Business Context and Reporting Period
This Form 8-K Current Report was filed by Texas Roadhouse, Inc. on December 27, 2017, covering events occurring on December 26, 2017. The filing details the execution of new employment agreements with four key executive officers: Kent Taylor (Chairman and CEO), Scott Colosi (President and CFO), Celia Catlett (General Counsel and Corporate Secretary), and Chris Jacobsen (Chief Marketing Officer). The agreements are effective January 8, 2018, with an initial three-year term.
Key Financial Metrics and Compensation
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics for the company. It focuses exclusively on executive compensation structures.
Base Salary (Annual)
| Officer | 2018 | 2019 | 2020 |
|---|---|---|---|
| Kent Taylor | $525,000 | $525,000 | $525,000 |
| Scott Colosi | $450,000 | $450,000 | $450,000 |
| Celia Catlett | $315,000 | $315,000 | $325,000 |
| Chris Jacobsen | $300,000 | $315,000 | $325,000 |
Target Incentive Bonus (2018)
| Officer | Target | Minimum | Maximum |
|---|---|---|---|
| Kent Taylor | $525,000 | $0 | $1,050,000 |
| Scott Colosi | $350,000 | $0 | $700,000 |
| Celia Catlett | $185,000 | $0 | $370,000 |
| Chris Jacobsen | $200,000 | $0 | $400,000 |
Bonus targets are based on earnings per share growth and pre-tax profits. Maximum payouts can reach 200% of the target.
Restricted Stock Units (RSUs)
- Service-Based (Vesting Jan 8, 2019): Kent Taylor (10,000), Scott Colosi (10,000), Celia Catlett (10,000). Chris Jacobsen received no initial grant due to a prior agreement.
- Retention Grants (Vesting Jan 8, 2021): Celia Catlett (10,000), Chris Jacobsen (10,000).
- Long-Term Incentive (Vesting Jan 8, 2023): Kent Taylor (75,000).
- Performance-Based (Vesting Jan 8, 2019): Kent Taylor (Target 50,000; Max 100,000), Scott Colosi (Target 40,000; Max 80,000). Payouts range from 0% to 200% of target based on EPS and pre-tax profit goals.
Material Changes
The primary material change is the replacement of prior employment agreements expiring January 7, 2018, with new three-year contracts. These new agreements formalize salary schedules, introduce specific performance-based RSU targets, and define severance and change-in-control provisions.
Outlook, Risks, and Contingencies
Separation and Change in Control:
- Without Cause (No Change in Control): Kent Taylor receives no severance (only a nominal $100 gift). Other officers receive 180 days of base salary plus 50% of the annual base incentive bonus, contingent on signing a release.
- Change in Control: If terminated without cause or resigning for good reason within 12 months of a change in control, officers receive base salary and incentive bonus through the end of the term (minimum one year). Unvested stock awards accelerate, and future RSU grants for years 2 and 3 are issued at target levels.
Risks and Provisions:
- Non-Compete: Officers are restricted from competing for two years post-employment, unless terminated without cause following a change in control.
- Clawback: Agreements include provisions allowing the company to recover compensation required by law or regulation.
Investor Verification Checklist
- Verify the total potential cash compensation exposure for the executive team under maximum bonus scenarios.
- Confirm the vesting schedules and performance metrics (EPS and pre-tax profit) required for the performance-based RSUs.
- Review the specific financial impact of the change-in-control severance provisions on the company's balance sheet.
- Check subsequent filings for actual performance against the 2018 bonus targets and RSU vesting outcomes.