UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K/A
Amendment No. 1
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 29, 2019
or
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number
001-36104
POTBELLY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 36-4466837 | |
(State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) | |
111 N. Canal Street, Suite 850 Chicago, Illinois | 60606 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (312)
951-0600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $0.01 par value | PBPB | The NASDAQ Stock Market LLC (Nasdaq Global Select Market) |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2
of the Exchange Act.Large accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Act). Yes ☐ No ☒As of June 30
th
, 2019, the last trading day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s outstanding common equity held bynon-affiliates
was $116.7 million, based on the closing price of the registrant’s common stock on such date as reported on the Nasdaq Global Select Market. For the purposes of this computation, shares held by directors and executive officers of the registrant have been excluded. Such exclusion is not intended, nor shall it be deemed, to be an admission that such persons are affiliates of the registrant.As of January 26, 2020, 23,638,157 shares of the registrant’s common stock were outstanding.
EXPLANATORY NOTE
Potbelly Corporation (the “Company”, “Potbelly,” “we” and “our”) is filing this Amendment No. 1 on Form
10-K/A
(this “Amendment”) to its Form10-K
for the fiscal year ended December 29, 2019, which was filed with the SEC on February 27, 2020 (the “Original Filing”).This Amendment is being filed for the purpose of providing the information required by Items 10 through 14 of Part III of Form
10-K.
This information was previously omitted from the Original Filing in reliance on General Instruction G(3) to Form10-K,
which permits the above-referenced Items to be incorporated in the Annual Report on Form10-K
by reference from a definitive proxy statement, if such definitive proxy statement is filed no later than 120 days after the last day of the Company’s fiscal year on December 29, 2019, or April 27, 2020. A definitive proxy statement was not filed on or before April 27, 2020. Unless otherwise specifically noted to the contrary, the information provided in this Amendment is as of the date of the Original Filing.In accordance with Rule
12b-15
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the cover page to the Original Filing and Items 10 through 14 of Part III of the Original Filing are hereby amended and restated in their entirety. In addition, pursuant to Rule12b-15
under the Exchange Act, the Company is including Item 15 of Part IV, solely to file the certifications required under Section 302 of the Sarbanes-Oxley Act of 2002 with this Amendment.Except as described above, no other changes have been made to the Original Filing. This Amendment No. 1 does not affect any other section of the Original Filing not otherwise discussed herein and continues to speak as of the date of the Original Filing. The Company has not updated the disclosures contained in the Original Filing to reflect any events that occurred subsequent to the date of the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Company’s other filings made with the SEC subsequent to the filing of the Original Filing.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are made throughout this Annual Report and are intended to come within the safe harbor protection provided by those sections. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “strives,” “goal,” “seeks,” “projects,” “intends,” “forecasts,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout this Annual Report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in “Risk Factors” in Item 1A of this Annual Report on Form
10-K,
as amended, which include, but are not limited to, the following:• | competition in the restaurant industry, which is highly competitive and includes many larger, more well-established companies; |
• | changes in economic conditions, including the effects of consumer confidence and discretionary spending; |
• | our ability to successfully implement our business strategy; |
• | the success of our initiatives to increase sales and traffic, including menu optimization, off-premises sales options and increased marketing and brand awareness programs; |
• | the future cost and availability of credit, and the liquidity or operations of our suppliers and other service providers; |
• | fluctuation in price and availability of commodities, including but not limited to items such as beef, poultry, grains, dairy and produce and energy supplies, where prices could increase or decrease more than we expect; |
• | our ability to identify, open and operate new shops (which is dependent upon various factors such as the availability of attractive sites for new shops), negotiate suitable lease terms, terminate on acceptable terms or sublease or assign leases for underperforming shops, obtain all required governmental permits including zoning approvals on a timely basis, control construction and development costs and obtain capital to fund such costs, and recruit, train and retain qualified operating personnel; |
• | changes in consumer tastes and lack of acceptance or awareness of our brand in existing or new markets; |
• | failure of our marketing efforts to attract and retain customers; |
• | damage to our reputation caused by, for example, any perceived reduction in the quality of our food, service or staff or an adverse change in our culture, concerns regarding food safety and food-borne illness or adverse opinions about the health effects of our menu offerings; |
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• | local, regional, national and international economic and political conditions; |
• | the seasonality of our business; |
• | demographic trends; |
• | traffic patterns and our ability to effectively respond in a timely manner to changes in traffic patterns; |
• | the cost of advertising and media; |
• | inflation or deflation, unemployment rates, interest rates, and increases in various costs, such as real estate and insurance costs; |
• | adverse weather conditions, local strikes, natural disasters and other disasters, especially in local or regional areas in which our shops are concentrated; |
• | our digital business; |
• | litigation or legal complaints alleging, among other things, illness, injury or violations of federal and state workplace and employment laws and our ability to obtain and maintain required licenses and permits; |
• | government actions and policies; tax and other legislation; regulation of the restaurant industry; and accounting standards or pronouncements; |
• | our reliance on a limited number of suppliers for our major products and on a distribution network with a limited number of distribution partners for the majority of our national distribution program; |
• | security breaches of confidential customer information in connection with our electronic processing of credit and debit card transactions or the failure of our information technology system; |
• | actions taken by activist stockholders; |
• | our ability to adequately protect our intellectual property; and |
• | other factors discussed under “Business” in Item 1, “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Annual Report on Form 10-K, as amended. |
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements included in this document. These risks and uncertainties, as well as other risks of which we are not aware or which we currently do not believe to be material, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS AND EXECUTIVE OFFICERS
Director Biographies
The following is a list of our directors and nominees for director as of February 27, 2020, their ages as of December 31, 2019, their occupation during the last five years and certain other biographical information
Joseph Boehm
Our Board of Directors believes Mr. Boehm’s qualifications to serve as a member of our Board include his financial industries experience.
Effective June 9, 2020, Mr. Boehm also began serving as Lead Director of the Board until such time the Board appoints a new Chair.
Adrian Butler
,
Our Board of Directors believes Mr. Butler’s qualifications to serve as a member of our Board includes his expertise in information technology and experience in the food industry.
Susan Chapman-Hughes
Our Board of Directors believes Ms. Chapman-Hughes’s qualifications to serve as a member of our Board include her real estate knowledge and her general management, innovation, financial and digital experience.
Ms. Chapman-Hughes resigned from our Board of Directors effective June 8, 2020.
Dan Ginsberg
,
Our Board of Directors believes Mr. Ginsberg’s qualifications to serve as a member of our Board includes his extensive executive officer experience as well as his marketing and branding expertise.
Mr. Ginsburg resigned from our Board of Directors effective June 9, 2020.
Marla Gottschalk
,
4
board of trustees of Underwriters Laboratories, a world leader in safety testing and certification, a strategic board advisor for Ocean Spray Cranberries, Inc., and sits on the board of directors for Big Lots, Inc. and Reynolds Consumer Products. She has previously served as a director of GATX Corp. and as a director of Visteon Corp.
Our Board of Directors believes Ms. Gottschalk’s qualifications to serve as a member of our Board include her extensive experience with global companies, her expertise in the food industry and her years of experience in operations and strategic management.
David Head
Our Board of Directors believes Mr. Head’s qualifications to serve as a member of our Board include his extensive knowledge and proven restaurant industry experience in restaurant operations, food service and production.
Alan Johnson
,
on-demand
deliverystart-up.
Mr. Johnson has over 30 years of executive leadership experience across a variety of blue chip organizations.Our Board of Directors believes Mr. Johnson’s qualifications to serve as a member of our Board include his role as Chief Executive Officer and President, his leadership experience as an executive at publicly-traded companies in the restaurant and retail sectors and his extensive experience in the retail industry.
Effective July 20, 2020, Mr. Johnson separated from his officer and director positions with the Company.
Benjamin Rosenzweig
,
Our Board of Directors believes Mr. Rosenzweig’s qualifications to serve as a member of our Board include his financial advisory experience across multiple industries.
Executive Officer Biographies
In addition to Alan Johnson, our President and Chief Executive Officer, whose biography is included under the heading “Director Biographies,” our executive officers as of February 27, 2020, their ages as of December 29, 2019, and a brief account of their business experience follows:
Julie Younglove-Webb,
Effective September 4, 2020, Ms. Younglove-Webb resigned from her position with the Company.
5
Brandon Rhoten
Matthew Revord
Daniel Lecocq
Jeffrey Douglas
Chief Financial Officer Transition
On December 27, 2019, Thomas Fitzgerald resigned as our Chief Financial Officer, and Mr. Johnson temporarily assumed the responsibilities of principal financial officer. Effective April 6, 2020, Steven Cirulis was appointed to serve as our Senior Vice President, Chief Financial Officer and Chief Strategy Officer.
Delinquent Section 16(a) Reports
Compliance with Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC.
Based solely on a review of the copies of such reports filed with the SEC and on written representations from our executive officers and directors, we believe that during 2019 all Section 16(a) filing requirements were complied with on a timely basis, except that (1) David Head was late in filing one transaction on one required report on Form 3 and (2) William Atkins was late in filing one transaction on one required report on Form 4, in each case due to an administrative error.
Ethics Code of Conduct
We have a written ethics code of conduct that applies to our directors, officers and employees. A copy of this code is available at
http://investors.potbelly.com/corporate-governance/governance-documents
. We will disclose information regarding any amendment to or waiver from the provision of this code by posting it on the same portion of our website.Audit Committee
Our Board of Directors has established three standing committees to assist it with its responsibilities, including an Audit Committee. The Audit Committee currently consists of Mr. Boehm, Mr. Butler, and Ms. Gottschalk, and the chairperson is Ms. Gottschalk. Our Board of Directors has affirmatively determined that each of these Audit Committee members meets the independence criteria applicable to directors serving on the Audit Committee under NASDAQ and SEC rules. Our Board of Directors has also determined that each of these Audit Committee members meet the requirements for financial literacy under the applicable NASDAQ rules and that each is an “audit committee financial expert” under SEC rules. Our Board of Directors has adopted a written charter under which the Audit Committee operates.
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ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis section is intended to provide our shareholders with a clear understanding of our compensation philosophy, objectives and practices; our compensation setting process; our executive compensation program components; and the decisions made with respect to the 2019 compensation of each of our Named Executive Officers (“
NEOs
”). For 2019 our NEOs were:• | Alan Johnson, President and Chief Executive Officer |
• | Tom Fitzgerald, Senior Vice President and Chief Financial Officer (resigned effective December 27) |
• | Julie Younglove-Webb, Senior Vice President and Chief Restaurant Operations Officer |
• | Brandon Rhoten, Senior Vice President and Chief Marketing Officer |
• | Matthew Revord, Senior Vice President, Chief Legal Officer, Chief People Officer and Secretary |
Executive Summary
Performance Overview for 2019.
adding off-premise sales
options, and increasing marketing and brand awareness programs. We made the investments required and tested new ideas to drive brand awareness, interest and purchase intent, and to support our topline, margin, profitability and growth aspirations. While we achieved meaningful progress toward our objectives, and the fourth quarter of fiscal year 2019 represented our best comparable same-store sales in over three years, we recognized that there is still work to be done as our actions did not translate into share price performance in 2019.Our incentive compensation plans worked as intended in 2019. The payouts under those plans were strongly aligned with our financial and stock price performance – demonstrating our commitment to structure an executive compensation program that pays for performance.
2019 Pay Actions.
Compensation Philosophy and Objectives
Our compensation philosophy is to pay for performance, rewarding employees when performance targets are met. Merit increases, annual incentive compensation, equity awards, and incremental paid time off are all tied to performance and results. Our compensation programs are designed to attract, retain, motivate, and reward employees. Our pay program is designed to compensate employees commensurate with the scope and influence of the employee’s role and the extent to which an employee contributes to the achievement of key initiatives and financial targets, and demonstrates our values. All of our compensation programs are designed to align and reward actions that we believe contribute to our competitiveness and encourage superior performance.
We evaluate our executives on a scale of one through five. A score of three means the executive is a “Contributor,” four is a “High Contributor” and five is a “Star.” Annual cash compensation varies based on the executive’s score, other individual performance measures, Company performance, and contributions to Potbelly.
7
Executive pay is tied to both the Company’s and the individual’s annual performance. Merit increases, annual incentive compensation, equity compensation, when granted, and paid time off are generally awarded in March or April of each year, following completion of the first quarter annual performance review cycle, the annual financial audit and approval from the Compensation Committee. The employment agreements of our named executive officers specify each executive’s annual incentive bonus target under our current bonus program. In addition, at the discretion of the Compensation Committee in the case of our Chief Executive Officer, and at the discretion of our Chief Executive Officer and upon the approval of the Compensation Committee in the case of our other executive officers, there may be an increase or decrease applied to the annual bonus awarded to an executive, including the other named executive officers, in order to account for exceptional circumstances. However, it is anticipated that such bonuses would only be awarded under unusual circumstances to further the objectives of our compensation program.
Elements of Executive Compensation
The following table provides information regarding the elements of our executive compensation program.
Element | Form | Objectives and Basis | ||
Base Salary | Cash | Attract and retain highly qualified executives. Determined based on the position’s importance within the Company, the executive’s experience, and external market data. | ||
Long-Term Incentive | RSUs and PSUs | Aligns the incentives of our executive officers with shareholder interests and rewards the creation of shareholder value; retain executives through long-term vesting. | ||
Annual Incentive Plan | Cash | Determined under our company-wide Annual Incentive Plan, which provides for variable payouts based on financial performance against pre-established total company revenue and adjusted EBITDA targets and Compensation Committee discretion. |
Other Compensation Policies.
provide sign-on bonuses
and new-hire equity
awards (subject to a time-based vesting period) when the Compensation Committee determines it is necessary and appropriate to advance the Company’s interests, including toattract top-executive talent
from othercompanies. Sign-on bonuses
and new hire equity awards are an effective means of offsetting the compensation opportunities executives forfeit when they leave a former employer to join the Company.Our Executive Compensation Process
Compensation for our executive officers is comprised of base salary, target value of long-term incentive, and target annual incentive bonus. Executive compensation is designed to be competitive with peer companies and market data, as explained below under “Role of Market Data and Our Peer Group.”
Roles and Responsibilities of the Compensation Committee, Compensation Consultant and the CEO in Setting Executive Officer Compensation.
Compensation Committee
The Compensation Committee reports to the Board. In accordance with its obligations as set forth in its charter, the Compensation Committee retains independent consultants and counsel to assist it in evaluating compensation as well as working with the CEO and the CFO to set performance goals. The Compensation Committee determines and approves executive compensation annually, with base salaries, bonus payments (for performance the prior fiscal year), performance goals for long-term incentive grants and annual incentive bonuses approved during the first quarter of the fiscal year. This process allows the Compensation Committee to consider comprehensive information, including the Company’s performance and each named executive officer’s individual performance during the prior fiscal year, when making final compensation decisions.
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Compensation Consultant
In 2019, the Compensation Committee retained the Rewards Solutions practice at Aon plc to provide executive compensation consulting services. Aon attended Compensation Committee meetings when requested and worked with management as necessary to gather and review information required to carry out its obligations. Aon also advised the Compensation Committee on the appropriateness and competitiveness of our compensation programs relative to market practice, our strategy and our internal processes.
CEO
Mr. Johnson, our CEO, and other members of the management team support the Compensation Committee in the executive compensation process and regularly attend portions of committee meetings. Mr. Johnson provides the Compensation Committee with his perspective regarding the performance of his executive leadership team, including the other named executive officers. Mr. Johnson makes recommendations to the Compensation Committee on the full range of annual executive compensation decisions, except with regard to his own compensation. In accordance with NASDAQ rules, Mr. Johnson was not present when his compensation for fiscal 2019 was being discussed and did not vote on executive compensation matters, and neither Mr. Johnson nor other members of management attended executive sessions of the Compensation Committee.
Role of Market Data and Our Peer Group.
The Compensation Committee does not explicitly benchmark our executive officers’ compensation to the peer group, but the peer group data is one of multiple reference points used to evaluate our executive compensation programs.
2019 Peer Group.
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Casual Dining | ||
Ark Restaurants Corp. BJ’s Restaurants, Inc. Chuy’s Holdings, Inc. Denny’s Corporation | Dine Brands Global, Inc. J. Alexander’s Holdings, Inc. Luby’s Inc. | |
Fine Dining | ||
Del Frisco’s Restaurant Group, Inc. | Ruth’s Hospitality Group, Inc. | |
Quick Casual | ||
Fiesta Restaurant Group, Inc. Noodles & Company | The Habit Restaurants, Inc. Zoe’s Kitchen, Inc. | |
Quick Service | ||
Bojangles’, Inc. Carrols Restaurant Group, Inc. Del Taco Restaurants, Inc. | El Pollo Loco Holdings, Inc. |
Base Salary
The Compensation Committee generally reviews and approves base salaries annually during its meetings in the first quarter with new salaries becoming effective
in mid-April. For
fiscal 2019, the Compensation Committee reviewed and approved the base salaries shown below (and with respect to Mr. Johnson, the Compensation Committee recommended, and the independent directors approved). As the named executive officers did not receive any merit, equity or bonus compensation in fiscal year 2018, Ms. Young-love Webb and Mr. Revord were granted merit increases for fiscal year 2019.Base Salary (Annualized Rate) | ||||||||||||
Named Executive Officer | Fiscal 2019 | Fiscal 2018 | % Change | |||||||||
Alan Johnson | $ | 746,750 | $ | 725,000 | 3 | % | ||||||
Tom Fitzgerald (1) | $ | 425,000 | $ | 425,000 | 0 | % | ||||||
Julie Younglove-Webb | $ | 380,800 | $ | 340,000 | 12 | % | ||||||
Brandon Rhoten (2) | $ | 425,000 | $ | 425,000 | 0 | % | ||||||
Matthew Revord | $ | 403,300 | $ | 370,000 | 9 | % |
(1) | Mr. Fitzgerald was hired in December 2018 and resigned from his position effective December 2019. |
(2) | Mr. Rhoten was hired in June 2018. |
Annual Incentive Plan
The Company has established the Support Center Annual Incentive Plan to provide annual cash incentive compensation to executives in its corporate offices (the “
Support Center
”). The graphic below illustrates the weighting of the metrics and the calculation of the objective component of the Annual Incentive Plan.10
This plan sets a threshold, target, and maximum level for each of these metrics applicable to all executive officers, and the amounts paid are based on the actual results achieved by the Company. The targets are set for the year by the Compensation Committee based on recommendations from the CEO and the CFO and are communicated to executives at the beginning of each year. To be eligible for an award under the plan, the named executive officer must receive an annual individual performance appraisal rating of “Contributor” or higher. The threshold, target and maximum criteria and actual fiscal year 2019 results for Same Store Sales and Adjusted EBITDA are as follows.
Threshold (50%) | Target (100%) | Maximum (200%) | ||||||||||
Same Store Sales – 3-year average | +1.2 | % | +2.4 | % | +3.0 | % | ||||||
Adjusted EBITDA (1) (in millions) – 3 years cumulative | $ | 110.0 | $ | 117.5 | $ | 122.0 |
The chart below sets forth the threshold, target, and maximum percentages of base salary for awards under the Support Center Annual Incentive Plan in 2019, together with the actual bonus levels paid to our NEOs, based on actual Company results.
Named Executive Officer | Threshold | Target | Maximum | Bonus Earned | ||||||||||
(%) of Target | ($) | |||||||||||||
Alan Johnson | — | 100% of base salary | 200% of base salary | 0 | % | $ | 0 | |||||||
Tom Fitzgerald | 48% of base salary | 60% of base salary | 90% of base salary | 0 | % | $ | 0 | |||||||
Julie Younglove-Webb | 48% of base salary | 60% of base salary | 90% of base salary | 0 | % | $ | 0 | |||||||
Brandon Rhoten | 48% of base salary | 60% of base salary | 90% of base salary | 0 | % | $ | 0 | |||||||
Matthew Revord | 48% of base salary | 60% of base salary | 90% of base salary | 0 | % | $ | 0 |
For fiscal year 2019, the Company did not achieve the threshold level for either of the metrics. Accordingly, no annual cash incentive awards were paid to the named executive officers under the Support Center Annual Incentive Plan for fiscal 2019 performance.
Long-Term Incentive Awards
Long-term incentive awards are currently granted under our 2019 Long-Term Incentive Plan (the “
Plan
”), which replaced the Potbelly Corporation Amended and Restated 2013 Incentive Plan (the “Prior Plan”) (provided that outstanding awards under the Prior Plan will continue to be subject to the terms of the Prior Plan). The Plan is administered by the Compensation Committee. We have adopted amendments to the Plan, subject to approval by our shareholders. A description of the amendments to the Plan is included in Proposal 4.Equity awards represent an important component of our named executive officer compensation. Beginning with grants in 2019, the equity mix for executive officers changed from 50% stock options and 50% restricted stock units to 50% performance stock units and 50% restricted stock units. The change from stock options to performance stock units served to further align the interests of our shareholders and our executive officers by increasing the proprietary interest of our executive officers in the Company’s growth and success; advance the Company’s interests by attracting and retaining qualified employees over time; and motivate our executives to act in the long-term best interests of our shareholders. To be eligible for an award, the named executive officer must receive an annual individual performance appraisal rating of “Contributor” or higher the previous year. All of our named executive officers, other than Mr. Fitzgerald, who joined the Company in December 2018, were eligible to receive an award in 2019. The graphic below illustrates the weighting of the metrics and the calculation of the long-term incentive award.
Performance Stock Units
Annual performance stock units were granted to our named executive officers on March 15, 2019 pursuant to the Prior Plan. The performance stock units
have 3-year cliff
vesting and the earning of the grants is based on achievement of adjusted EBITDA and same store sales goals over the three-year performance period. These two metrics were chosen based on (1) the criteria that the awards would be aligned to the Company’s long-term strategy and (2) a comparison with the compensation metrics used by the Company’s peer group and the broader industry. The specific targets are designated at the beginning of the performance period by the Compensation Committee. To reflect performance above or below target, the value of the grants is determined by a sliding11
scale that provides for payouts greater than target (up to a maximum 200% payout) or less than target (down to a 50% payout for threshold performance, below which the payout would be 0%). The table below outlines the threshold, target and maximum values for the performance period from December 31, 2018 to December 26, 2021.
Threshold (50%) | Target (100%) | Maximum (200%) | ||||||||||
Same Store Sales – 3-year average | +1.2 | % | +2.4 | % | +3.0 | % | ||||||
Adjusted EBITDA (1) (in millions) – 3 years cumulative | $ | 110.0 | $ | 117.5 | $ | 122.0 |
Restricted Stock Units
Annual restricted stock units were granted to our named executive officers on March 15, 2019 pursuant to the Prior Plan. The restricted stock units vest over three years, beginning on the first anniversary of the grant date
Other Plans
Our named executive officers are eligible to participate in our 401(k) plan. The Company matches 50% of the contributions that our employees, including our named executive officers, make to the 401(k) plan, with a maximum matching contribution of $3,000 per year.
The Company established in fiscal 2014
a non-qualified deferred
compensation plan which allows highly compensated employees to defer a portion of their base salary and variable compensation each plan year. The Company matches 50% of the contributions that our highly-compensated employees, including our named executive officers, make to the deferred compensation plan, with a maximum matching contribution of $3,000 per year. If an employee participates in both the 401(k) plan andthe non-qualified deferred
compensation plan, the total maximum matching contribution is $3,000 per year.Executive Stock Ownership Guidelines
Our stock ownership guidelines were established for executive officers to encourage them to have a long-term equity stake in the Company and to align their interests with shareholders. The Board expects that all executive officers own, or acquire within the later of (i) August of 2022, and (ii) five years of first becoming an executive officer, shares of Potbelly common stock (including restricted shares, but not options, under Potbelly’s equity-linked incentive plans) having a market value of a multiple of such executive officer’s annual base salary. For the Chief Executive Officer, the multiple is four (4) times annual base salary and for all other executive officers the multiple shall be one
and one-half (1.5)
times annual base salary.12
Anti-Hedging Policy
Under the Company’s Anti-Hedging Policy, our directors, officers and employees are prohibited from engaging in any kind of hedging transaction that could reduce or limit such person’s holdings, ownership or interest in or to any securities of the Company, including without limitation outstanding stock options, deferred share units, restricted share units, or other compensation awards the value of which are derived from, referenced to or based on the value or market price of securities of the Company. Prohibited transactions include the purchase by a director, officer or employee of financial instruments, including, without limitation, prepaid variable forward contracts, instruments for short sale or purchase or sale of call or put options, equity swaps, collars, or units of exchangeable funds, that are designed to or that may reasonably be expected to have the effect of hedging or offsetting a decrease in the market value of any securities of the Company.
Clawbacks and Forfeiture Provisions
On October 2019, the Company adopted an executive compensation recoupment policy that provides for the potential recoupment of any incentive-based award paid to all current and former executive officers. In the event that the Company is required to restate its financial results due to material noncompliance with any financial reporting requirement as a result of any gross negligence, intentional misconduct, theft, embezzlement, fraud or other serious misconduct by an executive officer, the result of which is that any performance-based compensation received by such executive officer during the three-year period preceding the publication of the restated financial statement would have been lower had it been calculated based on such restated results, the Compensation Committee may seek to recover the excess of the incentive compensation paid to the executive based on the erroneous data.
Employment Agreements
The following is a summary of the employment agreements and similar agreements the Company has entered into with each of the named executive officers.
Chief Executive Officer Employment Agreement.
Johnson Agreement
”) pursuant to which he will serve as our President and Chief Executive Officer. The Johnson Agreement provides for a base salary of $725,000, subject to increase from time to time in the discretion of the Board. For the 2019 calendar year, Mr. Johnson’s base salary was $746,750. The Johnson Agreement provides that beginning with the 2018 calendar year, Mr. Johnson is eligible for an annual bonus amount to be determined by the Compensation Committee. For the 2019 calendar year, Mr. Johnson was eligible for an annual target bonus of 100% of base salary, with a maximum bonus of 200% of base salary, subject to satisfaction of applicable Company and individual performance targets. The Johnson Agreement also provides for the reimbursement of relocation expenses actually incurred, including transportation expenses, temporary housing, moving household goods, real estate commissions and closing costs incurred with the sale of his current residence and with the purchase of a residence in the Chicago area.The Johnson Agreement contemplates that Mr. Johnson may be granted equity awards under the Company’s equity incentive plan beginning with calendar year 2019 with a target award value of $1,000,000, with the actual value of the equity award for any year determined by the Compensation Committee in its sole discretion.
The Johnson Agreement terminates upon death, disability, termination by us with or without cause or resignation by Mr. Johnson with or without good reason. The Johnson Agreement generally defines “cause” as Mr. Johnson’s (i) willful and continued failure to substantially perform his duties for the Company (other than due to his disability); (ii) willful engagement in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; (iii) engaging in egregious misconduct involving serious moral turpitude to the extent that, in the reasonable judgment of the Board, Mr. Johnson’s credibility and reputation no longer confirm to the standard of the Company’s executives; (iv) indictment for the commission of a crime that constitutes a felony; or (v) a breach of hisintellectual property agreement. The Johnson Agreement generally defines “good reason” as (1) assignment of duties that are materially inconsistent with his position and that result in a substantial diminution of the duties applicable to the position; (2) material reduction in base salary; (3) relocation to a place more than 50 miles from Chicago; or (4) material breach of the agreement by us.
confidentiality, non-competition, non-interference and
Mr. Johnson is also a party to a confidentiality, noncompetition, noninterference and intellectual property agreement, with the noncompetition and noninterference covenants lasting for one year after termination of employment. For information regarding the severance benefits under the Johnson Agreement as well as the treatment of Mr. Johnson’s outstanding equity awards upon a qualifying termination or a corporate transaction/change in control, see “Potential Payments Upon Termination of Employment or a Corporate Transaction/Change in Control – Alan Johnson Employment Agreement.”
13
Named Executive Officer Employment Agreements.
Each NEO’s employment agreement provides for a base salary subject to increase from time to time by the Compensation Committee at the recommendation of our President and Chief Executive Officer. Under the employment agreements, the NEOs are each eligible for an annual bonus in accordance with incentive plan metrics recommended by the CEO and CFO and approved by the Compensation Committee. The employment agreements also provide the executives with standard benefits and perquisites. The employment agreements contemplate that the executives may be granted equity awards under our equity incentive plans.
Our NEOs each continue to be parties to a confidentiality, noncompetition, noninterference and intellectual property agreement, with the noncompetition and noninterference covenants lasting for one year after termination of employment.
Executive Officer Retention Awards.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in Annual Report on Form
10-K
with management. Based on such review, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form10-K
for filing with the SEC.Susan Chapman-Hughes,
Chairman
Marla Gottschalk
David Head
Ben Rosenzweig
14
2019 COMPENSATION TABLES
2019 Summary Compensation Table
The following table summarizes compensation for the years ending December 29, 2019, December 30, 2018 and December 31, 2017 earned by our named executive officers.
Name and Principal Position | Year | Salary | Bonus (1) | Stock Awards (2) | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation (3) | Total | ||||||||||||||||||||||||
Alan Johnson (4) | 2019 | $ | 746,750 | $ | — | $ | 1,250,000 | $ | — | $ | — | $ | 18,519 | $ | 2,015,269 | |||||||||||||||||
Chief Executive Officer | 2018 | $ | 725,000 | $ | 543,750 | $ | 0 | $ | — | $ | — | $ | 399,114 | $ | 1,667,854 | |||||||||||||||||
(Principal Executive Officer) | 2017 | $ | 36,250 | $ | — | $ | 1,000,000 | $ | 1,000,000 | $ | — | $ | — | $ | 2,036,250 | |||||||||||||||||
Thomas Fitzgerald (5) | 2019 | $ | 444,615 | $ | — | $ | — | $ | — | $ | — | $ | 4,828 | $ | 449,443 | |||||||||||||||||
Former Chief Financial Officer (Principal Financial Officer) | 2018 | $ | 16,346 | $ | — | $ | 350,000 | $ | 350,000 | �� | $ | — | $ | — | $ | 716,346 | ||||||||||||||||
Julie Younglove-Webb | 2019 | $ | 380,800 | $ | 382,500 | $ | 782,000 | $ | — | $ | — | $ | 1,318 | $ | 1,546,618 | |||||||||||||||||
Chief Restaurant Operations | 2018 | $ | 340,000 | $ | 51,000 | $ | — | $ | — | $ | — | $ | — | $ | 391,000 | |||||||||||||||||
Officer | 2017 | $ | 335,961 | $ | — | $ | 195,000 | $ | 195,000 | $ | — | $ | — | $ | 725,961 | |||||||||||||||||
Brandon Rhoten (6) | 2019 | $ | 425,000 | $ | — | $ | 281,972 | $ | — | $ | — | $ | 217 | $ | 707,189 | |||||||||||||||||
Chief Marketing Officer | 2018 | $ | 228,846 | $ | 36,678 | $ | 250,000 | $ | 250,000 | $ | — | $ | 21,125 | $ | 786,649 | |||||||||||||||||
Matthew Revord | 2019 | $ | 403,300 | $ | 416,250 | $ | 481,000 | $ | — | $ | — | $ | 3,000 | $ | 1,303,550 | |||||||||||||||||
Chief Legal Officer, Chief | 2018 | $ | 370,000 | $ | 205,500 | $ | — | $ | — | $ | — | $ | — | $ | 575,500 | |||||||||||||||||
People Officer | 2017 | $ | 367,442 | $ | — | $ | 150,000 | $ | 150,000 | $ | — | $ | — | $ | 667,442 |
(1) | Represents retention bonuses paid to Ms. Younglove-Webb and Mr. Revord pursuant to the terms of retention agreements entered with each of Ms. Younglove-Webb and Mr. Revord. |
(2) | Represents the aggregate grant date fair value calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“FASB ASC Topic 718”) of restricted stock units (RSUs) and performance share units (PSUs). See Note 12 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 29, 2019 for a discussion of the relevant assumptions used in calculating these amounts. The amounts reported in this column do not correspond to the actual value that will be recognized by the NEOs. The actual value that an NEO may realize will depend on the stock price at the date of vesting and the NEO’s continued service through the vesting period. The 2019 PSU awards will not pay out or have any value unless certain performance targets are achieved, which targets are based on three-year same store sales goals and adjusted EBITDA from 2019-2021.The grant date fair value of the 2019 PSU awards, assuming maximum performance, is $750,000 for Mr. Johnson, $391,000 for Ms. Young-love, $140,986 for Mr. Rhoten and $240,500 for Mr. Revord. The grant date fair value of the 2019 performance-based RSU awards were $500,000 for Mr. Johnson, $391,000 for Ms. Younglove-Webb, $140,986 for Mr. Rhoten and $240,500 for Mr. Revord. The PSUs will vest at the end of fiscal year 2021. The RSUs will vest over a period of three years. For further discussion, see above under “Compensation Discussion and Analysis – Long Term Incentive Awards.” |
(3) | Amount for Mr. Johnson under All Other Compensation represents relocation expenses in the amount of $6,300, Company-paid life insurance in the amount of $594.10, parking expenses in the amount of $1,520.40, and related tax reimbursements in the amount of $10,104.42. Amount for Mr. Fitzgerald consists of relocation expenses. Amounts for Ms. Younglove-Webb, Mr. Rhoten and Mr. Revord consists of matching contributions made by the Company to Potbelly’s 401(k) Plan for the benefit of the executive. |
(4) | Mr. Johnson joined the Company as Chief Executive Officer effective November 29, 2017. |
(5) | Mr. Fitzgerald joined the Company as Chief Financial Officer effective December 3, 2018 and left the Company in December 2019. |
(6) | Mr. Rhoten joined the Company as Chief Marketing Officer effective June 4, 2018. |
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Grants of Plan-Based Awards in 2019
The following table sets forth information regarding fiscal 2019 annual incentive bonus awards and equity awards granted to our NEOs for fiscal 2019 performance.
All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards ($/SH) | Grant Date Fair Value of Stock and Option Awards ($) | |||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards (1) | |||||||||||||||||||||||||||||||||||||||||||||||
Name | Award | Grant Date) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||
Alan Johnson | AIP | (2) | — | — | $ | 746,750 | $ | 1,483,500 | ||||||||||||||||||||||||||||||||||||||||
RSUs | (3) | 3/15/2019 | 59,102 | 500,000 | ||||||||||||||||||||||||||||||||||||||||||||
PSUs | (4) | 3/15/2019 | 44,326 | 88,652 | 177,304 | 750,000 | ||||||||||||||||||||||||||||||||||||||||||
Thomas Fitzgerald | AIP | (2) | — | $ | 204,000 | $ | 255,000 | $ | 400,154 | |||||||||||||||||||||||||||||||||||||||
Julie Younglove-Webb | AIP | (2) | — | $ | 182,784 | $ | 228,480 | $ | 382,500 | |||||||||||||||||||||||||||||||||||||||
RSUs | (3) | 3/15/2019 | 46,217 | 391,000 | ||||||||||||||||||||||||||||||||||||||||||||
PSUs | (4) | 3/15/2019 | 23,109 | 46,217 | 92,434 | 391,000 | ||||||||||||||||||||||||||||||||||||||||||
Brandon Rhoten | AIP | (2) | — | $ | 204,000 | $ | 255,000 | $ | 382,500 | |||||||||||||||||||||||||||||||||||||||
RSUs | (3) | 3/15/2019 | 16,665 | 140,986 | ||||||||||||||||||||||||||||||||||||||||||||
PSUs | (4) | 3/15/2019 | 8,333 | 16,665 | 33,330 | 140,986 | ||||||||||||||||||||||||||||||||||||||||||
Matthew Revord | AIP | (2) | — | $ | 193,584 | $ | 241,980 | $ | 362,970 | |||||||||||||||||||||||||||||||||||||||
RSUs | (3) | 3/15/2019 | 28,428 | 240,500 | ||||||||||||||||||||||||||||||||||||||||||||
PSUs | (4) | 3/15/2019 | 14,214 | 28,428 | 56,856 | 240,500 |
(1) | All equity awards are denominated in shares of common stock and were granted under the Potbelly Corporation Amended and Restated 2013 Incentive Plan. |
(2) | Each executive officer was entitled to a cash award under the Support Center Annual Incentive Plan as described under “Compensation Discussion and Analysis – Annual Incentive Plan.” In fiscal year 2019, the Company did not achieve the threshold levels for the either metric under the Support Center Annual Incentive Plan, and accordingly, no annual cash incentive awards were paid to the named executive officers. |
(3) | Reflects restricted stock units that vest in three equal annual installments (subject to rounding of partial shares) beginning on first anniversary of the grant date. |
(4) | Reflects performance stock units that vest at the end of fiscal year 2021 (subject to rounding of partial shares), subject to the achievement of certain performance targets. The payout range for the PSUs is 0% to 200%, and none of the PSUs will vest if the performance target is below threshold. |
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Outstanding Equity Awards at
Fiscal Year-End
The following table summarizes outstanding stock options and stock awards for each named executive officer as of December 31, 2019.
Options Awards | Stock Awards | |||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) | Number of Units of Stock That Have Not Vested | Market Value of Units of Stock That Have Not Vested (2) | ||||||||||||||||||||||||||
Named Executive Officer | Exercisable | Unexercisable (1) | Option Exercise Price Per Share | Option Expiration Date | ||||||||||||||||||||||||
Alan Johnson | 100,200 | 100,201 | $ | 14.08 | 11/29/2027 | 26,041 | (3) | $ | 110,414 | |||||||||||||||||||
59,102 | (4) | $ | 250,592 | |||||||||||||||||||||||||
88,652 | (5) | $ | 375,884 | |||||||||||||||||||||||||
Tom Fitzgerald | 23,339 | 0 | $ | 9.37 | 12/3/2028 | |||||||||||||||||||||||
Brandon Rhoten | 11,878 | 35,635 | $ | 13.05 | 6/4/2028 | 12,771 | (3) | $ | 54,149 | |||||||||||||||||||
16,665 | (4) | $ | 70,660 | |||||||||||||||||||||||||
16,665 | (5) | $ | 70,660 | |||||||||||||||||||||||||
Julie Younglove-Webb | 3,709 | 0 | $ | 7.00 | 7/1/2020 | 5,882 | (3) | $ | 24,940 | |||||||||||||||||||
10,000 | 0 | $ | 7.22 | 5/10/2021 | 46,217 | (4) | $ | 195,960 | ||||||||||||||||||||
20,000 | 0 | $ | 8.16 | 3/5/2022 | 46,217 | (5) | $ | 195,960 | ||||||||||||||||||||
20,000 | 0 | $ | 9.47 | 3/5/2023 | ||||||||||||||||||||||||
25,000 | 0 | $ | 14.00 | 10/4/2023 | ||||||||||||||||||||||||
7,185 | 0 | $ | 20.53 | 3/6/2024 | ||||||||||||||||||||||||
95,000 | 0 | $ | 14.22 | 5/8/2025 | ||||||||||||||||||||||||
21,108 | 7,037 | $ | 13.73 | 3/4/2026 | ||||||||||||||||||||||||
22,169 | 22,170 | $ | 11.05 | 5/11/2027 | ||||||||||||||||||||||||
Matthew Revord | 7,000 | 0 | $ | 7.00 | 7/1/2020 | 4,525 | (3) | $ | 19,186 | |||||||||||||||||||
49,427 | 0 | $ | 7.22 | 5/10/2021 | 28,428 | (4) | $ | 120,535 | ||||||||||||||||||||
75,000 | 0 | $ | 14.00 | 10/4/2023 | 28,428 | (5) | $ | 120,535 | ||||||||||||||||||||
14,369 | 0 | $ | 20.53 | 3/6/2024 | ||||||||||||||||||||||||
75,000 | 0 | $ | 12.98 | 3/5/2025 | ||||||||||||||||||||||||
18,998 | 6,333 | $ | 13.73 | 3/4/2026 | ||||||||||||||||||||||||
17,053 | 17,054 | $ | 11.05 | 5/11/2027 |
(1) | Unvested portions of option awards are generally forfeited upon termination of employment. See “– Potential Payments Upon Termination of Employment or a Corporate Transaction/Change of Control” for additional information regarding accelerated vesting on certain terminations of employments. The vesting dates for the stock option awards described in the Outstanding Equity Awards at Fiscal Year-End table are as follows: |
Named Executive Officer | Vest Date | Number of Securities Underlying Unexercised Options | ||||||
Alan Johnson | 11/29/2020 | 50,100 | ||||||
11/29/2021 | 50,101 | |||||||
Julie Younglove-Webb | 3/4/2020 | 7,037 | ||||||
3/7/2020 | 11,085 | |||||||
3/7/2021 | 11,085 | |||||||
Brandon Rhoten | 6/4/2020 | 11,878 | ||||||
6/4/2021 | 11,878 | |||||||
6/4/2022 | 11,879 | |||||||
3/4/2020 | 6,333 | |||||||
Matthew Revord | 3/7/2020 | 8,527 | ||||||
3/7/2021 | 8,527 |
(2) | Calculated based on the closing price of our common stock on the last trading day of the fiscal year, December 27, 2019, which was $4.24. |
17
(3) | Represents restricted stock awards which vest in three equal installments on each anniversary of the grant date. |
(4) | Represents the annual grant of restricted shares units for 2019, which vest in three equal installments on each anniversary of the grant date. |
(5) | Represents the annual grant of performance share units for 2019, assuming achievement at the target level over a three-year performance period (2019 through 2021). |
Option Exercises and Stock Vested
The following table provides information regarding stock options that were exercised by our named executive officers and stock awards that vested during fiscal 2019. Option award value realized is calculated by subtracting the aggregate exercise price of the options exercised from the aggregate market value of the shares of common stock acquired on the date of exercise. Stock award value realized is calculated by multiplying the number of shares shown in the table by the closing price of our stock on the date the stock awards vested.
Option Awards | Stock Awards | |||||||||||||||||||
Name | Grant Date | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) (2) | Value Realized on Vesting ($) | |||||||||||||||
Alan Johnson | 11/29/2017 | 26,042 | 131,773 | |||||||||||||||||
Tom Fitzgerald | 12/3/2018 | 12,451 | 57,773 | |||||||||||||||||
Julie Younglove-Webb | 5/11/2017 | 5,882 | 50,115 | |||||||||||||||||
Brandon Rhoten | 6/4/2018 | 6,386 | 31,738 | |||||||||||||||||
Matthew Revord | 1/22/2009 | 12,200 | 2,196 | |||||||||||||||||
7/29/2013 | 6,000 | 1,080 | ||||||||||||||||||
5/11/2017 | 4,525 | 38,553 |
(1) | The value realized on exercise is calculated by multiplying the number of shares of our common stock that were acquired by the difference between the fair market value of a share of our common stock at the time of exercise and the exercise price of the stock option. The fair market value of a share of our common stock is based on the price of a share of our common stock as reported on NASDAQ. |
(2) | The value realized on vesting is calculated by multiplying the number of shares of our common stock that vested by the fair market value of a share of our common stock on the vesting date. The fair market value of a share of our common stock is based on the closing price of a share of our common stock on the vesting date as reported on NASDAQ. |
18
Nonqualified Deferred Compensation
The Company established in fiscal 2014
a non-qualified deferred
compensation plan which allows highly compensated employees to defer up to 80% of their salary and up to 100% of their bonus each plan year. The Company matches 50% of the contributions that our highly-compensated employees, including our named executive officers, make to the deferred compensation plan, with a maximum matching contribution of $3,000 per year. If an employee participates in both the 401(k) plan andthe non-qualified deferred
compensation plan, the total maximum matching contribution is $3,000 per year. Our matching contribution vests over six years starting on the first day of the participant’s service with the Company, such that an eligible employee with six years of service will be 100% vested in our matching contributions. Our matching contribution also fully vests upon the participant’s retirement at 65 or older, death, disability or a change of control. If the participant separates from the Company prior to his or her seniority date (the earlier the participant attains 62 years of age or 10 years of service from date of hire) or upon a change of control or death, the distribution payment will be made as a lump sum to the participant’s account. If the participant separates from the Company after his or her seniority date, or upon disability, the participant may elect to receive the distribution as a lump sum payment or in up to five annual installments.The following table shows the contributions, earnings and account balances for the named executive officers under the nonqualified deferred compensation plan for the fiscal year ended December 29, 2019:
Name | Executive Contributions in Last Fy | Registrant Contributions in Last Fy | Aggregate Earnings in Last Fy | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last Fye | |||||||||||||||
Alan Johnson | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Tom Fitzgerald | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Julie Younglove-Webb | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Brandon Rhoten | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Matthew Revord | $ | 55,207 | $ | — | $ | 35,278 | $ | — | $ | 210,157 |
Potential Payments Upon Termination of Employment or a Corporate Transaction/Change in Control
Each of our named executive officers serves at the pleasure of our Board of Directors. Our employment agreements with the named executive officers include provisions requiring us to make post-termination payments upon certain qualifying termination events. The disclosure below describes certain compensation that may become payable as a result of a qualifying termination of employment, based on the employment agreement in effect for each executive on December 27, 2020, the last business day of fiscal year 2020. In addition, the following disclosure describes the impact of a qualifying termination of employment (where a “qualifying termination means a termination by the Company without cause or termination by the named executive officer for good reason), a corporate transaction or a change in control, termination due to death or disability, or retirement under the terms of the our named executive officers’ employment agreements and equity awards held by each of our named executive officers as of December 27, 2020. These benefits are in lieu of benefits generally available to salaried employees. Mr. Fitzgerald did not receive any payments or benefits upon termination other than base salary and vacation accrued through his termination date.
Alan Johnson Employment Agreement.
occurs pro-rated through
the date of termination and based on actual performance for the year of termination; and subsidized COBRA benefits for 12 months, all subject to a release. In the event Mr. Johnson’s employment terminates in a qualifying termination on or within 12 months after a Change in Control, Mr. Johnson is entitled to a lump sum payment equal to 18 months of base salary plus his target annual bonus for the year in which the termination date occurs; any annual bonus earned with respect to the most recently completed fiscal year; subsidized COBRA benefits for 12 months; and all equity awards shall vest and shall be exercisable. Payments and benefits in connection with a Change in Control are not subject to a release. If termination occurs due to death or disability, Mr. Johnson will receive any accrued amounts otherwise owed.Named Executive Officer Employment Agreements.
19
payable in installments over 12 months and subsidized COBRA benefits for 12 months, all subject to a release. In the event the executive’s employment terminates in a qualifying termination on or within 12 months after a Change in Control, the executive is entitled to the same severance payments and benefits described above and a payment equal to the amount of the annual bonus that the executive would have received for the year in which the termination
occurs pro-rated through
the date of termination and based on actual performance for the year of termination (the “Pro-rated
Bonus
”). Payments and benefits in connection with a Change in Control are not subject to a release. If termination occurs due to death or disability, in addition to any accrued amounts otherwise owed to the executive, the executive will receivethe Pro-rated Bonus,
subject to a release. The NEOs’ employment agreements generally define “cause” as the executive’s (i) intentional misrepresentation of material information, (ii) felony indictment, (iii) commission of an act involving moral turpitude, (iv) material breach or material default of written obligations that remain unremedied for 30 days after notice, (v) fraud, (vi) embezzlement, (vii) failure to comply with our Board of Director’s written lawful direction that remains unremedied for 30 days after notice, or (viii) willful action to harm the Company or its affiliates. Their employment agreements generally define “good reason” as (1) reduction in base salary or target or maximum bonus percentages, (2) material reduction in position, authority, office, responsibilities or duties, (3) material breach of the agreement by us, or (4) relocation to a place more than 50 miles from Chicago, in each case without the executive’s consent.Options Granted Prior to 2011.
• | If an executive’s employment with the Company terminates for any reason other than cause, disability or death, vested options may thereafter be exercised by the executive until the earlier to occur of: (i) the date that is 90 days after the effective date of the executive’s termination of employment, and (ii) the expiration date of the option, and to the extent the options are not so exercised, they shall terminate upon such earlier date. If the executive dies following a termination for other than cause during the period described in the preceding sentence, vested options may thereafter be exercised by the executive’s legal representative until the earlier to occur of: (i) the date that is one year after the effective date of the executive’s termination of employment, and (ii) the expiration date, and to the extent the options are not so exercised, they shall terminate upon such earlier date. |
• | If an executive’s employment with the Company terminates by reason of disability or death, vested options may thereafter be exercised by the executive or the executive’s legal representative until the earlier to occur of: (i) the date that is one year after the effective date of the executive’s termination of employment, and (ii) the expiration date, and to the extent the options are not so exercised, they shall terminate upon such earlier date. |
• | If an executive is terminated for cause or the executive breaches a covenant in an agreement with the Company, the options automatically terminate. |
• | In the event of a Corporate Transaction, the Board of Directors may take action such as (i) providing for the options to be assumed, or equivalent options to be substituted, by the acquiring company; (ii) providing for termination of vested but unexercised options unless exercised prior to the transaction; (iii) providing for receipt by the executive of a cash payment based on the difference between the transaction price and the exercise price; and/or (iv) providing for accelerated vesting prior to the transaction and termination following such transaction. |
The following table quantifies the potential payments and benefits to which the named executive officers would have been entitled to receive if one of several different termination of employment or change in control events occurred on December 29, 2019. All employees are also entitled to life insurance benefits of up to the amount of such employee’s base salary, up to a maximum amount of $125,000, if death occurs while actively employed, which benefit is also not included in the table below. With regard to all options and RSUs subject to time-based vesting at December 29, 2019, the assumed values of the awards are shown in the table in the applicable columns. The value of each stock option as to which vesting is accelerated is assumed to be equal to the product of the number of shares underlying the option multiplied by the difference between the exercise price per share and $4.24, the closing price of our common stock on December 27, 2019 (the last business day of the fiscal year). For RSUs, the value shown in the table is based on the number of RSUs multiplied by $4.24.
20
Name | Benefit | Voluntary Termination For Good Reason or Involuntary Termination Without Cause | Qualifying Termination (following Change in Control) | Death/ Disability (1) | ||||||||||
Alan Johnson | Cash Severance | $ | 746,750 | $ | 1,120,125 | $ | — | |||||||
Cash Bonus | $ | — | $ | — | $ | — | ||||||||
Subsidized COBRA | $ | 4,492 | $ | 4,492 | $ | — | ||||||||
Options | $ | — | $ | — | $ | — | ||||||||
RSUs | $ | — | $ | 361,006 | $ | — | ||||||||
TOTAL | $ | 751,242 | $ | 1,485,623 | $ | — | ||||||||
Julie Younglove-Webb | Cash Severance | $ | 340,000 | $ | 340,000 | $ | — | |||||||
Cash Bonus | $ | — | $ | — | $ | — | ||||||||
Options | $ | — | $ | — | $ | — | ||||||||
Subsidized COBRA | $ | 11,590 | $ | 11,590 | $ | — | ||||||||
RSUs | $ | — | $ | 220,900 | $ | — | ||||||||
TOTAL | $ | 351,590 | $ | 572,490 | $ | — | ||||||||
Brandon Rhoten | Cash Severance | $ | 425,000 | $ | 425,000 | $ | — | |||||||
Cash Bonus | $ | — | $ | — | $ | — | ||||||||
Subsidized COBRA | $ | 6,125 | $ | 6,125 | $ | — | ||||||||
Options | $ | — | $ | — | $ | — | ||||||||
RSUs | $ | 124,809 | ||||||||||||
TOTAL | $ | 431,125 | $ | 555,214 | $ | — | ||||||||
Matthew Revord | Cash Severance | $ | 370,000 | $ | 370,000 | $ | — | |||||||
Cash Bonus | $ | — | $ | — | $ | — | ||||||||
Options | $ | — | $ | — | $ | — | ||||||||
Subsidized COBRA | $ | 6,125 | $ | 6,125 | $ | — | ||||||||
RSUs | $ | 139,721 | ||||||||||||
TOTAL | $ | 376,125 | $ | 515,845 | $ | — | ||||||||
(1) | As noted above, if a named executive officer’s termination occurs due to death or disability, the named executive officer would receive a Pro-rated Bonus under the Annual Incentive Plan. For fiscal year 2019, the Company did not achieve the threshold level for cash bonus payments under the Annual Incentive Plan. |
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Act, and Item 402(u) of
Regulation S-K, we
are providing the information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO, Mr. Johnson. Because the SEC rules for identifying the median employee and calculating the pay ratio permit companies to use various methodologies and assumptions, apply certain exclusions, and make reasonable estimates that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable with the pay ratio that we have reported.The following table sets forth a summary of the median of the annual total compensation of employees of the Company (other than the CEO), the annual total compensation of our CEO and the ratio of such amounts.
CEO Pay Ratio | ||||
Median employee total compensation | $ | 13,520 | ||
CEO total compensation | $ | 2,015,269 | ||
Ratio of CEO to Median employee compensation | 149:1 |
As of December 29, 2019, the Company employed over 6,000 persons, including Mr. Johnson. In determining the median employee, a listing was prepared of all employees as of December 29, 2019. Compensation was annualized for those employees who were not employed for the full year of 2019. This resulted in identification of a median employee with total compensation of $13,520. This total compensation figure reflects employment on a part-time basis, and is not necessarily representative of the compensation of other shop employees or of our overall compensation practices. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of the “Summary Compensation Table” above.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of our Compensation Committee is, or has at any time been, an officer or employee of the Company. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of our Board or our Compensation Committee during fiscal 2019. No directors served on our Compensation Committee in 2019 other than Ms. Chapman-Hughes, Ms. Gottschalk, Mr. Head and Mr. Rosenzweig, the directors currently serving on such committee, and Ms. Campbell and Mr. Kanter, who decided not to stand
for re-election in
the 2019 Annual Meeting of Shareholders.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
BENEFICIAL OWNERSHIP OF OUR COMMON STOCK
Except where indicated by footnote, the following tables set forth information as of February 27, 2020 as to the beneficial ownership of our common stock by:
• | each person (or group of affiliated persons) known to us to beneficially own more than 5 percent of our common stock; |
• | each of our executive officers; |
• | each of our directors and director nominees; and |
• | all of our executive officers and directors as a group. |
The number of shares beneficially owned by each shareholder is determined under SEC rules and generally includes shares for which the holder has voting or investment power. The information does not necessarily indicate beneficial ownership for any other purpose. Unless otherwise indicated below, the address for each listed director, officer and shareholder is c/o Potbelly Corporation, 111 North Canal Street, Suite 850, Chicago, Illinois 60606. The percentage of beneficial ownership shown in the following tables is based on 23,637,557 outstanding shares of common stock as of February 27, 2020. For purposes of calculating each person’s or group’s percentage ownership, shares of common stock issuable pursuant to the terms of stock options or restricted stock units exercisable or vesting within 60 days of February 27, 2020 are included as outstanding and beneficially owned for that person or group, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or group.
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Name of Beneficial Owner | Number of Shares Beneficial Owned | Percentage of Class Beneficially Owned | ||||||
Beneficial Owners of 5% or more of outstanding common stock | ||||||||
Renaissance Technologies LLC (1) | 1,890,500 | 8.0 | % | |||||
Blackrock Inc. (2) | 1,649,877 | 7.0 | % | |||||
Dimensional Fund Advisors LP (3) | 1,517,289 | 6.4 | % | |||||
180 Degree Capital Corp. (4) | 1,410,346 | 6.0 | % | |||||
Kennedy Capital Management, Inc. (5) | 1,295,022 | 5.5 | % | |||||
Vann Group (6) | 1,284,422 | 5.4 | % | |||||
Ancora Advisors, LLC (7) | 1,258,373 | 5.3 | % | |||||
Directors and Executive Officers | ||||||||
Alan Johnson (8) | 151,043 | * | ||||||
Tom Fitzgerald (9) | 12,451 | * | ||||||
Julie Younglove-Webb (10) | 271,593 | 1.1 | % | |||||
Brandon Rhoten (11) | 21,948 | * | ||||||
Matthew Revord (12) | 305,643 | 1.3 | % | |||||
Jeffrey Douglas (13) | 0 | * | ||||||
Daniel Lecocq (14) | 0 | * | ||||||
Joseph Boehm (15) | 14,181 | * | ||||||
Adrian Butler | 0 | * | ||||||
Susan Chapman-Hughes (16) | 32,551 | * | ||||||
Dan Ginsberg (17) | 35,732 | * | ||||||
Marla Gottschalk (18) | 148,177 | * | ||||||
David Head (19) | 10,000 | * | ||||||
Benjamin Rosenzweig (20) | 5,561 | * | ||||||
All directors and executive officers as a group (17 people) | 1,008,880 | 4.3 | % |
* | Represents less than 1.0% |
(1) | Based solely on report of Schedule 13G filed February 13, 2020. The shares are owned by Renaissance Technologies LLC (“RTC”) and beneficially owned by Renaissance Technologies Holdings Corporation (“RTHC”) because of RHTC’s majority ownership of RTC. RTC and RTHC have sole voting power and sole dispositive power over the shares. The address for these entities is 800 Third Avenue, New York, New York 10022. |
(2) | Based solely on report of Schedule 13G filed February 5, 2020. Blackrock, Inc. has sole voting power over 1,611,772 shares and sole dispositive power over 1,649,877 shares. The address for this entity is 55 East 52nd Street, New York, New York 10055. |
(3) | Based solely on report of Schedule 13G filed February 12, 2020. Dimensional Fund Advisors LP (“Dimensional”) is an investment adviser who furnishes investment advice to four investment companies and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively, the “Funds”). The Funds own the shares and Dimensional may be deemed beneficial owner as a result of its serving as investment advisor or investment manager. Dimensional or its subsidiaries have sole voting power over 1,455,142 shares and sole dispositive power over 1,517,289 shares. The address for these entities is Building One, 6300 Bee Cave Road, Austin, Texas 78746. |
(4) | Based solely on report of Schedule 13D filed January 28, 2020. The address for this entity is 7 N. Willow Street, Suite 4B, Montclair, NJ 07042. |
(5) | Based solely on report of Schedule 13G filed February 14, 2020. The address for this entity is 10829 Olive Blvd, St. Louis, MO 63141. |
(6) | Based solely on report of Schedule 13D filed February 18, 2020 by Vann A. Avedisian Trust U/A 8/29/85, Intrinsic Investment Holdings, LLC, Bryant L. Keil, Neil Luthra and KGT Investments, LLC (collectively, the “Vann Group”). Vann A. Avedisian Trust U/A 8/29/85 has sole voting and dispositive power over 513,163 shares; Intrinsic Investment Holdings, LLC has sole voting and dispositive power over 100 shares; Mr. Keil has sole voting and dispositive power over 164,659 shares; Mr. Luthra has sole voting and dispositive power over 6,500 shares; and KGT Investments, LLC has sole voting and dispositive power over 600,000 shares. The address for Vann A. Avedisian Trust U/A 8/29/85 and Intrinsic Investment Holdings, LLC is 220 N. Green Street, 3rd Floor, Chicago, IL 60607. The address for Mr. Keil is 25 S. Waukegan Road, Suite A8-50, Lake Forest, IL 60045. The address for Mr. Luthra is 870 Seventh Ave., 2nd Floor, New York, NY 10019. The Address for KGT Investment LLC is 545 E John Carpenter FWY Ste #1400, Irving, TX 75062. |
(7) | Based solely on report of Schedule 13G filed December 12, 2019. The address of this entity is 6060 Parkland Boulevard, Suite 200, Cleveland, Ohio 44124. |
(8) | Consists of 50,843 shares of common stock (including 19,701 RSUs that are scheduled to vest within 60 days of February 27, 2020) and options to purchase 100,200 shares of common stock. |
(9) | Consists of 12,451 shares of common stock. |
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(10) | Consists of 29,300 shares of common stock (including 21,288 RSUs that are scheduled to vest within 60 days of February 27, 2020) and options to purchase 242,293 shares of common stock (including 18,122 shares subject to options exercisable within 60 days of February 27, 2020). |
(11) | Consists of 10,070 shares of common stock (including 5,555 RSUs that are scheduled to vest within 60 days of February 27, 2020) and options to purchase 11,878 shares of common stock. |
(12) | Consists of 20,161 shares of common stock (including 14,001 RSUs that are scheduled to vest within 60 days of February 2020; options to purchase 271,707 shares of common stock (including 14,860 shares subject to options exercisable within 60 days of February 27, 2020); and 13,775 shares of common stock held by the Matthew J. Revord Declaration of Trust, of which Mr. Revord is a beneficiary. |
(13) | Mr. Douglas joined the Company on September 23, 2019. |
(14) | Mr. Lecocq joined the Company on January 6, 2020. |
(15) | Consists of 14,181 shares of common stock. |
(16) | Consists of 32,551 shares of common stock. |
(17) | Consists of 35,732 shares of common stock. |
(18) | Consists of 96,563 shares of common stock and options to purchase 51,614 shares of common stock. |
(19) | Consists of 10,000 shares of common stock. |
(20) | Consists of 5,561 shares of common stock. |
EQUITY COMPENSATION PLAN INFORMATION
The following table presents certain information related to Potbelly’s equity incentive plans under which the equity securities are authorized for issuance as of December 29, 2019 (shares in thousands):
(a) | (b) | (c) | ||||||||||
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 available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
Equity compensation plans approved by security holders (1) | 1,774 | $ | 11.34 | 1,560 | (2) | |||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 1,774 | $ | 11.34 | 1,560 | ||||||||
(1) | Consists of the 2004 Equity Incentive Plan, the 2013 Long-Term Incentive Plan and the 2019 Long-Term Incentive Plan. No further awards may be made under the 2004 Equity Incentive Plan or the 2013 Long-Term Incentive Plan. All remaining shares of common stock reserved for issuance under the 2013 Plan are available for issuance under the 2019 Plan. |
(2) | The total amount reported consists only of shares available for future issuance under the 2019 Long-Term Incentive Plan, which may be issued in connection with awards of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, performance stock and performance stock units. |
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
RELATED PARTY TRANSACTIONS
Indemnification Agreements
We have entered into indemnification agreements with our current directors and executive officers, in addition to the indemnification provided for in our certificate of incorporation and bylaws. These agreements, among other things, provide for indemnification of our directors and executive officers for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of our Company, arising out of such person’s services as a director or executive officer of ours. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.
Review, Approval or Ratification of Transactions with Related Persons
We have adopted a written policy relating to the approval of related party transactions. Our Audit Committee will review certain financial transactions, arrangements and relationships between us and any of the following related parties:
• | any of our directors, director nominees or executive officers; |
• | any beneficial owner of more than 5% of our outstanding stock; |
• | any immediate family member of any of the foregoing; and |
• | any entity in which any of the foregoing is employed or has more than a 5% beneficial ownership. |
Any member of the Audit Committee who is a party to a transaction under review will not be permitted to participate in the discussions, consideration or approval of such transaction. Prior to entering into any related party transaction, the interested director or officer shall provide notice of such transaction to our Chief Legal Officer. The Audit Committee shall review any such submissions and shall consider all relevant facts and circumstances of such transaction. The Audit Committee shall approve only those proposed transactions that are in, or not inconsistent with, the best interests of Potbelly and its shareholders.
In the event management determines a related party transaction exists which was not approved by the Audit Committee, management will submit the transaction to the Audit Committee for consideration. The Audit Committee shall consider all relevant facts and circumstances of such transaction, and shall evaluate all options, including but not limited to ratification, amendment, termination or rescission of the transaction.
The policy lists certain types of transaction in which an officer or director may have an interest that are deemed not to require review as a related party transaction, including (i) transactions in the ordinary course of business not exceeding $25,000, (ii) certain charitable contributions, and (iii) certain approved compensation arrangements.
DIRECTOR INDEPENDENCE
Our Board of Directors reviews the independence of the current and potential members of the Board of Directors in accordance with independence requirements set forth in the NASDAQ rules and applicable provisions of the Exchange Act. During its review, the Board of Directors considers transactions and relationships between each director and potential director, as well as any member of his or her immediate family, and the Company and its affiliates, including those related-party transactions contemplated by Item 404(a)
of Regulation S-K under the
Exchange Act. The Board of Directors must affirmatively determine that the director has no material relationship with the Company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company, that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The purpose of this review is to determine whether any such relationships or transactions exist that are inconsistent with a determination that the director is independent. Our Board of Directors has determined that all nominees except Alan Johnson, our President and Chief Executive Officer, are “independent” as such term is defined by NASDAQ rules, our corporate governance standards and the federal securities laws.25
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Audit Committee of our Board of Directors is responsible for recommending, for shareholder approval, our independent registered public accounting firm. The Audit Committee has selected the accounting firm of Deloitte & Touche LLP to serve as our independent registered public accounting firm for the fiscal year ending December 27, 2020. Deloitte & Touche LLP has served as our independent registered public accounting firm since before our Initial Public Offering and has also
provided non-audit services
from time to time.The following table sets forth the fees pertaining to audit services for the fiscal years ended December 29, 2019 and December 30, 2018 and for other services during those fiscal years:
2019 | 2018 | |||||||
Audit fees (1) | $ | 709,445 | $ | 683,666 | ||||
Audit-related fees (2) | 10,000 | 10,000 | ||||||
Tax fees (3) | 316,159 | 392,645 | ||||||
All other fees | 0 | 0 | ||||||
Total fees | $ | 1,035,604 | $ | 1,086,311 | ||||
(1) | Audit fees include fees for audits of our annual financial statements and internal controls, reviews of the related quarterly financial statements, and services that are normally provided by the independent accountants in connection with statutory and regulatory filings or engagements, including reviews of documents filed with the SEC. |
(2) | Audit-related fees were comprised of fees for services performed in connection with other audit-related services and our filing of a registration statement on Form S-8. |
(3) | Tax fees relate to professional services rendered for tax compliance, tax return review and preparation, cost segregation study, and related tax advice. |
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
(1) | The financial statements filed as part of this Annual Report on Form 10-K, as amended, are indexed in the table of contents of the Original Filing and incorporated by reference to the Original Filing. Financial Statement Schedules have been omitted, since they are either not applicable, not required or the information is included elsewhere herein. |
(2) | Any financial statement schedules required to be filed as part of this Annual Report on Form 10-K, as amended are set forth in section (c) below. |
(b) Exhibits
The exhibits listed in the Exhibit Index below are filed or incorporated by reference as part of this Annual Report on Form
10-K,
as amended.(c) Financial Statement Schedules
No financial statement schedules are provided because the information called for is not applicable or is shown in the financial statements or notes thereto.
26
EXHIBIT INDEX
27
† | Management contract or compensatory plan |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Potbelly Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
POTBELLY CORPORATION | ||
By: | /s/ Robert D. Wright | |
Robert D. Wright | ||
Chief Executive Officer and President (On behalf of the registrant, and in his capacity as Principal Executive Officer) |
Date: November 5, 2020
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