DEF 14A of ONE Group Hospitality, Inc.
Filed Apr 11, 2024 · FY20230001104659-24-046369
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
James Chambers — Hill Path Nominee
James Chambers — Hill Path Nominee James Chambers is a Partner and Co-Founder of Hill Path Capital LP. Prior to Hill Path, Mr. Chambers was a Principal at Apollo Management, where he worked from 2009 to 2016 on a wide range of private equity and credit transactions across a variety of industries, particularly in the out-of-home entertainment, leisure, and hospitality sectors. Prior to Apollo, Mr. Chambers worked in the Consumer Retail Group in the Investment Banking Division of Goldman Sachs & Co. where he advised consumer products, retail and restaurant companies on a variety of strategic and capital raising activities. Mr. Chambers has been a director of United Parks & Resorts Inc. (NYSE: PRKS) (f/k/a SeaWorld Entertainment, Inc.) since June 2019 and is a member of the Compensation Committee, Revenue Committee and the Nominating and Corporate Governance Committee, of which he is the Chairperson. Mr. Chambers has been a director of Dave & Buster’s Entertainment, Inc. (NASDAQ: PLAY) since December 2020 and is a member of the Finance Committee and the Compensation Committee, of which he is the Chairperson. Mr. Chambers has previously served on the board of directors of Great Wolf Resorts, Inc., CEC Entertainment Inc. (the parent company of Chuck E. Cheese’s), Principal Maritime Tankers Corp. and Principal Chemical Carriers, LLC. Mr. Chambers graduated from Duke University in 2007 with a B.A. in Political Science and a Certificate in Markets and Management. • Director Qualifications: We believe Mr. Chamber’s qualifications to serve on the Board include his business experience involving public and private companies in diverse industries and his service as a director on the boards of public and private companies, which give him a breadth of knowledge and valuable understanding of our business.
Meeting Attendance
| Primary Functions | Our Compensation Committee’s role and responsibilities are set forth in the Compensation Committee’s written charter and include reviewing, approving and making recommendations regarding our compensation policies, practices and procedures to ensure that legal and fiduciary responsibilities of the Board are carried out and that such policies, practices and procedures contribute to our success. Our Compensation Committee also administers our 2019 Equity Incentive Plan. The Compensation Committee is responsible for the determination of the compensation of our Chief Executive Officer, and his compensation is determined without the Chief Executive Officer present. | | | In establishing compensation amounts for executives, the Compensation Committee seeks to provide compensation that is competitive in light of current market conditions and industry practices. Accordingly, the Compensation Committee annually reviews market data comprising proxy-disclosed data from peer companies and information from nationally recognized published surveys for the restaurant industry, adjusted for size. The market data helps the committee gain perspective on the compensation levels and practices at the peer companies and to assess the relative competitiveness of the compensation paid to the Company’s executives. The market data guides the Compensation Committee in its efforts to set executive compensation levels and program targets at competitive levels for comparable roles in the marketplace. The Compensation Committee then takes into account other factors, such as the importance of each executive officer’s role to the Company, individual expertise, experience, and performance, retention concerns and relevant compensation trends, in making its final compensation determinations. | | | The Compensation Committee’s independent compensation consultant is Frederic W. Cook & Co. (“FW Cook”). FW Cook was previously engaged by, and reported directly to, the Compensation Committee, which has the sole authority to hire or fire FW Cook and to approve fee arrangements for work performed. FW Cook assisted the Compensation Committee in fulfilling its responsibilities under its charter, including advising on equity incentive compensation grants to employees, including officers and to directors. The Compensation Committee authorized FW Cook to interact with management on behalf of the Compensation Committee, as needed in connection with advising the Compensation Committee, and FW Cook was included in discussions with management. | | | It is the Compensation Committee’s policy that the Chair of the Compensation Committee or the full Compensation Committee pre-approve any additional services provided to management by an independent compensation consultant. | | | The Compensation Committee reviews the performance of each named executive officer in light of the above factors and determines whether the named executive officer should receive any increase in base salary or receive a discretionary equity award based on such evaluation. During 2023, the Compensation Committee utilized industry benchmarks and the work performed |
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION For 2023, each non-employee director received a retainer for service on our Board of $175,000 and an additional $12,500 for service as chair of a committee. The retainer was paid 40% in cash and 60% in stock. Compensation for service as chair of a committee is paid in cash. The Company reimburses all directors for reasonable expenses incurred traveling to and from Board meetings. The Company does not pay employee directors any compensation for services as a director. The following table sets forth the compensation paid or earned for the fiscal year ended December 31, 2023, to our non-employee directors.
2023 DIRECTOR COMPENSATION
| Name | Stock Awards ($) | Cash ($) | Total | | Dimitrios Angelis | $105,000 | $82,500 | $187,500 | | Eugene Bullis | $105,000 | $82,500 | $187,500 | | Susan Lintonsmith | $105,000 | $70,000 | $175,000 | | Haydee Olinger | $105,000 | $70,000 | $175,000 | | Michael Serruya | $105,000 | $82,500 | $187,500 |
CERTAIN INFORMATION REGARDING SECURITY HOLDERS
| Name | Number of Shares | Number of Shares Subject to Options within 60 days | Number of Shares Subject to RSUs | Total(1) | Percent | | Kanen Wealth Management, LLC(2) | 4,863,312 | — | — | 4,863,312 | 15.5% | | Jonathan Segal | 3,972,323 | 55,948 | — | 4,028,271 | 12.8% | | Emanuel Hilario | 1,034,320 | 368,000 | — | 1,402.320 | 4.4% | | Tyler Loy | 107,130 | — | — | 107,130 | * | | Michael Serruya(3) | 381,837 | — | — | 381,837 | 1.2% | | Eugene Bullis | 152,619 | — | | 152,619 | * | | Dimitrios Angelis | 103,190 | — | — | 103,190 | * | | Susan Lintonsmith | 30,364 | — | — | 30,364 | * | | Haydee Olinger | 34,364 | — | — | 34,364 | * | | All executive officers & director as a group | 5,816,147 | 423,948 | — | 6,240,095 | 19.7% |
EXECUTIVE COMPENSATION
| Name and Principal Position | Year | Salary | Bonus | Stock Awards(1) | Option Awards | Non Equity Incentive Plan Compensation | Other(5) | Total | | Emanuel Hilario(2) President and Chief Executive Officer | 2023 | $700,000 | $0 | $350,000 | $299,532 | $50,468 | $37,462 | $1,437,462 | | | 2022 | $700,000 | $0 | $4,296,404 | $0 | $297,500 | $37,462 | $5,331,366 | | Tyler Loy(3) Chief Financial Officer | 2023 | $315,866 | $0 | $81,250 | $52,151 | $8,787 | $6,250 | $464,304 | | | 2022 | $297,116 | $0 | $476,258 | $0 | $65,000 | $5,769 | $844,143 | | Jonathan Segal(4) Executive Chairman | 2023 | $350,000 | $0 | $131,250 | $60,359 | $11,828 | $6,730 | $560,168 | | | 2022 | $350,000 | $0 | $180,467 | $0 | $45,938 | $6,730 | $583,135 |
Pay Versus Performance
Pay Versus Performance The table below shows the total compensation for our NEOs for the past two fiscal years as set forth in the Summary Compensation Table, the “Compensation Actually Paid” (“CAP”) to our CEO, and, averages of calculated compensation actually paid for our other NEOs, together with shareholder returns and net income. CAP figures do not reflect the actual amount of compensation earned by or paid to our NEOs during the applicable year. For information regarding the decisions made by our Compensation Committee in regards to the NEOs’ compensation for each fiscal year, please see the Compensation Discussion & Analysis section of the proxy statement.
Pay Versus Performance
| Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2)(5) | Average Summary Compensation Table Total for Non-PEO NEOs(3) | Average Compensation Actually Paid to Non-PEO NEOs(3)(5) | Value of Initial Fixed $100 Investment Based On Total Shareholder Return(4) | Net Income | | 2023 | $1,437,462 | $1,395,754 | $512,236 | $519,593 | $49 | $4,718,000 | | 2022 | $5,331,366 | $796,321 | $713,639 | $173,171 | $50 | $13,534,000 |
Pay Versus Performance
(1) The Principal Executive Officer (“PEO”) in fiscal years 2023 and 2022 is Emanuel Hilario. (2) Adjustments have been made as of each measurement date using the stock price as of the measurement date. Performance stock unit grant date fair value is calculated using ASC 718 at target-level performance. The Company’s valuation assumptions are described in Note 11, “Employee Benefit Plans,” in the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2023. (3) The NEOs included in the calculation of average NEO compensation in fiscal years 2023 and 2022 are Jonathan Segal and Tyler Loy. (4) Total shareholder return lists a cumulative total shareholder return at the end of each fiscal year assuming $100 was invested in our stock on the last trading day before the beginning of the earliest fiscal year in the table. The stock price performance included in this column is not necessarily indicative of future stock price performance. SEC rules require certain adjustments to be made to the Summary Compensation Table totals to determine the CAP as reported in the Pay Versus Performance Table. CAP does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather as a value calculated under applicable SEC rules. In general, CAP is calculated as Summary Compensation Table total compensation adjusted to reflect certain changes in the fair market value of outstanding equity awards as of December 31 of the applicable year or, if earlier, the vesting date (rather than the grant date). The following table details the applicable adjustments that were made to determine CAP.
Pay Versus Performance
| | 2022 | | 2023 | | | | PEO | Average Non-PEO NEOs | PEO | Average Non-PEO NEOs | | Total Compensation as reported in Summary Compensation Table | $5,331,366 | $713,639 | $1,437,462 | $512,236 | | Deduct: Equity award amounts based on grant date fair values | (4,296,405) | (328,362) | (649,532) | (162,505) | | Add: Year-end fair value of any equity awards granted in the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year | 4,166,864 | 176,621 | 281,716 | 113,771 | | Add: Amount of change in fair value as of the end of the covered fiscal year (from the end of the prior fiscal year) of any awards granted in prior years that are outstanding and unvested as of the end of the covered fiscal year | (3,505,445) | (281,345) | (131,104) | (4,166) | | Add: Fair value as of the vesting date for awards that are granted and vest in the same covered fiscal year | — | — | — | — | | Add: Amount of change in fair value from the end of the prior fiscal year to the vesting date for awards granted in prior years that vested in the covered fiscal year | (900,059) | (107,382) | 457,212 | 60,257 | | Deduct: Amount of fair value at the end of the prior fiscal year for awards granted in prior years that were forfeited during the covered fiscal year | — | — | — | — | | Add: Dollar value of other earnings paid on stock or option awards in the covered fiscal year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the covered fiscal year | — | — | — | — | | Compensation Actually Paid | $796,321 | $173,171 | $1,395,754 | $519,593 |
Analysis of Information Presented in the Pay Versus Performance Table
Analysis of Information Presented in the Pay Versus Performance Table The Compensation Committee uses total shareholder return (“TSR”) and net income in establishing compensation programs. In 2022 it awarded to the PEO 500,000 performance stock units that are earned based on year-over-year increases in stock value. The Company uses several other performance measures to align executive compensation with performance, see “Executive Compensation” on page 26 and “Approval of Executive Compensation as Disclosed in this Proxy Statement” on page 36. Part of the compensation our NEOs are eligible to receive consists of annual incentive cash performance bonuses and long-term equity incentive awards that are designed to provide appropriate incentives to our executives to achieve defined annual corporate goals and to reward our executives for individual achievement towards these goals, subject to certain criteria. CAP to our PEO and average NEO tracks our TSR performance because CAP values reflect changes in the value of equity awards, which fluctuate with changes in our stock price. Because our PEO received large contingent equity compensation awards in 2021 and 2022, and because our stock price has fluctuated significantly in the specified periods, this is particularly true for his CAP. CAP to our PEO and average NEO tracks net income to the extent that a portion of annual cash bonus and annual long-term incentive plan awards are based on achieving target Adjusted EBITDA, which is closely related to net income. (Adjusted EBITDA is net income before interest expense, provision for income taxes, depreciation and amortization, non-cash impairment loss, non-cash rent expense, pre-opening expenses, gains and losses including incremental costs related to stock-based compensation and certain transactional costs.) See “Approval of Executive Compensation as Disclosed in this Proxy Statement” on page 36.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Exercise Expiration | Number of Shares or Units of Stock that Have Not Vested | Market Value of Shares or Unites of Stock that Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | Emanuel Hilario | 300,000 | — | — | $1.42 | 10/30/2027 | — | — | 774,386(1) | $4,739,240 | | | 68,000 | — | — | $2.99 | 2/18/2029 | — | — | | | | Jonathan Segal | 55,942 | — | — | $2.73 | 04/08/2026 | — | — | 31,145(2) | $190,605 | | Tyler Loy | — | — | — | — | — | — | — | 52,325(3) | $320,229 |
Outstanding Equity Awards at Fiscal Year-End
(1) RSUs for 100,000 shares granted on January 6, 2021 vest ratably over three years. RSUs for 73,223 shares granted on March 9, 2021 vest ratably over three years. RSUs for 400,000 shares granted on September 23, 2021 vest over four years beginning on August 31, 2022. RSUs for 30,919 shares granted on March 1, 2022 vest ratably over three years. RSUs for 100,000 shares granted on September 2, 2022 vest ratably in annual installments over four years. PSUs for 500,000 shares granted on September 2, 2022 contain both a market condition and time element. These PSUs may be earned based on achieving common stock price targets within four consecutive 12-month calculation periods. PSUs not earned in a calculation period may be earned in a subsequent calculation period and may be earned early. PSUs vest and are settled in the period in which specified targets are met, except that if a target for a future period is met early, the earned shares then vest ratably at the end of each subsequent 12-month calculation period. The RSUs for 46,032 shares granted on March 7, 2023 vest ratably over three years. (2) The RSUs for 24,083 shares granted on March 9, 2021 vest ratably over three years. The RSUs for 11,595 shares granted on March 1, 2022 vest ratably over three years. The RSUs for 15,387 shares granted on March 7, 2023 vest ratably over three years. The RSUs for 15,523 shares granted on March 9, 2021 vest ratably over three years. The RSUs for 6,000 shares granted on August 10, 2021 vest ratably over three years. The RSUs for 5,035 shares granted on March 1, 2022 vest ratably over three years. The RSUs for 30,000 shares granted on May 18, 2022 vest ratably over three years. The RSUs for 21,793 shares granted on March 7, 2023 vest ratably over three years.