El Pollo Loco 2015 Annual Report Download - page 102

Table of Contents
Board Composition and Election of Directors
Our certificate of incorporation provides that the number of directors on our board is to be fixed exclusively pursuant to board resolution. The
exact size of our board shall be determined from time to time by the board. In the near future, we intend to appoint an additional director who
satisfies the independence requirements of the NASDAQ. Wesley W. Barton has agreed to resign from the board upon that appointment. Our
board of directors is divided into three classes, with each director serving a three-year term and with one class to be elected at each year’s annual
meeting of stockholders.
We are a party to a stockholders agreement with LLC, whose members are investment funds managed by affiliates of Trimaran and Freeman
Spogli, certain members of our management, and other third-party investors. The stockholders agreement provides certain rights to LLC,
including registration rights for common stock owned by LLC. The limited liability company operating agreement of LLC also provides rights to
Trimaran and Freeman Spogli, including certain registration rights. See Item 13, “Certain Relationships and Related Transactions, and Director
Independence.”
Our certificate of incorporation provides that directors may only be removed for cause by a majority of the voting power of our then-outstanding
stock voting as a single class at a meeting of stockholders. However, if LLC beneficially owns more than 40% of our common stock, directors
may be removed with or without cause, by a majority of the voting power of our outstanding stock voting as a single class. The certificate also
provides that if a director is removed or if a vacancy occurs due to either an increase in the size of the board or due to death, resignation,
disqualification, or other cause, the vacancy will be filled solely by the affirmative vote of a majority of the remaining directors then in office,
even if less than a quorum remains.
Because LLC controls more than 50% of the voting power of our common stock, we are using the “controlled company” exception under
NASDAQ rules. The
“controlled company” exception eliminates the requirements that we have (a) a majority of independent directors on our
board and (b) compensation and nominating/corporate governance committees composed entirely of independent directors, as independence is
defined in Rule 10A-3 of the Exchange Act and under the listing standards. The “controlled company” exception does not modify the
independence requirements for the audit committee, and we comply with the requirements of the Sarbanes–Oxley Act and the NASDAQ by
having an audit committee with a majority of independent directors. One year from our IPO, we will be required to have an audit committee
comprised entirely of independent directors. Douglas K. Ammerman and Samuel N. Borgese currently qualify as independent directors.
If at any time we cease to be a “controlled company” under NASDAQ rules, our board of directors will take all action necessary to comply with
the applicable NASDAQ rules, including appointing a majority of independent directors to our board of directors and establishing certain
committees composed entirely of independent directors, subject to a permitted “phase-in” period.
Board Committees
Our board of directors has established standing committees in connection with the discharge of its responsibilities. These committees include an
Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Our board of directors has adopted
written charters for each of these committees, available at www.elpolloloco.com. Our board of directors may establish other committees as it
deems necessary or appropriate from time to time.
Audit Committee
Our Audit Committee is comprised of Dean C. Kehler, Douglas K. Ammerman, and Samuel N. Borgese. We are relying on the phase-in rules of
the Exchange Act and the NASDAQ with respect to the independence of our audit committee. These rules require us to have an audit committee
that has a majority of independent members
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