UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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☑ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to Section 240.14a-12 |
JACK IN THE BOX INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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☐ | Fee paid previously with preliminary materials. | |
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |
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January 25, 2018
Dear Fellow Stockholder:
We invite you to attend the Jack in the Box Inc. 2018 Annual Meeting of Stockholders. The meeting will be held on Tuesday, February 27, 2018, at 8:30 a.m. Pacific Standard Time at the offices of Jack in the Box Inc., 9330 Balboa Avenue, San Diego, CA 92123. In the following pages, you will find the Notice of Annual Meeting of Stockholders as well as a Proxy Statement describing the business to be conducted at the meeting. We have also enclosed a copy of our Annual Report on Form 10-K for the fiscal year ended October 1, 2017, for your information.
To assure that your shares are represented at the meeting, please mark your choices on the enclosed proxy card, sign and date the card, and return it promptly in the postage-paid envelope provided. We also offer stockholders the opportunity to vote their shares over the Internet or by telephone. Please see the Proxy Statement and the enclosed proxy card for details about voting. If you hold your shares through an account with a broker, bank, or other financial institution, please follow the instructions you receive from them to vote your shares. If you are able to attend the meeting and wish to vote your shares in person, you may do so at any time before the proxy is voted at the meeting.
Sincerely,
Leonard A. Comma
Chairman of the Board and Chief Executive Officer
Important notice regarding the availability of proxy materials
for the Annual Meeting of Stockholders to be held on February 27, 2018
The Jack in the Box Inc. Proxy Statement and Annual Report on Form 10-K for the
fiscal year ended October 1, 2017, are available electronically at
http://investors.jackinthebox.com
INFORMATION REGARDING ADMISSION TO THE ANNUAL MEETING
Everyone attending the 2018 Annual Meeting of Stockholders will be required to present both proof of ownership of Jack in the Box Inc. Common Stock and a valid picture identification, such as a drivers license or passport. If your shares are held in the name of a bank, broker or other financial institution, you will need a recent brokerage statement or letter from such entity reflecting your stock ownership as of the record date. If you do not have both proof of ownership of Jack in the Box Inc. stock and a valid picture identification, you may be denied admission to the Annual Meeting.
Cameras, sound or video recording devices, and large bags or packages will not be allowed in the meeting room.
JACK IN THE BOX INC.
9330 Balboa Avenue
San Diego, California 92123
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held February 27, 2018
The 2018 Annual Meeting of Stockholders of Jack in the Box Inc. will be held on Tuesday, February 27, 2018, at 8:30 a.m. Pacific Standard Time, at the offices of Jack in the Box Inc., 9330 Balboa Avenue, San Diego, CA 92123 for the following purposes:
1. | To elect the nine Directors specified in this Proxy Statement to serve until the next Annual Meeting of Stockholders and until their respective successors are elected and qualified; |
2. | To ratify the appointment of KPMG LLP as our independent registered public accountants for the fiscal year ending September 30, 2018; |
3. | To provide an advisory vote regarding the compensation of our named executive officers (Say on Pay) for the fiscal year ended October 1, 2017, as set forth in the Proxy Statement; and |
4. | To consider such other business as may properly come before the meeting and any adjournments or postponements thereof. |
These matters are more fully described in the attached Proxy Statement, which is made a part of this notice.
Our Board of Directors recommends a vote FOR proposals 1 through 3. You are entitled to vote at the 2018 Annual Meeting of Stockholders (the Annual Meeting) only if you were a Jack in the Box Inc. stockholder as of the close of business on December 29, 2017, the record date for the Annual Meeting. A complete list of stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder, for any purpose relating to the Annual Meeting, at the Annual Meeting, and for a period of ten days prior to the Annual Meeting, during regular business hours at our principal offices located at 9330 Balboa Avenue, San Diego, CA 92123.
Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares via the toll-free telephone number, over the Internet, or by signing, dating, and returning the enclosed proxy card as promptly as possible in the envelope provided.
San Diego, California
January 25, 2018
By order of the Board of Directors,
Phillip H. Rudolph
Executive Vice President, Chief Legal & Risk Officer and Corporate Secretary
INFORMATION REGARDING ADMISSION TO THE ANNUAL MEETING
Everyone attending the 2018 Annual Meeting of Stockholders will be required to present both proof of ownership of Jack in the Box Inc. Common Stock and a valid picture identification, such as a drivers license or passport. If your shares are held in the name of a bank, broker or other financial institution, you will need a recent brokerage statement or letter from such entity reflecting your stock ownership as of the record date. If you do not have both proof of ownership of Jack in the Box Inc. stock and a valid picture identification, you may be denied admission to the Annual Meeting.
Cameras, sound or video recording devices, and large bags or packages will not be allowed in the meeting room.
PROXY SUMMARY |
This is a summary only, and does not contain all of the information that you should consider in connection with this Proxy Statement. Please read the entire Proxy Statement carefully before voting.
Annual Meeting of Stockholders
Time and Date |
8:30 a.m. P.S.T., February 27, 2018 | |
Place |
9330 Balboa Avenue, San Diego, California 92123 | |
Record date |
December 29, 2017 | |
Voting |
Stockholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals. | |
Admission |
Proof of ownership and picture identification is required to enter Jack in the Box Inc.s annual meeting. |
Voting Matters
Stockholders are being asked to vote on the following matters:
Items of Business
|
Our Boards Recommendation | |
1. Election of Directors (page 14)
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FOR all Nominees | |
2. Ratification of KPMG LLP as Independent Registered Public Accountants for FY 2018 (page 31)
|
FOR
| |
3. Advisory Vote to Approve Executive Compensation (page 32)
|
FOR |
Stockholders also will transact any other business that may properly come before the meeting.
How to Vote
You are entitled to vote at the 2018 Annual Meeting of Stockholders if you were a stockholder of record at the close of business on December 29, 2017, the record date for the meeting. On the record date, there were 29,532,155 shares of the Companys common stock outstanding and entitled to vote at the annual meeting. For more details on voting and the annual meeting logistics, refer to the Questions and Answers section of this Proxy Statement.
2 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
PROXY SUMMARY |
Corporate Governance Highlights
We are committed to good corporate governance, which we believe promotes the long-term interests of stockholders and strengthens Board and Management accountability. We believe good governance also fosters trust in the Company by all our stakeholders, including our guests, employees, franchisees, suppliers and the communities we serve. The Corporate Governance section of this Proxy Statement describes our governance framework, which includes the following features:
Annual election of directors, with majority voting |
Annual assessment of Board leadership structure | |
8 of 9 independent directors |
Annual Board, committee and individual director evaluations | |
Regular executive sessions of independent directors |
Policy requiring long-tenured directors (more than 12 years on the Board) to submit voluntary offer to resign and be reviewed by Nominating & Governance Committee with respect to continued effectiveness | |
Annual evaluation of CEO/Chairman by independent directors |
Lead independent director with restaurant and franchise experience and oversight of independent directors executive sessions and information flow to the Board | |
Policy restricting directors to service on no more than three other public company boards |
Risk oversight by full Board and designated committees | |
No supermajority standards stockholders may amend bylaws or charter by majority vote |
No poison pill in place | |
Stockholder right to act by written consent |
Prohibition of hedging, pledging and short sales by Section 16 officers and directors | |
CEO/Chair and other members of Management regularly meet with the investment community, and Board is informed of feedback through Investor Relations update at each Board meeting |
Formal ethics Code of Conduct, ethics hotline and ethics training and communications to all employees to reinforce a culture of integrity |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 3
PROXY SUMMARY |
Fiscal 2017 Review
Returns to Stockholders
| The Companys stock price increased 6.2% to $101.92 per share at fiscal year-end (FYE) 2017, versus $95.94 at FYE 2016, on top of a 20.4% increase in FY 2016. |
| We returned more than $376 million in cash to stockholders during fiscal 2017, including over $327 million in share buybacks and over $49 million in dividends. |
Financial and Operational Results
| While we made progress on key strategic initiatives, fiscal 2017 was a challenging year for the Company. |
| Systemwide same-store sales grew 0.5% at Jack in the Box (JIB), but declined 1.4% at Qdoba. |
| Consolidated restaurant operating margin (ROM)1 declined 260 basis points to 17.6% of sales, with JIB margin down 110 basis points to 20.1% of sales, and Qdoba margins down 450 basis points to 13.6% of sales. |
| Operating Earnings Per Share (Operating EPS)2 of $3.88 per share increased approximately 3% over prior year, excluding the $0.09 benefit from the 53rd week in fiscal 2016. |
| The Company made progress on key strategic initiatives, including reducing our corporate general and administrative expenses (G&A), and refranchising 178 JIB restaurants which increased our franchise mix from 82% at the end of fiscal 2016 to 88% at 2017 fiscal year-end. |
| Impact on Incentive Compensation |
| The Operating EPS result was just slightly above the minimum threshold goal for annual incentive compensation. |
| The Company fell short of its threshold goals on systemwide sales and ROM at both brands. |
| As a result, the CEO and other Brand Services named executive officers (NEOs) received annual incentive payouts of less than 9% of target, and the Jack in the Box and Qdoba brand presidents received less than 4% of target. |
Other
| During fiscal 2017, the Company retained Morgan Stanley & Co. LLC to assist our Board of Directors in its evaluation of potential strategic alternatives with respect to the Qdoba business, as well as other ways to enhance shareholder value. Following the completion of a robust process, our Board determined that the sale of Qdoba is the best alternative for enhancing shareholder value and is consistent with our desire to transition to a less capital-intensive business model. In December 2017, we announced that the Company had entered into an agreement to sell Qdoba Restaurant Corporation for approximately $305 million in cash. The transaction is expected to close by April 2018. |
Consistent with the fundamental principle that compensation programs should align pay with performance, the Companys fiscal 2017 performance directly impacted compensation decisions and pay outcomes as described in our Compensation Discussion and Analysis (CD&A) starting on page 34.
1 | Restaurant operating margin is a non-GAAP measure, and is defined by the Company as company restaurant sales less expenses incurred directly by our restaurants in generating those sales (food and packaging costs, payroll and employee benefits costs, and occupancy and other costs). For a reconciliation of this measure to consolidated earnings from operations, the most comparable GAAP measure, please see the Reconciliation of Non-GAAP Measurements to GAAP Results attachment to the Companys Current Report on Form 8-K and accompanying press release filed November 29, 2017. |
2 | Operating EPS is a non-GAAP measure, and is defined by the Company as diluted EPS from continuing operations on a GAAP basis excluding restructuring charges and gains or losses from refranchising. For a reconciliation of this measure to diluted earnings per share from continuing operations, the most comparable GAAP measure, please see the Reconciliation of Non-GAAP Measurements to GAAP Results attachment to the Companys Current Report on Form 8-K and accompanying press release filed November 29, 2017. |
4 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
PROXY SUMMARY |
Board Nominees (Proposal 1)
We understand the importance of having a Board comprised of talented people with the highest integrity and the necessary skills and qualifications to oversee our business. The following table provides summary information about our director nominees (all current Directors), who have a diverse and balanced skill set including extensive financial, marketing, consumer brand, franchise, restaurant and retail experience. We encourage you to review the qualifications, skills and experience of each of our Directors on pages 15-19.
Name | Age | Director Since |
Principal Occupation | Independent | Committee Memberships |
Other Public Company Boards | ||||||||||||||
AC | CC | NG | FC | EC | ||||||||||||||||
Leonard A. Comma (Chairman of the Board) |
48 | 2014 | CEO, Jack in the Box Inc. |
No | - | |||||||||||||||
David L. Goebel (Lead Director) |
67 | 2008 |
Partner & Faculty Member, Merryck & Co. Ltd. |
Yes | x | x | x | Wingstop Inc. | ||||||||||||
Sharon P. John |
53 | 2014 |
President & CEO, Build-A-Bear Workshop, Inc. |
Yes | x | x | Build-a-Bear Workshop, Inc. | |||||||||||||
Madeleine A. Kleiner |
66 | 2011 | Director (Retired hotel & banking executive attorney) |
Yes | x | Northrop Grumman Corp. | ||||||||||||||
Michael W. Murphy |
60 | 2002 |
President & CEO, Sharp HealthCare |
Yes | x | x | - | |||||||||||||
James M. Myers |
60 | 2010 | Chairman of the Board, Petco |
Yes | x | x | - | |||||||||||||
David M. Tehle |
61 | 2004 | Director (Retired retail CFO) |
Yes | x | Genesco Inc., US Foods Holding Corp., National Vision, Inc. | ||||||||||||||
John T. Wyatt |
62 | 2010 |
CEO, Knowledge Universe United States |
Yes | x | - | ||||||||||||||
Vivien M. Yeung |
45 | 2017 | General Manager, Venture, Lululemon Athletica Inc. | Yes | x | x |
Chair |
AC Audit Committee |
FC Finance Committee | ||
x Member |
CC Compensation Committee |
EC Executive Committee | ||
NG Nominating and Governance Committee |
Director Attendance During the time each director nominee served on the Board in fiscal 2017, each attended more than 75% of the meetings of the Board and committees on which he or she sits.
Board Composition Our Board has a mix of relatively newer and longer-tenured directors. The charts below show Board makeup by various characteristics. For more information on our philosophy regarding the recruitment and diversity of Board members and our Board refreshment policies, please see pages 23-25.
Director Tenure Average Tenure: 7.5 years Average Age: 58 years Independence Gender
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 5
PROXY SUMMARY |
Auditors (Proposal 2)
Executive Compensation Highlights (Proposal 3)
The Company seeks a non-binding advisory vote from its stockholders to approve the compensation of our NEOs for fiscal 2017 (Say on Pay). The Board values stockholders opinions, and the Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions.
| Our CD&A describes the compensation decision-making process, details our programs and policies, and includes an illustration of our compensation framework and key fiscal 2017 performance measures and pay actions on page 36. |
| Our executive compensation programs are built on the following principles and objectives: |
| Our stockholders approved each of the prior four years Say on Pay proposals by over 96% of votes cast. |
6 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
PROXY SUMMARY |
Compensation Governance Practices
The company has several governance practices that we believe support the soundness and efficacy of our compensation programs. In short:
☑ What We Do |
☒ What We Dont Do | |
✓ Compensation Committee composed entirely of independent directors, who meet regularly in executive session without Management present. Pages 22, 43. |
☒ Section 16 officers and directors are prohibited from hedging, pledging or holding Company stock in margin accounts. Page 49. | |
✓ Independent compensation consultant who works exclusively for the Compensation Committee (no other work for the Company). Page 43. |
☒ No dividends or dividend equivalents are paid on unvested restricted stock units (RSUs) or performance share units. Page 41. | |
✓ Robust stock ownership and holding requirements. Page 48. |
☒ No re-pricing of equity without stockholder approval. Page 33. | |
✓ Compensation Risk Committee that analyzes compensation plans, programs, policies and practices. Page 53. |
☒ The Company ceased providing tax gross-up provisions in compensation arrangements entered into in 2009 and later, except related to relocation expenses (which require Compensation Committee approval in the case of executive officers). Page 51. | |
✓ Compensation Committee discretion to reduce payouts under incentive plans. Page 53. |
☒ No single trigger change in control accelerated vesting of RSUs and options. Since 2014, all RSUs and options awards that provide for vesting upon a change in control require a double trigger (termination and consummation of the change in control). Page 61. | |
✓ Clawback policy providing ability to recover incentive cash compensation and performance-based equity awards based on financial results that were subsequently restated due to fraud or intentional misconduct. Page 50. |
Additional Information
Please see the Questions and Answers section that immediately follows for important information about the proxy materials, voting, the annual meeting, Company documents, communications and the deadlines to submit stockholder proposals for the 2019 Annual Meeting of Stockholders.
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 7
QUESTIONS AND ANSWERS |
JACK IN THE BOX INC.
9330 Balboa Avenue
San Diego, California 92123
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
February 27, 2018
Proxy Materials and Voting Information
1. | Why am I receiving these materials? |
2. | Who can vote at the Annual Meeting? |
3. | What does it mean to be a stockholder of record? |
8 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
QUESTIONS AND ANSWERS |
4. | What does it mean to beneficially own shares in Street name? |
5. | What are my voting choices for each of the items to be voted on at the 2018 Annual Meeting? |
Item 1: Election of Directors |
Vote in favor of all nominees;
Vote in favor of specific nominees;
Vote against all nominees;
Vote against specific nominees;
Abstain from voting with respect to nominees; or
Abstain from voting with respect to specific nominees.
The Board recommends a vote FOR all Director nominees.
| |||
Item 2: Ratification of the Appointment of KPMG LLP as Independent Registered Public Accountants |
Vote in favor of ratification;
Vote against the ratification; or
Abstain from voting on the ratification.
The Board recommends a vote FOR the ratification.
| |||
Item 3: Advisory Vote to Approve Executive Compensation (Say on Pay) |
Vote in favor of the advisory proposal;
Vote against the advisory proposal; or
Abstain from voting on the advisory proposal.
The Board recommends a vote FOR the advisory approval of executive compensation.
|
6. | What if I return the proxy card to the Company but do not make specific choices? |
If you return a signed, dated, proxy card to the Company without making any voting selections, the Company will vote your shares as follows:
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 9
QUESTIONS AND ANSWERS |
7. | Could any additional matters be raised at the 2018 Annual Meeting? |
8. | What does it mean if I received more than one proxy card? |
9. | How are votes counted? |
Proposal Number |
Item | Votes Required for Approval | Abstentions | Uninstructed Shares | ||||||
1 | Election of 9 Directors |
Majority of votes cast. |
No effect. | No effect. | ||||||
2 | Ratification of the Appointment of KPMG LLP as Independent Registered Public Accountants | Majority of the voting power of the shares present in person or by proxy and entitled to vote. | Count as votes against. |
Discretionary voting by broker permitted. | ||||||
3 | Advisory Vote to Approve Executive Compensation |
Majority of the voting power of the shares present in person or by proxy and entitled to vote. | Count as votes against. |
No effect. | ||||||
10. | How many shares must be present or represented to conduct business at the Annual Meeting? |
10 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
QUESTIONS AND ANSWERS |
11. | How do I vote my shares of Jack in the Box Common Stock? |
12. | May I change my vote or revoke my proxy? |
Yes.
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 11
QUESTIONS AND ANSWERS |
13. | Who will pay for the cost of soliciting proxies? |
14. | How can I find out the results of the Annual Meeting? |
15. | How can I obtain copies of the proxy statement or 10-K? |
16. | How do I attend the 2018 Annual Meeting of Stockholders in person? |
12 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
PROPOSAL ONE ELECTION OF DIRECTORS |
PROPOSAL ONE ELECTION OF DIRECTORS
All of the directors of the Company are elected annually and serve until the next Annual Meeting and until their respective successors are elected and qualified. The current nominees for election as directors (each of whom is currently serving as a Director of the Company) are set forth below. All of the nominees have indicated their willingness to serve, and have consented to be named in the Proxy Statement. If any should be unable or unwilling to stand for election, the shares represented by proxies may be voted for a substitute designated by the Board, unless a contrary instruction is indicated in the proxy.
The following table provides certain information about each nominee for director as of January 1, 2018.
Name | Age | Position(s) with the Company | Director Since |
|||||||
Leonard A. Comma
|
48 | Chairman of the Board & Chief Executive Officer | 2014 | |||||||
David L. Goebel
|
67 | Independent Director | 2008 | |||||||
Sharon P. John
|
53 | Independent Director | 2014 | |||||||
Madeleine A. Kleiner
|
66 | Independent Director | 2011 | |||||||
Michael W. Murphy
|
60 | Independent Director | 2002 | |||||||
James M. Myers
|
60 | Independent Director | 2010 | |||||||
David M. Tehle
|
61 | Independent Director | 2004 | |||||||
John T. Wyatt
|
62 | Independent Director | 2010 | |||||||
Vivien M. Yeung
|
45 | Independent Director | 2017 |
Vote Required for Approval
In the election of directors, you may vote FOR, AGAINST, or ABSTAIN. The Companys Bylaws require that, in an election such as this, where the number of director nominees does not exceed the number of directors to be elected, each director will be elected by the vote of the majority of the votes cast (in person or by proxy) with respect to the director. A majority of votes cast means that the number of shares cast FOR a directors election exceeds the number of votes cast AGAINST that director. For purposes of determining the votes cast, only those votes cast FOR or AGAINST are included. Neither a vote to ABSTAIN nor a broker non-vote will count as a vote cast FOR or AGAINST a director nominee and, as a result, will have no direct effect on the outcome of the election of directors. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.
In an uncontested election, a nominee who does not receive a majority of the votes cast will not be elected. An incumbent director who is not elected because he or she does not receive a majority of the votes cast will continue to serve, but shall tender his or her resignation to the Board. The Nominating and Governance Committee will take action to determine whether to accept or reject the directors resignation, or whether other action is appropriate, and will make a recommendation to the Board. Within ninety (90) days following the date of the certification of the election results, the Board will act on the Committees recommendation and publicly disclose its decision and the rationale for such decision.
ON PROPOSAL ONE, ELECTION OF DIRECTORS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES.
14 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
PROPOSAL ONE ELECTION OF DIRECTORS |
Director Qualifications and Biographical Information
Our Board includes individuals with expertise in executive leadership and management, accounting and finance, marketing and branding, and across restaurant, franchise, hospitality, retail, manufacturing, and healthcare industries. Our Directors have a diversity of backgrounds and experiences. We believe that, as a group, they work effectively together in overseeing our business, hold themselves to the highest standards of integrity, and are committed to representing the long-term best interests of our stockholders.
Biographical information for each of the Director nominees, including the key qualifications, experience, attributes, and skills that led our Board to the conclusion that each of the Director nominees should serve as a director, is set forth on the pages below. In addition to the business and professional experiences described below, our Director nominees also serve on the boards of various civic and charitable organizations.
Director Nominees
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 15
PROPOSAL ONE ELECTION OF DIRECTORS |
16 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
PROPOSAL ONE ELECTION OF DIRECTORS |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 17
PROPOSAL ONE ELECTION OF DIRECTORS |
18 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
PROPOSAL ONE ELECTION OF DIRECTORS |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 19
CORPORATE GOVERNANCE |
We operate within a comprehensive corporate governance structure driving and expecting the highest standards of professional and personal conduct. Our Corporate Governance Principles and Practices, our ethics Code of Conduct: The Integrity Playbook, the charters for our Audit, Compensation, Finance, and Nominating and Governance Committees, and other corporate governance information, are available at http://investors.jackinthebox.com. These materials are also available in print to any stockholder upon written request to the Companys Corporate Secretary, Jack in the Box Inc., 9330 Balboa Avenue, San Diego, CA 92123. The information on our website is not a part of this Proxy Statement and is not incorporated into any of our filings made with the Securities and Exchange Commission.
Board Meetings, Annual Meeting of Stockholders, and Attendance
Determination of Current Board Leadership Structure
20 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
CORPORATE GOVERNANCE |
Compensation Committee Interlocks and Insider Participation
Additional Corporate Governance Principles and Practices
The Company has adopted Corporate Governance Principles and Practices which contain general principles and practices regarding the functioning of the Board of Directors and the Board Committees. The Nominating and Governance Committee regularly reviews the Principles and Practices and recommends revisions if and as appropriate. The full text of the Principles and Practices may be found at http://investors.jackinthebox.com. The Principles and Practices address many of the items discussed above, and also include the following items:
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 25
DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES |
DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES
The Compensation Committee of the Board of Directors (the Committee) is responsible for reviewing and recommending to the Board the form and amount of compensation for our non-employee directors. The following discussion of compensation and stock ownership guidelines applies only to our non-employee directors and does not apply to Mr. Comma. Mr. Comma is an employee of the Company, compensated as an executive officer, and does not receive additional compensation for service as a director.
The Board believes that total compensation for directors should reflect the work required in both (i) their ongoing oversight and governance role and (ii) their continuous focus on driving long-term performance and stockholder value. The compensation program is designed to provide pay that is competitive with directors in the Companys Peer Group. (The methodology used in determining the companies in the Peer Group, and the companies in the Fiscal 2017 Peer Group are described in Section III.b of the Compensation Discussion & Analysis (CD&A) in this Proxy Statement). The program consists of a combination of cash retainers and equity awards in the form of time-vested restricted stock units (RSUs). Competitive is defined as approximating the 50th percentile of pay of Peer Group directors.
Director Compensation Program Review and Changes
Annual Compensation Program
a. Cash Retainers
26 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES |
c. Annual Equity Grant Restricted Stock Units
Director Ownership and Stock Holding Requirements
The Board believes that all directors should maintain a meaningful personal financial stake in the Company to align their long-term interests with those of our stockholders. Pursuant to our Corporate Governance Principles and Practices, the Board desires that, within a reasonable period after joining the Board, each non-employee director hold Common Stock with a value of at least three times the annual cash Board service retainer. Direct holdings, unvested and deferred RSUs, and Common Stock equivalents count toward ownership value. In addition, each director is required to hold at least 50% of the shares resulting from RSU grants until termination of his or her Board service. The table below shows each non-employee directors ownership value as of fiscal year-end 2017, based on a closing stock price of $101.92 on the last trading day of fiscal 2017, September 29, 2017. Each of our directors, except Ms. Yeung who joined the board in April 2017, meets the stock holding requirement.
Name | Board Service Effective Date |
Direct Holdings/ Unvested RSUs |
Deferred Units & Common Stock Equivalents |
Total Value |
||||||||||||
Mr. Goebel
|
|
Dec. 2008
|
|
$
|
1,665,067
|
|
$
|
482,082
|
|
$
|
2,147,149
|
| ||||
Ms. John
|
|
Sept. 2014
|
|
$
|
345,509
|
|
$
|
0
|
|
$
|
345,509
|
| ||||
Ms. Kleiner
|
|
Sept. 2011
|
|
$
|
765,725
|
|
$
|
578,090
|
|
$
|
1,343,815
|
| ||||
Mr. Murphy
|
|
Sept. 2002
|
|
$
|
165,722
|
|
$
|
6,063,934
|
|
$
|
6,229,656
|
| ||||
Mr. Myers
|
|
Dec. 2010
|
|
$
|
693,056
|
|
$
|
941,945
|
|
$
|
1,635,001
|
| ||||
Mr. Tehle
|
|
Dec. 2004
|
|
$
|
354,376
|
|
$
|
4,726,540
|
|
$
|
5,080,916
|
| ||||
Mr. Wyatt
|
|
May 2010
|
|
$
|
713,542
|
|
$
|
880,385
|
|
$
|
1,593,927
|
| ||||
Ms. Yeung
|
|
April 2017
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 27
DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES |
Fiscal 2017 Compensation
The table below shows the compensation amounts for each of the Companys non-employee directors. Each director received an annual equity award of 957 RSUs, valued at $90,000 on the date of grant (March 1, 2017), except Ms. Yeung who joined the Board in April 2017. The RSUs vest 100% on the earlier of the first business day 12 months from the date of grant or upon the directors termination of service with the Board.
For fiscal 2017, the average annual compensation of directors was $177,857, comprised of (i) $87,857 in cash and (ii) $90,000 in RSUs. This average excludes dividend payments on deferred accounts and the pro-rated compensation paid to Ms. Yeung.
Name | Fees Earned or Paid in Cash (1) |
Stock Awards (2) |
All Other Compensation (3) |
Total | ||||||||||||
Mr. Goebel
|
$
|
95,000
|
|
$
|
90,000
|
|
$
|
6,564
|
|
$
|
191,564
|
| ||||
Ms. John
|
$
|
77,500
|
|
$
|
90,000
|
|
$
|
0
|
|
$
|
167,500
|
| ||||
Ms. Kleiner
|
$
|
85,000
|
|
$
|
90,000
|
|
$
|
1,508
|
|
$
|
176,508
|
| ||||
Mr. Murphy
|
$
|
95,000
|
|
$
|
90,000
|
|
$
|
78,852
|
|
$
|
263,852
|
| ||||
Mr. Myers
|
$
|
80,000
|
|
$
|
90,000
|
|
$
|
11,315
|
|
$
|
181,315
|
| ||||
Mr. Tehle
|
$
|
87,500
|
|
$
|
90,000
|
|
$
|
53,412
|
|
$
|
230,912
|
| ||||
Mr. Wyatt
|
$
|
95,000
|
|
$
|
90,000
|
|
$
|
3,202
|
|
$
|
188,202
|
| ||||
Ms. Yeung
|
$
|
70,769
|
|
$
|
0
|
|
$
|
0
|
|
$
|
70,769
|
|
(1) | Fees Earned or Paid in Cash reflects Board and Committee retainers paid to each director in 2017 either in cash or deferred, at the directors election. Ms. Yeung, who joined the Board in April 2017, received a pro-rated retainer payment for board and committee service from April 2017 through the next annual stockholder meeting in February 2018. |
(2) | Stock Awards reflects the grant date fair value of RSUs granted under the 2004 Stock Incentive Plan, computed in accordance with ASC 718. |
(3) | The amount reported in the All Other Compensation column reflects four dividend payments made during fiscal 2017 that were credited to the applicable directors common stock equivalent accounts, in connection with (1) the respective directors prior deferral of cash retainers, under the Director Deferred Compensation Plan described in the above section a. Cash Retainers and/or (2) beginning with the February 2015 RSU award, vested deferred RSUs as described in section c. Annual Equity Grant Restricted Stock Units. Dividends are paid only to the same extent the Company pays a dividend on outstanding shares. |
Outstanding Equity at Fiscal Year-End
The table below sets forth the aggregate number of unvested and deferred RSUs held by our non-employee directors at the end of fiscal 2017.
Name | Unvested RSUs |
Deferred RSUs |
||||||
Mr. Goebel
|
|
957
|
|
|
2,333
|
| ||
Ms. John
|
|
957
|
|
|
0
|
| ||
Ms. Kleiner
|
|
957
|
|
|
5,647
|
| ||
Mr. Murphy
|
|
957
|
|
|
11,471
|
| ||
Mr. Myers
|
|
957
|
|
|
2,957
|
| ||
Mr. Tehle
|
|
957
|
|
|
14,640
|
| ||
Mr. Wyatt
|
|
957
|
|
|
8,596
|
| ||
Ms. Yeung
|
|
0
|
|
|
0
|
|
28 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
PROPOSAL TWO RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS |
PROPOSAL TWO RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee has appointed the firm of KPMG LLP as the Companys independent registered public accountants for fiscal year 2018. Although action by stockholders in this matter is not required, the Audit Committee believes it is appropriate to seek stockholder ratification of this appointment.
KPMG LLP has served as the Companys independent auditor since 1986. One or more representatives of KPMG LLP is expected to be present at the Annual Meeting and will have the opportunity to make a statement and to respond to appropriate questions from stockholders present at the meeting. The following proposal will be presented at the Annual Meeting:
Action by the Audit Committee appointing KPMG LLP as the Companys independent registered public accountants to conduct the annual audit of the consolidated financial statements of the Company and its subsidiaries for the fiscal year ending September 30, 2018, is hereby ratified, confirmed and approved.
Vote Required for Ratification
Ratification requires the affirmative vote of a majority of the votes present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions will be included in the number of shares present and entitled to vote, and will have the same effect as a vote AGAINST this proposal. Brokers have discretionary authority to vote uninstructed shares on this matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS.
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 31
PROPOSAL THREE ADVISORY VOTE ON EXECUTIVE COMPENSATION |
PROPOSAL THREE ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act), stockholders have the opportunity to cast an advisory vote on the compensation of our named executive officers (NEOs) as disclosed in the CD&A, the compensation tables, narrative disclosures, and related footnotes included in this Proxy Statement. This Say on Pay vote is advisory, and therefore nonbinding on the Company; however, the Compensation Committee of the Board of Directors, which is comprised entirely of independent directors, values the opinions of our stockholders and will take into account the outcome of the vote when considering future executive compensation decisions. We received a 96.3% favorable vote on Say on Pay at our February 2017 Annual Meeting of Stockholders.
The Compensation Committee engages the services of an independent compensation consultant to advise on executive compensation matters, including competitive compensation targets within the marketplace, and Company performance goals and analysis.
As discussed in more detail in the CD&A, our executive compensation program is designed to attract and retain a talented team of executives who can deliver on our commitment to build long-term stockholder value. The Compensation Committee believes our program is competitive in the marketplace, links pay to performance by rewarding our NEOs for achievement of short-term and long-term financial and operational goals (and, in some years, strategic goals), and aligns our NEOs interests with the long-term interests of our stockholders by providing a mix of performance and service-based equity awards. Specifically, a significant portion of compensation paid to our NEOs is based on the Companys business performance.
Our fiscal 2017 NEOs consist of three Brand Services executives supporting both brands, namely our Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Chief Legal and Risk Officer (CLO), and the Jack in the Box Brand President and the Qdoba Brand President.
The Compensation Committee believes stockholders should consider the following key components of our compensation programs and governance practices when voting on this proposal:
32 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
PROPOSAL THREE ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Alignment with Long-Term Stockholder Interests
Recommendation
With the assistance of its independent compensation consultant, the Compensation Committee has thoughtfully developed our executive compensation programs, setting NEO compensation that links pay to performance and provides an appropriate balance of short-term and long-term incentives that are aligned with long-term stockholder interests. Accordingly, the Board of Directors recommends that you vote in favor of the following resolution:
RESOLVED, that Jack in the Box Inc. stockholders approve, on an advisory basis, the compensation of the Companys named executive officers as described in the Companys Compensation Discussion and Analysis, tabular disclosures, and other narrative disclosures in this Proxy Statement for the 2018 Annual Meeting of Stockholders.
Approval of the Say on Pay proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions will be included in the number of shares present and entitled to vote, and will have the same effect as a vote AGAINST the proposal. Broker non-votes will not count as votes cast FOR or AGAINST the proposal, and will not be included in calculating the number of votes necessary for approval for this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 33
CD&A I. EXECUTIVE SUMMARY |
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (CD&A) explains the key elements of our executive compensation program and compensation decisions for our named executive officers (NEOs) in fiscal 2017. The Compensation Committee of our Board of Directors (the Committee), with input from its independent compensation consultant, oversees these programs and determines compensation for our NEOs.
Our fiscal year 2017 NEOs are:
|
Leonard A. Comma |
Chairman and Chief Executive Officer (CEO), our principal executive officer | ||
|
Jerry P. Rebel |
Executive Vice President, Chief Financial Officer (CFO), our principal financial officer | ||
|
Frances L. Allen |
Jack in the Box Brand President (JIB President) | ||
|
Keith M. Guilbault |
Qdoba Brand President (Qdoba President) | ||
|
Phillip H. Rudolph |
Executive Vice President, Chief Legal and Risk Officer (CLO) and Corporate Secretary |
Quick Reference Guide
Executive Summary |
Section I | |||
Compensation Principles and Objectives |
Section II | |||
Compensation Competitive Analysis |
Section III | |||
Elements of Compensation |
Section IV | |||
Compensation Decision-Making Process |
Section V | |||
Fiscal 2017 Compensation |
Section VI | |||
Additional Compensation Information |
Section VII |
34 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
CD&A I. EXECUTIVE SUMMARY |
Jack in the Box is committed to responsibly building long-term stockholder value. Our executive compensation program is designed to deliver on this commitment by using a balanced performance measurement framework that is aligned with the key drivers of Company performance and stockholder value creation. This executive summary provides an overview of our fiscal 2017 performance, compensation framework and pay actions, targeted total direct compensation, and CEO pay for performance alignment.
a. Fiscal 2017 Review
Returns to Stockholders
| The Companys stock price increased 6.2% to $101.92 per share at fiscal year-end (FYE) 2017, versus $95.94 at FYE 2016, on top of a 20.4% increase in FY 2016. |
| Cumulative total shareholder return increased year over year, and increased for the sixth consecutive year in fiscal 2017. The TSR-CEO pay-for-performance alignment graph in Section I.d. below illustrates how CEO pay has corresponded to performance over the last five years. |
Financial and Operational Results
| While we made progress on key strategic initiatives, fiscal 2017 was a challenging year for the Company. |
| Systemwide same-store sales grew 0.5% at Jack in the Box (JIB), but declined 1.4% at Qdoba. |
| Consolidated restaurant operating margin (ROM)1 declined 260 basis points to 17.6% of sales, with JIB margin down 110 basis points to 20.1% of sales, and Qdoba margins down 450 basis points to 13.6% of sales. |
| Operating Earnings Per Share (Operating EPS)2 of $3.88 per share increased approximately 3% over prior year, excluding the $0.09 benefit from the 53rd week in fiscal 2016. |
| The Company made progress on key strategic initiatives, including reducing our corporate general and administrative expenses (G&A), and refranchising 178 JIB restaurants which increased our franchise mix from 82% at the end of fiscal 2016 to 88% at 2017 fiscal year-end. |
| Impact on Incentive Compensation |
| The Operating EPS result was just slightly above the minimum threshold goal for annual incentive compensation. |
| The Company fell short of its threshold goals on systemwide sales and ROM at both brands. |
| As a result, the CEO and other Brand Services NEOs received annual incentive payouts of less than 9% of target, and the Jack in the Box and Qdoba brand presidents received below 4% of target. |
Other
| During fiscal 2017, the Company retained Morgan Stanley & Co. LLC to assist our Board of Directors in its evaluation of potential strategic alternatives with respect to the Qdoba business, as well as other ways to enhance shareholder value. Following the completion of a robust process, our Board determined that the sale of Qdoba is the best alternative for enhancing shareholder value and is consistent with our desire to transition to a less capital-intensive business model. In December 2017, we announced that the Company had entered into an agreement to sell Qdoba Restaurant Corporation for approximately $305 million in cash. The transaction is expected to close by April 2018. |
1 | As set forth in Note 1 in the Proxy Summary, restaurant operating margin is a non-GAAP measure. For a reconciliation of this measure to the most comparable GAAP measure, please refer to the Companys Current Report on Form 8-K and accompanying press release filed November 29, 2017. |
2 | As set forth in Note 2 in the Proxy Summary, Operating EPS is a non-GAAP measure. For a reconciliation of this measure to the most comparable GAAP measure, please refer to the Companys Current Report on Form 8-K and accompanying press release filed November 29, 2017. |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 35
CD&A I. EXECUTIVE SUMMARY |
b. Fiscal 2017 Compensation Framework and Key Pay Actions
Our executive compensation program is designed to motivate, engage, and retain a talented executive leadership team and to appropriately reward them for their contributions to our business. Our performance measurement framework consists of a combination of financial and operational performance metrics, varying time horizons, and multiple equity vehicles. The largest portion of our executives compensation is variable and is directly tied to the achievement of annual and longer-term financial and operating goals. In combination, these metrics and variables provide a balanced and comprehensive view of performance, and drive the Committees executive compensation decisions.
Consistent with the fundamental principle that compensation programs should align pay with performance, the Companys fiscal 2017 performance directly impacted compensation decisions and pay outcomes, as shown in the chart below that summarizes the compensation framework, key fiscal 2017 performance measures and 2017 pay actions.
In fiscal 2017, the Company only gave pay increases to restaurant employees no increases were given to NEOs, executives and staff as part of an enterprise-wide cost savings initiative. Base Salary Annual Incentive BRAND SERVICES CEO, CFO, CLO 70% Jack in the Box Inc. Operating Earnings Per Share (EPS) 30% Consolidated Restaurant Operating Margin (ROM) JACK IN THE BOX Brand President 30% Jack in the Box Inc. Operating Earnings Per Share (EPS) 40% JIB Earnings from Operations 30% JIB Restaurant Operating Margin (ROM) QDOBA Brand President 30% Jack in the Box Inc. Operating Earnings Per Share (EPS) 40% Qdoba Earnings from Operations 30% Qdoba Restaurant Operating Margin (ROM) 2017 Results Annual incentives were paid at 8.8% of target payout, based on the weighted results below. EPS was just above the minimum threshold goal (8.8% of target payout). Consolidated ROM did not reach the minimum threshold goal (No payout). 2017 Results Annual incentives were paid at 3.8% of target payout, based on the weighted results below. EPS was just above the minimum threshold goal (3.8% of target payout). JIB Earnings from Operations did not reach the minimum threshold goal (No payout). JIB ROM did not reach the minimum threshold goal (No payout). 2017 Results Annual incentives were paid at 3.8% of target payout, based on the weighted results below. EPS was just above the minimum threshold goal (3.8% of target payout). Qdoba Earnings from Operations did not reach the minimum threshold goal (No payout). Qdoba ROM did not reach the minimum threshold goal (No payout). Long-Term Incentive 34% Stock Options 33% vesting per year 7 year term 33% Performance Share Units (PSUs) Vesting based on performance goal achievement over three-fiscal year performance period, with 50% holding requirement 33% Restricted Stock Units (RSUs) 25% vesting per year, with 50% holding requirement ROIC Goal (50%) Return on Invested Capital From Operations (ROIC) Sales Goal (50%) Consolidated Systemwide Sales (All Restaurants) 2017 Actions For the FY 2017-2019 PSU grant, the Committee established two goals: (1) an adjusted ROIC from Operations measure based on the third fiscal year of the three-fiscal year performance period (FY 2019), and (2) Consolidated Systemwide Sales Growth, with goals set annually at the beginning of each fiscal year of the three-fiscal year performance period. For the FY 2015-2017 PSU grant, the Committee certified goal achievement and approved a payout of 118.6% of target PSUs granted based on performance during the three-fiscal year performance period, as described in Section VI.c. of the CD&A.
36 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
CD&A I. EXECUTIVE SUMMARY |
c. Fiscal 2017 Targeted Total Direct Compensation Mix
The chart below shows the percentage breakdown of targeted total direct compensation (TDC) (consisting of base salary, target annual incentive, and target long-term incentive) for each NEO in fiscal 2017. Target TDC is set within a competitive range of the median of Market compensation based on market data and advice provided by the Committees independent consultant (as described in Section III.a Compensation Competitive Analysis). Consistent with our objective of pay for performance alignment (described in Section II Compensation Principles and Objectives), the largest portion of compensation is variable, at-risk pay in the form of annual and long-term incentives, including annual incentive, stock options and PSUs. In fiscal 2017, 61.5% of our CEOs pay was at risk, and 54%-55% of pay for our other NEOs was at risk.
CEO 2017 TDC
For fiscal 2017, the Committee determined that the target TDC for our CEO would be $5.7 million (consisting of base salary of $900,000, target annual incentive of $900,000, and target long-term incentive of $3.9 million), which was approximately 7% below the TDC Market median.
The LTI components are described in detail in proxy Section VI.d Fiscal 2017 Compensation Long-Term Incentive Compensation.
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 37
CD&A I. EXECUTIVE SUMMARY |
d. CEO Compensation and Pay for Performance Alignment
Each year, the Committee assesses our CEOs actual compensation relative to the Companys performance. The following graph shows the relationship of our CEOs actual TDC compared to our cumulative total shareholder return (TSR) performance in each of the last five fiscal years. Actual TDC in this chart includes base salary, actual annual incentive earned for the year, and the long-term incentive value based on the stock price at the time of grant, as detailed in the section immediately above. Pay for performance alignment is shown relative to the TDC of our current CEO, Mr. Comma, for fiscal 2014-2017, and relative to our former CEO, Ms. Lang, for fiscal 2013.
As illustrated, the Companys TSR performance has increased each year, and CEO compensation was generally aligned with the Companys TSR. However, CEO pay decreased despite an increase in TSR in fiscal 2014 (during the transition from the former CEO to the current CEO). And in fiscal 2017, CEO pay decreased from fiscal 2016 due to the Company failing to achieve internal performance targets (our CEO earned 167% of target on his annual incentive in FY 2016, but less than 9% of target in FY 2017). Even without the impact of the 2016 special award described in Note 2 to the chart, ongoing CEO total direct compensation decreased from 2016 to 2017.
(1) The graph above shows the cumulative return to holders of the Companys Common Stock at September 30th of each year assuming $100 was invested on September 30, 2012, and assumes reinvestment of dividends. The Company began paying dividends in fiscal 2014. (2) 2016 Special Retention Award: In fiscal 2016, the CEO was awarded a special stock award (reflected in the top portion of the FY 2016 bar) to recognize the criticality of his role and the Companys strong performance under his leadership, and to incentivize him to remain with the Company while providing measured increases to ongoing, target TDC. This one-time RSU grant (detailed in our 2017 Proxy Statement), which cliff vests 50% four years from the grant date and the remaining 50% five years from grant, is not included in total direct compensation. |
e. Say-on-Pay Feedback from Stockholders
In 2017, we sought an advisory vote from our stockholders regarding our executive compensation program and received a 96.3% favorable vote supporting the program. Each year, the Committee considers the results of the advisory vote as it completes its annual review of each pay element and the compensation provided to our NEOs and other executives. Given the significant level of stockholder support and our stockholder outreach throughout the year, the Committee concluded that our executive compensation program continues to align executive pay with stockholder interests and provides competitive pay that encourages retention and effectively incentivizes performance of talented NEOs and executives. Accordingly, the Committee determined not to make any significant changes to our programs as a result of the vote. The Committee will continue to consider the outcome of our say-on-pay votes and our stockholders views when making future compensation decisions for the NEOs and executives.
38 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
CD&A II. COMPENSATION PRINCIPLES AND OBJECTIVES |
II. COMPENSATION PRINCIPLES AND OBJECTIVES
The Committee focuses on the following principles and objectives in determining and measuring the various components of our executive compensation programs:
| Competitive target pay structure, including base salary, annual incentive, and long-term incentives that enable us to attract and retain talented, experienced executives who can drive long-term stockholder value. |
| Pay for performance alignment, with a higher percentage of executive pay in the form of annual and long-term incentives that directly tie payouts to the achievement of incentive goals. |
| Comprehensive goal setting, with financial, operational, and/or strategic performance metrics that drive long-term stockholder value. |
| Incentivizing balanced short-term and long-term executive decision making, through variable compensation components (cash and stock) using varying timeframes. |
| Executive alignment with stockholder interests, through stock ownership and holding requirements. |
| Sound governance practices and principles in plan design and pay decisions, with the Committee considering both what and how performance is achieved. |
| Management of compensation risk, by establishing incentive goals that avoid placing too much emphasis on any one metric or performance time horizon, thereby discouraging excessive or unwise risk-taking. |
Internal Pay Equity
Our compensation programs are designed so that potential compensation opportunities are appropriate relative to each executives level of responsibility and impact. While program design is similar for executives at the same level, actual pay may vary based on job scope and individual performance over time. In fiscal 2017, our CEOs targeted TDC was approximately 3.1 times higher than the next highest paid executive.
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 39
CD&A III. COMPENSATION COMPETITIVE ANALYSIS |
III. COMPENSATION COMPETITIVE ANALYSIS
a. Competitive Analysis
b. Fiscal 2017 Peer Group
2017 Peer Group | ||
Restaurant | Retail | |
Brinker International, Inc. |
Chicos FAS Inc. | |
Buffalo Wild Wings, Inc. |
Childrens Place Retail Stores Inc. | |
The Cheesecake Factory Incorporated |
DSW Inc. | |
Chipotle Mexican Grill, Inc. |
Express, Inc. | |
Cracker Barrel Old Country Store, Inc. |
Finish Line, Inc. | |
DineEquity, Inc |
Genesco Inc. | |
Dominos Pizza, Inc. |
Urban Outfitters, Inc. | |
Panera Bread Company |
||
Papa Johns International Inc. |
||
Sonic Corporation |
||
The Wendys Company |
40 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
CD&A IV. ELEMENTS OF COMPENSATION |
Our executive compensation programs consist of the elements summarized below, and are designed to (a) achieve our compensation objectives, (b) enable the Company to attract, retain, motivate, engage, and reward our NEOs and other executives, and (c) encourage an appropriate level of risk taking, as discussed later in this CD&A.
Element / Type of Plan |
Link to Compensation Objectives | Key Features | ||
Current Year Performance |
||||
Base Salary
(Cash) |
Fixed amount of compensation for performing day-to-day responsibilities. Provides financial stability and security, and represents the smallest portion of TDC. | Competitive pay that is targeted to approximate a reasonable range of the median of the Market, taking into account job scope and complexity, criticality of position, knowledge, skills and experience. Generally, executives are eligible for an annual salary increase, depending on individual performance, market pay changes, and internal equity. | ||
Annual Incentive
(Cash) |
Variable compensation component. Motivates and rewards for achievement of annual financial and operational goals, and in some years, other annual strategic objectives. | Incentives are targeted to approximate a reasonable range of the Market median. Total potential payouts range from 0% - 200% of target payout. Goals and weighting are set annually to align with specific financial, operational, and/or strategic performance objectives and the Companys operational plan and budget. Fiscal 2017 goals are described in Section VI.b. | ||
Multi-Year Performance |
||||
Long-Term Incentive (LTI)
(Equity) |
Variable compensation component. Motivates and rewards for sustained long-term financial and operational performance designed to increase long-term stockholder value.
Encourages continued employment through required vesting periods in order to obtain shares.
Stock ownership and holding requirements align the financial interests of our executives with the financial interests of our stockholders. |
LTI guidelines are reviewed annually and set to result in total pay that is within a reasonable range of the Market median. Actual grants may vary from the LTI guideline based on individual performance. No dividends are paid on unvested RSUs or PSUs.
Stock Options: In fiscal 2017, option awards represented 34% of each executives LTI guideline; they vest 33% per year over three years and expire seven years from the grant date. The exercise price is equal to the closing price of Jack in the Box Common Stock on the date of grant.
Performance Shares (PSUs): In fiscal 2017, PSUs represented 33% of the LTI guideline; they vest at the end of three years, and are payable in stock, with the amount vesting based upon achievement of pre-established performance goals (ranging from zero to 150% of the target number of shares granted). Since fiscal 2016, PSUs have been subject to a holding requirement (executives must hold 50% of after-tax net shares resulting from the vesting of PSUs until termination of service). The goals for the FY 2017-2019 grant are described in Section VI.c.
Restricted Stock Units (RSUs): In fiscal 2017, RSUs represented 33% of the LTI guideline, vest 25% per year over four years, and are payable in stock. RSUs are subject to a holding requirement (executives must hold 50% of after-tax net shares resulting from the vesting of RSUs until termination of service). Prior to FY 2016, RSU awards were generally subject to a 50-100% holding requirement depending on whether the recipient had met their stock ownership guideline at the time of grant. | ||
Attraction & Retention |
||||
Perquisites
(Cash) |
Provides a limited cash value for certain other benefits that are typically offered to executives. |
A taxable benefit provided to executives and paid bi-weekly. This benefit is intended to assist with each executives expenses for financial planning and use of their personal automobile and cell phone for business purposes. | ||
Other
|
2017 Qdoba President Conditional Transaction Bonus |
In connection with the Companys evaluation of strategic alternatives with respect to Qdoba, the Committee approved a conditional cash bonus to the Qdoba President to assure his continued employment with the Company, payable on the earlier of (a) January 2, 2018 or (b) the consummation of any sale or spin-off of Qdoba. |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 41
CD&A IV. ELEMENTS OF COMPENSATION |
Element / Type of Plan |
Link to Compensation Objectives | Key Features | ||
Retirement Benefits
(Pension, SERP, 401(k), Deferred Compensation) |
Provides for retirement income to reward service and commitment to the Company and to encourage retention. | Pension The Companys employee pension plan, that provides benefits based on years of service and earnings up to IRC limitations, was closed to employees hired on or after January 1, 2011, and was sunset on December 31, 2015 (after which time participants no longer accrue added benefits based on additional pay or service). Four NEOs are participants in the plan.
Supplemental Executive Retirement Plan (SERP) The SERP was closed to new participants in 2007. One NEO, who was hired into an Officer position prior to 2007, is a participant in the plan. The plan provides retirement income on a non-qualified basis, without regard to IRC limitations.
401(k) Plan The 401(k) Plan is a qualified deferred compensation plan that is available to all employees who are at least age 21. The 401(k) Plan includes a Company matching contribution of up to 4% of compensation deferred by employees, subject to annual IRC limits.
Executive Deferred Compensation Plan (EDCP) The EDCP is a non-qualified deferred compensation plan that is offered to highly-compensated employees. Prior to January 1, 2016, the EDCP included a Company matching contribution of up to 3% of compensation deferred, and beginning January 1, 2016, was replaced with an annual restoration matching contribution for participants whose deferrals to the 401(k) plan (and related Company matching contributions) are limited due to tax code limits applicable to the 401(k) plan. A participant must be employed on the last day of the calendar year to receive the restoration matching contribution. Executives hired or promoted to an Officer position after 2007, and not eligible for the SERP (including four NEOs), also receive a Company contribution to the EDCP for ten years from their hire date dates, equal to 4% of their base salary and annual incentive. In January 2017, Mr. Comma reached the maximum ten years of Company contributions to the EDCP and ceased receiving the enhanced EDCP Company contribution. |
42 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
CD&A VI. FISCAL 2017 COMPENSATION |
a. Base Salary
In fiscal 2017, the Company only gave pay increases to restaurant employees no increases were given to executives and staff positions as part of an enterprise-wide cost savings initiative. Accordingly, none of the NEOs received a base salary increase.
2017 Base Salary No Increases | ||||||||||||
Name | Fiscal 2016 Salary | Fiscal 2017 Salary | % Increase | |||||||||
Mr. Comma (CEO)
|
|
$900,000
|
|
|
$900,000
|
|
|
0.0%
|
| |||
Mr. Rebel (CFO)
|
|
$564,000
|
|
|
$564,000
|
|
|
0.0%
|
| |||
Ms. Allen (JIB President)
|
|
$515,000
|
|
|
$515,000
|
|
|
0.0%
|
| |||
Mr. Guilbault (Qdoba President)
|
|
$375,000
|
|
|
$375,000
|
|
|
0.0%
|
| |||
Mr. Rudolph (CLO)
|
|
$512,000
|
|
|
$512,000
|
|
|
0.0%
|
|
b. Performance-Based Annual Incentive Compensation (Cash)
2017 Performance Metrics | Why Goal Is Used | |
Operating EPS (diluted)1 |
This is a primary measure of how well the Company is performing overall, and is a key driver of stockholder return over the long term. This metric excludes restructuring charges and gains and losses from refranchising.
| |
Consolidated Restaurant Operating Margin (ROM) |
Consolidated ROM measures how effectively the Company manages its business operations and costs, and is a key performance metric for alignment with our franchise operators, our franchising strategy, and our stockholders and potential investors.
| |
JIB/Qdoba Brand Earnings from Operations |
Brand Earnings from Operations is a key performance metric for measuring operational performance relative to profitability, and is reported in the footnotes to our financial statements as Earnings from Operations by Segment. It includes all earnings for the specified brand all revenue less costs before interest and taxes, where such costs include regional administrative costs, but excludes unallocated costs related to shared service functions (such as accounting/finance, information technology, human resources, audit services, legal, tax and treasury) as well as unallocated costs such as restructuring costs, pension expense and share-based compensation.
| |
JIB/Qdoba Restaurant Operating Margin (ROM)2 |
Brand ROM measures how effectively JIB and Qdoba manage their respective business operations and costs, and is a key performance metric that aligns with the interests of each brands franchise operators, as well as with our stockholders and potential investors.
|
1 | As set forth in Note 2 in the Proxy Summary, Operating EPS is a non-GAAP measure. For a reconciliation of this measure to the most comparable GAAP measure, please refer to the Companys Current Report on Form 8-K and accompanying press release filed November 29, 2017. |
2 | As set forth in Note 1 in the Proxy Summary, restaurant operating margin is a non-GAAP measure. For a reconciliation of this measure to the most comparable GAAP measure, please refer to the Companys Current Report on Form 8-K and accompanying press release filed November 29, 2017. |
44 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
CD&A VI. FISCAL 2017 COMPENSATION |
Fiscal 2017 Performance Results
Fiscal 2017 Payouts
The 2017 target and maximum annual incentive payout percentages for the NEOs, expressed as a percentage of annual base salary, are shown in the table below. The payout percentages are set by position level, taking into account the compensation competitive analysis described in Section III.a. and each executives role in the Company. There is no minimum amount of incentive payout guaranteed for the NEOs, but the maximum amount is capped at 2x target payout (which is 200% of salary for the CEO, and 150% of salary for the other NEOs). The payouts as a percent of target incentive and as a percent of annual salary are shown below.
Potential Payout (As Percent of Annual Salary) |
Target Incentive |
Actual Payout (As Percent of Target Payout) |
Actual Payout (As Percent of Annual Salary) |
Actual Incentive Payout |
||||||||||||||||
Target | Max | |||||||||||||||||||
Mr. Comma (CEO) |
100% | 200% | $ | 900,000 | 8.7 | % | 8.7 | % | $ | 78,660 | ||||||||||
Mr. Rebel (CFO) |
75% | 150% | $ | 423,000 | 8.9 | % | 6.7 | % | $ | 37,506 | ||||||||||
Ms. Allen (JIB President) |
75% | 150% | $ | 386,250 | 3.8 | % | 2.9 | % | $ | 14,678 | ||||||||||
Mr. Guilbault (Qdoba President) |
75% | 150% | $ | 281,250 | 3.8 | % | 2.9 | % | $ | 10,688 | ||||||||||
Mr. Rudolph (CLO) |
75% | 150% | $ | 384,000 | 8.9 | % | 6.7 | % | $ | 34,048 |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 45
CD&A VI. FISCAL 2017 COMPENSATION |
c. Long-Term Incentive Compensation
Vests at the end of the 3-fiscal year period based on goal achievement, and settled in stock; beginning fiscal 2016, after-tax net shares subject to stock holding requirement. Two performance metrics: ROIC from Operations (50%) - Measures efficient use of capital on adjusted ROIC from Operations for the third fiscal year of the performance period. Consolidated Systemwide Sales Growth (50%) - Three annual goals set at the beginning of each fiscal year; measures growth in sales of all company and franchise restaurants. 4-year vesting, 25% per year and settled in stock; after-tax net shares subject to stock holding requirement. 3-year vesting, 33% per year, and 7-year term. Exercise price is equal to the closing price of Jack in the Box Common Stock on the date of grant.
46 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
CD&A VI. FISCAL 2016 COMPENSATION |
Fiscal 2015-2017 PSU Goals and Performance
Performance Period |
Goal | FY15 Actual |
FY16 Actual |
FY17 Actual |
||||||||||||||||||
Approved Measures | Weight | Threshold | Target | Maximum | ||||||||||||||||||
2015-2017
|
ROIC from Operations (at FYE2017)
|
50%
|
13.2%
|
15.0%
|
17.9%
|
|
17.7%
|
| ||||||||||||||
2015 |
Consolidated Systemwide Sales | 50% | $3.926 | $4.018 | $4.135 | $ | 4.149 | |||||||||||||||
2016 |
(All Restaurants) ($ in billions) | $4.201 | $4.502 | $4.610 | $ | 4.330 | ||||||||||||||||
2017 |
$4.288 | $4.502 | $4.581 | $ | 4.291 |
The Grants of Plan-Based Awards table shows the LTI awards to each of our NEOs in fiscal 2017.
d. Cash Perquisite Allowance
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 47
CD&A VII. ADDITIONAL COMPENSATION INFORMATION |
VII. ADDITIONAL COMPENSATION INFORMATION
a. Executive Stock Ownership Requirements
NEO Stock Ownership
Each year, the Committee reviews our NEOs stock ownership relative to their respective requirement, with new executives expected to meet their ownership requirement within five years from the date they became subject to the requirement. As of the end of fiscal 2017, all of our NEOs met their stock ownership requirement except Ms. Allen, who was hired in October 2014 and is still within her transition period for compliance.
Name | Shares Directly Held |
Restricted Stock/ Unvested Shares (1) |
Total Shares |
Value at 10/01/17 @ $101.92 |
Stock Requirement |
Meets Requirement |
||||||||||||||||||
Mr. Comma (CEO) |
46,914 | 127,473 | 174,387 | $ | 17,773,523 | $ | 4,500,000 | Yes | ||||||||||||||||
Mr. Rebel (CFO) |
35,240 | 73,674 | 108,914 | $ | 11,100,515 | $ | 1,692,000 | Yes | ||||||||||||||||
Ms. Allen (JIB President) |
2,932 | 8,577 | 11,509 | $ | 1,172,997 | $ | 1,545,000 | No | ||||||||||||||||
Mr. Guilbault (Qdoba President) |
13,203 | 3,986 | 17,189 | $ | 1,751,903 | $ | 1,125,000 | Yes | ||||||||||||||||
Mr. Rudolph (CLO) |
23,612 | 68,741 | 92,353 | $ | 9,412,618 | $ | 1,536,000 | Yes |
(1) | This column includes restricted shares and unvested RSUs; and for Mr. Comma, also includes deferred performance vested restricted stock. Unvested PSUs and unvested or unexercised options do not count toward meeting ownership guidelines. |
b. Executive Benefits
48 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
CD&A VII. ADDITIONAL COMPENSATION INFORMATION |
c. Retirement Plans
d. Prohibition of Pledging and Hedging Transactions
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 49
CD&A VII. ADDITIONAL COMPENSATION INFORMATION |
e. Executive Compensation Recovery (Clawback) Policy
f. Termination of Service
50 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
CD&A VII. ADDITIONAL COMPENSATION INFORMATION |
g. Compensation & Benefits Assurance (Change in Control) Agreements
h. Tax and Accounting Information
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 51
COMPENSATION COMMITTEE REPORT |
The Jack in the Box Compensation Committee is comprised solely of independent members of the Companys Board of Directors. The Committee assists the Board in fulfilling its responsibilities regarding compensation matters, and is responsible under its charter for determining the compensation of the Executive Officers. This includes reviewing all components of pay for our CEO and the other NEOs. The Committee reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with its Consultant, with Management and with the Board. Based on this review and discussion, the Committee, on behalf of the Board, has authorized that this Compensation Discussion and Analysis be included in this Proxy Statement for fiscal 2017, ended October 1, 2017.
THE COMPENSATION COMMITTEE
John T. Wyatt, Chair
David L. Goebel
Sharon P. John
Madeleine A. Kleiner
52 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
COMPENSATION RISK ANALYSIS |
The Committee has engaged in a thorough risk analysis of our compensation plans, programs, policies, and practices for all employees. This includes advice from the Committees independent Consultant regarding executive programs, and a detailed report, prepared by a Company Internal Compensation Risk Committee, describing the risk mitigation characteristics of the Companys annual and long-term incentive programs. For the following reasons, the Committee believes that the design of our compensation programs, the governance of our programs, and our risk oversight process guard against imprudent risk taking that could have a material adverse effect on the Company.
Compensation Program Design Protections
Structural Governance Protections
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 53
EXECUTIVE COMPENSATION |
The Summary Compensation Table (SCT) summarizes the total compensation of our NEOs for the fiscal year ended October 1, 2017, and the prior two fiscal years to the extent required under the Securities and Exchange Commission rules.
Name & Principal Position |
Fiscal Year |
Salary (1) | Bonus | Stock Awards (3) |
Option Awards (4) |
Non-Equity Incentive Plan Compensation (5) |
Change in Pension Value & NQDC Earnings (6) |
All Other Comp (7) |
Total | |||||||||||||||||||||||||||
Mr. Comma |
2017 | $ | 900,000 | $ | 0 | $ | 2,796,728 | $ | 858,264 | $ | 78,660 | $ | 0 | $ | 114,281 | $ | 4,747,933 | |||||||||||||||||||
Chairman and CEO |
2016 | $ | 909,615 | $ | 0 | $ | 5,963,780 | $ | 703,380 | $ | 1,506,240 | $ | 97,294 | $ | 260,745 | $ | 9,441,054 | |||||||||||||||||||
2015 | $ | 842,308 | $ | 0 | $ | 2,631,761 | $ | 1,013,216 | $ | 1,632,000 | $ | 36,357 | $ | 239,702 | $ | 6,395,344 | ||||||||||||||||||||
Mr. Rebel |
2017 | $ | 564,000 | $ | 0 | $ | 618,362 | $ | 182,381 | $ | 37,506 | $ | 687,915 | $ | 176,235 | $ | 2,266,399 | |||||||||||||||||||
Executive Vice President, |
2016 | $ | 573,615 | $ | 0 | $ | 648,609 | $ | 170,813 | $ | 708,243 | $ | 1,620,465 | $ | 179,577 | $ | 3,901,322 | |||||||||||||||||||
Chief Financial Officer |
2015 | $ | 553,539 | $ | 0 | $ | 925,277 | $ | 283,110 | $ | 801,335 | $ | 1,256,873 | $ | 155,541 | $ | 3,975,675 | |||||||||||||||||||
Ms. Allen |
2017 | $ | 515,000 | $ | 0 | $ | 593,882 | $ | 182,381 | $ | 14,678 | $ | 0 | $ | 94,635 | $ | 1,400,576 | |||||||||||||||||||
JIB President |
2016 | $ | 522,596 | $ | 0 | $ | 489,171 | $ | 180,869 | $ | 644,651 | $ | 0 | $ | 146,770 | $ | 1,984,057 | |||||||||||||||||||
2015 | $ | 461,538 | $ | 200,000 | (2) | $ | 614,752 | $ | 171,581 | $ | 683,654 | $ | 0 | $ | 291,636 | $ | 2,423,161 | |||||||||||||||||||
Mr. Guilbault Qdoba President |
2017 | $ | 375,000 | $ | 0 | $ | 352,383 | $ | 116,922 | $ | 10,688 | $ | 577 | $ | 97,831 | $ | 953,401 | |||||||||||||||||||
Mr. Rudolph |
2017 | $ | 512,000 | $ | 0 | $ | 609,155 | $ | 182,381 | $ | 34,048 | $ | 2,578 | $ | 149,063 | $ | 1,489,225 | |||||||||||||||||||
Executive Vice President, |
2016 | $ | 520,308 | $ | 0 | $ | 612,256 | $ | 170,813 | $ | 642,944 | $ | 64,290 | $ | 186,302 | $ | 2,196,913 | |||||||||||||||||||
Chief Legal and Risk Officer & Secretary |
2015 | $ | 499,385 | $ | 0 | $ | 731,084 | $ | 246,271 | $ | 723,508 | $ | 48,499 | $ | 171,248 | $ | 2,419,995 |
(1) | This column shows the base salary earned during the fiscal year, including any amounts deferred by the NEOs in the Executive Deferred Compensation Plan (EDCP). The amounts for 2016 reflect one additional week of compensation due to the Companys 53-week fiscal year. |
(2) | Ms. Allen joined the Company during fiscal 2015 and this amount represents the new hire cash bonus she received. |
(3) | This column shows the aggregate grant date fair value of the PSUs and RSUs granted during the applicable fiscal year, in accordance with FASB ASC Topic 718 (ASC 718) based on the assumptions and methodologies set forth in the Companys 2017 Annual Report on Form 10-K (Note 12, Share-Based Employee Compensation). The 2016 amount for Mr. Comma also includes his special one-time retention RSU award which vests 50% four years after the date of grant, and the remaining 50% five years after grant. The 2015 amount for Ms. Allen also includes her new-hire grant of 4,207 RSUs, which vest 33% per year over three years on each anniversary of the grant. |
PSU awards, which cliff vest after three years vest based on our performance during a three-fiscal year period. The performance metrics are established at the beginning of the three-year period when the grant is made; the specific performance goals for all or a portion of the award are reviewed and set by the Committee (a) for the full three-year performance period at the time of grant for some performance metrics, and (b) for a one-year period at the beginning of each fiscal year for other performance metrics. The amounts for each year include the sum of the grant date fair values under ASC 718 for current year PSU grants and past year PSU grants, for which performance metrics were set in that year, at target values. Assuming the maximum level of performance achievement (150% of target), the PSU total values for each NEO in 2017 are, respectively: Mr. Comma, $2,096,161; Mr. Rebel, $481,649; Ms. Allen, $444,929; Mr. Guilbault, $242,679 and Mr. Rudolph, $467,838. |
(4) | This column shows the grant date fair values of stock options granted during the applicable fiscal year in accordance with ASC 718. The grant date fair values have been determined based on the assumptions and methodologies set forth in the Companys 2017 Annual Report on Form 10-K (Note 12, Share-Based Employee Compensation). |
(5) | This column shows the annual incentive awards earned under the annual incentive plan for executives. Performance achievement is approved by the Committee following the end of the fiscal year. Annual incentive payments are made following Committee approval and reported in the SCT in the fiscal year for which the incentive is earned. |
(6) | This column shows the change in the estimated present value of each NEOs accumulated benefit under (a) the qualified pension plan (the Retirement Plan) for Messrs. Comma, Rebel, Rudolph and Guilbault, and (b) the Supplemental Executive Retirement Plan (SERP) for Mr. Rebel only. The estimates are determined using interest rate and mortality rate assumptions consistent with those used in the Companys financial statements for fiscal years ending October 1, 2017, October 2, 2016, and September 27, 2015. The RP-2014 Mortality Table is used for the Retirement Plan and SERP estimates (the SERP uses a white collar adjustment). Both Plans used the MP-2016 generational scale projected from 2006, modified to use 15 year convergence to an ultimate rate of 0.75%. The amounts reported in this column may fluctuate significantly in a given year based on a number of factors that affect the formula to determine pension benefits, including changes in: (i) salary and annual incentive; (ii) years of service; and, predominantly (iii) the discount rates used in estimating present values, which were 3.80% for the SERP and 3.99% for the Retirement Plan for 2017, 3.60% for the SERP and 3.85% for the Retirement Plan for 2016, and 4.45% for the SERP and 4.79% for the Retirement Plan for 2015. Participating NEOs become vested in the Retirement Plan after five years, and in the SERP after attaining age 55 and completing ten years of service. Both plans have been closed to new participants, and the Retirement Plan was sunset on December 31, 2015. For a detailed discussion of the Companys pension benefits, see the sections of this Proxy Statement titled Retirement Plan, Supplemental Executive Retirement Plan and Pension Benefits Table and accompanying footnotes. The Company does not provide above-market or preferential earnings on non-qualified deferred compensation. |
54 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
EXECUTIVE COMPENSATION |
(7) | Amounts in this column for fiscal 2017 are detailed in the following table: |
All Other Compensation Table | ||||||||||||||||||||
Perquisite Allowance |
Deferred Compensation Matching Contribution (a) |
Company- Paid Life Insurance Premiums |
Other | Total All Other |
||||||||||||||||
Mr. Comma (CEO) |
$ | 66,500 | $ | 47,781 | $ | 0 | $ | 0 | $ | 114,281 | ||||||||||
Mr. Rebel (CFO) |
$ | 52,000 | $ | 23,813 | $ | 307 | $ | 100,115 | (b) | $ | 176,235 | |||||||||
Ms. Allen (JIB President) |
$ | 52,000 | $ | 42,256 | $ | 379 | $ | 0 | $ | 94,635 | ||||||||||
Mr. Guilbault (Qdoba President) |
$ | 52,000 | $ | 31,384 | $ | 599 | $ | 13,848 | (c) | $ | 97,831 | |||||||||
Mr. Rudolph (CLO) |
$ | 52,000 | $ | 43,490 | $ | 384 | $ | 53,189 | (b) | $ | 149,063 |
(a) | Reflect matching contributions under the 401(k) plan and the restoration matching contribution in the EDCP related to fiscal 2017 compensation. For Messrs. Comma, Rudolph and Guilbault and Ms. Allen, these amounts include the enhanced EDCP Company contribution they receive in place of the SERP, as discussed in the Non-qualified Deferred Compensation section below. In January 2017, Mr. Comma reached the maximum ten years of Company contributions to the EDCP and ceased receiving the enhanced EDCP Company contribution. |
(b) | Represents cash dividends paid on December 16, 2016; March 20, 2017; June 12, 2017 and September 5, 2017 for Mr. Rebel and Mr. Rudolphs restricted stock shares being held in an escrow account until each executives termination or retirement. |
(c) | Represents reimbursement for relocation-related expenses while Mr. Guilbault was based in Denver, Colorado, pending the Companys decision to relocate the Qdoba corporate office to San Diego. |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 55
EXECUTIVE COMPENSATION |
The following table provides information on fiscal 2017 cash and equity incentive awards granted to our NEOs. Cash incentive awards are based on fiscal year performance under our annual incentive plan (AIP). Long-term equity incentive compensation includes stock options, time-based restricted stock units, and performance share awards that vest, if at all, upon achievement of performance goals over a three fiscal year period. The 2017 incentive award terms are further described in CD&A Sections IV (Elements of Compensation) and VI (Fiscal 2017 Compensation).
Grant Date (1) |
Approval Date |
Award Type (2) |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (3) |
Estimated Future Payouts Under Equity Incentive Plan Awards (4) |
All Other Stock or Units # (5) |
All Other Securities Underlying Options # (6) |
Exercise or Base Awards ($/Share) |
Grant Date Fair Option Awards ($) (7) |
||||||||||||||||||||||||||||||||||||||||||||
Name | Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
||||||||||||||||||||||||||||||||||||||||||||||
Mr. Comma (CEO) |
11/29/2016 | 11/17/2016 | PSU 15-17 | 1,264 | 2,528 | 3,792 | $ | 253,441 | ||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | PSU 16-18 | 1,193 | 2,385 | 3,578 | $ | 239,120 | |||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | PSU 17-19 | 4,513 | 9,025 | 13,538 | $ | 904,880 | |||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | RSU | 13,538 | $ | 1,399,288 | |||||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | Option | 41,026 | $ | 104.95 | $ | 858,264 | |||||||||||||||||||||||||||||||||||||||||||||
11/17/2016 | AIP | $ | $ | 900,000 | $ | 1,800,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Mr. Rebel (CFO) |
11/29/2016 | 11/17/2016 | PSU 15-17 | 353 | 706 | 1,059 | $ | 70,800 | ||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | PSU 16-18 | 290 | 579 | 869 | $ | 58,067 | |||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | PSU 17-19 | 959 | 1,917 | 2,876 | $ | 192,232 | |||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | RSU | 2,876 | $ | 297,263 | |||||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | Option | 8,718 | $ | 104.95 | $ | 182,381 | |||||||||||||||||||||||||||||||||||||||||||||
11/17/2016 | AIP | $ | $ | 423,000 | $ | 846,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Ms. Allen (JIB President) |
11/29/2016 | 11/17/2016 | PSU 15-17 | 214 | 428 | 642 | $ | 42,911 | ||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | PSU 16-18 | 307 | 613 | 920 | $ | 61,476 | |||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/29/2016 | PSU 17-19 | 959 | 1,917 | 2,876 | $ | 192,232 | |||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | RSU | 2,876 | $ | 297,263 | |||||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | Option | 8,718 | $ | 104.95 | $ | 182,381 | |||||||||||||||||||||||||||||||||||||||||||||
11/17/2016 | AIP | $ | $ | 386,250 | $ | 772,500 | ||||||||||||||||||||||||||||||||||||||||||||||
Mr. Guilbault (Qdoba President) |
11/29/2016 | 11/17/2016 | PSU 15-17 | 107 | 214 | 321 | $ | 21,456 | ||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/12/2016 | PSU 16-18 | 85 | 170 | 256 | $ | 17,078 | |||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | PSU 17-19 | 615 | 1,229 | 1,844 | $ | 123,253 | |||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | RSU | 1,844 | $ | 190,596 | |||||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | Option | 5,589 | $ | 104.95 | $ | 116,922 | |||||||||||||||||||||||||||||||||||||||||||||
11/17/2016 | AIP | $ | $ | 281,250 | $ | 562,500 | ||||||||||||||||||||||||||||||||||||||||||||||
Mr. Rudolph (CLO) |
11/29/2016 | 11/17/2016 | PSU 15-17 | 307 | 614 | 922 | $ | 61,593 | ||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | PSU 16-18 | 290 | 579 | 869 | $ | 58,067 | |||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | PSU 17-19 | 959 | 1,917 | 2,876 | $ | 192,232 | |||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | RSU | 2,876 | $ | 297,263 | |||||||||||||||||||||||||||||||||||||||||||||||
11/29/2016 | 11/17/2016 | Option | 8,718 | $ | 104.95 | $ | 182,381 | |||||||||||||||||||||||||||||||||||||||||||||
11/17/2016 | AIP | $ | $ | 384,000 | $ | 768,000 |
(1) | All grants were approved at the November 2016 Committee meeting, with a grant date of November 29, 2016, the second business day of the Companys next open trading window, as is the Companys standard practice. In accordance with ASC 718, the grant date is shown for the portion of the PSUs awarded in fiscal 2017 that relate to the fiscal 2017 performance period, and the portion of the PSUs awarded in fiscal 2015 and 2016 related to the fiscal 2017 performance period, as further described in Footnote 7 to this table. |
(2) | For PSU awards, this column shows the three fiscal years of the PSU performance period. |
(3) | This column shows the potential payouts under the fiscal 2017 annual incentive plan, which could have been earned based on performance in fiscal 2017. The threshold payout is zero, target payout represents the amount payable for achieving the target level of performance, and maximum payout is capped at two times target payout. Incentive payouts are prorated between performance levels, and the payout values are calculated using the executives annual salary rate as specified at the time performance goals are approved by the Committee. The SCT for fiscal 2017 shows the actual incentive compensation earned by our NEOs for fiscal 2017 performance. |
(4) | This column shows the threshold, target, and maximum potential share payout levels for the PSUs under the Companys long-term incentive plan for the fiscal 2017-19 PSU award and for the fiscal 2017 performance period of the 2015-17 and 2016-18 PSU awards. The amount for the 2017-19 PSU award represents (a) the entire three-fiscal year period for one of the two performance metrics (ROIC from Operations), and (b) the fiscal 2017 performance period only for the second metric (consolidated systemwide sales growth) for the reasons explained in Footnote 7. Threshold payout for all of the PSUs reflected above is 50% of target and requires achieving an established minimum performance requirement (there is no payout if performance doesnt meet the minimum requirement). Maximum payout is 150% of target. |
(5) | This column shows the number of RSUs granted on November 29, 2016 that vest 25% per year over four years on each anniversary of the grant date. |
(6) | This column shows the number of stock options granted on November 29, 2016 that vest 33% per year over three years on each anniversary of the grant date. The options expire seven years from grant date. The exercise price is the closing price of Common Stock on the grant date ($104.95). |
(7) | For stock options, the value represents the grant date fair value computed in accordance with ASC 718, which is a theoretical value at grant using a valuation model that requires the input of assumptions, including the expected volatility of our stock price. As such, the values may not reflect the actual amounts that our NEOs will realize; rather the actual amount realized will depend on the Companys stock price relative to the exercise price. The values of PSUs and RSUs also represent the grant date fair values, as computed in accordance with ASC 718, based on the closing price of the Companys Common Stock on the grant date discounted by the present value of the expected dividend stream over the vesting period, as applicable, which was $100.26 for PSUs and $103.36 for RSUs. The grant date fair values of all awards were determined based on the assumptions and methodologies set forth in the Companys 2017 Annual Report on Form 10-K (Note 12, Share-Based Employee Compensation). PSU awards, which cliff vest after three years, are made annually and vest based on the Companys performance during the succeeding three-fiscal year period. The performance metrics are established at the beginning of the three- fiscal year period when the grant is made; while the specific performance goals are either set by the Committee (a) at that time also for the full three-fiscal year performance period or (b) at the beginning of each fiscal year for that portion of the performance period; in accordance with SEC rules and ASC 718, the values shown on each of the three rows for the PSUs reflect the grant date fair value of the fiscal 2017 performance period (total or portion, as applicable) of the award based on probable outcome (target level performance) of each of the PSU awards. |
56 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
EXECUTIVE COMPENSATION |
Outstanding Equity Awards at Fiscal Year-End 2017
The following table provides information on all outstanding option awards and unvested stock awards held by each of the NEOs at the end of fiscal 2017. Each option grant is shown separately and the vesting schedule is shown as Footnote 1 to the table. The market value of the stock awards is based on the closing price of Jack in the Box Inc. Common Stock as of the last trading day of the fiscal year, September 29, 2017, which was $101.92.
Option Awards (1) | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Option Grant Date |
Number of Securities Underlying Unexercised Options Exercisable (#) |
Number of Securities Underlying Unexercised Options Unexercisable (#) |
Option Exercise Price ($) |
Option Expiration Date |
Number Of Shares or Units of Stock That Have Not Vested (#) (2) |
Market Value of Shares or Units of Stock That Have Not Vested ($) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
|||||||||||||||||||||||||||
Mr. Comma (CEO) |
11/25/2014 | 30,640 | 15,320 | $ | 73.53 | 11/25/2021 | 148,682 | $ | 15,153,669 | 18,656 | $ | 1,901,420 | ||||||||||||||||||||||||
11/24/2015 | 14,455 | 28,910 | $ | 75.24 | 11/24/2022 | |||||||||||||||||||||||||||||||
11/29/2016 | | 41,026 | $ | 104.95 | 11/29/2023 | |||||||||||||||||||||||||||||||
Mr. Rebel (CFO) |
11/26/2013 | 25,263 | | $ | 47.29 | 11/26/2020 | 80,147 | $ | 8,168,582 | 4,216 | $ | 429,695 | ||||||||||||||||||||||||
11/25/2014 | 8,561 | 4,281 | $ | 73.53 | 11/25/2021 | |||||||||||||||||||||||||||||||
11/24/2015 | 3,511 | 7,020 | $ | 75.24 | 11/24/2022 | |||||||||||||||||||||||||||||||
11/29/2016 | | 8,718 | $ | 104.95 | 11/29/2023 | |||||||||||||||||||||||||||||||
Ms. Allen |
11/25/2014 | 5,188 | 2,595 | $ | 73.53 | 11/25/2021 | 13,130 | $ | 1,338,210 | 4,334 | $ | 441,721 | ||||||||||||||||||||||||
(JIB President) |
11/24/2015 | 3,717 | 7,434 | $ | 75.24 | 11/24/2022 | ||||||||||||||||||||||||||||||
11/24/2015 | | 8,718 | $ | 104.95 | 11/29/2023 | |||||||||||||||||||||||||||||||
Mr. Guilbault |
11/26/2013 | 1,925 | | $ | 47.29 | 11/26/2020 | 6,087 | $ | 620,387 | 2,003 | $ | 204,146 | ||||||||||||||||||||||||
(Qdoba President) |
11/25/2014 | 1,297 | 1,297 | $ | 73.53 | 11/25/2021 | ||||||||||||||||||||||||||||||
11/24/2015 | 1,033 | 2,064 | $ | 75.24 | 11/24/2022 | |||||||||||||||||||||||||||||||
11/29/2016 | | 5,589 | $ | 104.95 | 11/29/2023 | |||||||||||||||||||||||||||||||
Mr. Rudolph (CLO) |
11/25/2014 | 7,447 | 3,724 | $ | 73.53 | 11/25/2021 | 74,560 | $ | 7,599,155 | 4,216 | $ | 429,695 | ||||||||||||||||||||||||
11/24/2015 | 3,511 | 7,020 | $ | 75.24 | 11/24/2022 | |||||||||||||||||||||||||||||||
11/29/2016 | | 8,718 | $ | 104.95 | 11/29/2023 |
(1) | All option awards vest 33% each year for three years from date of grant. |
(2) | The amounts in this column are: |
(a) unvested restricted stock awards or RSUs granted under the stock ownership program with vesting subject to the executives continued employment with the Company, and full vesting ten years from the grant date and issued only upon termination (Mr. Comma, 34,700; Mr. Rebel, 62,572; and Mr. Rudolph, 58,815); |
(b) unvested RSUs that vest (i) for each executive: (A) 20% each year for five years for grants prior to November 2015, and (B) 25% each year for four years for the regular November 2015 and 2016 grants (Mr. Comma, 40,213; Mr. Rebel, 11,102; Ms. Allen, 8,577; Mr. Guilbault, 3,986; and Mr. Rudolph, 9,926); and (ii) for Mr. Commas FY 2016 special retention stock award: 49,560 RSUs that vest 50% four years after the date of grant and the remaining 50% five years after grant; and |
(c) unvested PSUs for which the performance goals have been met for a completed performance period and that vest upon the third anniversary of the November 2014, November 2015 and November 2016 grant dates, subject to the executives continued employment with the Company (Mr. Comma, 24,209; Mr. Rebel, 6,473; Ms. Allen, 4,553; Mr. Guilbault, 2,101; and Mr. Rudolph, 5,819). |
(3) | This column shows unvested PSUs granted in November 2014, November 2015 and November 2016 for which the performance achievement was not yet known at fiscal year-end (FYE), and that vest upon the third anniversary of each grant date. The share amount is reported at target payout level. |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 57
EXECUTIVE COMPENSATION |
Option Exercises and Stock Vested in Fiscal 2017
The following table provides information on stock option exercises and shares acquired on the vesting of stock awards by the NEOs during fiscal 2017. Option award value realized is calculated by subtracting the aggregate exercise price of the options exercised from the aggregate fair market value of the shares of Jack in the Box Inc. stock acquired on the date of exercise. Stock award value realized is calculated by multiplying the number of shares shown in the table by the closing price of our stock on the date the stock awards vested.
Option Awards | Stock Awards (1) | |||||||||||||||
Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
|||||||||||||
Mr. Comma (CEO) |
25,529 | $ | 1,474,431 | 36,557 | $ | 3,930,757 | ||||||||||
Mr. Rebel (CFO) |
0 | $ | 0 | 13,714 | $ | 1,471,296 | ||||||||||
Ms. Allen (JIB President) |
0 | $ | 0 | 2,836 | $ | 286,210 | ||||||||||
Mr. Guilbault (Qdoba President) |
1,297 | $ | 42,051 | 2,747 | $ | 295,673 | ||||||||||
Mr. Rudolph (CLO) |
20,722 | $ | 1,200,371 | 10,763 | $ | 1,155,575 |
(1) | The reported number of shares and value realized on vesting includes time-vested RSUs granted in prior years, and the PSUs granted in November 2013 for the performance period fiscal 2014-2016, which vested in November 2016 and resulted in a payout of 122.4% of the target PSU award. |
The following table provides information on the pension benefits for the NEOs under each of the following pension plans:
58 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
EXECUTIVE COMPENSATION |
Pension Benefits Table | ||||||||||||||
Plan Name (1) | Number of Years Credited Service (#) |
Present Value of Accumulated Benefit at Normal Retirement Age ($) (2) |
Payments During Last Year ($) |
|||||||||||
Mr. Comma (CEO) |
Retirement Plan | 14 | $ | 381,504 | $ | 0 | ||||||||
Mr. Rebel (CFO) |
Retirement Plan | 12 | $ | 525,998 | $ | 0 | ||||||||
SERP | 14 | $ | 6,676,481 | $ | 0 | |||||||||
Ms. Allen (JIB President) |
None | N/A | N/A | N/A | ||||||||||
Mr. Guilbault (Qdoba President) |
Retirement Plan | 11 | $ | 387,445 | $ | 0 | ||||||||
Mr. Rudolph (CLO) |
Retirement Plan | 8 | $ | 335,935 | $ | 0 |
(1) | Messrs. Comma, Rebel, Rudolph and Guilbault participate in the Retirement Plan; Mr. Rebel is the only NEO who participates in the SERP. |
(2) | As of the end of fiscal 2017, all four Retirement Plan participants are vested in the Plan, and Mr. Rebel has met the service and minimum age requirements for vesting in the SERP. The actuarial present value of accumulated benefits under the Retirement Plan and the SERP is based on discount rates of 3.99% and 3.80% respectively, as of October 1, 2017. The RP-2014 Mortality Table is used for both the Retirement Plan and the SERP calculations (the SERP uses a white collar adjustment). Both Plans use the MP-2016 generational scale projected from 2006, modified to use 15 year convergence to an ultimate rate of 0.75%. Participants are assumed to retire at the latest of current age and the plans earliest retirement date with unreduced benefits. No pre-retirement mortality, retirement, or termination has been assumed for the present value factors. |
Non-Qualified Deferred Compensation
Executive Deferred Compensation Plan (EDCP)
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 59
EXECUTIVE COMPENSATION |
Non-Qualified Deferred Compensation Plan Table | ||||||||||||||||||||
Executive Contributions in Fiscal 2017 (1) |
Registrant Contributions In Fiscal 2017 (2) |
Aggregate Earnings in Fiscal 2017 |
Aggregate Withdrawals/ Distributions |
Aggregate Balance at FYE17 (3) |
||||||||||||||||
Mr. Comma (CEO) |
$ | 232,866 | $ | 47,781 | $ | 297,892 | $ | | $ | 3,798,771 | ||||||||||
Mr. Rebel (CFO) |
$ | 24,435 | $ | 23,813 | $ | 91,907 | $ | | $ | 1,325,431 | ||||||||||
Ms. Allen (JIB President) |
$ | 37,518 | $ | 42,256 | $ | 53,470 | $ | | $ | 527,627 | ||||||||||
Mr. Guilbault (Qdoba President) |
$ | 58,922 | $ | 31,384 | $ | 172,368 | $ | | $ | 2,365,906 | ||||||||||
Mr. Rudolph (CLO) |
$ | 54,605 | $ | 43,490 | $ | 141,393 | $ | | $ | 1,510,627 |
(1) | These amounts are also included in the salary and non-equity incentive plan compensation columns in the 2017 row of the SCT. |
(2) | These amounts are reported as All Other Compensation in the SCT. |
(3) | Amounts reported in this column are included in the Salary column in the SCT in prior years if the NEO was a named executive officer in previous years. The balance at FYE 2017 reflects the cumulative value of each NEOs deferrals, match, and investment gains or losses. These FYE amounts do not include contributions or earnings related to the fiscal 2017 annual incentive payment which was paid after the end of fiscal 2017 (but which amounts are included in the executive and registrant contributions columns of this table). |
Potential Payments on Termination of Employment or Change in Control
60 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
EXECUTIVE COMPENSATION |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 61
EXECUTIVE COMPENSATION |
62 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
EXECUTIVE COMPENSATION |
Potential Payments on Termination of Employment or Change in Control
Lump Sum Cash Payment (1) |
Annual Incentive (2) |
Continuation of Benefits (3) |
Equity Incentive and Stock Awards (4) |
Pension and SERP Benefits (5) |
Gross-Up for Excise Tax (6) |
Total | ||||||||||||||||||||||
Mr. Comma (CEO) |
||||||||||||||||||||||||||||
Termination Reason |
||||||||||||||||||||||||||||
Voluntary/Involuntary Termination | | | | | $ | 381,504 | | $ | 381,504 | |||||||||||||||||||
Death |
| | | $ | 13,922,864 | $ | 381,504 | | $ | 14,304,368 | ||||||||||||||||||
Disability |
| | | $ | 12,716,610 | $ | 381,504 | | $ | 13,098,114 | ||||||||||||||||||
CIC/Qualifying Termination |
$ | 0 | (7) | $ | 2,694,010 | (7) | $ | 50,596 | $ | 15,190,247 | $ | 381,504 | | $ | 18,316,357 | |||||||||||||
CIC/No Termination |
| | | $ | 5,531,869 | | | $ | 5,531,869 | |||||||||||||||||||
Mr. Rebel (CFO) |
||||||||||||||||||||||||||||
Termination Reason |
||||||||||||||||||||||||||||
Voluntary/Involuntary Termination | | | | $ | 1,735,462 | $ | 7,202,479 | | $ | 8,937,941 | ||||||||||||||||||
Death |
| | | $ | 1,735,462 | $ | 7,202,479 | | $ | 8,937,941 | ||||||||||||||||||
Disability |
| | | $ | 1,426,631 | $ | 7,202,479 | | $ | 8,629,110 | ||||||||||||||||||
CIC/Qualifying Termination |
$ | 1,410,000 | $ | 1,298,845 | $ | 35,393 | $ | 2,017,563 | $ | 5,937,738 | | $ | 10,699,539 | |||||||||||||||
CIC/No Termination |
| | | $ | 891,028 | | | $ | 891,028 | |||||||||||||||||||
Ms. Allen (JIB President) |
||||||||||||||||||||||||||||
Termination Reason |
||||||||||||||||||||||||||||
Voluntary/Involuntary Termination | $ | 515,000 | | | | | | $ | 515,000 | |||||||||||||||||||
Death |
| | | $ | 1,453,353 | | | $ | 1,453,353 | |||||||||||||||||||
Disability |
| | | $ | 1,181,342 | | | $ | 1,181,342 | |||||||||||||||||||
CIC/Qualifying Termination |
$ | 929,152 | (7) | $ | 1,185,144 | $ | 122,448 | $ | 1,741,483 | | | $ | 3,978,227 | |||||||||||||||
CIC/No Termination |
| | | $ | 738,196 | | | $ | 738,196 | |||||||||||||||||||
Mr. Guilbault (Qdoba President) |
||||||||||||||||||||||||||||
Termination Reason |
||||||||||||||||||||||||||||
Voluntary/Involuntary Termination | | | | | $ | 387,445 | | $ | 387,445 | |||||||||||||||||||
Death |
| | | $ | 616,066 | $ | 387,445 | | $ | 1,003,511 | ||||||||||||||||||
Disability |
| | | $ | 524,177 | $ | 387,445 | | $ | 911,622 | ||||||||||||||||||
CIC/Qualifying Termination |
$ | 864,690 | (7) | $ | 740,860 | $ | 21,283 | $ | 761,293 | $ | 387,445 | | $ | 2,775,571 | ||||||||||||||
CIC/No Termination |
| | | $ | 324,915 | | $ | 324,915 | ||||||||||||||||||||
Qdoba CIC/Qualifying Termination (8) |
$ | 651,161 | $ | 740,860 | $ | 21,283 | $ | 761,293 | $ | 387,445 | $ | 2,562,042 | ||||||||||||||||
Qdoba CIC/No Termination (8a) |
$ | 187,500 | | | $ | 761,293 | | | $ | 948,793 | ||||||||||||||||||
Mr. Rudolph (CLO) |
||||||||||||||||||||||||||||
Termination Reason |
||||||||||||||||||||||||||||
Voluntary/Involuntary Termination | | | | | $ | 335,935 | | $ | 335,935 | |||||||||||||||||||
Death |
| | | $ | 5,157,105 | $ | 335,935 | | $ | 5,493,040 | ||||||||||||||||||
Disability |
| | | $ | 4,864,087 | $ | 335,935 | | $ | 5,200,022 | ||||||||||||||||||
CIC/Qualifying Termination |
$ | 1,280,000 | $ | 1,178,987 | $ | 35,393 | $ | 5,439,206 | $ | 335,935 | | $ | 8,269,521 | |||||||||||||||
CIC/No Termination |
| | | $ | 4,362,117 | | | $ | 4,362,117 |
(1) | Lump Sum Cash Payment (Cash Payment): For all NEOs, amounts shown in the table for a CIC/Qualifying Termination reflect a multiple of annual base salary under the CIC Agreement, as described in the Compensation and Benefits Assurance Agreements section (CIC Section) above. In the case of Ms. Allen, the amount shown in the table for a termination not related to a CIC represents the one year base salary she is entitled to for termination without cause pursuant to her employment offer letter. |
(2) | Annual Incentive: Reflects multiple of annual incentive as described in the CIC Section. |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 63
EXECUTIVE COMPENSATION |
(3) | Continuation of Benefits: Reflects benefits continuation as described in the CIC section, including an outplacement fee estimate of $10,000; and 100% vesting of company matching and supplemental contributions to the EDCP. |
(4) | Equity Incentive and Stock Awards: The amounts shown in the table reflect only the value of unvested awards and options that would be accelerated upon termination and/or CIC as applicable; they do not include the vested portion of awards and options as of the end of fiscal 2017. For Mr. Rebel, the only NEO who was retirement eligible at FYE 2017, the value of his unvested equity that would be accelerated on termination (retirement), is shown in the Voluntary/Involuntary Termination row. For a CIC, the amounts shown reflect only the amount of acceleration of unvested restricted stock awards and stock units, unvested performance shares, and in-the-money unvested stock options. All references to termination exclude terminations for cause. |
a) | Pre-2011 Stock Awards (RSA/RSU under the stock ownership program in place prior to fiscal 2011, for Messrs. Comma, Rebel and Rudolph only): |
(i) | Upon termination not related to a CIC, if eligible to retire under a Company sponsored retirement plan, determination of shares vested is based on a schedule of the greater of: a) 30% of the award vesting three years from the date of grant, and 10% vesting for each year of service thereafter as of the date of retirement; b) such vesting as would have occurred had 10% of the award vested for each year of service with the Company, or c) in such greater amount as may be determined by the Board in its sole discretion. |
(ii) | Upon termination not related to a CIC, and not eligible to retire under a Company sponsored retirement plan, determination of shares vested is based on a schedule of 15% vesting on or after three years from the grant date, and 5% vesting for each year of service thereafter as of the termination date. |
(iii) | Upon death, disability, or a CIC, stock awards would vest 100%. |
b) | Performance Shares (PSUs): |
(i) | Upon termination not related to a CIC, if eligible to retire under a Company sponsored retirement plan or due to death or disability, and the awardee had been continuously employed by the Company as of the last date of the first fiscal year of the performance period, the performance shares would vest on a prorated basis, based on the number of full accounting periods the awardee was continuously employed by the Company during the performance period and to the extent to which performance goals are achieved. |
(ii) | Upon termination not related to a CIC (other than as described above), the award would be cancelled. |
(iii) | Upon a CIC, PSUs awarded prior to 2014 would vest and pay out at the greater of the performance level attained as of the date of the CIC or 100% of target, and PSUs granted in 2014 and thereafter would vest and pay out based on (A) actual achievement for completed fiscal years for which targets have been set and performance results measured and (B) at 100% of target for any incomplete fiscal years for which performance results are not known. |
For the accelerated portion of PSUs for which performance was unknown as of the last day of fiscal 2017, the amounts in the table assume that the PSUs will be accelerated based on target performance levels.
c) | Time-vested RSUs: |
(i) | Upon termination not related to a CIC, disability, or retirement, the award would be cancelled. |
(ii) | Upon death, disability or retirement, the RSUs would vest 100%. |
(iii) | Upon a CIC, RSUs awarded prior to 2014 would vest 100%, and RSUs awarded in 2014 and thereafter would vest only upon a Qualifying Termination. |
d) | Option Awards: |
(i) | Upon termination not related to a CIC, and eligible to retire under a Company sponsored retirement plan, determination of shares vested is based on a formula of 5% additional vesting for each year of service with the Company. |
(ii) | Upon termination not related to a CIC, and not eligible to retire under a Company sponsored retirement plan, there is no acceleration of option awards. |
(iii) | Upon death, options would vest 100%. |
(iv) | Upon a CIC, where options are not assumed by the acquiring company, options awarded prior to 2014 would vest 100%, while those awarded in 2014 and thereafter would vest 100% only upon a Qualifying Termination related to the CIC. |
(v) | Vesting upon disability is based on the number of shares which would have been vested as of twelve months following the optionees first day of absence from work with the Company, and therefore, for purposes of this table, no additional vesting is applied in the event of a disability. |
(5) | Pension and SERP: Annual benefit amounts listed for each NEO are subject to the eligibility and vesting provisions of the Retirement Plan (Messrs. Comma, Rebel, Rudolph and Guilbault) and the SERP (Mr. Rebel), which are described above in the sections of this Proxy Statement titled Retirement Plan, Supplemental Executive Retirement Plan and Pension Benefits Table and accompanying footnotes. All values shown represent present values and are based on the following: |
a) | In the event of a voluntary/involuntary termination (for any reason) or death, benefit values are based on accrued benefits as of fiscal year-end payable at normal retirement. Benefit values were calculated as of October 1, 2017, based on a discount rate of 3.988% for the qualified pension plan and 3.799% for the SERP. The RP-2014 Mortality Table is used for both the Retirement Plan and the SERP calculations (the SERP uses a white collar adjustment). Both Plans use the MP-2016 generational scale projected from 2006, modified to use 15 year convergence to an ultimate rate of .75%. Under the SERP, which applies only to Mr. Rebel, in the event of death, the amount of the survivor benefit would be the greater of one times the participants compensation or the actuarial equivalent lump sum present value of the participants supplemental retirement benefit. In the event of death while actively employed, the amount of the benefit under the Retirement Plan would be the accrued actuarial equivalent pension benefit as determined on the date of death. Such benefit is not subject to any reduction of benefits. |
b) | Disability benefits shown assume an NEO terminates employment with the Company due to disability and remains continuously disabled until reaching normal retirement age. Benefit values are based on accrued benefits as of the NEOs normal retirement age and were calculated as of October 1, 2017 based on a discount rate of 3.988% for the qualified pension plan and 3.799% for the SERP and the RP-2014 Mortality Table as described above. |
c) | In the event of an involuntary termination (or material diminution in duties or responsibilities or material downward change of title) within 24 months following a CIC, a participant would become 100% vested in the SERP. Benefit values are based on accrued benefits as of fiscal year-end and were calculated as of October 1, 2017. The SERP values are based on an interest rate of 6.0% and the RP-2000 Mortality Table, projected ten years. |
d) | As described in the Non-Qualified Deferred Compensation Section above, all of the NEOs received a three percent Company match on their contributions made to the non-qualified deferred compensation (EDCP) prior to January 1, 2016, and an annual restoration match of up to 4% for contributions made after January 1, 2016. In addition, Messrs. Comma, Rudolph, and Guilbault and Ms. Allen, who are not eligible to participate in the SERP, receive an additional 4% Company contribution to their EDCP accounts for up to ten years. In January 2017, Mr. Comma reached the maximum ten years to receive the additional 4% Company contribution to the EDCP and therefore ceased receiving these contributions at that time. As of the end of fiscal 2017, all the NEOs, except Ms. Allen, are 100% vested in the Company matching contributions. Accordingly, these amounts are not included here, but are described in the Non-Qualified Deferred Compensation Section above. |
64 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
EXECUTIVE COMPENSATION |
(6) | Gross-Up for Excise Tax: No gross-up would be payable to any NEOs for termination at FYE 2017. While Mr. Rebel does have an agreement (entered into prior to 2009) that could provide for a gross-up in the event of excess parachute payments under IRC Section 280G(b)(1) subject to excise tax, no such gross-up would be triggered as of FYE 2017, applying calculations based on the value of all benefits that could have been received and characterized as contingent upon a CIC under IRC Section 280G and related regulations as of FY 2017, except for equity award acceleration which is calculated based on the assumption that the CIC occurred on December 31, 2017. For purposes of this calculation, the value of the acceleration of vesting of all outstanding equity awards is calculated according to Section 280G and the related regulations. Other than Mr. Rebel, all other NEOs have 2009 and later agreements under which no gross-up is provided in any circumstance. |
(7) | The CIC Agreement best after tax provision applied to Mr. Comma at FYE 2017 would result in reducing his Cash Payment and a portion of his annual incentive payment so as to remain below the maximum amount he may receive without triggering an excise tax; the estimated reduction is $2,700,000 in his Cash Payment and a reduction of $619,250 in his annual incentive. The best after tax provision also applied to Ms. Allen and Mr. Guilbault and would result in reducing each of their Cash Payments. The estimated reduction is $358,348 for Ms. Allen and $72,810 for Mr. Guilbault. The net amounts are reflected in the Cash Payment and Annual Incentive columns for Mr. Comma, and the Cash Payment column for Ms. Allen and Mr. Guilbault. |
(8) | Under the terms of Mr. Guilbaults Qdoba CIC Agreement (described in the section above the table): in the event of a Qdoba CIC and his qualifying termination, Mr. Guilbault would receive a Cash Payment based on a multiple of annual base salary under the Qdoba CIC Agreement and additional payments for annual incentive, an equivalent value of the unvested portion of his equity, and other benefits as shown in those columns. The Cash Payment column also includes a $187,500 conditional bonus to which Mr. Guilbault is entitled contingent on continuous employment with the Company and satisfactory performance through the earlier of (a) January 2, 2018 or (b) the consummation of a sale or spin-off of Qdoba. The best after tax provision applied to Mr. Guilbault would result in reducing his Cash Payment amount so as to remain below the maximum amount he may receive without triggering an excise tax; the estimated reduction is $473,839 and net amount is shown in the column. |
(8a) | This row represents the benefits Mr. Guilbault would receive upon a Qdoba CIC absent a qualifying termination: the conditional bonus described in Note 8 above and the equivalent value of the unvested portion of his equity. |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 65
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth, as of December 29, 2017 (the Record Date), information with respect to beneficial ownership of our Common Stock by (i) each person who we know to beneficially own more than 5% of our Common Stock, (ii) each director and nominee for director of the Company, (iii) each NEO listed in the Summary Compensation Table herein and (iv) all of our directors and executive officers of the Company as a group. The address of each director and executive officer shown in the table below is c/o Jack in the Box Inc., 9330 Balboa Avenue, San Diego, CA 92123.
We determined the number of shares of Common Stock beneficially owned by each person under rules promulgated by the SEC, based on information obtained from questionnaires, Company records and filings with the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and also any shares which the individual or entity had the right to acquire within sixty days of December 29, 2017. All percentages are based on the shares of Common Stock outstanding as of December 29, 2017. Except as noted below, each holder has sole voting and investment power with respect to all shares of Common Stock listed as beneficially owned by that holder.
Security Ownership of Certain Beneficial Owners
Name | Number of Shares of Common Stock Beneficially Owned as of December 29, 2017 |
Percent of Class |
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BlackRock, Inc. (1) |
3,064,242 | 10.4% | ||||||
The Vanguard Group, Inc. (2) |
2,431,268 | 8.2% |
(1) | According to its Form 13F filings as of September 30, 2017, BlackRock, Inc. had investment discretion with respect to accounts holding 3,064,242 shares, of which it had sole voting power with respect to 3,000,736 shares and no voting power with respect to 63,506 shares. The address of BlackRock Inc. is 55 East 52nd Street, New York NY 10055. |
(2) | According to its Form 13F filings as of September 30, 2017, The Vanguard Group Inc., on behalf of itself and its direct subsidiaries, Vanguard Fiduciary Trust Co, and Vanguard Investments Australia, Ltd., had investment discretion with respect to accounts holding 2,431,268 shares. The Vanguard Group, Inc. was the beneficial owner of 2,376,909 shares, of which it had sole voting power with respect to 2,309 shares and no voting power with respect to 2,374,600 shares. Vanguard Fiduciary Trust Co was the beneficial owner of 50,409 shares, of which it had sole voting power. Vanguard Investments Australia, Ltd. was the beneficial owner of 3,950 shares, of which it had shared voting power. The address of The Vanguard Group, Inc. is: P.O. Box 2600 Valley Forge, Pennsylvania 19482-2600. |
66 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
Security Ownership Of Directors and Management
Name | Number of Shares of Common Stock Beneficially Owned as of December 29, 2017 (1) |
Number Attributable to Options Exercisable Within 60 Days of December 29, 2017 |
Percent of Class |
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Mr. Comma |
169,070 | 88,545 | * | |||||||||
Mr. Rebel |
167,610 | 57,354 | * | |||||||||
Ms. Allen |
25,159 | 18,123 | * | |||||||||
Mr. Guilbault |
25,492 | 8,447 | * | |||||||||
Mr. Rudolph |
124,881 | 28,967 | * | |||||||||
Mr. Goebel |
21,085 | 0 | * | |||||||||
Ms. John |
3,390 | 0 | * | |||||||||
Ms. Kleiner |
13,188 | 0 | * | |||||||||
Mr. Murphy |
61,317 | 0 | * | |||||||||
Mr. Myers |
16,072 | 0 | * | |||||||||
Mr. Tehle |
49,984 | 0 | * | |||||||||
Mr. Wyatt |
15,648 | 0 | * | |||||||||
Ms. Yeung |
0 | 0 | * | |||||||||
All directors and executive officers as a group (20 persons) |
792,515 | 243,510 | 2.6% |
* | Asterisk in the percent of class column indicates beneficial ownership of less than 1% |
(1) | For purposes of computing the percentage of outstanding shares held by each person or group of persons named in the Beneficial Ownership table on a given date, any security which such person or persons has the right to acquire within 60 days after such date is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The securities totaled in this column include stock options, direct holdings, stock equivalents under the Director Deferred Compensation Plan, restricted stock and restricted stock units as described below. |
JACK IN THE BOX INC. ï 2018 PROXY STATEMENT 67
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
| Restricted Stock Units As a group, within 60 days of December 29, 2017, our directors, NEOs and other executive officers may convert an aggregate of 121,208 RSUs on a one-for-one basis into shares of Common Stock upon vesting. RSUs may not be voted. The breakdown between directors and NEOs is provided below. |
68 JACK IN THE BOX INC. ï 2018 PROXY STATEMENT
JACK IN THE BOX INC. 9330 BALBOA AVENUE SAN DIEGO, CALIFORNIA 92123 |
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VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Follow the instructions to obtain your records and to create an electronic voting instruction form
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
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VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
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VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||
E16496-P84132 KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY | ||||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED. |
JACK IN THE BOX INC.
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The Board of Directors recommends you vote FOR all 9 nominees listed and FOR proposals 2 and 3.
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1. | Election of Directors
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For | Against | Abstain | ||||||||||||||||||||||||||||
Nominees:
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1a. Leonard A. Comma
1b. David L. Goebel
1c. Sharon P. John |
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Ratification of the appointment of KPMG LLP as independent registered public accountants.
Advisory approval of executive compensation. |
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1d. Madeleine A. Kleiner
1e. Michael W. Murphy |
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1f. James M. Myers |
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1g. David M. Tehle |
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1h. John T. Wyatt |
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NOTE: In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. |
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1i. Vivien M. Yeung |
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For address changes and/or comments, please check this box and write them on the back where indicated. | ☐ | |||||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting. | ☐ | ☐ | ||||||||||||||||||||||||||||||
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Proxy Statement and the 2017 Annual Report on Form 10-K are available at www.proxyvote.com.
E16497-P84132
JACK IN THE BOX INC. Annual Meeting of Stockholders February 27, 2018, 8:30 a.m., Pacific Time This proxy is solicited by the Board of Directors |
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The undersigned hereby appoints Leonard A. Comma and Phillip H. Rudolph, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Jack in the Box Inc. Common Stock which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the 2018 Annual Meeting of Stockholders of the company to be held February 27, 2018, or at any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the Annual Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF ALL DIRECTORS AND FOR PROPOSALS 2 AND 3.
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting or any adjournment thereof.
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
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