DEF 14A of ONE Group Hospitality, Inc., Apr 10, 2025

DEF 14A of ONE Group Hospitality, Inc.

Filed Apr 10, 2025 · FY20240001104659-25-033581

Open on EDGAR

  1. Compensation Highlights

    Compensation Highlights • Say-on-pay proposal approved by 94% of stockholders voting at the 2024 meeting • Performance metrics aligned with business strategy and stockholder value creation • Target compensation is over 50% risk-based on financial and non-financial performance measures • CEO — 60% at risk, based on financial and non-financial performance measures • Average NEO — 52% at risk, based on financial and non-financial performance measures • Incentive compensation plan and practices include good corporate governance features such as: • Recommended Senior Executive Management team goals are presented to the Compensation Committee by the CEO • The Compensation Committee evaluates the recommended goals and approves • Performance goals are established and weighted 75% to Company financial performance and 25% to individual performance goals • No excise tax gross-up on executive severance plan • Three-year minimum performance period for long-term incentive plan awards • Certain long-term incentive plan awards are performance stock units which have both a market condition and time element • Independent compensation consultant Annual compensation risk assessment

  2. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  3. Meeting Attendance

    | Compensation Committee | | | Members | This committee currently has four members, Messrs. Angelis (Chair), Bullis, Ross and Serruya. All members of the Compensation Committee qualify as independent under the definition promulgated by NASDAQ. | | Number of Meetings Last Year | One | | 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 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 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. |

  4. 2024 DIRECTOR COMPENSATION

    2024 DIRECTOR COMPENSATION For 2024, 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, 2024, to our non-employee directors.

  5. 2024 DIRECTOR COMPENSATION

    | Name | Stock Awards ($) | Cash ($) | Total ($) | | Dimitrios Angelis | $105,000 | $82,500 | $187,500 | | Eugene Bullis | $105,000 | $82,500 | $187,500 | | James Chambers(1) | $70,000 | $46,667 | $116,667 | | Susan Lintonsmith | $105,000 | $70,000 | $175,000 | | Haydee Olinger | $105,000 | $70,000 | $175,000 | | Scott Ross(2) | $70,000 | $46,667 | $116,667 | | Michael Serruya | $105,000 | $82,500 | $187,500 |

  6. 2024 DIRECTOR COMPENSATION

    (1) Mr. Chambers was appointed as a Class I director of the Board on May 1, 2024. The amounts in the table above reflect his prorated compensation for the portion of 2024 that he served as a director. Mr. Ross was appointed as a Class III director of the Board on May 1, 2024. The amounts in the table above reflect his prorated compensation for the portion of 2024 that he served as a director.

  7. Summary Compensation Table

    Summary Compensation Table The following table shows the total compensation paid or accrued during the last two fiscal years ended December 31, 2024 and 2023 to (i) our President and Chief Executive Officer and (ii) our next two most highly compensated executive officers who earned more than $100,000 and served as executive officers during the fiscal year ended 2024.

  8. Summary Compensation Table

    | Name and Principal Position | Year | Salary | Bonus | Stock Awards(1) | Option Awards | Non Equity Incentive Plan Compensation | Other(5) | Total | | Emanuel Hilaro(2) President and Chief Executive Officer | 2024 | $700,000 | $350,000 | $350,000 | $0 | $157,500 | $37,462 | $1,594,962 | | | 2023 | $700,000 | $0 | $350,000 | $299,532 | $50,468 | $37,462 | $1,437,462 | | Tyler Loy(3) Chief Financial Officer | 2024 | $335,961 | $225,000 | $91,250 | $0 | $41,063 | $6,539 | $699,813 | | | 2023 | $315,866 | $0 | $81,250 | $52,151 | $8,787 | $6,250 | $464,304 | | Jonathan Segal(4) Executive Chairman | 2024 | $350,000 | $0 | $131,250 | $0 | $59,063 | $6,731 | $547,044 | | | 2023 | $350,000 | $0 | $131,250 | $60,359 | $11,828 | $6,731 | $560,168 |

  9. Summary Compensation Table

    (1) The amounts reflect the grant date fair value of performance stock units (“PSUs”) or restricted stock units (“RSUs”) issued for the respective year pursuant to the 2019 Equity Incentive Plan. (2) The 2024 stock awards are composed of the following: (a) 58,725 RSUs awarded on March 4, 2025 which vest ratably in annual installments over three years and (b) 72,364 PSUs awarded on March 4, 2025 with both a market condition and time element; The 2023 stock awards are comprised of 61,082 PSUs awarded on April 2, 2024, with both a market condition and time element and 11,513 RSUs awarded on July 1, 2024. The 2023 option awards are 81,616 stock options granted on April 2, 2024, that vest on the one-year anniversary of the grant date. On May 1, 2024, Mr. Hilario received a cash bonus of $350,000 in recognition of his efforts with respect to the acquisition of Benihana. (3) The 2024 stock awards are composed of the following: (a) 15,310 RSUs awarded on March 4, 2025 which vest ratably in annual installments over three years and (b) 18,866 PSUs awarded on March 4, 2025 with both a market condition and time element; The 2023 stock awards are comprised of 14,179 PSUs awarded on April 2, 2024, with both a market condition and time element, 12,000 RSUs awarded on April 2, 2024 and 2,673 RSUs awarded on July 1, 2024. The 2023 option awards are 14,209 stock options granted on April 2, 2024, that vest on the one-year anniversary date. On May 1, 2024, Mr. Loy received a cash bonus of $225,000 in recognition of his efforts with respect to the acquisition of Benihana. (4) The 2024 stock awards are composed of the following: (a) 22,022 RSUs awarded on March 4, 2025 which vest ratably in annual installments over three years and (b) 27,137 PSUs awarded on March 4, 2025 with both a market condition and time element. The 2023 stock awards are comprised of 22,905 PSUs awarded on April 2, 2024, with both a market condition and time element and 4,318 RSUs awarded on July 1, 2024. The 2023 option awards are 16,446 stock options granted on April 2, 2024, that vest on the one-year anniversary of the grant date. Other includes 53rd week of salary paid in December for all salaried employees. Mr. Hilario’s 2024 and 2023 amount includes $24,000 in transportation allowance.

  10. Pay Versus Performance

    Pay Versus Performance The table below shows (i) the total compensation for our NEOs for the past two fiscal years as set forth in the Summary Compensation Table, (ii) the “Compensation Actually Paid” (“CAP”) to our President and Chief Executive Officer, and (iii) averages of calculated compensation actually paid for our other named executive officers (“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 “Our Compensation Program and Philosophy” on page 37.

  11. 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 (Loss) Income | Adjusted EBITDA | | 2024 | $1,594,962 | $(476,191) | $623,429 | $498,320 | $46 | $(15,824,000) | $75,189,000 | | 2023 | $1,437,462 | $1,395,754 | $512,236 | $519,593 | $97 | $4,718,000 | $32,785,000 |

  12. Pay Versus Performance

    (1) The Principal Executive Officer (“PEO”) in fiscal years 2024 and 2023 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 14, “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, 2024. (3) The NEOs included in the calculation of average NEO compensation in fiscal years 2024 and 2023 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.

  13. Pay Versus Performance

    | | 2023 | | 2024 | | | | PEO | Average Non-PEO NEOs | PEO | Average Non-PEO NEOs | | Total Compensation as reported in Summary Compensation Table | $1,437,462 | $512,236 | $1,594,962 | $623,429 | | Deduct: Equity award amounts based on grant date fair values | (649,532) | (162,505) | (350,000) | (111,250) | | 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 | 281,716 | 113,771 | 328,575 | 96,334 | | 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 | (131,104) | (4,166) | (1,638,336) | (64,932) | | 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 | 457,212 | 60,257 | (411,392) | (45,261) | | 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 | $1,395,754 | $519,593 | $(476,191) | $498,320 |

  14. 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. In 2024, the Company granted performance stock units to the NEOs that may be earned at any time prior to the third anniversary of the grant date based on attaining a 15% year-over-year increase in compounded annual growth rate in the volume-weighted average price of the Company’s stock. The Company uses several other performance measures to align executive compensation with performance, see “Executive Compensation” on page 28 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, gains and losses including incremental costs related to stock-based compensation and certain transaction and transition costs.) The net loss for 2024 includes $28 million in transaction, transition and integration expenses, lease termination and other costs associated with the acquisition of Benihana. See “Approval of Executive Compensation as Disclosed in this Proxy Statement” on page 37.

  15. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End

  16. 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 Units 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 | — | — | 638,589(1) | $1,851,909 | | | 68,000 | — | — | $2.99 | 2/18/2029 | — | — | | | | | — | 81,616 | 81,616 | $5.73 | 04/02/2034 | — | — | | | | Jonathan Segal | 55,942 | — | — | $2.73 | 04/08/2026 | — | — | 41,346(2) | $119,903 | | | | 16,446 | 16,446 | $5.73 | 04/02/2034 | — | — | | | | Tyler Loy | — | 14,209 | 14,209 | $5.73 | 04/02/2034 | — | — | 55,059(3) | $159,671 |

  17. Outstanding Equity Awards at Fiscal Year-End

    (1) RSUs for 400,000 shares granted on September 24, 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. RSUs for 46,032 shares granted on March 7, 2023 vest ratably over three years. PSUs for 61,082 shares granted on April 2, 2024, contain both a market condition and time element. The PSUs granted on April 2, 2024 may be earned at any time prior to the third anniversary of the grant date based on attaining a 15% year-over-year increase in compounded annual growth rate in the volume-weighted average price of the Company’s stock. The RSUs for 11,513 shares granted on July 1, 2024 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 PSUs for 22,905 shares granted on April 2, 2024, contain both a market condition and time element. The PSUs granted on April 2, 2024 may be earned at any time prior to the third anniversary of the grant date based on attaining a 15% year-over-year increase in compounded annual growth rate in the volume-weighted average price of the Company’s stock. The RSUs for 4,318 shares granted on July 1, 2024 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. The PSUs for 14,179 shares granted on April 2, 2024, contain both a market condition and time element. The PSUs granted on April 2, 2024 may be earned at any time prior to the third anniversary of the grant date based on attaining a 15% year-over-year increase in compounded annual growth rate in the volume-weighted average price of the Company’s stock. The RSUs for 12,000 shares granted on April 2, 2024 vest ratably over three years. The RSUs for 2,673 shares granted on July 1, 2024, vest ratably over three years.