2) ($) | Total ($) | ||||||||||||
Current Directors and Director Nominees | |||||||||||||||
Lynn Crump-Caine | 76,250 | (3) | 50,000 | (4) | 126,250 | ||||||||||
David L. Goebel | 13,750 | (5) | 41,700 | (6) | 55,450 | ||||||||||
Michael J. Hislop | 61,263 | (7) | 50,000 | (4) | 111,263 | ||||||||||
Kilandigalu (Kay) M. Madati | 39,375 | (8) | 50,000 | (4) | 89,375 | ||||||||||
Wesley S. McDonald | 69,388 | (9) | 50,000 | (4) | 119,388 | ||||||||||
Former Directors | |||||||||||||||
Neal K. Aronson(10) | — | — | — | ||||||||||||
Sidney J. Feltenstein | 56,888 | (11) | 50,000 | (4)(12) | 106,888 | ||||||||||
Erik O. Morris(13) | — | — | — | ||||||||||||
Steven M. Romaniello(14) | — | — | — | ||||||||||||
| (1) |
| (2) |
Name
| Shares Underlying
| Unvested Shares of
| ||||||||
Current Directors and Director Nominees
| ||||||||||
Lynn Crump-Caine
|
| —
|
|
| 1,714
|
| ||||
David L. Goebel
|
| —
|
|
| 1,231
|
| ||||
Michael J. Hislop
|
| 14,534
|
|
| 3,017
|
| ||||
Kilandigalu (Kay) M. Madati
|
| —
|
|
| 1,714
|
| ||||
Wesley S. McDonald
|
| —
|
|
| 3,017
|
| ||||
Former Directors
| ||||||||||
Neal K. Aronson
|
| —
|
|
| —
|
| ||||
Sidney J. Feltenstein
|
| —
|
|
| —
|
| ||||
Erik O. Morris
|
| —
|
|
| —
|
| ||||
Steven M. Romaniello
|
| —
|
|
| —
|
| ||||
The unvested and unexercised equity awards held by our former directors were forfeited following the date of their respective resignations.
| WINGSTOP INC. 2018 PROXY STATEMENT | 21 |
CORPORATE GOVERNANCE
| (3) | Represents the cash retainer fees paid to Ms. Crump-Caine for services (i) as a director for the entire 2017 fiscal year, (ii) a member of the Compensation Committee from January through March 2017, (iii) chair of the Compensation Committee from March 2017 through the remainder of the 2017 fiscal year, and (iv) service as Lead Independent Director from March 2017 through the remainder of the 2017 fiscal year, based on the additional Lead Independent Director retainer authorized by the Board in May 2017. |
| (4) | Represents the fair market value of an award of 1,714 shares of restricted stock granted on May 3, 2017. These shares of restricted stock will vest in three (3) equal annual installments on each anniversary of the date of grant. |
| (5) | Represents the cash retainer fees paid to Mr. |
| (6) | Represents the fair market value of an award of 1,231 shares of restricted stock granted on October 31, 2017. These shares of restricted stock will vest in three (3) equal annual installments on each anniversary of the date of grant. Although Mr. Goebel was not appointed as a member of the Board until November 2017, the Board and Compensation Committee determined that Mr. Goebel would be eligible to receive the annual equity award granted tonon-employee directors under the Company’snon-employee director compensation policy. |
| (7) | Represents the cash retainer fees paid to Mr. Hislop for services (i) as a director and a member of the Audit, Compensation and Nominating and Corporate Governance Committees for the entire 2017 fiscal year and (ii) as Nominating and Corporate Governance Committee chair from March 2017 through the remainder of the 2017 fiscal year. Also includes $1,888 that Mr. Hislop received as a result of dividends on our common stock. |
| (8) | Represents the cash retainer fees paid to Mr. Madati for services as a director and a member of the Nominating and Corporate Governance Committee from March 2017 through the remainder of the 2017 fiscal year. |
| (9) | Represents the cash retainer fees paid to Mr. McDonald for services as (i) a director and Audit Committee chair for the entire 2017 fiscal year and (ii) as a member of the Compensation and Nominating and Corporate Governance Committees from March 2017 through the remainder of the 2017 fiscal year. Also includes $1,888 that Mr. McDonald received as a result of dividends on our common stock. |
| (10) | Mr. Aronson resigned as a director |
We have entered into change in control
| (11) | Represents the cash retainer fees paid to Mr. Feltenstein for services as a director and a member of the Audit and Compensation Committees through his resignation in November 2017. Also includes $1,888 that Mr. Feltenstein received as a result of dividends on our common stock. |
| (12) | This award of restricted stock was forfeited in its entirety upon Mr. Feltenstein resigning in November 2017. |
| (13) | Mr. Morris resigned as a director and a member of the Audit (Chair), Compensation and Nominating and Corporate Governance (Chair) Committees in March 2017 and was not paid any director fees for his services in 2017. |
| (14) | Mr. Romaniello resigned as a director and a member of the Compensation (Chair) and Nominating and Corporate Governance Committees in March 2017 and was not paid any director fees for his services in 2017. |
In addition to the foregoing, we are party to achange-in-control bonus award agreementsagreement with Mr. Feltenstein and Mr. Hislop. Under these agreements,this agreement, a cash bonuses arebonus is payable to each of Mr. Feltenstein and Mr. Hislop upon the consummation of a change in controlchange-in-control so long as he remains a director.director or is an employee at the time of thechange-in-control. The cash bonus calculation for each participant differs and is determined by multiplying the participant’s
Mr. Hislop’s covered securities by an amount designated in each agreement.$0.82 (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations). Further, no cash bonus is payable if the per share consideration paid for our common stock in the change in controlchange-in-control transaction is equal to or less than an amount specified in each agreement. The maximum potential payments to Mr. Feltenstein and Mr. Hislop under these agreements are $58,000 and $32,800, respectively.$2.72.
| 22 | WINGSTOP INC. 2018 PROXY STATEMENT | |
Each of our independent directors, currently Messrs. Hislop and Feltenstein, will receive an annual cash retainer fee of $50,000, which began following the completion of our initial public offering. We will evaluate the appropriate level of any future equity compensation for independent directors on an annual basis. Non-independent directors, including those associated with Roark, do not receive any compensation for services as directors.
BENEFICIAL OWNERSHIP OF THE COMPANY’S SECURITIES
The following table sets forth certain information concerningwith respect to the beneficial ownership of our common stock as of March 15, 2016, unless otherwise indicated,13, 2018, for:
We have determined beneficial ownership in accordance with the rules of the SEC. Under such rules, a person is generally deemed to beneficially own a security if such person has sole or shared voting or investment power with respect to that security, including with respect to options and warrants that are currently exercisable or exercisable within sixty (60) days of March 13, 2018. With respect to the different types of awards that we issue under our incentive plans:
has the right to acquire such shares upon exercise of the stock option. A person is not deemed to beneficially own shares underlying an unvested portion of a performance-based stock option that may vest within sixty (60) days of March 13, 2018 because the satisfaction of the applicable performance conditions is outside of the person’s control. |
Name | Shares of Common Stock Beneficially Owned (1) | Number of Exercisable Options (2) | Percent of Shares Outstanding (3) | |||||||||
Charles R. Morrison (4) | 62,803 | 196,610 | * | |||||||||
Michael F. Mravle (5) | 10,000 | 32,700 | * | |||||||||
Larry D. Kruger | — | — | — | |||||||||
Neal K. Aronson (6) | 12,765,858 | — | 44.7 | % | ||||||||
Sidney J. Feltenstein (7) | 43,600 | 10,900 | * | |||||||||
Michael J. Hislop (8) | 21,800 | 7,267 | * | |||||||||
Lawrence P. Molloy (9) | — | — | — | |||||||||
Erik O. Morris | — | — | — | |||||||||
Steven M. Romaniello | — | — | — | |||||||||
All current executive officers and directors as a group (14 persons)(6) | 13,060,536 | 343,941 | 45.7 | % | ||||||||
RC II WS (6) | 12,765,858 | — | 44.7 | % | ||||||||
Except as indicated in the footnotes below, we believe, based on the information furnished or available to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to community property laws where applicable.
| WINGSTOP INC. 2018 PROXY STATEMENT | 23 |
BENEFICIAL OWNERSHIP OF THE COMPANY’S SECURITIES
The applicable percentage ownership is based on 29,156,292 shares of common stock outstanding at March 13, 2018, which includes shares of unvested restricted stock that are or were subject to vesting conditions.
Shares Beneficially Owned
| ||||||||||||
Name of Beneficial Owner(1)
| Number(2)
| Equity Awards
| %
| |||||||||
BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10055
|
| 3,687,267
|
|
| —
|
|
| 12.7
| %
| |||
FMR LLC(4) 245 Summer Street Boston, MA 02210
|
| 1,767,093
|
|
| —
|
|
| 6.1
| %
| |||
T. Rowe Price Associates, Inc.(5) 100 E. Pratt Street Baltimore, MA 21202
|
| 3,816,688
|
|
| —
|
|
| 13.1
| %
| |||
The Vanguard Group(6) 100 Vanguard Blvd. Malvern, PA 19355
|
| 2,669,236
|
|
| —
|
|
| 9.2
| %
| |||
Wellington Management Group LLP(7) c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210
|
| 2,970,450
|
|
| —
|
|
| 10.2
| %
| |||
Non-Employee Directors:
| ||||||||||||
Lynn Crump-Caine(8)
|
| 2,374
|
|
| —
|
|
| *
|
| |||
David L. Goebel(9)
|
| 1,231
|
|
| —
|
|
| *
|
| |||
Michael J. Hislop(10)
|
| 30,002
|
| 14,534 |
| *
|
| |||||
Kilandigalu (Kay) M. Madati(11)
|
| 1,714
|
|
| —
|
|
| *
|
| |||
Wesley S. McDonald(12)
|
| 3,668
|
|
| —
|
|
| *
|
| |||
Named Executive Officers:
| ||||||||||||
Lawrence D. Kruguer(13)
|
| 24,057
|
|
| 15,789
|
|
| *
|
| |||
Charles R. Morrison(14)
|
| 303,977
|
|
| 199,825
|
|
| 1.0
| %
| |||
Michael M. Mravle(15)
|
| 40,975
|
|
| —
|
|
| *
|
| |||
Michael J. Skipworth(16)
|
| 6,067
|
|
| 5,450
|
|
| *
|
| |||
Stacy Peterson(17)
|
| 55,773
|
|
| 24,525
|
|
| *
|
| |||
Flynn K. Dekker(18)
|
| 33,239
|
|
| —
|
|
| *
|
| |||
All directors and current executive officers as a group (11 persons)
|
| 503,077
|
|
| 260,123
|
|
| 1.7
| %
| |||
| * |
| (1) |
| (2) |
| 24 | WINGSTOP INC. 2018 PROXY STATEMENT | |
BENEFICIAL OWNERSHIP OF THE COMPANY’S SECURITIES
| (3) |
| (4) |
| (5) |
| (6) |
| (7) |
| (8) | Includes |
| (9) | Includes 1,231 shares of restricted stock, of which 247 shares will vest on May 2, 2018, 492 shares will vest on May 2, 2019, and 492 shares will vest on May 2, 2020. |
| (10) | Includes (i) 1,954 shares of restricted stock, of which 651 shares have vested, 651 shares will vest on May 18, 2018, and 652 shares will vest on May 18, 2019, (ii) 1,714 shares of restricted stock, of which 571 shares will vest on May 3, 2018, 571 shares will vest on May 3, 2019, and 572 shares will vest on May 3, 2020 and (iii) the vested, or deemed vested, and unexercised portion of a stock option representing the right to purchase 36,333 shares of common stock, all of which have vested and 14,534 shares remain unexercised. |
| (11) | Includes 1,714 shares of restricted stock, of which 571 shares will vest on May 3, 2018, 571 shares will vest on May 3, 2019, and 572 shares will vest on May 3, 2020. |
| (12) | Includes (i) 1,954 shares of restricted stock, of which 651 shares have vested, 651 shares will vest on May 18, 2018, and 651 shares will vest on May 18, 2019 and (ii) 1,714 shares of restricted stock, of which 571 shares will vest on May 3, 2018, 571 shares will vest on May 3, 2019, and 572 shares will vest on May 3, 2020. |
| (13) | Includes (i) 5,862 shares of restricted stock, of which 1,466 shares have vested, 1,465 shares will vest on May 18, 2018, 1,466 shares will vest on May 18, 2019, and 1,466 shares will vest on May 18, 2020 and (ii) the vested, or deemed vested, and unexercised portion of (a) a performance-based stock option representing the right to purchase 26,316 shares of common stock, of which 10,526 shares have vested and were acquired pursuant to an option exercise by Mr. |
| (14) | Includes the vested, or deemed vested, and unexercised portion of (a) a stock option representing the right to purchase 204,375 shares of common stock, all of which have vested and 79,816 shares remain unexercised and (b) a performance-based stock option representing the right to purchase 204,375 shares of common stock, all of which have vested and 120,009 shares remain unexercised. |
| (15) | Mr. Mravle resigned |
| (16) | Includes the vested, or deemed vested, and unexercised portion of (a) a |
| (17) | Includes the vested, or deemed vested, and unexercised portion of (a) a performance-based stock option representing the right to purchase 40,875 shares, of which 16,350 shares have vested and were acquired pursuant to an option exercise by Ms. Peterson, 16,350 shares have vested and remain unexercised and 8,175 will vest upon the achievement of certain performance goals for fiscal year 2018 and (b) a stock option representing the right to purchase 40,875 shares, of which 24,525 shares have vested and were acquired pursuant to an option exercise by Ms. Peterson, 8,175 shares have vested and remain unexercised and 8,175 will vest on September 1, 2018. |
| (18) | Mr. Dekker resigned from the position of Chief Marketing Officer effective March |
| WINGSTOP INC. 2018 PROXY STATEMENT | 25 |
BENEFICIAL OWNERSHIP OF THE COMPANY’S SECURITIES
Section 16(a) Beneficial Ownership Reporting Compliance
Directors,Section 16(a) of the Exchange Act requires our officers and directors, and persons who beneficially own more than 10% of a registered class of our common stock are required by Section 16(a) of the Exchange Actequity securities, to file reports of ownership and changes inof ownership of our common stock with the SEC. Our officers, directors, and 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports so filed. Based solely on a review of copies of such reports received, we believe that, during the Nasdaq,last fiscal year, all filing requirements under Section 16(a) applicable to our officers, directors, and us. To the Company’s knowledge, all filings10% stockholders were timely during fiscal year 2015.
Certain Relationships and Related Party Transactions
Management Agreement
Until our IPOSince January 1, 2017, there have not been any transactions in June 2015,which (i) we were party to an amendedhave been a participant, (ii) the amount involved in the transaction exceeds or will exceed $120,000, and restated management advisory and consulting services agreement, dated December 15, 2011, or the management agreement, with Roark Capital Management, pursuant to which Roark Capital Management provided management consulting services to us and received specified consideration for such services. The management consulting services generally consisted of advice concerning management, finance, marketing, strategic planning and such other services requested from time to time by our board of directors. The management agreement also included customary exculpation and indemnification provisions in favor of Roark Capital Management. The management agreement terminated at the time(iii) any of our initial public offering. Under the termsdirectors, executive officers or holders of the management agreement, Roark Capital Management received an aggregate termination fee payment from us of $3.3 million upon the consummationmore than 5% of our initial public offering. In addition to this termination fee, we paid an aggregatecapital stock, or any immediate family member of, $0.2 million for management consulting services in fiscal 2015. Followingor person sharing the termination of the management agreement, no additional fees were paid. In fiscal years 2014 and 2013, we paid Roark Capital Management an aggregate of $0.5 million and $0.4 million, respectively, for management consulting services. The management agreement included customary exculpation and indemnification provisions in favor of Roark Capital Management.
Stock Transfer Restriction Agreements
In connectionhousehold with, our initial public offering, we and our principal stockholder, RC II WS, entered into agreements with other stockholders of the company with respect to 2,238,980 shares of our common stock that were not sold in our initial public offering pursuant to which such stockholders agreed, effective as of the closing of our initial public offering and subject to limited exceptions, that, without the prior written consent of us and RC II WS, they will not sell, assign, transfer, pledge, hypothecate, mortgage, encumber or otherwise dispose of:
In addition, pursuant to the terms of agreements that became effective upon the closing of our initial public offering, the shareholders agreement applicable to the respective stockholder terminated and is of no further force and effect.direct or indirect material interest (any such transaction, a “Related Party Transaction”).
Shareholder Agreements
We and our principal stockholder, RC II WS, previously entered into shareholder agreements with each of the other stockholders of the company prior to our initial public offering, which set forth certain rights and restrictions with respect to the ownership of shares of our common stock, including:
All of these shareholders agreements terminated upon the closing of our initial public offering pursuant to the terms of the stock transfer restriction agreements described above or pursuant to the terms of individual shareholders agreements.
We and our principal stockholder, RC II WS, also entered into a shareholder agreement with respect to 551,812 shares of our common stock that were not sold in our initial public offering. These shares were sold by the counterparty subsequent to our initial public offering, and our remaining obligations under the agreement terminated.
Registration Rights Agreement
We entered into a registration rights agreement with RC II WS in connection with our initial public offering. The terms of the registration rights agreement include provisions for demand registration rights and piggyback registration rights in favor of RC II WS and piggyback registration rights in favor of certain other stockholders. Subject to the terms of the registration rights agreement, RC II WS has the right to require that we register its remaining shares under the Securities Act for sale to the public. So long as we do not have an effective shelf registration statement with respect to our common stock, RC II WS may request registration (a “demand registration”) of all or a portion of its common stock (“RC II WS registrable securities”). If RC II WS makes a demand registration, certain other stockholders of our common stock, together with the RC II WS registrable securities (“registrable securities”) may request that such holder’s registrable securities be included in such registration statement in proportion to the registrable securities of RC II WS that are to be included in the demand registration. We shall not be obligated to effectuate more than three demand registrations in any 12-month period. Any demand registration must be for an anticipated aggregate offering price of at least $10 million. The registration rights agreement provides that subject to certain limitations, at any time that we are eligible to use Form S-3, we will upon request of RC II WS file a shelf registration statement covering all registrable securities and, if such shelf registration statement is not automatically effective, use reasonable best efforts to cause the shelf registration statement to be declared effective. If RC II WS requests that we file a shelf registration statement, the other stockholders parties to the agreement may request that such holder’s registrable securities be included in such registration statement in proportion to the registrable securities of RC II WS that are to be included in the shelf registration statement. Once the shelf registration statement is effective, we are required to use reasonable best efforts to keep the shelf registration statement continuously effective and usable for resale of registrable securities. In addition, if at any time we propose or are required to register any shares of our common stock under the Securities Act (other than a demand registration or pursuant to an employee benefit) (a “piggyback registration”), we are required to notify RC II WS and the other stockholders parties to the agreement of their right to participate in such registration. We will use commercially reasonable efforts to cause registrable securities requested to be included in the registration to be so included. These piggyback registration rights are subject to certain exceptions set forth in the registration rights agreement. The registration rights agreement also provides that, subject to limitations described below, RC II WS may effect an underwritten offering of registrable securities after delivery of advance notice to us.
Under the registration rights agreement, we have agreed, subject to certain limitations, to indemnify RC II WS and any other participating stockholders and their respective officers, directors, managers and partners, and each person controlling such holder against all losses, claims, actions, damages, liabilities and expenses in certain circumstances and to pay any expenses reasonably incurred in connection investigating, preparing or defending these, except insofar as the same are caused by or contained in any information furnished in writing to us by such holder expressly for use therein.
Policies and Procedures With Respect to Related Party Transactions
In accordance with our Policy on Related Party Transactions, our Audit Committee is responsible for reviewing and approving related party transactions.Related Party Transactions. When considering proposed Related Party Transactions, the Audit Committee will take into account the relevant facts and circumstances and will approve only those transactions that are not inconsistent with our best interests and the best interests of our stockholders. In addition, our Code of Business Conduct and Ethics requires that all of our employees and directors inform the General Counsel of any material transaction or
relationship that comes to their attention that could reasonably be expected to create a conflict of interest. Further, at least annually, each director and executive officer will complete a detailed questionnaire that asks questions about any business relationship that may give rise to a conflict of interest and all transactions in which we are involved and in which the executive officer, a director, or a related person has a direct or indirect material interest.
| 26 | WINGSTOP INC. 2018 PROXY STATEMENT | |
PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF THE
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee appointed Ernst & Young LLP (“E&Y”)&Y to audit our consolidated financial statements for the year ending December 31, 201629, 2018 and to prepare a report on this audit. A representative of E&Y will be present at the Annual Meeting, will have the opportunity to make a statement, and will be available to respond to appropriate questions by stockholders.
We are asking our stockholders to ratify the appointment of E&Y as our independent registered public accounting firm. Although ratification is not required by our bylawsBylaws or otherwise, the board of directorsBoard is submitting the selection of E&Y to our stockholders for ratification because we value our stockholders’ views on the Company’s independent registered public accounting firm and as a matter of good corporate practice. In the event that our stockholders fail to ratify the appointment, it will be considered as a direction to the board of directorsBoard and the Audit Committee to consider the appointment of a different firm. Even if the appointment is
ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.
Information regarding fees paid to E&Y during fiscal year 20152017 and fiscal year 20142016 is set out below in “Fees Billed by Independent Registered Public Accounting Firm.”Firm” on page 29.
Vote Required
The Board of Directors recommends that you vote FOR the ratificationapproval of the appointmentAuditor Ratification Proposal requires the affirmative vote of Ernst & Young LLP asthe holders of a majority in voting power of the shares of our common stock that are present in person or by proxy and entitled to vote at the Annual Meeting.
The Board of Directors recommends that you voteFOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm. |
| WINGSTOP INC. 2018 PROXY STATEMENT | 27 |
PROPOSAL 2 RATIFICATION OF THE AUDIT COMMITTEEAPPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for, among other things, reviewing with E&Y, our independent registered public accounting firm for fiscal year 2015,2017, the scope and results of their audit engagement. In connection with the audit for the fiscal year ended December 26, 2015,30, 2017, the Audit Committee has:
Management is primarily responsible for Wingstop’s financial reporting process (including its system of internal control) and for the preparation of the consolidated financial statements of Wingstop in accordance with generally accepted accounting principles (GAAP). E&Y is responsible for auditing those financial statements and issuing an opinion on whether the audited financial statements conform with GAAP. The Audit Committee’s responsibility is to monitor and review these processes. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews or procedures. Therefore, the Audit Committee has relied on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States and on the representations of E&Y included in their report to the financial statements of Ignite.Wingstop.
Based on the review and the discussions described in the preceding bullet points, the Audit Committee recommended to the boardBoard of directorsDirectors that the audited financial statements be included in our Annual Report onForm 10-K for the fiscal year ended December 26, 2015.30, 2017.
Submitted by the Audit Committee:
Erik O. MorrisWesley S. McDonald (Chair)
Sidney J. FeltensteinDavid L. Goebel
Michael J. Hislop
| 28 | WINGSTOP INC. 2018 PROXY STATEMENT | |
FEES BILLED BYPROPOSAL 2 RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees Billed By Independent Registered Public Accounting Firm
The following table sets forth the aggregate fees billed during the fiscal years ended December 26, 201530, 2017 and December 27, 2014:31, 2016:
| Fiscal Year 2015 | Fiscal Year 2014 | |||||||
Fees Billed: | ||||||||
Audit Fees | $ | 565,000 | $ | 1,427,000 | ||||
Audit-Related Fees | 2,000 | — | ||||||
Tax Fees | 91,000 | — | ||||||
|
|
|
| |||||
Total | $ | 658,000 | $ | 1,427,000 | ||||
| Name | Fiscal Year 2017 | Fiscal Year 2016 | ||||||
Audit Fees(1) | $ | 672,250 | $ | 585,000 | ||||
Audit-Related Fees(2) | 2,000 | 2,000 | ||||||
Tax Fees(3) | — | — | ||||||
All Other Fees(4) | — | — | ||||||
Total Fees | $ | 674,250 | $ | 587,000 | ||||
Audit Fees include fees for services rendered for the audit of our annual financial statements and the review of the interim financial statements. Audit fees also include fees associated with the review of filings made with the SEC.
| (1) | Audit fees include fees for services rendered for the audit of our annual financial statements and the review of the interim financial statements. Audit fees also include fees associated with the review of filings made with the SEC. |
Audit-Related Fees include amounts billed for an annual membership to E&Y’s online accounting research tool.
| (2) | Audit-related fees include amounts billed for an annual membership to E&Y’s online accounting research tool. |
Tax Fees include amounts billed for the filing of the Company’s 2011, 2012 and 2013 amended tax returns and professional services performed related to the tax deductions associated with costs incurred associated with the Company’s June 2015 initial public offering.
| (3) | Tax fees consist of fees billed for professional services rendered for tax compliance (including the preparation, review, and filing of tax returns), tax advice and tax planning. These services include assistance regarding federal and state tax compliance. |
| (4) | E&Y did not provide any “other services” during the relevant periods. |
The Audit Committee has established policies and procedures for the approval andpre-approval of audit services and permittednon-audit services. The Audit Committee has the responsibility to engage and terminate our independent registered public accounting firm, topre-approve the performance of all audit and permittednon-audit services provided to us by our independent registered public accounting firm in accordance with Section 10A of the Exchange Act, and to review with our independent registered public accounting firm their fees and plans for all auditing services. All fees paid to E&Y
werepre-approved by the Audit Committee and there were no instances of waiver of approval requirements or guidelines.
The Audit Committee considered the provision ofnon-audit services by the independent registered public accounting firm and determined that provision of those services was compatible with maintaining auditor independence.
There were no “reportable events” as that term is described in Item 304(a)(1)(v) ofRegulation S-K.
| WINGSTOP INC. 2018 PROXY STATEMENT | 29 |
Pursuant to Section 14A(a)(1) of the Exchange Act, we are asking our stockholders to approve, on an advisory ornon-binding basis, the compensation of our named executive officers as disclosed in this Proxy Statement. The vote on this matter is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the policies and practices described in this Proxy Statement.
Our Board and the Compensation Committee believe that we maintain a compensation program that is tied to performance, aligns with stockholder interests, and merits stockholder support. Accordingly, we are asking our stockholders to approve the compensation of our named executive officers as disclosed in this Proxy Statement by voting FOR the following resolution:
“NOW, THEREFORE, BE IT RESOLVED, that the stockholders hereby approve, on an advisory basis, the compensation paid to the named executive officers of the Company, as disclosed pursuant to Item 402 ofRegulation S-K, including the Compensation Discussion and Analysis, the compensation tables, and the narrative discussion related thereto.”
Although this vote isnon-binding, the Board and the Compensation Committee value the views of our stockholders and will review the results. If there are a significant number of negative votes, we will take steps to understand those concerns that influenced the vote, and consider them in making future decisions about executive compensation. If our stockholders approve “1 YEAR” with respect to theSay-on-Frequency Proposal (as recommended by our Board of Directors), the next stockholder advisory vote to approve executive compensation will occur at the 2019 annual meeting of stockholders.
Vote Required
The approval of theSay-on-Pay Proposal requires the affirmative vote of the holders of a majority in voting power of the shares of our common stock that are present in person or by proxy and entitled to vote at the Annual Meeting.
The Board of Directors recommends that you voteFOR the approval of the compensation of our named executive officers, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion following such compensation tables, and the other related disclosures in this Proxy Statement. |
| 30 | WINGSTOP INC. 2018 PROXY STATEMENT | |
Pursuant to Section 14A(a)(1) of the Exchange Act, we are asking our stockholders to recommend, on an advisory basis ornon-binding basis, whether the advisory stockholder vote on the compensation of our named executive officers should occur every one, two, or three years. While this vote is anon-binding advisory vote, we value the opinions of stockholders and will consider the outcome of the vote when determining the frequency of future advisory votes on executive compensation.
Our Board has determined that an annual advisory vote on executive compensation will allow our stockholders to provide timely, direct input on our executive compensation philosophy, policies, and practices, as disclosed in the proxy statement each year. Our Board believes that an
annual vote is consistent with our efforts to engage in an ongoing dialogue with our stockholders on executive compensation and corporate governance matters. It is anticipated that the next advisory vote to determine the frequency of future advisory votes on executive compensation will be presented at our annual meeting of stockholders held in 2024.
Vote Required
The approval of theSay-on-Frequency Proposal requires the affirmative vote of the holders of a majority in voting power of the shares of our common stock that are present in person or by proxy and entitled to vote at the Annual Meeting.
The Board of Directors recommends that you vote for the option to hold future advisory votes on executive compensation every 1 YEAR. |
| WINGSTOP INC. 2018 PROXY STATEMENT | 31 |
Below is information regarding each of our current executive officers. Executive officers are elected annually by the board of directors andBoard to serve at the Board’s discretion until their successor is duly elected and qualified or until their earlier death, resignation, or removal. There are no family relationships between any of the board. our directors or executive officers.
| Name | Age | Executive Officer Since | Title | |||||||
Charles R. Morrison | 49 | 2012 | Chairman of the Board, Chief Executive Officer, and President | |||||||
Madison A. Jobe | 63 | 2017 | Senior Vice President and Chief Development Officer | |||||||
Lawrence D. Kruguer | 52 | 2015 | Executive Vice President and Chief Operating Officer | |||||||
Darryl R. Marsch | 52 | 2016 | Senior Vice President, General Counsel, and Secretary | |||||||
Stacy Peterson | 42 | 2014 | Executive Vice President and Chief Experience Officer | |||||||
Michael J. Skipworth | 40 | 2017 | Executive Vice President and Chief Financial Officer | |||||||
Charles R. Morrison serves as a Directorour Chief Executive Officer, President, and as an executive officer.Chairman of the Board. His business experience is discussed above in “Item“Proposal 1—Election of Directors—Continuing Directors withDirector Nominees for Terms Expiring at the 2017 or 20182021 Annual Meetings.Meeting.”
Other executive officers as ofMadison A. Jobe, 63, joined the date of this Proxy Statement are:
Michael F. Mravle, 40, has servedcompany as our Chief FinancialDevelopment Officer since September 2014. Mike joinedin March 2017. Prior to joining Wingstop, he worked as Chief Operating Officer at Watermill Express, LLC from Bloomin’ Brands, a large publicly traded casual dining company, where he spent over seven years in various financial roles.April 2016 to March 2017. He was most recently Group Vice PresidentCEO/Founder & Principal of Financial PlanningDevelopment Strategies International, an advisory and Analysis and U.S. Chief Financial Officer since October 2013.consulting firm, from January 2015 to April 2016. Prior to that, he servedwas with Dickey’s Barbecue Restaurants, Inc. as Senior Vice President of Corporate Finance since February 2012International and asNon-traditional Development from August 2014 to October 2014 and Vice President of Finance for Carrabba’s Italian Grill beginning in January 2011. PriorFranchise Development from April 2014 to that, Mike wasAugust 2014. He held several positions with Pizza Inn Holdings, Inc. (now known as RAVE Restaurant Group, Inc.) from February 2009 through February 2014, including Senior Vice President, of Finance for Fleming’s Prime SteakhouseChief Development Officer, and Wine Bar from 2009 to 2011. Prior to Bloomin’ Brands, Mike spent over eight yearsChief Operating Officer, as well as various management positions at McDonald’s Corporation. Mike has over 15 years of financeRuby Restaurant Group, Shakey’s Inc., Red Robin International, Inc., and accounting experience in the restaurant industry.Fuddruckers, Inc.
William M. Engen, 43Larry D. Kruguer, 52, has served as our Chief Operating Officer since September 2014. Bill joined Wingstop from 7-Eleven, the world’s largest operator, franchisor and licensor of convenience stores, where he was Senior Vice President of Operations for the Eastern U.S. since 2011 and served as Division Vice President from 2009 to 2011.January 2018. Prior to that, he served for ten years in various roles at Circuit City, a large United States electronics retailer, including most recently as Vice President, Retail Operations. Bill has also held management roles during his almost 20 year career in retail operations at Saks Fifth Avenue and Bachrach Clothing Company, a men’s clothing retailer.
Larry D. Kruguer, 50, joined the company asour President of International inOperations from June 2015.2015 to January 2018. Prior to joining Wingstop, Larry was at Wendy’s International, where he served as Vice President, International Joint Ventures from October 2014 to June 2015, Vice President, International Business Development and Finance from January 2010 to October 2014 and Vice President, International Marketing from October 2007 to January 2010. Prior to that, he was the President and Managing Partner of Prontowash USA, a global car wash services company, from January 2002 to October 2007. From October 1998 to August 2001, he served as Vice President, Marketing and Strategic Alliances for SportsLine.com, a CBS Sports affiliate. Larry has also held management positions with Alamo-Autonation and American Express.
Jay A. Young, 46Darryl R. Marsch, 52, has served as our General Counsel since October 2014. JayJuly 2016. Darryl joined Wingstop from CEC Entertainment Inc., the parent companylaw firm of Chuck E. Cheese,Womble Carlyle Sandridge & Rice, LLP, a chain of family entertainment centers,large business law firm, where he was Senior Vice Presidentpracticed securities, franchise, and General Counselcorporate law since 2007.October 2015. Prior to that, he wasserved as Senior Vice President, and Assistant General Counsel for Wachovia Corporation since 1999. Prior to Wachovia, Jay was Assistant General Counsel, and Antitrust Compliance OfficerSecretary
| 32 | WINGSTOP INC. 2018 PROXY STATEMENT | |
EXECUTIVE OFFICERS
of Krispy Kreme Doughnuts, Inc., a publicly traded franchisor of doughnuts shops in the U.S. and 25 countries internationally, since May 2007. Prior to Krispy Kreme, Darryl spent over eight years as Senior Counsel at R.J. Reynolds and was an associate at Jones Day, a leading international law firm, for Charles Schwab Capital Markets. Jayseven years. Darryl has nearly 20over 25 years of legal experience and 10 years of experience in handling complex corporate legal matters.the restaurant industry.
David A. Vernon, 57Stacy Peterson, 42, has served as our Chief DevelopmentExperience Officer since November 2012. Dave joined Wingstop in October 2010 as Vice President of Franchise Sales, and was promoted to Senior Vice President of Development in January 2012 before becoming Chief Development Officer in November 2012. Prior to Wingstop, he was Vice President of Franchise Sales for Sonic Corporation, the nation’s largest drive-in restaurant chain, from December 1996 to June 2010. With more than 20 years of restaurant franchise experience, Dave also spent 13 years as Vice President of Sales at Sonic Corporation and has held development positions for Brinker International, Rave Restaurant Group, USA Cafes and Signature Foods.
Flynn K. Dekker, 46, has served as our Chief Marketing Officer since February 2014. Prior to joining Wingstop, Flynn was Chief Marketing Officer for Rave Restaurant Group from February 2012 to February 2014. Prior to that, he owned his own upscale restaurant, Home & Dekker, located in Dallas, Texas, from February 2010 to
February 2012 and was also Chief Marketing Officer for Fogo de Chao, a Brazilian steakhouse chain, from March 2008 to February 2010. With more than 20 years of leadership experience, Flynn has also held senior marketing positions with Metromedia Restaurant Group, FedEx Kinko’s, EMI Music Distribution and Blockbuster.
Stacy Peterson, 40, has served as our Chief Information Officer since August 2014.May 2017. Stacy joined Wingstop in September 2013 and served as Senior Vice President of Information Technology and Chief Information Officer before becoming Chief InformationExperience Officer. Prior to Wingstop, she was Vice President of IT for CB Richard Ellis, a major commercial real estate company, from October 2011 to August 2013 and served as Director of IT from October 2010 to October 2011. Prior to that, she was Director of IT for FedEx Services from August 2009 to
September 2010 and Director of IT for FedEx Office from December 2006 to August 2009. With more than 15 years of information technology experience, Stacy has also held management roles at Kinko’s and Blockbuster.
Michael J. Skipworth,40, has served as our Chief Financial Officer since August 2017. Michael joined Wingstop in December 2014 as Vice President, Corporate Controller, and served as Vice President of Finance from January 2016 to June 2017. In June 2017, Michael was appointed as our interim Chief Financial Officer and served in that role until his appointment as Chief Financial Officer in August 2017. From September 2010 to November 2014, Michael served as Vice President, Corporate Controller at Cardinal Logistics Holdings, LLC, where he was promoted to Senior Vice President of Finance and Accounting, serving in that role until he joined Wingstop. Previously, Michael was an audit senior manager at KPMG, LLP. He is a certified public accountant.
| WINGSTOP INC. 2018 PROXY STATEMENT | 33 |
EXECUTIVE COMPENSATIONNamed Executive Officers
IntroductionThe purpose of this Compensation Discussion and Analysis is to provide our stockholders with a clear understanding of our compensation philosophy and objectives, compensation-setting process, and 2017 compensation programs and actions for our named executive officers. For fiscal 2017, our named executive officers were as follows:
Charles R. Morrison | Chairman of the Board, Chief Executive Officer, and President (Principal Executive Officer) | |
Michael J. Skipworth(1) | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |
Michael F. Mrvale(1) | Former Chief Financial Officer (Former Principal Financial Officer) | |
Lawrence D. Kruguer | Executive Vice President and Chief Operating Officer | |
Stacy Peterson | Executive Vice President and Chief Experience Officer | |
Flynn K. Dekker(2) | Former Senior Vice President and Chief Marketing Officer |
| (1) | Mr. Mravle resigned from the position of Chief Financial officer effective June 23, 2017. On June 12, 2017, Mr. Skipworth was appointed as our interim Chief Financial Officer, and in August 2017, Mr. Skipworth was appointed as our Chief Financial Officer. |
| (2) | Mr. Dekker resigned from the position of Chief Marketing officer effective March 21, 2018. |
This section should be read in conjunction with the compensation discussion provides an overviewtables below, which provide a detailed view of the compensation paid to our named executive officers in 2017.
Wingstop is a high-growth franchisor and operator of restaurants that specialize incooked-to-order, hand-sauced and tossed chicken wings. Founded in 1994 in Garland, Texas, we believe we pioneered the concept of wings as a“center-of-the-plate” item for all of our meal occasions. We are the largest fast casual chicken wings-focused restaurant chain in the world, and have demonstrated strong, consistent growth on a national scale. We believe our simple and efficient restaurant operating model, low initial cash investment, and compelling restaurant economics help drive continued system growth through both existing and new franchisees and that our asset-light, highly-franchised business model generates strong operating margins and requires low capital expenditures, creating shareholder value through
strong and consistent free cash flow and capital-efficient growth.
Highlights for Fiscal Year 2017 Compared to Fiscal Year 2016 (on a52-Week Basis)
Highlights of Wingstop’s performance during fiscal 2017 include, among other things:
| 34 | WINGSTOP INC. 2018 PROXY STATEMENT | |
COMPENSATION DISCUSSION AND ANALYSIS
We believe that our named executive officers contributed significantly to obtaining these results, particularly in light of substantial competitive pressures that the Company faced during fiscal 2017, including more than 40% inflation in the cost of chicken wings and declining sales following the presidential election.
2017 Executive Compensation Program Overview
The objective of our executive compensation program together withis to attract, retain, and motivate high caliber, values-aligned talent who share our dedication to our community and are committed to supporting the growth of our business. We accomplish this through a descriptionstraightforward compensation program that is focused on pay for performance.
Wingstop’s compensation policy reflects its philosophy that compensation should reward employees, including its named executive officers, for achievements that support the financial and strategic objectives of the material factors underlyingCompany. Our Compensation Committee, with input from management and FW Cook, has developed an executive compensation program that we believe is designed to (i) motivate, reward, and retain our leaders, (ii) support our strategic objectives, including long-term, sustainable growth and increasing stockholder value and (iii) encourage strong financial performance on an annual and long-term basis, in each case without encouraging excessive or inappropriate risk taking.
Determining Executive Compensation
Overview
In determining the decisions that resultedcompensation for each named executive officer, the Compensation Committee primarily considers our performance in the previous year, based on financial andnon-financial metrics, including the performance of our stock, as well as our outlook and operating plan of the coming year. The Compensation Committee also analyzes, with respect to each of our named executive officers:
When making determinations about equity compensation for our named executive officers, the Compensation Committee considers, among other things, the size of the aggregate equity pool available for awards for the year and the relative allocation of such pool among the named executive officers and the other participants in our incentive plans and our overall equity dilution, burn rates and equity overhang levels. The Compensation Committee also reviews the value of and expense associated with, proposed and previously awarded equity grants, including the continuing retentive value of past awards granted to our named executive officers.
Finally, the Compensation Committee analyzes, in consultation with FW Cook, compensation trends and competitive factors within our industry and the likelihood that our compensation packages will attract and retain high caliber personnel. With advice from FW Cook, the Compensation Committee has determined a compensation peer group, discussed below.
Parties Responsible for Determining Executive Compensation
The following parties are responsible for the development and oversight of our executive compensation program.
Role of the Compensation Committee
| WINGSTOP INC. 2018 PROXY STATEMENT | 35 |
COMPENSATION DISCUSSION AND ANALYSIS
Role of the Independent Compensation Consultant (FW Cook)
The Compensation Committee assesses FW Cook’s independence annually and, with respect to 2017, has determined that its relationship with FW Cook and the work of FW Cook on behalf of the Compensation Committee has not raised any conflict of interest. FW Cook
did not provide any services to Wingstop during 2017 other than its services as independent compensation consultant to the Compensation Committee.
Role of the Chief Executive Officer
The named executive officers, including our Chief Executive Officer, do not participate in any part of the process of reviewing and setting their own compensation levels.
Market Data, Competitive Positioning and Compensation Peer Group; Total Shareholder Return
The Compensation Committee relies on several factors in its review of total direct compensation opportunities for our executives, including a review of peer group data and available market data from industry surveys. Generally, our Compensation Committee targets total direct compensation for our executives within a competitive range of the median for our peer group and available market data. The Compensation Committee uses peer group data as a point of reference for designing our compensation programs and setting compensation levels. The Compensation Committee does not use peer group data as a single determinative factor, but rather as an external check to verify that our executive compensation programs are reasonable and competitive.
| 36 | WINGSTOP INC. 2018 PROXY STATEMENT | |
COMPENSATION DISCUSSION AND ANALYSIS
To develop the composition of the peer group, our Compensation Committee, with the assistance of FW Cook, reviewed companies in the restaurant industry using a number of criteria, including, among other things:non-franchise sales, franchise sales and systemwide sales, market capitalization, enterprise value, EBITDA, industry, customer base, and geography. Based on this review, our Compensation Committee determined that our peer group for 2017 consisted of fifteen (15) companies. The following graph sets forth each member of our peer group for 2017, as well as a comparison of our total shareholder return to the total shareholder return of each member of the peer group for the period of December 31, 2016 to December 31, 2017:
| (1) | Buffalo Wild Wings, Inc. and Popeyes Louisiana Kitchen, Inc. were also members of our 2017 peer group but have been omitted from the table above because each entity is no longer a public reporting company. |
In developing the Company’s 2017 compensation policies, the Compensation Committee, with the assistance of FW Cook, reviewed a combination of data drawn from the
peer companies listed above, as well as compensation survey data.
| WINGSTOP INC. 2018 PROXY STATEMENT | 37 |
COMPENSATION DISCUSSION AND ANALYSIS
The peer group is reviewed periodically by the Compensation Committee, with the assistance of FW Cook, in light of the competitive landscape and relative comparability of the group of peer companies. At the beginning of 2018, the Compensation Committee reviewed the group of peer companies taking into account the recent growth of the Company and the talent pool in which the Company competes for top level executives. Based on this review and analysis, the Compensation Committee approved a new group of peers to be used in connection with determining the compensation of our executive officers for fiscal 2018. The Compensation Committee designated and approved seventeen (17) companies as our new peer group. The following graph sets forth each member of our peer group for 2018, as well as a comparison of our total shareholder return to the total shareholder return of each member of the peer group for the period of December 31, 2016 to December 31, 2017:
| 38 | WINGSTOP INC. 2018 PROXY STATEMENT | |
COMPENSATION DISCUSSION AND ANALYSIS
Based on total shareholder return, Wingstop outperformed each member of its peer group in calendar year 2017 and would have outperformed each member of its 2018 peer group based on total shareholder return in the calendar year ended December 31, 2017.
Elements of Executive Compensation
The key elements of our executive compensation program for our named executive officers include:
In designing the Company’s executive compensation policies, the Compensation Committee considers pay as a
whole, and there is no specific weight given to any particular component. The Compensation Committee reviews competitive market compensation data, but does not target named executive officer compensation to be at any specific percentile of the competitive data. In practice, the total direct compensation opportunity for each of our named executive officers is based on many factors including competitive market data, the executive’s experience, importance of the role within the Company, and the executive’s contribution to the Company’s long-term success.
The following table summarizes the key elements of each component of our executive compensation program:
Compensation Element | Type | Form | Primary | Reward Realized | ||||
Base Salary | Fixed | Cash | Attract and retain | Service | ||||
Performance-Based Annual Cash Incentive | Variable | Cash | Short-term Company and individual performance | Adjusted EBITDA targets(1) | ||||
Service-Based Long-Term Equity Incentive | Variable | Stock Options; Restricted Stock Units | Rewards long-term value creation; fosters retention and continuity | Service | ||||
Performance-BasedLong-Term Equity Incentive | Variable | Stock Options; Restricted Stock Units | Stockholder alignment and rewards long-term value creation | Adjusted EBITDA targets(1) | ||||
| (1) | We define Adjusted EBITDA, anon-GAAP measure, as net income before interest expense, net, income tax expense, and depreciation and amortization (EBITDA), further adjusted for transaction costs, gains and losses on the disposal of assets, and stock-based compensation expense. For purposes of our Adjusted EBITDA targets related to our performance-based annual cash incentives, we further adjust the definition of Adjusted EBITDA to exclude bonus expense. |
We also provide severance and change in control related benefits and other benefits such as health and wellness benefits, skills workshops and training, and a 401(k) plan with matching contributions. Our named executive officers participate in the standard employee benefit plans and programs available to our other employees.
Base Salary
We pay base salaries to attract talented executives and to provide a fixed base of cash compensation. Base salaries are determined by the Compensation Committee based on
the facts and circumstances relevant to each named executive officer, including the breadth, scope, and complexity of the executive’s role, his or her experience, expected future contributions to the Company, current compensation, individual performance, and the competitive market.
The Company believes that a significant portion of a named executive officer’s compensation should be variable, based on the performance of the Company. Accordingly, base salary is only a portion of the overall total compensation of the named executive officers.
| WINGSTOP INC. 2018 PROXY STATEMENT | 39 |
COMPENSATION DISCUSSION AND ANALYSIS
The following table provides information concerning the annual base salary of each of our named executive officers:
| Name | 2017 Base Salary ($) | 2016 Base Salary ($) | ||||||||
Charles R. Morrison(1)
|
|
628,500
|
|
|
500,000
|
| ||||
Michael J. Skipworth(2)
|
|
300,000
|
|
|
—
|
| ||||
Michael F. Mravle(3)
|
|
350,000
|
|
|
336,538
|
| ||||
Lawrence D. Kruguer(4)
|
|
300,000
|
|
|
300,000
|
| ||||
Stacy Peterson(5)
|
|
350,000
|
|
|
—
|
| ||||
Flynn K. Dekker(6)
|
|
325,000
|
|
|
—
|
| ||||
| (1) | Mr. Morrison’s base salary was increased from $500,000 to $628,500 in January of 2017, in light of personal performance. |
| (2) | Mr. Skipworth was appointed as our interim Chief Financial Officer in June 2017, and was subsequently appointed as our Chief Financial Officer in August 2017. Upon Mr. Skipworth’s appointment as our Chief Financial Officer, his base salary was increased to $300,000. Information for 2016 is not included because Mr. Skipworth was not a named executive officer during 2016. |
| (3) | Mr. Mravle resigned from the Company in June 2017. The amount shown for 2017 reflects Mr. Mravle’s annual base salary and is not prorated to account for Mr. Mravle’s resignation. In light of peer group comparisons, job responsibilities, and performance, Mr. Mravle’s base salary was increased from $336,538 to $350,000 in May of 2016. |
| (4) | Mr. Kruguer was appointed as our Chief Operating Officer in January 2018. In connection with this change, Mr. Kruguer’s base salary was increased from $300,000 to $400,000. |
| (5) | In recognition of personal performance and in connection with her appointment as our Chief Experience Officer, Ms. Peterson’s base salary was increased from $300,000 to $350,000 in February 2017. Information for 2016 is not included because Ms. Peterson was not a named executive officer during 2016. |
| (6) | In recognition of personal performance, Mr. Dekker’s base salary was increased from $300,000 to $325,000 in May of 2016. Information for 2016 is not included because Mr. Dekker was not a named executive officer during 2016. |
Performance-Based Annual Cash Incentives
Pursuant to their employment agreements and our annual cash bonus plans, each of our named executive officers is eligible to earn an annual cash bonus up to a specified percentage of the portion of such executive officer’s base salary that is earned in a given fiscal year.
For fiscal year 2017, our Compensation Committee adopted the Wingstop 2017 Bonus Plan (the “2017 Bonus Plan”). The purpose of the 2017 Bonus Plan is to advance our interests and the interests of our stockholders by (i) providing certain employees, including our named executive officers, with incentive compensation that is tied to the achievement ofpre-established, objective performance goals, (ii) identifying and rewarding superior performance and providing competitive compensation to attract, motivate and retain employees who have outstanding skills and abilities, and who achieve superior performance, and (iii) fostering accountability and teamwork throughout Wingstop. The Compensation Committee administers the 2017 Bonus Plan. Bonuses under our bonus plans have historically been paid in March of the year following the year in which the bonus was earned.
Pursuant to the 2017 Bonus Plan, our Chief Executive Officer is eligible to earn a target bonus of 100% of base earnings. Our other named executive officers are eligible to earn a target bonus of 50% of base earnings. The actual amount of the bonus payable under the 2017 Bonus Plan ranges from 0% to 150% of the target bonus amount based on the achievement of certain Adjusted EBITDA target goals more fully set forth below. For purposes of our 2017 Bonus Plan, “Adjusted EBITDA” is defined as net income before interest expense, net, income tax expense, and depreciation and amortization (EBITDA), further adjusted for transaction costs, gains and losses on the disposal of assets, stock-based compensation expense and bonus expense.
For fiscal 2017, the Compensation Committee set a target Adjusted EBITDA level of approximately $44.1 million, which represented an increase of approximately 16.5% over the actual Adjusted EBITDA that Wingstop achieved in fiscal 2016 (in each case excluding bonus expense).
| 40 | WINGSTOP INC. 2018 PROXY STATEMENT | |
COMPENSATION DISCUSSION AND ANALYSIS
With respect to our Chief Executive Officer, the target Adjusted EBITDA achievement levels and payout percentages under the 2017 Bonus Plan were as follows:
Target Adjusted EBITDA Achievement (%) | Target Adjusted EBITDA ($) (in thousands) | Bonus Payout (% of Target Bonus) | ||||||||
<95%
|
<41,903
|
0%
| ||||||||
95%
|
41,903
|
50%
| ||||||||
96%
|
42,345
|
60%
| ||||||||
97%
|
42,786
|
70%
| ||||||||
98%
|
43,227
|
80%
| ||||||||
99%
|
43,668
|
90%
| ||||||||
100%
|
44,109
|
100%
| ||||||||
107%
|
47,197
|
125%
| ||||||||
112%
|
49,402
|
150%
| ||||||||
With respect to our other named executive officers, the target Adjusted EBITDA achievement levels and payout percentages under the 2017 Bonus Plan were as follows:
Target Adjusted EBITDA Achievement (%) | Target Adjusted EBITDA ($) (in thousands) | Bonus Payout (% of Target Bonus) | ||||||||
<95%
|
<41,903
|
0%
| ||||||||
95%
|
41,903
|
50%
| ||||||||
96%
|
42,345
|
60%
| ||||||||
97%
|
42,786
|
70%
| ||||||||
98%
|
43,227
|
80%
| ||||||||
99%
|
43,668
|
90%
| ||||||||
100%
|
44,109
|
100%
| ||||||||
100-106.99%
|
44,109–47,192
|
100%-115%
| ||||||||
>107%
|
47,192–53,394
|
115%-150%
| ||||||||
| WINGSTOP INC. 2018 PROXY STATEMENT | 41 |
COMPENSATION DISCUSSION AND ANALYSIS
For fiscal 2017, our Adjusted EBITDA was $44.2 million, representing approximately 100% of the target Adjusted EBITDA level under the 2017 Bonus Plan (in each case excluding bonus expense). As a result, we made bonus payments under the 2017 Bonus Plan at 100% of the target bonus amount to our named executive officers in March of 2018 as follows:
| Name | 2017 Earned Salary ($) | Target Bonus % of Earned Salary | 2017 Bonus Payout ($) | |||||||||
Charles R. Morrison | 628,500 | 100 | % | 628,500 | ||||||||
Michael J. Skipworth | 263,893 | 50 | % | 131,947 | ||||||||
Michael F. Mravle(1) | 179,038 | 50 | % | — | ||||||||
Lawrence D. Kruguer | 300,000 | 50 | % | 150,000 | ||||||||
Stacy Peterson | 342,307 | 50 | % | 171,154 | ||||||||
Flynn K. Dekker | 321,154 | 50 | % | 160,577 | ||||||||
| (1) | Mr. Mrvale was ineligible to receive a bonus under the 2017 Bonus Plan because he was not serving as an officer of Wingstop at the time such bonuses were paid. |
For information concerning the base earnings of our named executive officers in fiscal 2017, see “Executive Compensation—Summary Compensation Table.”
Dividend Equivalency Payments and Adjustments
In the past, we have made dividend equivalency payments to our stock options holders and/or adjusted the exercise prices of our stock options in order to maintain the relative economic value of our outstanding stock option awards in connection with our declaration and payment of an extraordinary dividend.
On January 30, 2018, we declared a special cash dividend of $3.17 per share to the holders of our common stock of record as of February 9, 2018, which was paid on February 14, 2018. In connection with the payment of the special dividend, the Compensation Committee determined to (i) make a cash payment to the holders of outstanding and vested stock options awarded under the Wing Stop Holding Corporation 2010 Stock Option Plan in an amount equal to the number of outstanding options held multiplied by the per share amount of the dividend and (ii) reduce the exercise prices of the outstanding stock options granted under the Wingstop Inc. 2015 Omnibus Incentive Compensation Plan in an amount equal to the per share value of the dividend.
The following table sets forth the number of outstanding stock options that were held by our named executive officers and which were subject to the dividend equivalency cash payment:
| Name | Outstanding Stock Options under 2010 Plan(1) | Cash Payment(2) ($) | ||||||
Charles R. Morrison | 199,825 | 633,445 | ||||||
Michael J. Skipworth | 16,350 | 17,267 | ||||||
Michael F. Mravle | — | — | ||||||
Lawrence D. Kruguer | — | — | ||||||
Stacy Peterson | 40,875 | 77,744 | ||||||
Flynn K. Dekker | 32,700 | 51,830 | ||||||
| (1) | For additional information concerning the outstanding stock options held by our named executive officers, see “Executive Compensation— Outstanding Equity Awards at FiscalYear-End Table.” |
| (2) | Amounts represent the cash dividend equivalency payment made in respect of outstanding and vested stock options. Subject to and conditioned upon any additional amount of such stock options vesting, the holder of such stock options will receive an additional cash dividend equivalency payment at the same rate described above on the newly vested portion of such stock option. |
| 42 | WINGSTOP INC. 2018 PROXY STATEMENT | |
COMPENSATION DISCUSSION AND ANALYSIS
The following table sets forth the number of outstanding stock options that were held by our named executive officers and which were subject to the dividend equivalency reduction in exercise prices:
| Name | Outstanding Stock Options under 2015 Plan(1) | Original Exercise Price ($) | Adjusted Exercise Price ($) | |||||||||
Charles R. Morrison | — | — | — | |||||||||
Michael J. Skipworth | — | — | — | |||||||||
Michael F. Mravle | — | — | — | |||||||||
Lawrence D. Kruguer | 42,106 | 16.10 | 12.93 | |||||||||
Stacy Peterson | — | — | — | |||||||||
Flynn K. Dekker | — | — | — | |||||||||
| (1) | For additional information concerning the outstanding stock options held by our named executive officers, see “Executive Compensation— Outstanding Equity Awards at FiscalYear-End Table.” |
Long-Term Equity Incentive Awards
We provide long-term equity incentive compensation to help align executives’, including our named executive officers’, interests with the long-term interests of our stockholders. We believe that equity awards encourage a long-term focus and decision-making that is in line with our mission and strategic goals. We also grant equity awards in order to attract, motivate, and retain executive talent.
Our Compensation Committee typically grants equity awards to new hires, in connection with promotions, as a reward for superior performance and/or for retention purposes. In addition, certain employees, including our named executive officers, receive annual equity awards.
All of our outstanding equity awards have been issued under the Wing Stop Holding Corporation 2010 Stock Option Plan (the “2010 Plan”) or the Wingstop Inc. 2015 Omnibus Incentive Compensation Plan (the “2015 Plan”). The 2010 Plan was terminated as to future awards upon the adoption of the 2015 Plan. As of March 13, 2018, approximately 413,486 shares and 327,173 shares were eligible for issuance upon the vesting or exercise of outstanding awards under the 2010 Plan and 2015 Plan, respectively, and 1,678,637 shares remained available for grant pursuant to awards under the 2015 Plan.
Historically, the Company’s overall long-term equity incentives approach was to award service-based and performance-based stock options to the Company’s named executive officers, which was designed to focus our management on Wingstop’s long-term success by growing its stock price. In 2017 the Compensation Committee, with input from FW Cook, undertook an analysis of various types of equity award vehicles and determined to begin
incentivizing Wingstop’s named executive officers with service-based and performance-based restricted stock units instead of stock options.
The Compensation Committee determined that both stock options and restricted stock units have motivational attributes for named executive officers. However, the Compensation Committee believes that there are three potential advantages to granting restricted stock units over stock options:
(i) restricted stock units are less depletive on the remaining available shares available under the Company’s long-term incentive plan because they carry a higher valuation than stock options on the date of grant and therefore less shares are required for each restricted stock unit award than would be required for an equivalent stock option award to achieve the Company’s desired equity award value for the named executive officer;
(ii) the prospect of a restricted stock unit award retaining the Company’s intended motivational attributes for the named executive officer over time can be greater than a stock option award because a restricted stock unit award does not carry an exercise price that must be exceeded for the restricted stock unit award to continue to be of value to the named executive officer; and
(iii) because the motivational aspects of a restricted stock unit over a stock option can be greater as described in clause (ii) above, that prospect can result in enhanced value to the Company for the compensation charges that will be recognized by the Company to grant restricted stock unit award versus a stock option award.
| WINGSTOP INC. 2018 PROXY STATEMENT | 43 |
COMPENSATION DISCUSSION AND ANALYSIS
As a result, the Company currently expects that it will continue to incentivize its named executive officers with service-based and performance-based restricted stock unit awards instead of stock options in future years.
Fiscal Year 2017 Equity Grants. In fiscal 2017, the Compensation Committee considered the following factors in determining the amount, type, and value of the equity awards to be issued to our named executive officers:
The Compensation Committee believes that a substantial portion of equity awards should contain a performance-based component. For fiscal 2017, the Compensation Committee determined thattwo-thirds of the Chief Executive Officer’s equity awards would consist of performance-based restricted stock units andone-third
would consist of service-based restricted stock units. For other named executive officers, the Compensation Committee divided equity awards equally between performance-based restricted stock units and service-based restricted stock units.
| • | Performance-Based Restricted Stock Units: The performance-based restricted stock units granted to our named executive officers in 2017 vest based on the achievement of EBITDA or Adjusted EBITDA goals. For performance-based restricted stock units granted to Mr. Morrison, the performance-based restricted stock units vest between 0% and 100% of the target number of units based on the achievement of the compound annual growth rate of our EBITDA over the three-year period beginning on January 1, 2017 and ending on December 31, 2019. For performance-based restricted stock units granted to our other named executive officers, the performance-based restricted stock units vest between 0% and 100% of the target number of units based on the achievement of goals related to the percentage increase in our EBITDA year-over-year. |
| • | Service-Based Restricted Stock Units: The service-based restricted stock units granted to our named executive officers in 2017 vest in three equal annual installments beginning on the first anniversary of the date of grant. Each vested unit is equivalent to one share of Wingstop common stock. |
After weighing these factors, the Compensation Committee determined to make the following long-term equity incentive awards to our named executive officers:
| Name | Service-Based Restricted Stock Units | Performance- Based Restricted Stock Units | ||||||
CharlesR. Morrison | 17,563 | 35,125 | ||||||
MichaelJ. Skipworth(1) | 7,595 | 4,948 | ||||||
MichaelF. Mravle(2) | 7,985 | 7,985 | ||||||
LawrenceD. Kruguer | 5,704 | 5,703 | ||||||
StacyPeterson | 13,989 | 13,388 | ||||||
FlynnK. Dekker(3) | 9,981 | 9,981 | ||||||
| (1) | Mr. Skipworth was awarded additional service-based restricted stock units in connection with his appointment as our Chief Financial Officer on August 2, 2017. |
| (2) | Mr. Mravle resigned from the position of Chief Financial Officer effective June 23, 2017. In connection with his resignation, all of the unvested restricted stock units awarded to Mr. Mravle in 2017 were automatically forfeited. |
| (3) | Mr. Dekker resigned from the position of Chief Marketing Officer effective March 21, 2018. In connection with his resignation, all of the unvested restricted stock units awarded to Mr. Dekker in 2017 were automatically forfeited. |
| 44 | WINGSTOP INC. 2018 PROXY STATEMENT | |
COMPENSATION DISCUSSION AND ANALYSIS
Vesting and Forfeiture. The vesting of equity awards is generally contingent on continued service and/or the satisfaction of performance criteria. However, vesting of awards is accelerated upon a termination of employment due to death, disability, or retirement, or, in the event of a change in control, if a qualifying termination occurs within six months prior or two years following a change in control. See “Executive Compensation—Potential Payments upon Termination or Change in Control” below. The Compensation Committee’s recent practice has been to provide for three-year ratable vesting of awards.
The restricted stock units and stock options granted to our named executive officers are subject to forfeiture in accordance with the terms of the grant agreements if the executive terminates employment before the award vests, the executive is terminated for cause, or the executive otherwise fails to comply with the terms of his or her award agreement.
Grant Dates of Equity Awards. The Compensation Committee has determined to generally grant equity awards to the named executive officers immediately prior to the public announcement of the Company’s fourth quarter and fiscal year results. The Compensation Committee believes that this practice allows the Compensation Committee to consider the Company’s performance in the prior fiscal year in determining the size of equity awards to be granted to our named executive officers and to make a reasonable estimate of the Company’s performance in the current fiscal year in order to determine appropriate performance goals for performance-based awards. As described above, the Compensation Committee will also grant equity awards in connection with promotions, as a reward for superior performance and/or for retention purposes.
In fiscal 2017, all of the Company’s equity awards to its named executive officers were granted on February 28, 2017, except for:
Dividend Equivalency Adjustments. As described above, we have adjusted the exercise prices of our outstanding
stock options in the past in order to allow our option holders to maintain the relative economic value of their stock options upon our payment of an extraordinary dividend. For additional information, see “ —Dividend Equivalency Payments and Adjustments.”
Other Compensation Components and Benefits
Retirement Benefits
We believe that establishing competitive benefit packages for our employees is an important factor in attracting and retaining highly qualified personnel. We maintain broad-based benefits that are provided to all employees, including medical, dental, group life insurance, accidental death and dismemberment insurance, long and short term disability insurance, and a 401(k) plan. Our named executive officers are eligible to participate in all of our employee benefit plans, in each case on the same basis as other employees. The Compensation Committee in its discretion may revise, amend, or add to a named executive officer’s benefits and perquisites if it deems it advisable.
We maintain a 401(k) profit sharing plan for our employees. Our 401(k) plan is intended to qualify as atax-qualified plan under Section 401 of the Code so that contributions to our 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the 401(k) plan. Our 401(k) plan provides that each participant may contribute up to 100% of his or herpre-tax compensation, up to the applicable statutory limit. Participants who are at least 50 years old can also make“catch-up” contributions, which are limited to a certain amount above the standard statutory limit. Under our 401(k) plan, each employee is fully vested in his or her deferred salary contributions. Employee contributions are held and invested by the plan’s trustee, subject to participants’ ability to give investment directions by following certain procedures. We provide matching contributions under our 401(k) plan for up to 5% of eligible compensation. We match dollar for dollar on the first 3% of contributions, and then match 50 cents on the dollar for the next 2% of contributions. Our 401(k) plan also permits us to make discretionary contributions, and all of our contributions are subject to established limits and a vesting schedule.
We do not maintain any defined benefit pension plans or any nonqualified deferred compensation plans.
| WINGSTOP INC. 2018 PROXY STATEMENT | 45 |
COMPENSATION DISCUSSION AND ANALYSIS
Perquisites and Indemnification
We do not typically provide perquisites to our named executive officers that are not available to employees generally. However, pursuant to our Bylaws, we are required to indemnify, to the fullest extent permitted by applicable law, any person who was or is made, or is threatened to be made, a party, or is otherwise involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that he or she, or a person for whom he or she is a legal representative, is or was a director or an officer of the Company, including our named executive officers.
From time to time, we may provide perquisites for recruitment or retention purposes.
Severance and Change of Control Benefits
We do not maintain any severance or change in control plans. However, under the terms of certain employment agreements, stock option agreements and restricted stock unit agreements, executive officers, including the named executive officers, are eligible to receive severance and other benefits in the case of certain termination events and in the case of a change in control. See “Executive Compensation—Potential Payments upon Termination or Change in Control” below.
Other Compensation Information
Prohibition on Hedging and Pledges
The Company’s insider trading compliance policy generally prohibits directors, executive officers, and employees from engaging in hedges in the Company’s securities. In addition, the policy prohibits certain senior officers and directors from making pledges of the Company’s securities. See “Corporate Governance—Insider Trading Compliance Policy; Prohibition on Hedges and Pledges” on page 18 for additional information.
Clawback Policy
The Company maintains a clawback policy that allows it to seek to recover incentive compensation paid to current or former executive officers in certain circumstances. See “Corporate Governance—Clawback Policy” on page 19 for additional information.
Compliance with Section 409A
Section 409A of the Code sets forth limitations on the deferral and payment of certain benefits. Generally, the
Compensation Committee intends to administer our executive compensation program and design individual compensation components, and the compensation plans and arrangements for our employees generally, so that they are either exempt from, or satisfy the requirements of, Section 409A.
Accounting Considerations
The Compensation Committee recognizes accounting implications that may impact executive compensation. For example, we record salaries and performance-based compensation in the amount paid or to be paid to the named executive officers in our financial statements. Also, U.S. generally accepted accounting principles require us to record an expense in our financial statements for equity awards, even though equity awards are not paid as cash to employees and may not vest or be earned by such employees.
Risks Related to Compensation Plans
The Company’s compensation policies and practices are designed to encourage its employees, including its executive officers, to remain focused on both the short-term and long-term goals of the Company, while at the same time discouraging employees from taking unnecessary and excessive risks that could ultimately threaten the value of the Company. The following elements of our compensation programs contribute to risk mitigation:
The Compensation Committee has reviewed the Company’s current compensation policies and practices and believes that, in light of their overall structure, the risks arising from such compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
| 46 | WINGSTOP INC. 2018 PROXY STATEMENT | |
COMPENSATION DISCUSSION AND ANALYSIS
Tax Deductibility of Compensation
Section 162(m) of the Code provides that compensation paid to a public company’s chief executive officer and our twoits three other highest paid executive officers during fiscalat the end of the year (other than its chief financial officer) in excess of $1 million is not deductible unless certain requirements have been satisfied, such as the compensation qualifying as “performance-based compensation.” The 2015 (collectively,Plan is structured to permit compliance with the “named executive officers”),requirements imposed by Section 162(m) and related regulations. Stock options granted at or above market value qualify as presented inperformance-based compensation and are deductible under Section 162(m). However, full value awards, such as restricted stock units, that vest based on time do not qualify as performance-based compensation and are not deductible under Section 162(m).
As a company that recently became public, we are generally permitted a transition period before the tables which follow this discussion. This discussion contains statements regarding our performance targets and goals. These targets and goals are disclosed in the limited contextprovisions of Section 162(m) become applicable to our compensation programplans, subject to certain exceptions. As a result, our Compensation Committee has not historically considered the deductibility of awards under Section 162(m) in determining executive compensation. As part of the 2017 Tax Cuts & Jobs Act (the “Tax Reform Act”), which was signed into law on December 22, 2017, the ability to rely on the performance-based compensation exception was eliminated and should notthe limitation on deductibility generally was expanded to include all named executive officers. As a result of the Tax Reform Act, the Company will no longer be understoodable to deduct any compensation paid to its named executive officers in excess of $1 million for any awards made after November 2, 2017.
| WINGSTOP INC. 2018 PROXY STATEMENT | 47 |
COMPENSATION DISCUSSION AND ANALYSIS
Report of the Compensation Committee
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis (which is set forth above) with management. Based on this review and discussion, the Compensation Committee recommended to
the Board that the Compensation Discussion and Analysis be statements of management’s expectations or estimates of financial results or other guidance. We specifically caution investors not to apply these statements to other contexts.included in this Proxy Statement.
Submitted by the Compensation Committee:
Lynn Crump-Caine (Chair)
Michael J. Hislop
| 48 | WINGSTOP INC. 2018 PROXY STATEMENT | |
The following table sets forth information concerning the total compensation awarded to, earned by, or paid to the named executive officers for 20142017, 2016, and 2015, calculated in accordance with SEC rules and regulations.
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Option awards ($)(3) | Non-equity incentive plan compensation ($)(4) | All other compensation ($)(5) | Total ($) | |||||||||||||||||||||
Charles R. Morrison | 2015 | 442,308 | 240,000 | — | 243,269 | 15,913 | 941,490 | |||||||||||||||||||||
President and Chief Executive Officer | 2014 | 375,000 | — | — | 225,000 | 2,678 | 602,678 | |||||||||||||||||||||
Michael F. Mravle | 2015 | 315,000 | 100,000 | — | 138,000 | 10,912 | 564,512 | |||||||||||||||||||||
Chief Financial Officer | 2014 | 78,750 | 140,000 | 648,030 | — | 90,033 | 956,813 | |||||||||||||||||||||
Larry D. Kruguer | 2015 | 158,077 | 100,000 | 560,716 | 69,554 | 91,407 | 979,754 | |||||||||||||||||||||
President of International | ||||||||||||||||||||||||||||
| Year | Salary(1) ($) | Bonus(2) ($) | Stock/Unit ($) | Option Awards(3) ($) | Non-Equity Incentive Plan ($) | All Other ($) | Total ($) | |||||||||||||||||||||||||||||||||
Charles R. Morrison(6) Chairman of the Board, Chief Executive Officer, and President | 2017 | 628,500 | — | 1,500,027 | (7) | — | 628,500 | 4,057 | 2,761,084 | |||||||||||||||||||||||||||||||
| 2016 | 500,000 | — | — | — | 298,712 | 585,955 | 1,384,667 | |||||||||||||||||||||||||||||||||
| 2015 | 442,308 | 240,000 | — | — | 243,269 | 13,846 | 939,423 | |||||||||||||||||||||||||||||||||
Michael J. Skipworth(8) Executive Vice President and Chief Financial Officer | 2017 | 263,893 | — | 369,663 | (7) | — | 131,947 | 10,800 | 776,303 | |||||||||||||||||||||||||||||||
Michael M. Mravle(9) Former Chief Financial Officer | 2017 | 179,038 | — | 420,011 | (7) | — | — | 6,899 | 605,948 | |||||||||||||||||||||||||||||||
| 2016 | 336,538 | — | — | — | 160,845 | 103,894 | 601,277 | |||||||||||||||||||||||||||||||||
| 2015 | 315,000 | 100,000 | — | — | 138,000 | 8,965 | 561,965 | |||||||||||||||||||||||||||||||||
Lawrence D. Kruguer(10) Executive Vice President and Chief Operating Officer | 2017 | 300,000 | — | 300,004 | (7) | — | 150,000 | 15,051 | 765,055 | |||||||||||||||||||||||||||||||
| 2016 | 300,000 | — | — | 150,000 | (11) | 143,382 | 13,820 | 607,202 | ||||||||||||||||||||||||||||||||
| 2015 | 158,077 | 100,000 | — | 560,716 | (11) | 69,554 | 90,462 | 978,809 | ||||||||||||||||||||||||||||||||
Stacy Peterson(12) Executive Vice President and Chief Experience Officer | 2017 | 342,307 | — | 720,015 | (7) | — | 171,154 | 7,602 | 1,241,078 | |||||||||||||||||||||||||||||||
Flynn K. Dekker(13) Former Senior Vice President and Chief Marketing Officer | 2017 | 321,154 | — | 525,001 | (7) | — | 160,577 | 10,800 | 1,017,532 | |||||||||||||||||||||||||||||||
| (1) |
| (2) | In connection with our |
| (3) |
| (4) |
| WINGSTOP INC. 2018 PROXY STATEMENT | 49 |
EXECUTIVE COMPENSATION
| (5) | Includes the following: company match under the 401(k) plan; relocation costs to Mr. Mravle and Mr. Kruguer per the terms of their employment agreement; insurance premiums; and |
| Year | 401(k) match ($) | Relocation ($) | Insurance ($) | |||||||||||||
Mr. Morrison | 2015 | 13,846 | — | 2,067 | ||||||||||||
| 2014 | 1,839 | — | 839 | |||||||||||||
Mr. Mravle | 2015 | 8,965 | — | 1,987 | ||||||||||||
| 2014 | — | 90,000 | 33 | |||||||||||||
Mr. Kruguer | 2015 | 462 | 90,000 | 945 | ||||||||||||
| Year | 401(k) match ($) | Relocation ($) | Dividend ($) | |||||||||||||
Charles R. Morrison(5) Chairman of the Board, Chief Executive Officer, and President | 2017 | 4,057 | — | — | ||||||||||||
| 2016 | 15,789 | — | 570,166 | |||||||||||||
| 2015 | 13,846 | — | — | |||||||||||||
Michael J. Skipworth Executive Vice President Chief Financial Officer | 2017 | 10,800 | — | — | ||||||||||||
Michael M. Mravle Former Chief Financial Officer | 2017 | 6,899 | — | — | ||||||||||||
| 2016 | 9,064 | — | 94,830 | |||||||||||||
| 2015 | 8,965 | — | — | |||||||||||||
Lawrence D. Kruguer Executive Vice President and Chief Operating Officer | 2017 | 10,800 | — | 4,251 | ||||||||||||
| 2016 | 12,000 | — | 1,820 | |||||||||||||
| 2015 | 462 | 90,000 | — | |||||||||||||
Stacy Peterson Executive Vice President and Chief Experience Officer | 2017 | 7,602 | — | — | ||||||||||||
Flynn K. Dekker Former Senior Vice President and Chief Marketing Officer | 2017 | 10,800 | — | — | ||||||||||||
| (6) | All amounts shown reflect compensation paid to Mr. Morrison for his service as our Chief Executive Officer and President. Mr. Morrison did not receive additional compensation for his service as a director or Chairman of the Board. |
| (7) | Represents the aggregate grant date fair value of restricted stock units issued to the named executive officer during 2017. See “Elements of Executive Compensation—Long-Term Equity Incentive Awards—Fiscal Year 2017 Equity Grants.” |
| (8) | Information for 2016 and 2015 is not included because Mr. Skipworth was not a named executive officer during those years. |
| (9) | Mr. Mravle resigned from the Company in June 2017. The salary shown for 2017 reflects the prorated amount of base salary Mr. Mravle earned prior to his resignation. |
| (10) | Mr. Kruguer was appointed as our Chief Operating Officer in January 2018. |
| (11) | Represents the aggregate grant date fair value of stock options issued to Mr. Kruguer during 2016 or 2015, as applicable. |
| (12) | Information for 2016 and 2015 is not included because Ms. Peterson was not a named executive officer during those years. |
| (13) | Information for 2016 and 2015 is not included because Mr. Dekker was not a named executive officer during those years. |
The amounts reported in the Summary Compensation Table are described more fully under “Compensation Discussion and Analysis” herein.
| 50 | WINGSTOP INC. 2018 PROXY STATEMENT | |
EXECUTIVE COMPENSATION
Outstanding EquityGrants of Plan-Based Awards at Fiscal 2015 Year-EndTable
The following table sets forth information with respectregarding the plan-based awards granted to outstanding option awardseach named executive officer during the 2017 fiscal year:
Name | Grant | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock (#) | Grant Date | |||||||||||||||||||||||||||||||||||||||||||||
| Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||
Charles R. Morrison | n/a | (2) | 314,250 | 628,500 | 942,750 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| 1/31/2017 | (3) | — | — | — | — | 35,125 | — | — | 1,000,009 | |||||||||||||||||||||||||||||||||||||||||
| 1/31//2017 | (4) | — | — | — | — | — | — | 17,563 | 500,019 | |||||||||||||||||||||||||||||||||||||||||
Michael J. Skipworth | n/a | (2) | 65,974 | 131,947 | 197,921 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (4) | — | — | — | — | — | — | 2,647 | 69,616 | |||||||||||||||||||||||||||||||||||||||||
| 8/1/2017 | (3) | — | — | — | — | 4,948 | — | — | 150,023 | |||||||||||||||||||||||||||||||||||||||||
| 8/1/2017 | (4) | — | — | — | — | — | — | 4,948 | 150,023 | |||||||||||||||||||||||||||||||||||||||||
Michael M. Mravle | n/a | (2) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (3) | — | — | — | — | 7,985 | — | — | 210,006 | |||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (4) | — | — | — | — | — | — | 7,985 | 210,006 | |||||||||||||||||||||||||||||||||||||||||
Lawrence D. Kruguer | n/a | (2) | 75,000 | 150,000 | 225,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (3) | — | — | — | — | 5,703 | — | — | 149,989 | |||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (4) | — | — | — | — | — | — | 5,704 | 150,015 | |||||||||||||||||||||||||||||||||||||||||
Stacy Peterson | n/a | (2) | 85,577 | 171,154 | 256,731 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (3) | — | — | — | — | 13,388 | — | — | 352,104 | |||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (4) | — | — | — | — | — | — | 13,989 | 367,911 | |||||||||||||||||||||||||||||||||||||||||
Flynn K. Dekker | n/a | (2) | 80,289 | 160,577 | 240,866 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (3) | — | — | — | — | 9,981 | — | — | 262,500 | |||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (4) | — | — | — | — | — | — | 9,981 | 262,500 | |||||||||||||||||||||||||||||||||||||||||
| (1) | Amounts represent the aggregate grant date fair value of restricted stock units granted to each named executive officer in 2017 computed in accordance with ASC 718, with the exception that the amount shown assumes no forfeitures. A discussion of the assumptions used in the calculation of these amounts is included in Note 13, “Stock-Based Compensation,” in the annual consolidated financial statements included in the Form10-K filed with the SEC on February 23, 2018. |
| (2) | Represents possible payout amounts under the 2017 Bonus Plan based on the achievement of the performance goals described above in “Compensation Discussion and Analysis—Elements of Executive Compensation—Performance-Based Annual Cash Incentives.” Under the 2017 Bonus Plan, our Chief Executive Officer’s target bonus amount was set at 100% of base earnings, and our other named executive officers’ target bonus amounts were set at 50% of base earnings. Each named executive officer, including our Chief Executive Officer, was eligible to earn a bonus between 0% and 150% of the target bonus amount based on the Company’s achievement of performance goals. For purposes of this table, the “Threshold” column represents a 50% payout of the target bonus amount because it was the minimum amount payable under the 2017 Bonus Plan other than no award. See the“Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table for actual amounts paid to each of the named executive officers under the 2017 Bonus Plan for the 2017 performance period. |
| (3) | Represents an award of performance-based restricted stock units that vest based upon the achievement of EBITDA or Adjusted EBITDA goals. For additional information, see “Elements of Executive Compensation—Long-Term Equity Incentive Awards—Fiscal Year 2017 Equity Grants.” Performance-based restricted stock units have no threshold or maximum payouts and vest either at the target level or not at all. |
| (4) | Represents an award of service-based restricted stock units that vest in three equal annual installments beginning on the first anniversary of the date of grant. Each vested unit is equivalent to one share of Wingstop common stock. For additional information, see “Elements of Executive Compensation—Long-Term Equity Incentive Awards—Fiscal Year 2017 Equity Grants.” |
| WINGSTOP INC. 2018 PROXY STATEMENT | 51 |
EXECUTIVE COMPENSATION
Outstanding Equity Awards at FiscalYear-End Table
The following table sets forth information regarding the outstanding equity awards held by our named executive officers as of December 26, 2015. We have not granted any stock awards to the named executive officers.end of the 2017 fiscal year:
| Option Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant date | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option expiration date | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock That Have Not Vested | Market Value of That ($) | Equity Incentive Plan Number Unearned Shares, or Other Rights That Not (#) | Equity Incentive Plan Market or Payout of Shares, or Other Rights That Have Not Vested | |||||||||||||||||||||||||||||||||||||||||||||||||
Charles R. Morrison | 8/30/12 | (1) | 196,609 | 51,093 | 51,093 | $ | 1.52 | (4) | 8/30/2022 | 8/30/2012 | (2) | 199,825 | — | 1.52 | 8/30/2022 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Michael F. Mravle | 9/26/14 | (2) | 32,700 | 65,400 | 65,400 | $ | 5.76 | (5) | 9/26/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Larry D. Kruguer | 6/11/15 | (3) | — | 26,316 | 26,316 | $ | 19.00 | 6/11/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Charles R. Morrison | 1/31/2017 | (3) | — | — | — | — | — | — | 35,125 | 1,369,173 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/31/2017 | (4) | — | — | — | — | 17,563 | 684,606 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael J. Skipworth | 12/12/2014 | (5) | 2,725 | 13,625 | 6.29 | 12/12/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (4) | — | — | — | — | 2,647 | 103,180 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8/1/2017 | (3) | — | — | — | — | — | — | 4,948 | 192,873 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8/1/2017 | (4) | — | — | — | — | 4,948 | 192,873 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael M. Mravle(6) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lawrence D. Kruguer | 6/11/2015 | (7) | 10,526 | 31,580 | 16.10 | 6/11/2025 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/18/2016 | (8) | — | — | — | — | 4,396 | 171,356 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (3) | — | — | — | — | — | — | 5,703 | 222,303 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (4) | — | — | — | — | 5,704 | 222,342 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stacy Peterson | 9/20/2013 | (9) | 16,350 | 24,525 | 2.44 | 9/20/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (3) | — | — | — | — | — | — | 13,989 | 545,291 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (4) | — | — | — | — | 13,388 | 521,864 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Flynn K. Dekker | 2/17/2014 | (10) | — | 32,700 | 3.16 | 2/17/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (3) | — | — | — | — | — | — | 9,981 | 389,059 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2017 | (4) | — | — | — | — | 9,981 | 389,059 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) |
| (2) | Represents stock options representing the right to purchase an aggregate of 408,750 shares |
| (3) | Represents performance-based restricted stock units based upon the achievement of EBITDA or Adjusted EBITDA goals. For additional information, see “Elements of Executive Compensation—Long-Term Equity Incentive Awards—Fiscal Year 2017 Equity Grants.” |
| (4) | Represents an award of service-based restricted stock units that vest in three equal annual installments beginning on the first anniversary of the date of grant. |
| (5) | Represents stock options representing the right to purchase an aggregate of 27,250 shares of common stock, half of which vest based on the achievement of service-based conditions and half of which based upon the achievement of performance-based conditions. Of the 13,625 performance-based stock options, 20% vested upon the Company’s achievement of an annual Adjusted EBITDA target for each of the 2015 and 2016 fiscal years and 20% will vest upon the Company’s achievement of an annual Adjusted EBITDA target for each of the 2017, 2018, and 2019 fiscal |
| 52 | WINGSTOP INC. 2018 PROXY STATEMENT | |
EXECUTIVE COMPENSATION
| years. Of the 13,625 service-based stock options, 20% vested on each of December 12, 2015, 2016 and 2017 and 20% will vest on each of December 12, 2018 and 2019. The |
| (6) | Mr. Mravle resigned from the position of Chief Financial officer effective June 23, 2017. In connection with his resignation, all of Mr. Mravle’s unexercised stock options and unvested restricted stock units were automatically forfeited. |
| (7) | Represents stock options representing the right to purchase an aggregate of 52,632 shares of common stock, half of which vest based on the achievement of service-based conditions and half of which based upon the achievement of performance-based conditions. Of the 26,316 service-based stock options, 40% vested on June 11, 2017 and 20% will vest on each of June 11, 2018, 2019 and 2020. Of the 26,316 performance-based stock options,40% vested upon the Company’s achievement of an annual Adjusted EBITDA target for the 2016 fiscal year and 20% will vest upon the Company’s achievement of an annual Adjusted EBITDA target for each of the 2017, 2018, and 2019 fiscal years. The exercise price of these stock options was originally $19.00 per share. The exercise price was subsequently reduced to $12.93 to reflect the impact of a dividend paid to our stockholders in June 2016 and February 2018. A portion of these stock options was previously exercised. |
| (8) | Represents an award of 5,862 shares of service-based restricted stock of which 1,465 shares vested on May 18, 2017, 1,465 shares will vest on May 18, 2018, 1465 shares will vest on May 18, 2019, and 1,465 shares will vest on May 18, 2020. |
| (9) | Represents stock options representing the right to purchase an aggregate of 81,750 shares of common stock, half of which vest based on the achievement of service-based conditions and half of which vest based upon the achievement of performance-based conditions. The 40,875 service-based stock options vest in five equal annual installments beginning on the first anniversary of the date of grant. The 40,875 performance-based stock options vest in five equal annual installments based on the Company’s satisfaction of certain performance criteria for each of the fiscal years 2014, 2015, 2016, 2017 and 2018. A portion of these stock options was previously exercised. |
| (10) | Represents stock options representing the right to purchase an aggregate of 81,750 shares of common stock, half of which vest based on the achievement of service-based conditions and half of which vest based upon the achievement of performance-based conditions. The 40,875 service-based stock options vest in five equal annual installments beginning on the first anniversary of the date of grant. The 40,875 performance-based stock options vest in five equal annual installments based on the Company’s satisfaction of certain performance criteria for each of the fiscal years 2014, 2015, 2016, 2017 and 2018.A portion of these stock options was previously exercised. |
Potential Payments upon TerminationOption Exercises and Stock Vested Table
The following table sets forth a summary of the option exercises and vesting of restricted stock units and shares of restricted stock during fiscal 2017 for each of the named executive officers:
| Option Awards | Stock Awards | ||||||||||||||||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise(1) ($) | Number of Shares Acquired on Vesting | Value Realized on Vesting(2) ($) | |||||||||||||||||||||
Charles R. Morrison | 98,971 | 2,768,268 | — | — | |||||||||||||||||||||
Michael J. Skipworth | 10,100 | 190,116 | — | — | |||||||||||||||||||||
Michael M. Mravle | 65,400 | 1,638,728 | — | — | |||||||||||||||||||||
Lawrence D. Kruguer | 10,526 | 218,299 | 1,466 | 43,599 | |||||||||||||||||||||
Stacy Peterson | 18,257 | 494,929 | — | — | |||||||||||||||||||||
Flynn K. Dekker | 16,350 | 448,513 | — | — | |||||||||||||||||||||
| (1) | Amounts shown reflect the value of shares obtained upon exercise of the stock option by taking the difference between the market price of the underlying securities at exercise and the exercise price of the option. |
| (2) | Amounts shown reflect the value of shares obtained upon the vesting of restricted stock awards or restricted stock units by multiplying the number of vested shares of restricted stock or vested restricted stock units by the closing price of our common stock on the Nasdaq on the date of vesting. |
| WINGSTOP INC. 2018 PROXY STATEMENT | 53 |
EXECUTIVE COMPENSATION
Pension Benefits; Nonqualified Defined Contribution; and Other Nonqualified Deferred Compensation Plans
We do not provide any pension benefits, nonqualified defined contribution, or Changeother deferred compensation plans for our named executive officers.
Employment Agreements and Arrangements
Each of Control
Theour employment agreements with each of our named executive officers providecontains a “double trigger,” both achange-in-control and a termination of employment for the payment of certain severance benefits upon termination.rights to be triggered. In addition, the terms of the stock options and restricted stock units granted to theour named executive officers under the 2010 Plan include certain vesting rights upon a change of control.
Severance Benefits under the Employment Agreements
We have agreed to pay severance benefits in the event of an executive’s termination by us without cause or, for Mr. Morrison, a termination by the executive for good reason. We also provide severance benefits in the case of death and disability.
Mr. Morrison. On December 22, 2016, the Company entered into a new employment agreement with Mr. Morrison,
effective January 1, 2017. The agreement provides for severance benefits if Mr. Morrison’s employment is terminated without cause (as defined in the agreement) or if he resigns for good reason (as defined in the agreement).reason. In such instance, Mr. Morrison is entitled to (1)(i) any earned but unpaid cash bonus, and (2)(ii) the continuation of base salary for 1324 months following the termination of his employment, and (iii) continued participation for up to 24 months in employee welfare benefit plans which, by their terms, permit a former employee to participate, subject to his compliance with thenon-disclosure of trade secrets, a five-year confidentiality obligation, an 18 month non-compete obligation, a 24 month non-solicitationnon-compete obligation, a 24 monthnon-solicitation obligation, anon-disparagement obligation, and the execution of a general release of claims. If a change of control of the company occurs, there is no obligation to make severance payments in connection with such change of control unless Mr. Morrison’s employment is terminated without cause or he resigns for good reason simultaneously withwithin six months prior to or two years following such change of control.
If Mr. Morrison is terminated as a result of a permanent disability, (as defined in the agreement), he is entitled to (1)(i) a prorated portion of the annual cash bonus earned for the year of termination (if any), calculated at the end of such year, and paid on the same date on which bonuses are paid to other executives of the company, (2)(ii) any other amounts earned, accrued,
or owing, but not yet paid, and (3)(iii) continued participation in employee welfare benefit plans which, by their terms, permit a former employee to participate. In the event of his death, his estate is entitled to (1)(i) and (2)(ii) above as well as any other benefits to which he would be entitled in accordance with the terms of the applicable plans and programs of the company.
If we terminate Mr. Morrison’s employment for cause or he resigns other than for good reason, we will pay (1)(i) his base salary actually earned up to the date of termination and (2)(ii) any earned cash bonus from the previous year not yet paid.
Mr. Mravle and Mr. Kruguer
Other Named Executive Officers. The employment agreements for Mr. Mravle and Mr. Kruguerour other named executive officers provide for severance benefits if the executive’s employment is terminated without cause (as defined in the agreement).cause. In such instance, the executive is entitled to the continuation of base salary for 6 or 12 months, depending on the agreement, following the termination of the executive’s employment and subject to, among other things, the executive’s compliance with the non-disclosure of trade secrets, a confidentiality obligation, a 24 month non-compete obligation, a 24 month non-solicitation obligation, a non-disparagement obligation and the execution of a general release of claims. If a change of control ofThe employment agreements do not entitle the company occurs, there is no obligationexecutives to makeany severance payments in connection with sucha change of control unless the executive’stheir employment is terminated without cause simultaneously with such change of control.
If the executive is terminated as a result of a permanent disability, (as defined in the agreement), he or she is entitled to any amounts earned, accrued, or owing, but not yet paid, and continued participation in employee welfare benefit plans which, by their terms, permit a former employee to participate. In the event of the executive’s death, his or her estate is entitled to any amounts earned, accrued, or owing, but not yet paid, as well as any other benefits to which he or she would be entitled in accordance with the terms of the applicable plans and programs of the company.
If we terminate the executive’s employment for cause, or the executive resigns for any reason, we will pay the executive’s base salary actually earned up to the date of termination.termination and any cash bonus earned in the previous year that has not yet been paid.
Accelerated Vesting under Equity Award Agreements
The stock options granted to the named executive officers under the 2010 Plan and 2015 Plan include provisions that accelerate vesting in certain circumstances, including upon a change of control (as defined in the 2010 Plan and the 2015 Plan).
Mr. Morrison
| 54 | WINGSTOP INC. 2018 PROXY STATEMENT | |
EXECUTIVE COMPENSATION
In general, the service-based stock options held by our named executive officers are automatically forfeited upon a change of control. With respect to Mr. Morrison’s time vestingperformance-based stock options 100% of his unvested options will vestheld by our named executive officers, if a change of control occurs after December 31, 2015.
With respect to his performance vesting options, if(i) a change of control occurs prior to December 31, 2016a specified date in the applicable form of award, (ii) we met or exceeded the Adjusted EBITDA target for the year prior to the year in which the change of control occurs, and if(iii) the boardBoard determines that we were on track to meet or exceed the adjustedAdjusted EBITDA target for the year in which the change of control occurs, then any unvested options that were eligible to vest prior to the change of control but did not will vest.
In addition, if (1)(i) a change of control occurs prior to December 31, 2016, (2)a specified date in the applicable form of award, (ii) during the year preceding the change of control, we met or exceededachieved the adjustedAdjusted EBITDA target for anya year afterfollowing the year during whichof the change of control, occurs, and (3)(iii) the boardBoard determines that we wereare on track to meet or exceedachieve the adjustedAdjusted EBITDA target for such subsequent year in the year in whichthat the change of control
occurs, then the unvested options allocated to the year in which the change of control occurs and the unvested options allocated to any subsequent year for which the adjustedwe met such Adjusted EBITDA target was achieved will vest.
The unvested service-based and performance-based restricted stock units held by our named executive officers will vest following a change in control if, within six months prior or two years following such change in control, the named executive officer is terminated without cause by the Company (or its successor) or the named executive officer terminates his or her employment for good reason.
In the case of termination as a result of death or disability, Mr. Morrison’sthe employment of our named executive officers will be deemed to have been terminated on the last day of the year in which the death or disability occurs, and that year will count toward the applicable vesting schedule, subject, in the case of performance-based awards, to the achievement of adjusted EBITDA targetsthe applicable performance targets.
| WINGSTOP INC. 2018 PROXY STATEMENT | 55 |
EXECUTIVE COMPENSATION
Potential Payments upon Termination or Change in Control
The following table shows potential payments to our named executive officers that were employed by us as of December 29, 2017 for various scenarios involving a death, disability, change in control, termination without cause or termination for good reason, using, where applicable, the closing price of our common stock of $38.98 as reported on the Nasdaq as of December 29, 2017, the last trading day of fiscal 2017, and assuming that the applicable triggering event occurred on December 29, 2017.
| Name | Benefit | Death ($) | Disability ($) | Change in ($) | Termination ($) | Termination by NEO for Good Reason ($) | ||||||||||||||||
Charles R. Morrison | Salary continuation (24 months) | — | — | 1,257,000 | 1,257,000 | 1,257,000 | ||||||||||||||||
| 2017 Bonus Plan bonus(2)(3) | — | — | 628,500 | 628,500 | 628,500 | |||||||||||||||||
| Continuation of health benefits | — | — | 26,276 | 26,276 | 26,276 | |||||||||||||||||
| Vesting of equity awards | — | — | 2,053,778 | — | — | |||||||||||||||||
Total | — | — | 3,965,554 | 1,911,776 | 1,911,776 | |||||||||||||||||
Michael J. Skipworth | Salary continuation (12 months) | — | — | 300,000 | 300,000 | 300,000 | ||||||||||||||||
| 2017 Bonus Plan bonus(2) | — | — | — | — | — | |||||||||||||||||
| Continuation of health benefits | — | — | — | — | — | |||||||||||||||||
| Vesting of equity awards | — | — | 934,327 | — | — | |||||||||||||||||
Total | — | — | 1,234,327 | 300,000 | 300,000 | |||||||||||||||||
Lawrence D. Kruguer | Salary continuation (12 months) | — | — | 300,000 | 300,000 | 300,000 | ||||||||||||||||
| 2017 Bonus Plan bonus(2) | — | — | — | — | — | |||||||||||||||||
| Continuation of health benefits | — | — | — | — | — | |||||||||||||||||
| Vesting of equity awards | — | — | 1,338,551 | — | — | |||||||||||||||||
Total | — | — | 1,638,551 | 300,000 | 300,000 | |||||||||||||||||
Stacy Peterson | Salary continuation (6 months) | — | — | 175,000 | 175,000 | 175,000 | ||||||||||||||||
| 2017 Bonus Plan bonus(2) | — | — | — | — | — | |||||||||||||||||
| Continuation of health benefits | — | — | — | — | — | |||||||||||||||||
| Vesting of equity awards | — | — | 1,963,299 | — | — | |||||||||||||||||
Total | — | — | 2,138,299 | 175,000 | 175,000 | |||||||||||||||||
Flynn K. Dekker | Salary continuation (6 months) | — | — | 162,500 | 162,500 | 162,500 | ||||||||||||||||
| 2017 Bonus Plan bonus(2) | — | — | — | — | — | |||||||||||||||||
| Continuation of health benefits | — | — | — | — | — | |||||||||||||||||
| Vesting of equity awards | — | — | 1,949,433 | — | — | |||||||||||||||||
Total | — | — | 2,111,933 | 162,500 | 162,500 | |||||||||||||||||
| (1) | Assumes that, in connection with the change of control, the named executive officer’s employment is terminated without cause or for good reason within six months prior to, or two years following, the applicable change of control. |
| (2) | Under Mr. Morrison’s employment agreement, Mr. Morrison is entitled to any earned but unpaid portion of his bonus in the event of termination without cause or for good reason, including a termination without cause or for good reason occurring within six months prior to, or two years following, a change of control. The payment of bonuses to our other named executive officers in these events is governed by the 2017 Bonus Plan. Under the 2017 Bonus Plan, participants must be employed at the time applicable bonuses are paid to receive an annual bonus. Because the Compensation Committee did not approve the 2017 bonuses until February 2018, the named executive officer would not be employed when the bonuses were paid and therefore would not be eligible to receive a bonus. However, if the named executive officer becomes disabled, or is granted leave of absence during the 2017 fiscal year, the Company may, but is not obligated to, pay a prorated bonus on acase-by-case basis at the discretion of the Compensation Committee. See the“Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table for actual amounts paid to each of the named executive officers under the 2017 Bonus Plan for the 2017 performance period. |
| 56 | WINGSTOP INC. 2018 PROXY STATEMENT | |
EXECUTIVE COMPENSATION
| (3) | Represents the amount of bonus Mr. Morrison would have been entitled to under the 2017 Bonus Plan based on the Company’s actual performance during the 2017 performance period, which is the same bonus amount actually paid to Mr. Morrison for 2017 and reported in the“Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table. |
Mr. Mravle resigned from the position of Chief Financial Officer effective June 23, 2017 and was not entitled to any payments in connection with respectsuch resignation. Mr. Dekker resigned from the position of Chief Marketing Officer effective March 21, 2018 and in connection with his resignation we entered into a customary termination and
severance agreement with Mr. Dekker, as well as a customary consulting agreement pursuant to which Mr. Dekker agreed to provide us with certain consulting services for a limited transition period while we search for a permanent replacement.
Equity Compensation Plan Table
The following table includes information regarding securities authorized for issuance under our equity compensation plans as of December 30, 2017:
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining for future issuance under equity compensation plans | |||||||||
Equity compensation plans approved by security holders | — | — | — | |||||||||
Equity compensation plans not approved by security holders | 529,000 | (1) | $ | 5.45 | 2,328,000 | |||||||
| (1) | Includes performance-based restricted stock units that vest based upon the achievement of EBITDA or Adjusted EBITDA goals. For additional information, see “Elements of Executive Compensation—Long-Term Equity Incentive Awards—Fiscal Year 2017 Equity Grants.” The amount reported in “Weighted-average exercise price of outstanding options, warrants and rights” does not take into account performance-based restricted stock units because they have no exercise price. |
We believe executive pay must be internally consistent and equitable to motivate our employees to create stockholder value. We are committed to internal pay equity, and the Compensation Committee monitors the relationship between the pay our executive officers receive and the pay ournon-managerial employees receive. The Compensation Committee reviewed a comparison of Chief Executive Officer pay (base salary and incentive pay) to the performance vesting options.pay of all our employees in 2017. The compensation for our Chief Executive Officer in 2017 was approximately 132 times the median pay of our employees, as shown below:
Mr. Mravle
| Year | Salary ($) | Bonus ($) | Stock/Unit ($) | Non-Equity Incentive Plan ($) | All Other ($) | Total ($) | ||||||||||||||||||||||
Charles R. Morrison Chairman of the Board, Chief Executive Officer and President (1) | 2017 | 628,500 | — | 1,500,027 | 628,500 | 4,057 | 2,761,084 | |||||||||||||||||||||
Median Employee | 2017 | 20,976 | — | — | — | — | 20,976 | |||||||||||||||||||||
With respect
CEO Pay to Median Employee Pay Ratio: 132:1 | ||||||||||||||
| (1) | For additional information concerning Mr. Morrison’s compensation, see “Executive Compensation—Summary Compensation Table.” |
| WINGSTOP INC. 2018 PROXY STATEMENT | 57 |
EXECUTIVE COMPENSATION
We identified the performance vesting options heldmedian employee by Mr. Mravle, if (1) a change of control occurs prior toexamining the 2017 total compensation (including equity compensation) for all individuals, excluding our Chief Executive Officer, who were employed by us on December 31, 2019, (2) we met or exceeded the adjusted EBITDA target for the year prior to the year in which the change of control occurs, and (3) the board determines that we were on track to meet or exceed the adjusted EBITDA target for the year in which the change of control occurs, then any unvested options that were eligible to vest prior to the change of control but did not will vest.
In addition, if (1) a change of control occurs prior to December 31, 2019, (2) during the year preceding the change of control, we achieved the adjusted EBITDA target for a year following the year of the change of control, and (3) the board determines that we are on track to achieve the adjusted EBITDA target for such subsequent year in the year that the change of control occurs, then the unvested options allocated to the year in which the change of control occurs and any subsequent year for which we met such adjusted EBITDA target will vest.
In the case of termination as a result of death or disability, the employment of Mr. Mravle will be deemed to have been terminated on30, 2017, the last day of the year in which the deathour fiscal year. We included all employees, whether employed on a full-time, part-time, or disability occurs, and that year will count toward the applicable vesting schedule, subject to the achievement of adjusted EBITDA targetsseasonal basis. We did not make any assumptions, adjustments, or estimates with respect to total compensation, and we did not annualize the performance vesting options.
Mr. Kruguer
With respect to the performance vesting options held by Mr. Kruguer, if (1) a change of control occurs prior to December 31, 2019, (2) we met or exceeded the adjusted EBITDA targetcompensation for the year prior to the year in which the change of control occurs, and (3) the board determines that we were on track to meet or exceed the adjusted EBITDA target for the year in which the change of control occurs, then any unvested optionsfull-time employees that were not employed by us for all of 2017. We believe the use of total compensation for all employees is a consistently applied compensation measure because it takes into account every potential form of compensation
that the Company offers to its employees. Although most employees, including the median employee, are not eligible to vest priorreceive equity compensation, we have nevertheless calculated the pay ratio to include our Chief Executive Officer’s equity awards to provide a more complete view of our compensation practices.
After identifying the change of control but did not will vest.
In addition, if (1) a change of control occurs prior to December 31, 2019, (2) during the year preceding the change of control,median employee based on total compensation, we achieved the adjusted EBITDA target for a year following the year of the change of control, and (3) the board determines that we are on track to achieve the adjusted EBITDA targetcalculated annual total compensation for such subsequent yearemployee using the same methodology we use for our named executive officers as set forth in the year that the change of control occurs, then the unvested options allocated to the year in which the change of control occurs and any subsequent year for which we met such adjusted EBITDA target will vest.“Summary Compensation Table” on beginning on page 49.
| 58 | WINGSTOP INC. 2018 PROXY STATEMENT | |
In the case of termination as a result of death or disability, the employment of Mr. Kruguer will be deemed to have been terminated on the last day of the year in which the death or disability occurs, and that year will count toward the applicable vesting schedule, subject to the achievement of adjusted EBITDA targets with respect to the performance vesting options.
NEXT ANNUAL MEETING—STOCKHOLDER PROPOSALS
Rule14a-8 Proposals for Our 20172018 Proxy Statement
Pursuant toRule 14a-8 under the Exchange Act, of 1934, as amended (the “Exchange Act”), a stockholder proposal submitted for inclusion in our proxy statement for the 20172019 Annual Meeting must be received by November 23, 2016.22, 2018. However, pursuant to such rule, if the 20172019 Annual Meeting is held on a date that is before April 4, 20172, 2019 or after June 3, 2017,1, 2019, then a stockholder proposal submitted for inclusion in our proxy statement for the 20172019 Annual Meeting must be received by us a reasonable time before we begin to print and mail our proxy statement for the 20172019 Annual Meeting.
Stockholder Proposals of Business
Under our bylaws that will be in effect for the 2017 Annual Meeting,Bylaws, a stockholder is eligible to submit a stockholder proposal of business (other than nominations of directors, the procedures for which are described below) at an annual meeting outside the processes ofRule 14a-8 if the stockholder (i) is (1) a stockholder of record at the time of giving notice of such proposal, (2)(ii) is entitled to vote at the meeting, and (3)(iii) complies with the notice procedures set forth in our bylaws. Bylaws.
Our bylawsBylaws provide that the proposal must be a proper matter for stockholder action under Delaware law and the stockholder must provide timely notice of the proposal in writing to our Corporate Secretary. To be timely under our bylaws,Bylaws, our Corporate Secretary must receive advance notice of a proposal for business at the 20172019 Annual Meeting between January 4, 20172, 2019 and February 3, 2017;1, 2019; provided, however, if and only if the 20172019 Annual Meeting is not scheduled to be held between April 4, 20172, 2019 and July 13, 2017,11, 2019, such stockholder’s notice must be delivered to our Corporate Secretary not earlier than 120 days prior to the date of the 20172019 Annual Meeting and not later than the later of (A) the tenth day following the day of the Public Announcementpublic announcement of the date of the 20172019 Annual Meeting or (B) the date which is 90 days prior to the date of the 20172019 Annual Meeting. The advance notice of the
proposal must contain certain information specified in our By-laws,Bylaws, including information concerning the proposal and the stockholder proponent. The foregoing description is only a summary of the requirements of our By-laws.Bylaws. Stockholders intending to submit a proposal of business at the 20172019 Annual Meeting outside the processes of Rule14a-8 must comply with the provisions specified in our bylaws, as amended and restated and adopted as of June 11, 2015,Bylaws, which were filed with the SEC as an exhibit to our Registration StatementForm10-K filed on Form S-1 on June 2, 2015.February 23, 2018.
Stockholder Nominations of Directors
Stockholders may nominate directors for election without consideration by the Nominating and Corporate Governance Committee by complying with the eligibility, advance notice, and other provisions of our bylaws. Under our bylaws that will be in effectBylaws, which are the same as the procedures for the 2017 Annual Meeting, a stockholder is eligible to submit a stockholder nominationsubmissions for proposals of directors at an annual meeting if the stockholder is (1) a stockholder of record at the time of giving notice of such proposal, on the record date for the annual meeting and at the time of the annual meeting (2) entitled to vote at the meeting and (3) complies with the notice procedures set forth in our bylaws. The stockholder must provide timely notice of the nomination in writing to our Corporate Secretary. To be timely under our bylaws, our Corporate Secretary must receive advance notice of a nomination for election of a director at the 2017 Annual Meeting between January 4, 2017 and February 3, 2017; provided, however, if and only if the 2017 Annual Meeting is not scheduled to be held between April 4, 2017 and July 13, 2017, such stockholder’s notice must be delivered to our Corporate Secretary not earlier than 120 days prior to the date of the 2017 Annual Meeting and not later than the later of (C) the tenth day following the day of the Public Announcement of the date of the 2017 Annual Meeting or (D) the date which is 90 days prior to the date of the 2017 Annual Meeting.business described above. The advance notice of the nomination must contain certain information specified in our bylaws,Bylaws, including information concerning the nominee and the stockholder proponent, and the stockholder must update and supplement that information as of, and within ten days of, the record date for the 20172019 Annual Meeting. The foregoing description is only a summary of the requirements of our bylaws.Bylaws. Stockholders intending to submit a
nomination for the 20172019 Annual Meeting must comply with the provisions specified in our bylaws, as amended and restated and adopted as of June 11, 2015,Bylaws, which were filed with the SEC as an exhibit to our Registration StatementForm10-K filed on Form S-1 on June 2, 2015.February 23, 2018.
Stockholder proposals or nominations should be sent to:
Wingstop Inc.
5501 LBJ Freeway, 5th Floor
Dallas, Texas 75240
Attention: Corporate Secretary
| WINGSTOP INC. 2018 PROXY STATEMENT | 59 |
We know of no other business to be transacted, but if any other matters do come before the meeting, the persons named as proxies in the accompanying proxy, or their substitutes, will vote or act with respect to them in accordance with their best judgment.
By order of the Board of Directors, |
|
Darryl R. Marsch
| 60 | WINGSTOP INC. 2018 PROXY STATEMENT | |
ANNUAL MEETING OF WINGSTOP INC.
| Date: | May | |
| Time: | | |
| Place: | |
Please make your marks like this: x☒ Use dark black pencil or pen only
Board of Directors Recommends a VoteFORall Nominees listed in proposal 1, andFOR proposals 2 and 3, and1 YEAR for proposal 2.4.
| 1: | Election of Directors | For | Withhold | Directors Recommend
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01 | ||||||||||||
For | ||||||||||||
02 Charles R. Morrison | ☐ | ☐ | For | |||||||||
For |
Against | Abstain | ||||||||||
2: |
Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year |
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For | |||||||
3: |
Approve, on an advisory basis, the compensation of our named executive officers. | ☐ | ☐ | ☐ | For | |||||||
| 1 year | 2 years | 3 years | Abstain | |||||||||
| 4: | Approve, on an advisory basis, the frequency of future advisory votes on named executive officer compensation. | ☐ | ☐ | ☐ | ☐ | 1 Year | ||||||
| 5: | Consider and act upon such other business as may properly come before the annual meeting or any adjournments or postponements thereof.
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| To attend the meeting and vote your shares in person, please mark this box. |
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Authorized Signatures - This section must be
completed for your Instructions to be executed.
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| Please Sign Here | Please Date Above | |
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| Please Sign Here | Please Date Above | |
Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.
Annual Meeting of Wingstop Inc.
to be held on Wednesday, May 4, 20162, 2018
for Holders as of March 15, 201613, 2018
This proxy is being solicited on behalf of the Board of Directors
| VOTE BY: | ||||||||
 INTERNET |  | TELEPHONE 866-243-5450 |
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www.proxypush.com/WING • Cast your vote online. • View Meeting Documents. | OR
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Use any touch-tone telephone. Have your Proxy Card/Voting Instruction Form ready. Follow the simple recorded instructions. | |||||||||||
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• | Mark, sign and date your Proxy Card/Voting Instruction Form. | ||||
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| Return your Proxy Card/Voting Instruction Form in the postage-paid envelope provided. |
The undersigned hereby appoints Charles R. Morrison and Michael F. Mravle,J. Skipworth, and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Wingstop Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN ITEM 1, FOR THE PROPOSALS IN ITEMS 2 AND 3, AND FOR 1 YEAR FOR THE PROPOSAL IN ITEM 2.4.
All votes must be received by 5:00 P.M., Eastern Time, May 3, 2016.1, 2018.
PROXY TABULATOR FOR
WINGSTOP INC. P.O. BOX 8016
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CARY, NC 27512-9903 |
EVENT #
CLIENT # | ||||||||||
| Proxy — Wingstop Inc. Annual Meeting of Stockholders May This Proxy is Solicited on Behalf of the Board of Directors
The undersigned appoints Charles R. Morrison and Michael
This proxy is revocable and will be voted as directed. However, if no instructions are specified, the proxy will be voted FOR the election of the director nominees specified in Item 1, FOR the proposals in Items 2 and
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) |
