El Pollo Loco 2015 Annual Report Download - page 106

Table of Contents
employment agreement also provides that each executive will be eligible to earn annual bonus awards with a target of 75% of the executive’s
then current base salary and that each executive is entitled to receive certain other benefits and perquisites as more fully described in the
“Elements of Compensation—Other Benefits” section. The employment agreements provide that the NEOs’ employment with us is “at will”
and
may be terminated at any time by either party, provided the NEOs are required to provide us with 90-
day advance notice in case of resignation. If
we terminate an NEO’s employment without “cause,” as defined in the respective employment agreement, or if the agreement is terminated by
the NEO for “good reason,”
as defined in the respective employment agreement, and provided that the NEO signs a general release of claims, the
NEO will be entitled to receive continuation of base salary for 12 months following termination of employment. In addition, in case of any
termination of employment, except termination by us for “cause” or voluntary resignation by the NEO, each NEO will be entitled to receive a
pro-rata bonus for the year of termination based on our actual performance. Finally, in case of any termination of employment the NEO will be
entitled to receive certain accrued obligations (including base salary through the date of termination, reimbursement of unreimbursed business
expenses, and any earned but unpaid annual bonus for the previously completed year). The employment agreements contain 12-month post-
termination covenants relating to non-interference and non-solicitation of employees.
Elements of Compensation
Each of the named executive officers was provided with the following primary elements of compensation in fiscal years 2013 and 2014:
Base Salary
Each named executive officer received a fixed base salary in an amount determined in accordance with the executive’s employment agreement
and based on a number of factors, including:
Each named executive officer’s base salaries for 2013 and 2014 are listed in “—Summary Compensation Table.”
2014 Bonus Arrangements
Each named executive officer was eligible to earn an annual cash incentive in 2014. Our practice with respect to annual incentive compensation
has historically been to provide an opportunity to earn bonus awards based on the achievement of company performance measures, specifically
EBITDA adjusted for various add-backs permitted by our 2014 Revolver (“Internal EBITDA”). Our El Pollo Loco Support Center Incentive
Plan is adopted on an annual basis subject to approval by our board of directors and provides the opportunity for each of our NEOs to earn a
bonus equal to 75% of their annual base salary at target for each year, based on our achievement of Internal EBITDA targets. The Internal
EBITDA targets are set each year based on achievement of strategic goals and financial results. The cash incentive plan also provides for no
bonus to be paid if Internal EBITDA achievement is less than 92.5% of target and for a cap equal to 200% of the target bonus amount to be paid
if Internal EBITDA achievement is 125% of target or greater. Based on our performance, bonuses for 2014 are anticipated to be paid out at
108% of target.
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•
The nature, responsibilities and duties of the officer
’
s position;
•
The officer
’
s expertise, demonstrated leadership ability and prior performance;
•
The officer
’
s salary history and total compensation, including annual cash bonuses and long
-
term incentive compensation; and
•
The competitiveness of the market for the officer
’
s services.