EXHIBIT 10.1

 

 

 

NATHAN’S FAMOUS, INC.

 

2019 MANAGEMENT INCENTIVE PLAN
Fiscal Year Ending March 31, 2019

 

Plan Purpose

 

The Nathan’s Famous, Inc. 2019 Management Incentive Plan (“Plan”) provides for
certain employees of Nathan’s Famous, Inc. (the “Company”) and its subsidiaries
who are executive officers and are designated (the “Covered Employees”) to
receive annual incentive awards (“Awards”) based on the achievement of specific
goals and objectives as established by the Compensation Committee of the Board
of Directors of the Company (the “Board”). The Compensation Committee has
delegated the authority with respect to the Plan to its Performance-Based
Compensation Subcommittee (the “Committee”). The Plan has been adopted pursuant
to the authority granted to the Committee under the Nathan’s Famous, Inc. Code
Section 162(m) Bonus Plan and accordingly no stockholder approval is required to
approve the Plan.

 

Plan Administration

 

By virtue of the authority delegated to the Committee, the Committee shall have
the exclusive power and authority, in its discretion, to: (i) interpret the
Plan; (ii) approve the designation of Covered Employees eligible to participate
in the Plan; (iii) set the performance criteria and performance period for
Awards within the Plan guidelines; (iv) certify attainment of performance goals
and other material terms; (v) reduce Awards as provided herein; (vi) authorize
the payment of all benefits and expenses of the Plan as they become payable
under the Plan; (vii) adopt, amend and rescind rules and regulations relating to
the Plan; and (viii) make all other determinations and take all other actions
necessary or desirable for the Plan’s administration including, without
limitation, correcting any defect, supplying any omission or reconciling any
inconsistency in the Plan in the manner and to the extent it shall deem
necessary to carry the Plan into effect, but only to the extent any such action
would be permitted under Section 162(m) of the Internal Revenue Code of 1986, as
amended. The Committee’s determinations under the Plan need not be uniform and
may be made selectively among Covered Employees whether or not such Covered
Employees are similarly situated.

 

All decisions of the Committee on any question concerning the designation of
Covered Employees and the interpretation and administration of the Plan shall be
final, conclusive and binding upon all parties. The Committee may rely on
information, and consider recommendations, provided by the Board or the
executive officers of the Company. The Plan is intended to comply with Code
Section 162(m), and all provisions contained herein shall be limited, construed
and interpreted in a manner to comply therewith.

 

 

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In addition to such other rights of indemnification as they may have as members
of the Board, members of the Committee who administer the Plan shall be defended
and indemnified by the Company, to the extent permitted by law, on an after-tax
basis against (i) all reasonable expenses (including attorneys’ fees) actually
and necessarily incurred in connection with the defense of any claim,
investigation, action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Award
awarded hereunder and (ii) all amounts paid by them in settlement thereof
(provided such settlement is approved by the Company) or paid by them in
satisfaction of a judgment in any such claim, investigation, action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such claim, investigation, action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct; provided, however,
that within 30 days after the institution of such claim, investigation, action,
suit or proceeding, such person shall offer to the Company, in writing, the
opportunity at the Company’s expense to defend the same.

 

Eligible Executives

 

For the fiscal year ending March 31, 2019 the Covered Employees will include
Eric Gatoff, Chief Executive Officer (“Covered Employee 1”), Ron DeVos, Chief
Financial Officer (“Covered Employee 2”), Scott Harvey, Executive Vice President
(“Covered Employee 3”), and Leigh Platte, Vice President, Food Service (“Covered
Employee 4”). Additional executive officers of the Company may be added to the
Plan at the discretion of the Committee.

 

Determination of Incentive Awards

 

Performance Criteria

 

Annual Awards will be established based on the following performance criteria:

 

 

 

(i)

Modified EBITDA Net of Restaurant Contribution – Modified EBITDA less
Company-Owned Restaurant Operating Profit and Franchising Revenue. The
performance measures for the year ending March 31, 2019 are set forth on Exhibit
A, and the target Modified EBITDA Net of Restaurant Contribution is as
established by separate resolution of the Committee on June 20, 2018.

 

 

(ii)

Modified EBITDA – Earnings before interest expense, income taxes, depreciation
and amortization and modified to exclude FASB 123R expenses, bonus expenses for
Plan participants, any year-end surplus or deficit in the Company’s marketing
development fund, litigation or claim judgments or settlements, any tariffs paid
by the Company in order to retain existing foodservice customers in Mexico
and/or Canada, non-operating items and expenses for restructuring, productivity
initiatives or new business initiatives. The performance measures for the year
ending March 31, 2019 are set forth on Exhibit B, and the target Modified EBITDA
is as established by separate resolution of the Committee on June 20, 2018.

 

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(iii)

Company-Owned Restaurant Operating Profit. Operating profit derived from
Company-owned restaurants. The performance measures for the year ending March
31, 2019 are set forth on Exhibits A and C, and the target Company- Owned
Restaurant Operating Profit is as established by separate resolution of the
Committee on June 20, 2018.

 

 

(iv)

Franchising Revenue – Total franchise fees, royalties and rebates earned from
franchising activities. The performance measures for the year ending March 31,
2019 are set forth on Exhibits A and C, and the target Franchising Revenue is as
established by separate resolution of the Committee on June 20, 2018.

 

 

(v)

Foodservice Operating Profit – Operating profit derived from the Branded
Products Program excluding any tariffs paid by the Company in order to retain
existing foodservice customers in Mexico and/or Canada. The performance measures
for the year ending March 31, 2019 are set forth on Exhibit D and the target
Foodservice Operating Profit is as established by separate resolution of the
Committee on June 20, 2018.

 

The aforementioned criteria may be adjusted by the Committee to exclude the
effects of the following items: extraordinary, unusual or non-recurring items;
effects of changes in tax law, accounting principles or other such laws or
provisions affecting reported results; effects of currency fluctuations; effects
of financing activities (e.g., effect on earnings per share of issuing
convertible debt securities); expenses for restructuring, productivity
initiatives or new business initiatives; impairment of tangible or intangible
assets; litigation or claim judgments or settlements; non-operating items;
acquisition expenses; and effects of assets sales or divestitures.

 

Individual Awards – Performance Criteria:

 

 

Target

Bonus (%

of Salary)

Modified

EBITDA Net of

Restaurant

Contribution

(Weight %)

Company-

Owned

Restaurant

Operating Profit

(Weight %)

Franchising

Revenue

(Weight %)

Covered Employee 1

155%

75%

12.5%

12.5%

 

 

 

 

Target Bonus (% of Salary)

Modified EBITDA (Weight %)

Covered Employee 2

100%

100%

 

 

 

 

Target Bonus

(% of Salary)

Company-Owned

Restaurant Operating

Profit (Weight %)

Franchising Revenue

(Weight %)

Covered Employee 3

40%

35%

65%

 

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Target Bonus (% of Salary)

Foodservice Operating Profit

(Weight %)

Covered Employee 4

55%

100%

 

 

The amount of individual Awards will be determined by the Committee upon
attainment of the performance goals based on the aforementioned criteria (the
“Performance Goals”). The Committee may exercise negative discretion with
respect to any Award to reduce any amount that would otherwise be payable under
the Plan.

 

Payment of Awards

 

Awards will be paid in cash no later than 2½ months after the year ending March
31, 2019. Payment of the Awards shall be contingent upon the Committee
certifying in writing that the Performance Goals and any other material terms
applicable to such Award were satisfied.

 

Limitation on Awards

 

The maximum annual Award payable for the fiscal year ending March 31, 2019 to
any Covered Employee under the Plan is $1,162,500.

 

Effective Date

 

The Plan is effective as of March 26, 2018.

 

Amendment, Suspension or Termination of the Plan. The Committee may at any time
amend, suspend or terminate the Plan. However, any amendment or modification of
the Plan shall be subject to stockholder approval to the extent required under
Code Section 162(m) or other applicable law or regulation.

 

Adopted by the Performance-Based Subcommittee on June 20, 2018 for the fiscal
year ending March 31, 2019.

 

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