Compensation Discussion and Analysis
The Company’s compensation committee reviews and establishes executive compensation in connection with each executive officer’s employment agreement. As one purpose of this discussion is to present the compensation committee’s overall program and philosophy for executive compensation, we have generally presented the discussion as of the end of the prior fiscal year and as of the beginning of the current fiscal year without taking into account the March 2021 death of Mr. Taylor.
We entered into new employment agreements with W. Kent Taylor, Doug W. Thompson, Tonya R. Robinson, and S. Chris Jacobsen, each a Named Executive Officer, on December 30, 2020, each of which has an effective date of January 8, 2021. As a part of Gerald L. Morgan’s appointment to President, we entered into a new employment agreement with Mr. Morgan, a Named Executive Officer, on December 17, 2020, which has an effective date of January 8, 2021. In connection with Mr. Morgan’s appointment to President, Mr. Taylor resigned as President while still remaining as Chairman and Chief Executive Officer of the Company. Additionally, on March 18, 2021 and consistent with the Board’s succession planning, Mr. Morgan was named Chief Executive Officer of the Corporation following Mr. Taylor’s death. Mr. Morgan remains the President of the Corporation following his appointment to Chief Executive Officer. As used herein, the employment agreements with Messrs. Taylor, Morgan, Jacobsen, and Thompson, and Ms. Robinson entered into during December 2020 (as applicable) shall be referred to collectively as the “2021 Employment Agreements” and with respect to any Named Executive Officer, as a “2021 Employment Agreement.” Each 2021 Employment Agreement establishes an initial three-year term which automatically renews for successive one-year terms thereafter unless either party elects not to renew by providing written notice to the other party at least 60 days before expiration.
Additionally, during fiscal year 2020, (i) each of Messrs. Taylor and Jacobsen were party to employment agreements dated December 26, 2017, each of which expired on January 7, 2021, (ii) Ms. Robinson was party to an employment agreement dated June 11, 2018, which expired on January 7, 2021, and (iii) Mr. Thompson was party to an employment agreement dated August 23, 2018, which expired on January 7, 2021. As used herein, the employment agreements with Messrs. Taylor, Jacobsen, and Thompson, and Ms. Robinson entered into during 2018 (as applicable) shall be referred to collectively as the “2018 Employment Agreements” and with respect to any Named Executive Officer, as a “2018 Employment Agreement.” The 2021 Employment Agreements supersede and replace the prior 2018 Employment Agreement with Messrs. Taylor, Thompson, and Jacobsen and Ms. Robinson, and the 2021 Employment Agreement with Mr. Morgan supersedes and replaces his prior regional market partner agreement. Under Mr. Morgan’s prior regional market partner agreement and as shown in the Summary Compensation Table below, Mr. Morgan received, without limitation, a base salary and a performance bonus equal to a certain percentage of the pre-tax income of the restaurants which were under the supervision of the market partners that he managed (which percentage varied based on whether the restaurant was a Company restaurant or a franchise restaurant).
To assist in setting compensation under the 2018 Employment Agreements and pursuant to the authority granted under its charter, the compensation committee engaged Willis Towers Watson as an independent compensation consultant in 2017 to advise the compensation committee on compensation for the executive officers and the non-employee directors, together with analysis and services related to such executive and director compensation. Specifically, the compensation committee asked the consultant to provide market data, review the design of the executive and director compensation packages, and provide guidance on cash and equity compensation for the Company’s executive officers and the non-employee directors. In order to supplement this analysis from our compensation consultant, the compensation committee has subsequently used Equilar (the Company’s external executive and director compensation database aggregator) to establish the compensation for our Named Executive Officers under their respective 2021 Employment Agreements. In connection with this process, the chairperson of the compensation committee and management of the Company agreed on a list of the following 12 peer companies to evaluate their executive compensation: BJ’s Restaurants, Inc., Bloomin Brands, Inc., Brinker International, Inc., Churchill Downs Incorporated, Cracker Barrel Old Country Store, Inc., Dave & Buster’s Entertainment, Inc., Dine Brands Global, Inc., Dunkin’ Brands Group, Inc., Papa John’s International, Inc., Red Robin Gourmet Burgers, Inc., The Cheesecake Factory Incorporated, and The Wendy’s Company. While the compensation committee and management of the Company do not utilize specific market targets when establishing compensation for the Company’s executive officers, the chairperson of the compensation committee and management of the Company used the executive compensation from such peer companies as a part of the overall discussion when establishing executive