Shake Shack 2015 Annual Report Download - page 81

Table of Contents
Employee Benefits and Perquisites
All of our full-time employees, including our named executive officers, are eligible to participate in health and welfare plans maintained by USHG, including:
Our named executive officers participate in these plans on the same basis as other eligible employees. We do not maintain any supplemental health and welfare plans for our named
executive officers. We believe the benefits described above are necessary and appropriate to provide a competitive compensation package to our named executive officers.
In addition, in 2014, Ms. Rubenzer was entitled to reimbursement in an aggregate amount equal to $6,812 for airfare in connection with commuting to and from our Company's office.
No Tax Gross
-Ups
We do not make gross-
up payments to cover our named executive officers' personal income taxes that may pertain to any of the compensation or perquisites paid or provided by our
Company.
Special Bonus Agreements
In March 2011, Mr. Garutti entered into a Special Bonus Agreement (as amended, the " Special Bonus Agreement
") with USHG with respect to Mr. Garutti's services to SSE
Holdings. This Special Bonus Agreement provides for the payment of a special bonus in the amount of $2.45 million by USHG to Mr. Garutti in the event of a change in control or an
initial public offering of SSE Holdings prior to March 11, 2018, which will be payable to him in March 2018. On October 30, 2014, USHG, Mr. Garutti and SSE Holdings entered into
an Assignment and Assumption Agreement, pursuant to which USHG assigned this obligation to SSE Holdings. The Special Bonus Agreement contains restrictive covenants
prohibiting Mr. Garutti from competing with us and from soliciting any of our or of USHG's employees or contractors for one year following his termination of employment. The
restrictive covenants also prohibit the unauthorized use of confidential information.
In addition to the Special Bonus Agreement, Mr. Garutti entered into two other bonus arrangements in July 2013 with SSE Holdings (the " Incentive Bonus Agreemen
t") and USHG
(the " Supplemental Bonus Agreement
"), respectively. Such agreements provide for a bonus payment equal to the value of the special bonus under the Special Bonus Agreement and
may become payable in the event a change in control or an initial public offering does not occur on or before March 11, 2018, subject to and conditioned upon certain other conditions
specified in the Supplemental Bonus Agreement and Incentive Bonus Agreement, as applicable.
Mr. Garutti will only be entitled to receive payment under one of the Special Bonus Agreement, the Incentive Bonus Agreement or the Supplemental Bonus Agreement. As a result of
the IPO, such payment with a value of $2.45 million will be made in March 2018 under the Special Bonus Agreement (as described above).
New Employment Agreements
In connection with the IPO, we entered into employment agreements with Messrs. Garutti and Uttz, which became effective as of the date of the consummation of the IPO. The
material terms of such agreements are summarized below.
Employment Term and Position
The term of employment of each of Messrs. Garutti and Uttz is three years from the date of the IPO, subject to automatic one-
year extensions provided that neither party provides
written notice of non-extension within ninety days of the expiration of the then-
current term. During their respective terms of employment, Mr. Garutti will serve as Chief Executive
Officer of the Company and SSE Holdings and Mr. Uttz will serve as Chief Financial Officer of the Company and SSE Holdings. Further, Mr. Garutti will be appointed to our Board of
Directors and will be proposed for re-election during his term of employment.
Base Salary, Annual Bonus and Equity Compensation
Pursuant to their employment agreements, Messrs. Garutti and Uttz are entitled to initial base salaries of $400,000 and $330,000, respectively.
In addition, Messrs. Garutti and Uttz are eligible to receive annual performance-
based cash bonuses upon the attainment of individual and Company performance goals established by
our Board of Directors or the compensation committee. The amount of the annual performance-
based cash bonus that may be received by Messrs. Garutti and Uttz upon attainment of
target performance for any fiscal year will be 50% of base salary and 35% of base salary, respectively, and the maximum amount of the annual performance-
based cash bonus that may
be received by Messrs. Garutti and Uttz for any fiscal year will be 100% of base salary and 70% of base salary, respectively.
80
▪
medical, dental and vision benefits;
▪
medical and dependent care flexible spending accounts; and
▪ short-term and long-
term disability insurance