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2023 Annual Report
Dear
Shareholders,
It’s been 20 years since our Founder,
Kent Taylor and team, along with our
mascot, Andy the Armadillo, opened
the Nasdaq Stock Exchange, taking
Texas Roadhouse public. Going
public allowed Kent to reward our
early investors and employees who
believed in his dream, as well as
provide Texas Roadhouse with
the necessary capital to
grow the business.
A lot has changed since October 5,
2004, but more importantly, much
more has stayed the same. Over the
years, we’ve evolved with industry
challenges, embraced technology
innovation, and learned valuable
lessons from not only our successes,
but also our failures.
Along the way, we have remained
people-first, committed to
made-from-scratch food, and
focused on our legendary service.
We have also remained steadfast
in our commitment to our
Managing Partner model, which
we believe is foundational to
our success.
We had another impressive year
in 2023, with over $4.6 billion in
revenue and earnings per share
growth of 14.3%. Our operators
generated average unit volumes
of over $7.6 million at our Texas
Roadhouse company restaurants.
Across all of our brands, average
weekly sales at company restaurants
approached $144,000 driven by
comparable restaurant sales of
10.1%, with guest traffic representing
5.4% of that increase.
In addition, we also generated
$565 million in cash flow from
operations. With this cash flow, we
self-funded $347 million of capital
expenditures as well as the
$39 million acquisition of eight
franchise restaurants. We also
returned over $147 million to our
shareholders in the form of dividends,
completed $50 million of share
repurchases, and repaid our remaining
$50 million of bank debt.
On the development front, 2023 was
a record year with 45 new restaurant
openings systemwide. We were
proud to open 30 new company
restaurants across all three of our
brands, and our franchise partners
opened 15 new franchise restaurants,
including the first Jaggers franchise
location in Jacksonville, North
Carolina. These openings not only
expand our restaurant base, but also
provide growth opportunities for our
Roadies and allow us to impact even
more local communities.
In August 2023, we conducted an
Attitude and Usage Study to gain a
better understanding of our guests.
We surveyed over 3,800 participants
who affirmed their love of our
scratch-made food and appreciation
of our service with heart. Through
the responses, we learned that
we over-index on our guests who
identify as Gen Z and those married
with children. We also learned of
opportunities, including continued
education for our guests on our
Digital Waitlist and Mobile App.
We continue to explore efficiencies
in our restaurants and one important
enhancement we are focused on
for 2024 is the transition to Digital
Kitchens. This technology assists
with our speed of service and creates
a calmer, more efficient kitchen for
our Roadies. We are continuing to
roll this out to restaurants across the
country, including all new locations.
Bubba’s 33 celebrated its 10-year
anniversary in 2023 and wrapped up
the year with 45 restaurants in 15
states. As we continue to build this
brand, we rolled out brand-specific
operational goals to align our teams
on expectations and the experience
we create for our guests and Roadies.
We also added our first Bubba’s 33
Regional Partner, Stefan Gentry,
who has over 35 years of restaurant
experience, a people-first mentality,
and is focused on operational
excellence in our stores.
Jaggers, our fast-casual concept,
continues to grow and we ended
the year with eight company and
two franchise restaurants. Recently,
we have begun testing third-party
delivery at several locations as an
opportunity to reach new guests. We
will continue evaluating the success
of this partnership throughout 2024
to determine next steps. While
Jaggers is early in its development,
we are encouraged with the results
and expect continued growth in
company and franchise locations.
In 2023, we saw another exciting
year of interacting with guests
through our merchandise and
licensing efforts. Our bread basket
holiday ornament sold more than
25,000 units and fans across the
country are proudly wearing Texas
Roadhouse branded apparel. Coming
up in 2024, we’ll be launching two
flavors of steak sauce nationally with
a number of large grocery chains.
This product will begin hitting
shelves in April 2024 and will be
available at more than 10,000
locations across the country.
Since the beginning, our focus has
been on more than just being known
for our made-from-scratch food and
lively dining experience. We also
strive to be a hometown favorite by
supporting the local communities in
which we operate. In 2023,
our restaurants donated over
$3.3 million to schools, non-profits,
and community organizations across
the country. Our restaurants are proud
to focus on local partnerships and
supporting causes in their
own communities.
In February, Texas Roadhouse and
Bubba’s 33 locations across the
country joined together to raise over
$800,000 for the American Tinnitus
Association (ATA), which will make an
impact through research grants and
funding resources for those suffering
with tinnitus.
In November 2023, our restaurants
also came together on Veterans Day
to provide nearly $2 million in meals
and distribute 675,000 vouchers to our
nation’s heroes.
Another annual commitment we have
as a company is Fall Tour. During this
“listening tour,” our Leadership Team
meets with each of our Managing
Partners in-person to listen and learn.
During 2023, the tour had 28 stops over
six weeks and the insights gained were
invaluable as we strive to keep our
Managing Partners the center of
our universe.
Our growth and success are only made
possible by our people. In April 2023,
we crowned our Texas Roadhouse
Managing Partner of the Year, Brad
Apgar, from College Station, Texas. Brad
and his team are a shining example
of what it means to be a committed
community partner. We also celebrated
our first-ever Bubba’s 33 Managing
Partner of the Year, Rob Auw, from
Colorado Springs, Colorado. Rob’s
dedication to marketing and developing
his team are top notch. At our annual
Support Center Awards, Steve Zero
from our Field Internal Audit Team
was named Roadie of the Year for his
partnership mentality in working with
our operators.
In 2023, our Executive Leadership Team
got stronger with the addition of Chris
Monroe as Chief Financial Officer and
Travis Doster as Chief Communications
Officer. Chris brings over 34 years of
financial experience and is responsible
for overseeing accounting, SEC
reporting, investor relations, tax,
treasury, internal audit, and financial
analysis functions. Travis began his
Texas Roadhouse journey in 2006 and
has provided valuable leadership in
promoting and protecting our brands
throughout his tenure. In his expanded
role, Travis now oversees all internal
and external communications,
public relations matters, public
affairs, and marketing.
We also added Wayne Jones to our
Board of Directors. Wayne has over
40 years of restaurant experience,
including chief executive experience
at BJ’s Restaurants and P.F. Chang’s
and as CEO at Anthony’s Coal Fired
Pizza. In addition, we were proud to
strengthen our Regional Team with
Randy Boss’ promotion to Regional
Partner of the southeast.
Hundreds of thousands of Roadies,
guests, and members of communities
across the country have been positively
impacted by our brands over the last
three decades. In 2024 and beyond, we
will continue to focus on driving results
through Legendary Food and Legendary
Service. From creating memories in our
restaurants to supporting non-profit
organizations in our communities
and celebrating our Roadies’
accomplishments – our people remain
the cornerstone of what we do.
Reflecting on 20 years as a public
company fills us with pride and
gratitude. It also reinforces our
commitment to continue honoring our
past while writing our future. Although
our company is 31-years-old, there is no
doubt we are just gettin’ started.
Let’s Go Roadhouse, Bubba’s 33,
and Jaggers!
Twenty years ago, our Founder, Kent Taylor,
and team opened the Nasdaq Stock Exchange,
taking Texas Roadhouse public.
Texas Roadhouse and Bubba’s 33
raised over $800,000 for the
American Tinnitus Association (ATA).
On Veterans Day, we provided nearly
$2 million in meals and distributed
675,000 vouchers to our nation’s heroes.
Jaggers opened its first franchise
location in Jacksonville, NC.
Jerry Morgan
Chief Executive Officer
In 2024, we’ll launch two flavors of
steak sauce nationally with a number
of large grocery chains.
As discussed in our Sustainability
Report, we’ve been proud of
the progress we’ve made since
launching our Women’s Leadership
Series and we continue to see the
number of women in leadership
rise. We are also excited to launch
an African American Leadership
Summit in 2024 and are eager to
continue finding ways to develop
and empower our people.
In 2023, we partnered with Rosetta
Stone to offer an English as a
Second Language (ESL) Program to
Roadies who were recommended
by their leaders to participate. The
goal of the program is to assist our
native Spanish speaking Roadies in
increasing their English language
fluency. The courses are self-
directed and completed on-demand
at the convenience of each learner.
We now have over 100 Roadies in
the program.
Listening to our people has been
a part of our culture since the
beginning and we are continually
focused on “feedback as a gift” at
all levels. In the field, our Executive
Team meets face-to-face with
every operator during our Fall
Tour. The annual “listening tour”
gives our Managing Partners the
opportunity to give direct feedback
to leadership.
At the Support Center, we gathered
feedback on development
opportunities and our overall
culture from Roadie focus groups.
We also launched the Roadie
Engagement Survey to receive
feedback from our Support Center
Roadies. With 90% participation,
the survey conducted by Gallup was
focused on identifying our strengths
and opportunities to continue to
provide a best-in-class workplace
experience. The insights will be
used to create action plans and
help foster conversations during
developmental one-on-ones.
Another key component of our
people-first culture is being there
for our Roadies in good times and
bad. One of the ways we do this is
through our Roadie-funded non-
profit employee assistance fund,
Andy’s Outreach. In 2023,
Andy’s helped 1,200 Roadies and
distributed almost $3 million to
support Roadies experiencing
hardships. In total, Andy’s has
provided more than $25 million to
Roadies in need since its inception.
We were also excited to celebrate
our people for their efforts through
daily recognition, awards, and
bigger events throughout the year.
These celebrations motivate our
Roadies to continue striving for
legendary in all that they do.
We are proud of our culture of
recognition and the awards we
receive as a company for having
a people-first culture. In 2023,
our company was named one of
America’s Greatest Workplaces
by Newsweek, with additional
recognition in the following
categories – Great Workplace for
Diversity, Women, Job Starters,
and Parents & Families. These
accolades are a testament of our
efforts to be one of the best places
to work in town.
Since day one, Texas Roadhouse
has been a people-first company.
We support our employees
through programs that encourage
an inclusive culture, people
development, community outreach,
and fun with purpose. We have a
lot to be proud of in 2023, but it’s
our commitment to continue to get
better that will keep our people-
first culture strong.
For a detailed overview of
what “People-First” means at
Texas Roadhouse, visit
texasroadhouse.com/people-first.
Gina Tobin
President
These words are proudly displayed
on a plaque in every Texas
Roadhouse location. Our Roadies,
Managers, and guests see it when
they walk through our front doors.
This plaque serves as a daily
reminder of the intentional culture
on which Texas Roadhouse was
built. A culture Kent could not
find anywhere else. A culture that
attracts employees. A culture that,
like our food, people crave to be
part of and belong to.
We believe our commitment to
people-first is a strength, not
just a slogan. We believe it is a
competitive advantage. But, what’s
more important than seeing these
words every day, is putting them
into action, and we continued to
make great strides in 2023.
For example, knowing that
diversity, equity, and inclusion are
vital to our people-first culture,
we reported our EEO-1 data for
the very first time in our 2023
Sustainability Report. The report
includes data regarding our entire
workforce composition, broken
down by gender and ethnicity. We
strive to reflect the communities
we serve and we are committed
to knowing our numbers to find
growth and opportunities for
enhancement. We created the
DE&I Advisory Council to set DE&I
strategy, and move the needle on
our DE&I initiatives which focus
on recruitment, retention, guests,
employee growth/development,
and ownership.
April 5, 2024
To our Shareholders:
You are cordially invited to attend the 2024 Annual Meeting of Shareholders of Texas Roadhouse, Inc.
(the “Company”) on Thursday, May 16, 2024. The meeting will be held at the Texas Roadhouse Support Center
located at 6040 Dutchmans Lane, Louisville, Kentucky at 9:00 a.m. eastern daylight time.
The official Notice of Annual Meeting, Proxy Statement, and Proxy Card are enclosed with this letter.
Please take the time to read carefully each of the proposals for shareholder action described in the
accompanying proxy materials. Whether or not you plan to attend, you can ensure that your shares are
represented at the meeting by promptly completing, signing and dating your Proxy Card and returning it in the
enclosed postage - paid envelope. Shareholders of record can also vote by touch - tone telephone from the
United States, using the toll - free number on the Proxy Card, or by the Internet, using the instructions on the
Proxy Card. If you attend the meeting, then you may revoke your proxy and vote your shares in person.
Your interest and participation in the affairs of the Company are greatly appreciated. Thank you for
your continued support.
Sincerely,
Gerald L. Morgan
Chief Executive Officer
TEXAS ROADHOUSE, INC.
6040 Dutchmans Lane
Louisville, Kentucky 40205
2024 Annual Meeting of Shareholders (the “Annual Meeting”)
of Texas Roadhouse, Inc., a Delaware corporation (the “Company”)
Date and Time:
Thursday, May 16, 2024
9:00 A.M. Eastern Daylight Time
Place:
Texas Roadhouse Support Center
6040 Dutchmans Lane
Louisville, Kentucky 40205
PROPOSALS FOR BUSINESS
NOTICE ON VOTING
Proposal 1: To elect nine directors to the
Board of Directors of the Company, each for a
term of one year
Proposal 2: To ratify the appointment of
KPMG LLP as the Company’s independent
auditors for the Company’s 2024 fiscal year
Proposal 3: To hold an advisory vote on
executive compensation
Proposal 4: To amend
the Company’s
Amended and Restated Certificate of
Incorporation to remove references to Class B
shares
Proposal 5: To amend the Company’s
Amended and Restated Certificate of
Incorporation to provide for exculpation of our
officers as permitted by Delaware law
Proposal 6: To amend the Company’s Bylaws
to reduce the ownership percentage required
for shareholders to request a special meeting
of shareholders from 50% to 25%
Proposal 7: An advisory vote on a shareholder
proposal regarding the issuance of a climate
report and to set reduction targets by the
Company, if properly presented at the Annual
Meeting
Whether or not you expect to be present at the Annual
Meeting, please submit your vote by using one of the voting
methods described in the attached materials. If you attend
the Annual Meeting, then you may revoke your proxy and
vote your shares in person.
WHO CAN VOTE
Only shareholders of record at the close of business on
March 18, 2024 are entitled to receive notice of and to vote
at the Annual Meeting.
DATE OF MAILING
This Notice of the Annual Meeting and the attached Proxy
Statement describing matters to be described at the
Annual Meeting are being distributed or otherwise
furnished to shareholders on April 5, 2024.
Important Notice Regarding the Availability of Proxy
Materials For the 2024 Annual Meeting of Shareholders
to be Held on May 16, 2024: Our Annual Report
containing our Proxy Statement relating to our 2024 Annual
Meeting of Shareholders and Form 10-K for the fiscal year
ended on December 26, 2023 is available on our website
at www.texasroadhouse.com in the Investors Section.
By Order of the Board of Directors,
Christopher C. Colson
Corporate Secretary
Table of Contents
SUMMARY OF MATTERS REQUIRING SHAREHOLDER ACTION . . . . . . . . . . . . . . . . . . . . .
Proposal 1: Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal 2: Ratification of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal 3: Advisory Vote on Approval of Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal 4: To Amend the Company’s Amended and Restated Certificate of Incorporation to
Remove Class B Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal 5: To Amend the Company’s Amended and Restated Certificate of Incorporation to
Provide for Exculpation of Our Officers as Permitted by Delaware Law . . . . . . . . . . . . . . . . . . . . . . .
Proposal 6: To Amend the Company’s Bylaws to Reduce the Ownership Percentage Required
for Shareholders to Request a Special Meeting of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal 7: Advisory Vote on a Shareholder Proposal Regarding the Issuance of a Climate
Report and to Set Reduction Targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INFORMATION ABOUT PROXIES AND VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Record Date and Voting Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revocability of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Voting Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNUAL MEETING FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CORPORATE GOVERNANCE AND OUR BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 Corporate Governance Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Summary Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Summaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meetings of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leadership Structure of the Board and the Role of the Board in Strategy and Risk Oversight . . . . . .
Committees of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Policy Regarding Consideration of Candidates for Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Code of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Ownership Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Succession Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mandatory Retirement Age for Board Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Orientation and Continuing Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
STOCK OWNERSHIP INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delinquent Section 16(a) Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grants of Plan - Based Awards in Fiscal Year 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding Equity Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Termination, Change of Control and Change of Responsibility Payments . . . . . . . . . . . . . . . . . . . . . . .
Pay Versus Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CEO Pay Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AUDIT COMMITTEE REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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PRESENTATION OF PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal 1: Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal 2: Ratification of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal 3: Advisory Vote on Approval of Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal 4: To Amend the Company’s Amended and Restated Certificate of Incorporation to
Remove Class B Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposal 5: To Amend the Company’s Amended and Restated Certificate of Incorporation to
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Include an Exculpation of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92
Proposal 6: To Amend the Company’s Bylaws to Reduce the Percentage Required for
Shareholders to Request a Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95
Proposal 7: Advisory Vote on a Shareholder Proposal Regarding the Issuance of a Climate
Report and to Set Reduction Targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
SHAREHOLDERS’ COMMUNICATIONS WITH THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
FORM 10 - K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
APPENDIX A – CLASS B REMOVAL AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B – EXCULPATION AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C – SPECIAL MEETING AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
PROXY STATEMENT
2024 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2024
TEXAS ROADHOUSE, INC.
6040 Dutchmans Lane
Louisville, Kentucky 40205
This proxy statement and accompanying proxy card are being furnished in connection with the
solicitation of proxies by the board of directors (the “Board”) of Texas Roadhouse, Inc., a Delaware corporation,
to be voted at the 2024 Annual Meeting of Shareholders (the “Annual Meeting”) and any adjournments thereof.
In this proxy statement, references to the “Company,” “we,” “us” or “our” refer to Texas Roadhouse, Inc. This
proxy statement and accompanying proxy card are first being mailed to shareholders on or about April 5, 2024.
The Annual Meeting will be held at the Texas Roadhouse Support Center located at 6040 Dutchmans
Lane, Louisville, Kentucky on Thursday, May 16, 2024 at 9:00 a.m. eastern daylight time, for the purposes set
forth in this proxy statement and the accompanying notice of the Annual Meeting.
SUMMARY OF MATTERS REQUIRING SHAREHOLDER ACTION
Proposal 1—Election of Directors (Page 84)
The affirmative vote of a plurality of the votes entitled to be cast by the holders of the Company’s
common stock present in person or represented by proxy is required to elect each nominee. Election by a
plurality means that the director nominee with the most votes for the available slot is elected for that slot. You
may vote “FOR” each nominee or you may “WITHHOLD AUTHORITY” to vote for each nominee. Unless you
“WITHHOLD AUTHORITY” to vote for a nominee, your proxy will be voted “FOR” the election of the individuals
nominated as directors.
Our Board has adopted a majority voting policy for uncontested director elections. Under this policy, any
nominee who receives fewer “FOR” votes than “WITHHOLD” votes is required to offer his or her resignation.
Our nominating and corporate governance committee would then consider the offer of resignation and make a
recommendation to our independent directors as to the action to be taken with respect to the offer.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES.
Proposal 2—Ratification of Independent Auditors (Page 87)
The proposal to ratify the appointment of KPMG LLP as the Company’s independent auditors for the
fiscal year ending December 31, 2024 must be approved by the affirmative vote of a majority of the shares
present (in person or by proxy) and entitled to vote. You may vote “FOR” or “AGAINST” the ratification, or you
may “ABSTAIN” from voting on this proposal. A vote to “ABSTAIN” will have the same effect as a vote
“AGAINST” this proposal.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
1
Proposal 3—Advisory Vote on Approval of Executive Compensation (Page 87)
The outcome of the advisory vote on whether to approve the executive compensation detailed in this
proxy statement (including the Compensation Discussion and Analysis, the Executive Compensation section
and the other related executive compensation tables and related discussions) will be determined by the
affirmative vote of a majority of the shares present (in person or by proxy) and entitled to vote. You may vote
“FOR” or “AGAINST” approval of the executive compensation, or you may “ABSTAIN” from voting on this
proposal. A vote to “ABSTAIN” will have the same effect as a vote “AGAINST” approval of the executive
compensation.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
Proposal 4—To Amend the Company’s Amended and Restated Certificate of Incorporation to Remove
Class B Shares (Page 89)
The proposal to amend the Company’s Amended and Restated Certificate of Incorporation to remove
any reference to Class B shares must be approved by the affirmative vote of a majority of the shares of our
common stock outstanding as of the Record Date. You may vote “FOR” or “AGAINST” the ratification, or you
may “ABSTAIN” from voting on this proposal. A vote to “ABSTAIN” and broker non-votes will have the same
effect as a vote “AGAINST” this proposal.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
Proposal 5—To Amend the Company’s Amended and Restated Certificate of Incorporation to Provide
for Exculpation of Our Officers as Permitted by Delaware Law (Page 92)
The proposal to amend the Company’s Amended and Restated Certificate of Incorporation to include
an exculpation of officers must be approved by the affirmative vote of a majority of the shares of our common
stock outstanding as of the Record Date. You may vote “FOR” or “AGAINST” the ratification, or you may
“ABSTAIN” from voting on this proposal. A vote to “ABSTAIN” and broker non-votes will have the same effect
as a vote “AGAINST” this proposal.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
Proposal 6—To Amend the Company’s Bylaws to Reduce the Ownership Percentage Required for
Shareholders to Request a Special Meeting of Shareholders (Page 95)
The proposal to amend the Company’s Bylaws to reduce the percentage required for a shareholder to
request a special meeting from 50% to 25% must be approved by the affirmative vote of a majority of the shares
of our common stock outstanding as of the Record Date. You may vote “FOR” or “AGAINST” the ratification, or
you may “ABSTAIN” from voting on this proposal. A vote to “ABSTAIN” and broker non-votes will have the same
effect as a vote “AGAINST” this proposal.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
2
Proposal 7—Advisory Vote on the Shareholder Proposal Regarding the Issuance of a Climate Report
and to Set Reduction Targets by the Company (Page 97)
The outcome of the vote on whether the Company should issue a climate report, at a reasonable cost
and omitting proprietary information, describing if, and how, the Company plans to reduce its total GHG
emissions and align its business with the Paris Agreement’s goal of maintaining global temperature increases
to 1.5°
will be determined by the affirmative vote of a majority of the shares present (in person or by proxy) and
entitled to vote. You may vote “FOR” or “AGAINST” the shareholder proposal, or you may “ABSTAIN” from
voting on this proposal. A vote to “ABSTAIN” will have the same effect as a vote “AGAINST” approval of the
shareholder proposal.
C
THE BOARD RECOMMENDS THAT YOU VOTE “AGAINST” THIS PROPOSAL.
Other Matters
As of the date of this proxy statement, the Board knows of no matters that will be presented for
consideration at the Annual Meeting other than those matters discussed in this proxy statement. If any other
matters should properly come before the Annual Meeting and call for a vote of shareholders, then validly
executed proxies in the enclosed form returned to us will be voted in accordance with the recommendation of
the Board, or, in the absence of such a recommendation, in accordance with the judgment of the proxy holders.
Any such additional matter must be approved by an affirmative vote of a majority of the shares present (in person
or by proxy) and entitled to vote at the Annual Meeting.
3
INFORMATION ABOUT PROXIES AND VOTING
Record Date and Voting Securities
The Board has fixed the record date (the “Record Date”) for the Annual Meeting as the close of business
on March 18, 2024. Only shareholders of record at the close of business on the Record Date will be entitled to
vote at the Annual Meeting and at any adjournment or postponement thereof. At the close of business on the
Record Date, there were outstanding 66,864,958 shares of common stock, each of which is entitled to one vote
per share on all matters to be considered at the Annual Meeting.
The presence in person or by proxy of the holders of a majority of the shares of common stock will
constitute a quorum for the transaction of business at the Annual Meeting. Shares of common stock represented
by properly executed proxies received before the close of voting at the Annual Meeting will be voted as directed
by such shareholders, unless revoked as described below.
Revocability of Proxies
A shareholder who completes and returns the proxy card that accompanies this proxy statement may
revoke that proxy at any time before the closing of the polls at the Annual Meeting. A shareholder may revoke a
proxy by voting at a later date by one of the methods described on the proxy card or by filing a written notice of
revocation with, or by delivering a duly executed proxy bearing a later date to, Christopher C. Colson, the
Corporate Secretary of the Company, at the Company’s main office address located at 6040 Dutchmans Lane,
Louisville, Kentucky 40205 at any time before the Annual Meeting. Shareholders may also revoke proxies by
delivering a duly executed proxy bearing a later date to the inspector of election at the Annual Meeting before
the close of voting or by attending the Annual Meeting and voting in person. You may attend the Annual Meeting
even though you have executed a proxy, but your presence at the Annual Meeting will not automatically revoke
your proxy.
Solicitation of Proxies
The cost of solicitation of proxies being solicited on behalf of the Board will be borne by us (as and if
applicable). In addition to solicitation by mail, proxies may be solicited personally, by telephone or by other
means by our directors, officers or employees, who receive no additional compensation for these solicitation
activities. We will, upon request, reimburse brokerage houses and persons holding common stock in the names
of their nominees for their reasonable out - of - pocket expenses in sending materials to their principals.
Other Voting Considerations
Broker Non - Votes. Under rules of the New York Stock Exchange, matters subject to shareholder vote
are classified as “routine” or “non - routine.” In the case of routine matters, brokers may vote shares held in “street
name” in their discretion if they have not received voting instructions from the beneficial owner. In the case of
non - routine matters, brokers may not vote shares unless they have received voting instructions from the
beneficial owner (“broker non - votes”); therefore, it is important that you complete and return your proxy early
so that your vote may be recorded.
The election of directors (Proposal 1) is a non - routine matter under the applicable rules, so broker
non - votes may occur. However, broker non - votes do not count as shares entitled to vote. Because the election
is decided by a plurality of shares present (in person or by proxy) and entitled to vote at the Annual Meeting, and
because our majority voting policy for directors only considers “FOR” votes and “WITHHOLD” votes, any broker
non - votes will not affect the outcome of Proposal 1.
The ratification of the appointment of the Company’s independent auditors (Proposal 2) is a routine
matter under the applicable rules so broker non - votes should not occur. In addition, because this matter is routine
and brokers may vote as stated above, the number of votes cast, plus the number of abstentions, on Proposal
2 will be used to establish whether a quorum is present.
4
The advisory vote on the approval of executive compensation (Proposal 3), the advisory vote on the
shareholder proposal regarding the issuance of a climate report and to set reduction targets by the Company
(Proposal 7), and any other matters that may properly come before the Annual Meeting are also non - routine
matters under the applicable rules, so broker non - votes may occur. Because broker non - votes do not count as
shares entitled to vote, they do not affect the outcome of the vote on Proposals 3 and 7. With respect to the vote
on amending and restating the Company’s Amended and Restated Certificate of Incorporation to remove
references to Class B shares (Proposal 4), the vote to amend the Company’s Amended and Restated Certificate
of Incorporation to include an exculpation of officers (Proposal 5), the vote to amend the Company’s Bylaws to
reduce the percentage required to request a special meeting of shareholders (Proposal 6), broker non-votes will
have the same effect as a vote “AGAINST” Proposal 4, 5, and/or 6 (as applicable).
Abstentions. Abstentions will be counted for purposes of calculating whether a quorum is present. The
effect of an abstention on each proposal where “ABSTAIN” is a voting choice is discussed above.
Executed but Unmarked Proxies. If no instructions are given, then shares represented by properly
executed but unmarked proxies will be voted in accordance with the recommendation of the Board, or, in the
absence of such a recommendation, in accordance with the judgment of the proxy holders.
5
WHEN AND WHERE IS THE ANNUAL MEETING?
ANNUAL MEETING FAQS
The 2024 Annual Meeting of Shareholders will be held at the Texas Roadhouse Support Center located at 6040
Dutchmans Lane, Louisville, Kentucky 40205 on Thursday, May 16, 2024 at 9:00 a.m. eastern daylight time.
WHO CAN ATTEND THE ANNUAL MEETING?
The Annual Meeting is open to all shareholders. If you wish to attend the Annual Meeting, please contact our
Investor Relations Department at investment@texasroadhouse.com or (502) 426-9984.
WHO IS SOLICITING MY PROXY?
The Company’s Board is soliciting your proxy in connection with the Annual Meeting. Certain of our directors,
officers and employees also may solicit proxies on the Board’s behalf by personal contact, telephone, mail, e-
mail or other means.
WHO IS ENTITLED TO VOTE?
Only shareholders of record at the close of business on March 18, 2024 will be entitled to vote at the Annual
Meeting.
WHAT CONSTITUTES A QUORUM?
The presence in person or by proxy of the holders of a majority of the shares of common stock issued and
outstanding on the record date will constitute a quorum for the transaction of business at the Annual Meeting.
HOW DO I VOTE?
If you are entitled to vote, then you may cast your vote in accordance with any of the following options:
- Online, by going to the website shown on your proxy card;
- By touch-tone telephone from the United States, using the toll-free number on the proxy card;
- By mail by promptly completing, signing and dating your proxy card and returning it in the enclosed
postage-paid envelope; or
-
In person, by revoking your proxy and attending the Annual Meeting.
Telephone and Internet Voting facilities for Shareholders of record will close on 11:59 p.m. eastern
daylight time on May 15, 2024.
CAN I CHANGE MY VOTE OR REVOKE MY PROXY?
Yes, you may revoke your proxy at any time before the closing of the polls at the Annual Meeting by voting at a
later date by one of the methods described on the proxy card or by filing a written notice of revocation with, or
by delivering a duly executed proxy bearing a later date to, Christopher C. Colson, the Chief Legal and
Administrative Officer and Corporate Secretary of the Company, at the Company’s main office address located
at 6040 Dutchmans Lane, Louisville, Kentucky 40205 at any time before the Annual Meeting.
You can also revoke proxies by delivering a duly executed proxy bearing a later date to the inspector of election
at the Annual Meeting before the close of voting or by attending the Annual Meeting and voting in person. You
may attend the Annual Meeting even though you have executed a proxy, but your presence at the Annual
Meeting will not automatically revoke your proxy.
6
WHAT IS A BROKER NON-VOTE?
Under rules of the New York Stock Exchange, matters subject to shareholder vote are classified as “routine” or
“non-routine.” In the case of routine matters, brokers may vote shares held in “street name” in their discretion if
they have not received voting instructions from the beneficial owner.
In the case of non-routine matters, brokers may not vote shares unless they have received voting instructions
from the beneficial owner; therefore, it is important that you complete and return your proxy early so that your
vote may be recorded.
WHAT ITEMS WILL BE VOTED ON AND WHAT ARE THE RECOMMENDATIONS OF THE BOARD?
The Board is requesting that shareholders vote on the following seven proposals at the Annual Meeting and
makes the following recommendations with respect to each proposal:
- Proposal 1: To elect nine directors to the Board of Directors of the Company, each for a term of one
year.
Recommendation: “FOR”
- Proposal 2: To ratify the appointment of KPMG LLP as the Company’s independent auditors for the
Company’s 2024 fiscal year.
Recommendation: “FOR”
- Proposal 3: An advisory vote on executive compensation.
Recommendation: “FOR”
- Proposal 4: To amend the Company’s Amended and Restated Certificate of Incorporation to remove
Class B shares.
Recommendation: “FOR”
- Proposal 5: To amend the Company’s Amended and Restated Certificate of Incorporation to provide
for exculpation of our officers as permitted by Delaware law
Recommendation: “FOR”
- Proposal 6: To amend the Company’s Bylaws to reduce the ownership percentage required for
shareholders to request a special meeting of shareholders from 50% to 25%.
Recommendation: “FOR”
- Proposal 7: An advisory vote on a shareholder proposal regarding the issuance of a climate report and
to set reduction targets by the Company, if properly presented at the Annual Meeting.
Recommendation: “AGAINST”
WHO PAYS FOR THE PROXY SOLICITATION?
The cost of solicitation of proxies being solicited on behalf of the Board will be borne by us. In addition to
solicitation by mail, proxies may be solicited personally, by telephone or by other means by our directors, officers
or employees, who receive no additional compensation for these solicitation activities. We will, upon request,
reimburse brokerage houses and persons holding common stock in the names of their nominees for their
reasonable out-of-pocket expenses in sending materials to their principals.
7
WHO COUNTS THE VOTES?
Computershare, the transfer agent for the Company, will count the votes and will serve as the independent
inspector of election at the Annual Meeting.
WHERE DO I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
Results of the vote held at the Annual Meeting will be included on a Form 8-K which is expected to be filed with
the Securities and Exchange Commission within one business day after the date of the Annual Meeting.
WHO IS “BUBBA” AND WHY IS HE REFERENCED IN THE PROXY?
Bubba was the nickname of W. Kent Taylor, the Company’s late founder, and is the namesake of our Bubba’s
33 restaurant concept. As used in Compensation Discussion and Analysis and in honor of Mr. Taylor, we use
the headings “Bubba Who” (outlining our Named Executive Officers), “Bubba What” (outlining what we do and
do not do from an executive compensation standpoint), and “Bubba How” (outlining our philosophy on executive
compensation).
8
CORPORATE GOVERNANCE AND OUR BOARD
2023 CORPORATE GOVERNANCE OVERVIEW
The following is an executive summary of corporate governance activities for our 2023 fiscal year:
Meetings
We held 27 meetings of the Board and applicable committees comprised of (i) seven meetings of the Board,
(ii) 12 meetings of the audit committee, (iii) four meetings of the compensation committee, and (iv) four
meetings of the nominating and corporate governance committee. Of the seven meetings of the Board, three
were joint meetings among the Board, the compensation committee and/or the nominating and corporate
governance committee.
New Board Member
On June 2, 2023, Wayne L. Jones was appointed to the Board as an independent director. In connection
with the appointment, the Board desired to add a Board member with extensive restaurant industry
experience. Mr. Jones was nominated as a non-employee director because of his chief executive and board
of director experience as well as his extensive knowledge of the restaurant industry where he has over 40
years of experience in the industry.
On February 28, 2024, Jane Grote Abell was appointed to the Board as an independent director. In
connection with the appointment, the Board desired to add a Board member with extensive restaurant
industry experience. Ms. Abell was nominated as a non-employee director because of her executive and
board experience as well as her extensive knowledge of the restaurant industry where she has over 30 years
of experience in the industry.
Board Composition
2023
In 2023, the Board consisted of eight directors – seven of which are independent, as that term is defined in
the listing standards under Nasdaq Marketplace Rule 5605(a)(2) and meet the criteria for independence
under the Sarbanes - Oxley Act of 2002 and the rules adopted by the Securities and Exchange Commission.
The following is a breakdown of committee membership and leadership during the 2023 fiscal year:
1) Chairman of the Board: Gregory N. Moore
2) Audit Committee: Donna E. Epps (Chair); Michael A. Crawford; Wayne L. Jones; Gregory N. Moore;
Curtis A. Warfield; and James R. Zarley. Kathleen M. Widmer also served on the Audit Committee
for a portion of the 2023 fiscal year.
3) Compensation Committee: James R. Zarley (Chair); Michael A. Crawford; Donna E. Epps; Wayne
L. Jones; Gregory N. Moore; Curtis A. Warfield; and Kathleen M. Widmer
4) Nominating and Corporate Governance Committee: Curtis A. Warfield (Chair); Michael A. Crawford;
Donna E. Epps; Wayne L. Jones; Gregory N. Moore; Kathleen M. Widmer; and James R. Zarley
9
2024
The Board currently consists of nine directors – seven of which are independent, as that term is defined in
the listing standards under Nasdaq Marketplace Rule 5605(a)(2) and meet the criteria for independence
under the Sarbanes - Oxley Act of 2002 and the rules adopted by the Securities and Exchange Commission.
The following is a breakdown of current committee membership and leadership:
1) Chairman of the Board: Gregory N. Moore
2) Audit Committee: Donna E. Epps (Chair); Michael A. Crawford; Wayne L. Jones; Gregory N. Moore;
and Curtis A. Warfield
3) Compensation Committee: Michael A. Crawford (Chair); Gregory N. Moore; and Kathleen M. Widmer
4) Nominating and Corporate Governance Committee: Curtis A. Warfield (Chair); Donna E. Epps;
Wayne L. Jones; and Kathleen M. Widmer
Compensation Philosophy
With respect to each non-employee director’s 2023 fiscal year service, each non-employee director received
a fixed cash amount for serving on the Board, together with additional compensation relating to leadership
positions on the Board and/or on any Board committee. Additionally, the Chairman of the Board received an
annual grant of service based restricted stock units equal to $313,000 divided by the closing sales price of
the Company’s common stock on the Nasdaq Global Select Market on the trading day immediately preceding
the date of the grant, with such quotient being rounded up or down to the nearest 100 shares, while each
remaining non-employee director received an annual grant of service based restricted stock units equal to
$223,000 divided by the closing sales price of the Company’s common stock on the Nasdaq Global Select
Market on the trading day immediately preceding the date of the grant, with such quotient being rounded up
or down to the nearest 100 shares.
Similar to our compensation philosophy for our executive officers, we believe that issuing service based
restricted stock units to our non-employee directors aligns their interests with those of our shareholders.
Specifically, since the bulk of each non-employee director’s compensation lies in the value of the service
based restricted stock units granted, the non-employee directors are motivated to continually improve the
Company’s performance in the hope that the performance will be reflected by the stock price on the vesting
date of their service based restricted stock units. Moreover, we believe that the service based restricted stock
unit awards drive director alignment with maximizing shareholder value because the value of the service
based restricted stock units varies in response to investor sentiment regarding overall Company performance
at the time of vesting.
Cap on Total Compensation
The total compensation for any non-employee director may not exceed $500,000, which amount shall be
calculated by adding (i) the total cash compensation to be paid for services rendered by a non-employee
director in any given fiscal year to (ii) the grant date value of any equity granted to such non-employee director
in that fiscal year. This cap on Board total compensation is included in the Company’s 2021 Long-Term
Incentive Plan.
10
Mandatory Retirement Age for Board Service
In November 2019, the Board and the nominating and corporate governance committee determined that it is
advisable and in the best interest of the Company to establish a mandatory retirement age for the non-
employee directors on the Board. In furtherance of the foregoing, in no event shall any non-employee be
elected, re-elected, and/or appointed to the Board if such non-employee is 75 years or older at the time of
such election, re-election, and/or appointment; provided, however, any director who began serving on the
Board prior to 2006 shall be permitted to be re-elected to the Board so long as they are not 80 years or older
at the time of such re-election.
In furtherance of this policy, Mr. Zarley is being nominated for re-election for the last time at the Annual
Meeting. Mr. Zarley is our longest tenured member of the Board, being appointed to the Board in 2004 as a
part of the Company’s initial public offering. He was appointed to the Board because of his chief executive
and information technology experience in developing industries, his technology experience, and his
transactional experience. During his time on the Board, he has continued to serve on each of the three
committees of the Board and has provided both formal and informal mentorship and leadership, most recently
as the chairperson of the compensation committee. The Company thanks Mr. Zarley for his almost 20 years
of service to the Board and the tremendous value that he has brought to the Company during his tenure,
including during key transitional moments in the Company’s history (specifically following the sudden passing
of our founder Kent Taylor).
Shareholder Engagement
During 2023, management of the Company interacted with shareholders owning approximately 65% of the
outstanding shares of the Company as of the end of fiscal year 2023. These interactions ranged from one-
on-one phone/video calls, face-to-face meetings at investor conferences, video calls during virtual non-deal
roadshows, participants listening to virtual fireside chats between members of management and sell-side
analysts, and conversations with stewardship teams regarding corporate governance.
Director Summary Overview
Nominee
Jane Grote Abell
Michael A. Crawford
Donna E. Epps
Wayne L. Jones
Gregory N. Moore
Gerald L. Morgan
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
OUR DIRECTOR NOMINEES
Age
57
56
60
65
74
63
56
62
79
Director
Since
2024
2020
2021
2023
2005
2021
2018
2013
2004
Independent
(Y/N)
Y
Y
Y
Y
Y
N
Y
Y
N
Committee Membership
A
○
●
○
○
N/A
○
C
●
○
N/A
○
N
○
○
N/A
●
○
A (Audit Committee) C (Compensation Committee) N (Nominating and Corporate Governance Committee)
● Chairperson ○ Committee Member
11
Director Summaries
Jane Grote Abell
Director Since: 2024
Age: 57
Board Committees /
Leadership:
None.
Public Boards: None
Favorite Texas
Roadhouse Food Item:
Herb Crusted Chicken,
Baked Potato and Steamed
Vegetables with the World
Famous Texas Roadhouse
Rolls
Business Experience:
Ms. Abell is a founding family member, Executive Chairwoman of the Board of
Directors, and Chief Purpose Officer for Donatos Pizza and Jane’s Dough
Premium Foods, all positions she has held since 2010. At Donatos, Ms. Abell
previously held the title of Chief Operations Officer, Chief People Officer, and
President. She also previously served as Senior Vice President of Business
franchising and
Development
development during the period of time in which Donatos was owned by the
McDonald’s corporation.
for Donatos where she
led growth
for
Reason for Nomination:
Ms. Abell is being nominated as a non-employee director because of her
executive and board experience as well as her extensive knowledge of the
restaurant industry where she has over 30 years of experience in the industry.
As a result of these and other professional experiences, Ms. Abell possesses
particular knowledge and experience that strengthens the Board’s collective
qualifications, skills, and experience.
Michael A. Crawford
Director Since: 2020
Age: 56
Board Committees /
Leadership:
Audit Committee and
Compensation Committee;
Chairperson of
Compensation Committee
Public Boards:
Hall of Fame Resort &
Entertainment Company
(NASDAQ: HOFV)
Favorite Texas
Roadhouse Food Item:
6oz Filet and Grilled Shrimp
Business Experience:
Mr. Crawford is currently serving as Chairman of the Board, President and Chief
Executive Officer for Hall of Fame Resort & Entertainment Company (NASDAQ:
HOFV), including Hall of Fame Village, Hall of Fame Village Media and Gold
Summit Gaming divisions, which he joined in December 2018. Hall of Fame
Resort & Entertainment Company is a sports, entertainment, and media
enterprise headquartered in Canton, Ohio which was established in 2020 as a
result of a merger between HOF Village, LLC, a partnership between the Pro
Football Hall of Fame and Industrial Realty Group (IRG) which began in 2016
and Gordon Pointe (GPAQ) Acquisition Corp. From 2014 to 2018, Mr. Crawford
held numerous executive positions with the Four Seasons Hotels and Resorts
Company, starting as the President of Asia Pacific and subsequently becoming
Global President of Portfolio Management. While at Four Seasons, he was
responsible for business and capital planning, along with the design and
construction of all new Four Seasons Hotels and Resorts worldwide. Prior to
Four Seasons, Mr. Crawford spent almost 25 years at the Walt Disney Company
(NYSE: DIS) where he rose to Senior Vice President and General Manager of
Shanghai Disney Resort and President of Shanghai’s Walt Disney Holdings
Company.
Reason for Nomination:
Mr. Crawford is being nominated as a non-employee director because of his
chief executive experience, his hospitality and international experience, and his
strategic planning experience. As a result of these and other professional
experiences, Mr. Crawford possesses particular knowledge and experience that
strengthens the Board’s collective qualifications, skills, and experience.
12
Donna E. Epps
Director Since: 2021
Age: 60
Board Committees /
Leadership:
Audit Committee and
Nominating & Corporate
Governance Committee;
Chairperson of Audit
Committee
Public Boards:
Saia, Inc. (NASDAQ: SAIA)
Texas Pacific Land
Corporation (NYSE: TPL)
Favorite Texas
Roadhouse Food Item:
Fall-Off-The-Bone Ribs
Business Experience:
Ms. Epps is a certified public accountant licensed in the State of Texas who
previously served in various capacities at Deloitte LLP for over 31 years,
including over 17 years of focus on providing attest services to private and
public companies across industries including distribution, commercial and
industrial products, energy, technology, and telecommunications. Following her
retirement from Deloitte in 2017, Ms. Epps serves as an independent director
for Saia, Inc. (NASDAQ: SAIA), a transportation company that predominantly
transports less-than-truckload shipments across 45 states but also offers a wide
range of other services, including non-asset truckload, expedited transportation
and logistics services across North America, where she is a member of the Audit
Committee and Nominating and Corporate Governance Committee. Ms. Epps
also serves as an independent director for Texas Pacific Land Corporation
(NYSE: TPL), one of the largest landowners in the state of Texas with
approximately 900,000 acres of land located in 19 counties of West Texas,
where she serves as Audit Committee Chairperson and is a member of the
Nominating and Corporate Governance Committee.
Reason for Nomination:
Ms. Epps is being nominated as a non-employee director because of her
extensive audit, risk, financial and accounting experience and her extensive
board experience. As a result of these and other professional experiences,
Ms. Epps possesses particular knowledge and experience that strengthens the
Board’s collective qualifications, skills, and experience.
Wayne L. Jones
Director Since: 2023
Age: 65
Board Committees /
Leadership:
Audit Committee and
Nominating & Corporate
Governance Committee
Business Experience:
Mr. Jones has over 40 years of experience in the restaurant industry, where his
career spans several well-respected brands, including BJ’s Restaurants, P.F.
Chang’s, Anthony’s Coal Fired Pizza and The Cheesecake Factory. Most
recently, Mr. Jones served as the Chief Executive Officer of Anthony’s Coal
Fired Pizza from 2017 until his retirement in 2020. In addition to his executive
level experience, Mr. Jones served on the Board of Directors as an independent
director at Craftworks Restaurants from 2015 to 2018.
Public Boards: None
Reason for Nomination:
Favorite Texas
Roadhouse Food Item:
Ribeye, Loaded Baked
Potato and Rattlesnake
Bites with the World Famous
Texas Roadhouse Rolls
Mr. Jones is being nominated because of his chief executive and board of
director experience as well as his extensive knowledge of the restaurant
industry where he has over 40 years of experience in the industry.
13
Gregory N. Moore
Director Since: 2005
Age: 74
Board Committees /
Leadership:
Audit Committee and
Compensation Committee;
Chairman of the Board
Public Boards:
Newegg Commerce, Inc.
(NASDAQ: NEGG)
Favorite Texas
Roadhouse Food Item:
Texas Size Combo of 6oz
Filet and Fall-Off-The Bone
Ribs
Business Experience:
Mr. Moore served as the Senior Vice President and Controller of Yum!
Brands, Inc. until he retired in 2005. Yum! Brands is the worldwide parent
company of Taco Bell, KFC, and Pizza Hut. Prior to becoming Yum! Brands’
Controller, Mr. Moore was the Vice President and General Auditor of Yum!
Brands. Before that, he was with PepsiCo, Inc. and held the position of Vice
President, Controller of Taco Bell and Controller of PepsiCo Wines & Spirits
International, a division of PepsiCola International. Before joining PepsiCo, he
was an Audit Manager with Arthur Young & Company in its New York, New York
and Stamford, Connecticut offices. Mr. Moore is a certified public accountant in
the States of New York and California. In July 2011, Mr. Moore joined the board
of Newegg Commerce, Inc. (NASDAQ: NEGG), an on-line retailer specializing
in computer and computer-related equipment and serves as the Chair of the
Audit Committee, and serves on both the Nominating and Corporate
Governance and Compensation Committees.
Reason for Nomination:
Mr. Moore is being nominated as a non-employee director because of his
extensive financial, accounting, and international experience as well as his
experience in the restaurant industry. As a result of these and other professional
experiences, Mr. Moore possesses particular knowledge and experience that
strengthens the Board’s collective qualifications, skills, and experience.
Gerald L. Morgan
Director Since: 2021
Age: 63
Board Committees /
Leadership:
Company’s Chief Executive
Officer
Public Boards: None
Favorite Texas
Roadhouse Food Item:
Dickie V Pizza from Bubba’s
33
Business Experience:
Mr. Morgan is a 27-year veteran of Texas Roadhouse and has nearly 40 years
of total foodservice experience, including with Bennigan’s and Burger King. His
career with Texas Roadhouse began in 1997 as Managing Partner in Grand
Prairie, Texas, which was store number 26 and the first in Texas. Mr. Morgan
was named Managing Partner of the Year in 2001, which is the Company’s
highest recognition. Mr. Morgan was promoted to Market Partner in 2001, where
he oversaw and grew operations in Texas and Oklahoma. In 2014, Mr. Morgan
was awarded the Texas Roadhouse Legends Award at the Company’s
Managing Partner Conference. The following year, he was promoted to
Regional Market Partner. Mr. Morgan was named Chief Executive Officer in
2021. Mr. Morgan also previously served as President of the Company from
December 2020 through January 2023.
Reason for Nomination:
Mr. Morgan is being nominated as an executive director because of his role as
Chief Executive Officer of the Company, his knowledge of the restaurant
industry and his in-depth knowledge of the Company. As a result of these and
other professional experiences, Mr. Morgan possesses particular knowledge
and experience that strengthens the Board’s collective qualifications, skills, and
experience.
14
Curtis A. Warfield
Director Since: 2018
Age: 56
Board Committees /
Leadership:
Audit Committee and
Nominating & Corporate
Governance Committee;
Chairperson of Nominating &
Corporate Governance
Committee
Public Boards:
Talkspace, Inc.
(NASDAQ: TALK)
Favorite Texas Roadhouse
Food Item:
Beef Tips, Mashed Potatoes
and Gravy with the World
Famous Texas Roadhouse
Rolls
Business Experience:
Mr. Warfield is a certified public accountant licensed in the Commonwealth of
Kentucky and is currently the President and Chief Executive Officer of Windham
Advisors LLC, a private equity and strategic advisory firm that offers innovative
business solutions for companies in logistics, healthcare, and real-estate
industries. He served as part of the senior leadership team of Anthem, Inc.
(NYSE: ANTM), one of the nation’s largest health insurers with over $100 billion
in revenues from 2017 to 2019. Previously he served in a variety of roles from
1997 to 2016 at HCA, the largest healthcare provider in the country. He began
as the Chief Financial Officer of the Columbia Healthcare Network with a
majority of his tenure serving as the Chief Executive Officer of NPAS, a
healthcare services company. In 2021, Mr. Warfield joined the board of
Talkspace, Inc. (NASDAQ: TALK), a digital company which offers mental health
treatment
of
OneOncology, before the sale to Amerisource Bergen (NYSE:ABC) , a
company that invests in and collaborates with community oncology practices
and served as Chair of the Audit Committee.
services. Mr. Warfield also served
board
the
on
Reason for Nomination:
Mr. Warfield is being nominated as a non-employee director because of his
extensive financial and accounting experience, his executive management
experience, and his information technology experience. As a result of these and
other professional experiences, Mr. Warfield possesses particular knowledge
and experience that strengthens the Board’s collective qualifications, skills, and
experience.
15
Kathleen M. Widmer
Director Since: 2013
Age: 62
Board Committees /
Leadership:
Compensation Committee,
and Nominating & Corporate
Governance Committee
Public Boards: None
Favorite Texas
Roadhouse Food Item:
All American Burger
Business Experience:
through well - known and
Ms. Widmer served as the Group President of North America and Latin America
for Kenvue (NYSE: KVUE), a position she held from May 2023 through her
retirement in December 2023. Previously, Ms. Widmer served as the Company
Group Chairman for Consumer North America and Latin America with
Johnson & Johnson Consumer Health (NYSE: JNJ), a position she held from
December 2018 through May 2023. Prior to that position, she served as the
President of the Johnson & Johnson Consumer OTC Division, which provides
trusted over-the-counter
healthcare solutions
medicines and products, a position she held from August 2015. She was
previously with Johnson & Johnson for 21 years, until 2009, where she held
numerous positions, including serving as Vice President, Marketing, McNeil
Consumer Healthcare. Prior to re - joining Johnson & Johnson, she served as
Executive Vice President and Chief Marketing Officer at Elizabeth Arden, Inc.
(NASDAQ: RDEN), from 2009 to 2015, and was responsible for the global
growth strategy and marketing execution of the Elizabeth Arden Brand. In 2017,
she was appointed to the board of directors for the Wounded Warrior Project, a
board position in which she served until 2023. She is a graduate of the U.S.
Military Academy in West Point, New York, and served for five years as a U.S.
Army officer.
Reason for Nomination:
Ms. Widmer is being nominated as a non-employee director because of her
executive management experience, her extensive marketing experience in the
retail sector, and her knowledge of the global retail industry. As a result of these
and other professional experiences, Ms. Widmer possesses particular
knowledge and experience
the Board’s collective
qualifications, skills, and experience.
that strengthens
James R. Zarley
Director Since: 2004
Age: 79
Board Committees /
Leadership:
None.
Public Boards:
None.
Favorite Texas
Roadhouse Food Item:
6oz Filet
Business Experience:
Mr. Zarley served as Chairman, Chief Executive Officer and Chairman of the
Board of Conversant, a single - source provider of media, technology and
services across major interactive marketing channels which previously operated
under the name ValueClick, Inc. (NASDAQ: CNVF), and was a member of
Conversant’s board of directors from 1999 until his retirement in 2014.
Mr. Zarley shaped the company into a global leader in online marketing
solutions. Prior to joining Conversant, Mr. Zarley was Chief Operating Officer of
Hiway Technologies, where he was a leading member of the management team
that closed the merger with Verio in 1999. Prior to that, Mr. Zarley was Chairman
and Chief Executive Officer of Best Internet until it merged with Hiway
Technologies in 1998. Mr. Zarley also founded and later sold Quantech
Information Services, now an ADP company. In addition, he spent 19 years at
RCA in various senior management roles. Currently, he serves on the board of
directors of multiple private companies.
Reason for Nomination:
Mr. Zarley is being nominated as a non-employee director because of his chief
executive and information technology experience in developing industries, his
technology experience, and his transactional experience. As a result of these
and other professional experiences, Mr. Zarley possesses particular knowledge
and experience that strengthens the Board’s collective qualifications, skills, and
experience.
16
Meetings of the Board
The Board met on seven occasions and its standing committees (audit committee, compensation
committee, and nominating and corporate governance committee) met on 20 occasions during our fiscal year
ended December 26, 2023, which consistent of (i) 12 meetings of the audit committee, (ii) four meetings of the
compensation committee, and (iii) four meetings of the nominating and corporate governance committee. Of the
seven meetings of the Board, three were joint meetings among the Board, the compensation committee and/or
the nominating and corporate governance committee. Each incumbent director attended at least 75% of the
aggregate number of meetings of the Board and its committees on which such director served during his or her
period of service in fiscal 2023. In addition, the Company expects all members of the Board to attend the Annual
Meeting. All incumbent directors attended the 2023 annual meeting. Four regular Board meetings are currently
scheduled for the 2024 fiscal year. Executive sessions of non - employee directors, without management directors
or employees present, are typically scheduled in conjunction with each regularly scheduled Board meeting. The
role of each standing committee is more fully described below.
Leadership Structure of the Board and Role of the Board in Strategy and Risk Oversight
Leadership Structure. The Board consists of seven independent directors, one non-independent non-
employee director and one executive director. Following the passing of W. Kent Taylor, the Company’s founder
and then Chairman of the Board and Chief Executive Officer of the Company, the Board named Gregory N.
Moore as Chairman of the Board on March 19, 2021. Mr. Moore joined the Board in 2005 following the
Company’s initial public offering in 2004. Until his appointment as Chairman of the Board, Mr. Moore had
previously served as the Board’s Lead Independent director since the creation of that position in 2012. The
responsibility and authority of the Lead Independent director are delineated in our Corporate Governance
Guidelines, which can be found on the Company’s website at www.texasroadhouse.com. The Board determined
that a separation of the duties and responsibilities of the Chairman of the Board from those of the Chief Executive
Officer was appropriate during the transition following the death of the Company’s founder. As more particularly
described below, Mr. Morgan, the Company’s Chief Executive Officer, was appointed to the Board on June 15,
2021.
Role of the Board and Management. As more specifically described in our Corporate Governance
Guidelines, the Company’s business is conducted by the officers and employees under the direction of the
Chairman of the Company, and if there is no Chairman, then the Chief Executive Officer of the Company, and
under the oversight of the Board. In connection with the same, the Board’s role is to enhance the long-term
value of the Company for its shareholders. The Board is elected annually by the Company’s shareholders to
oversee management and the execution of the Company’s strategy, and to ensure that the long-term interests
of the shareholders are being served. In order to fulfill these obligations, the Board is responsible for establishing
broad corporate policies, setting and overseeing the Company’s strategic direction and overseeing the
management of the Company.
Strategic Planning and Strategic Initiatives. In addition to and as part of the broad responsibilities
described in the immediately preceding paragraph, the Board plays an instrumental oversight role in the strategic
planning and initiatives of the Company to ensure that the appropriate processes, systems, and organizational
infrastructure is in place to support and align all management teams and functions toward the execution of the
Company’s mission, vision and purpose. The Board’s oversight role includes succession and organizational
planning, human capital management, governance, corporate policy and process development, enterprise risk
management, business planning and development, and capital structure and allocation.
As a part of this role, the Board reviews the Company’s strategy with management to ensure that the
Company and the Board are aligned on the long-term goals and strategic initiatives of the Company. At every
quarterly Board meeting, the Board and management conduct a strategic overview of one of the Company’s
main restaurant brands (including the international business) and is continually updated throughout the year on
the performance of each brand or business unit. Additionally, the Board conducts periodic reviews of the manner
in which the Company is allocating its capital to ensure that the Board and the management of the Company are
in agreement on how the Company is managing its asset portfolio. Finally, the Board provides direct oversight
over certain other strategic initiatives or transactions implemented by the Company, including new store
17
development, franchise acquisitions and development, international development, retail or other business
development initiatives, and the Company’s share repurchase activities and dividend program (as applicable).
The Board executes its strategic oversight responsibility directly and through its committees as more particularly
described below.
Risk Oversight. The Board is also responsible for overseeing the Company’s risk management strategy,
including the Company’s implementation of appropriate processes to administer day - to - day risk management.
The Board executes its oversight responsibility directly and through its committees and is informed about risk
management matters as part of its role in its general oversight and approval of corporate matters. The Board
provides the Company’s management with clear guidance on the risks it believes face the Company, such as
the matters disclosed as risk factors in the Company’s Annual Report on Form 10 - K. Additionally, the Board has
delegated certain risk management responsibilities to its audit committee and compensation committee.
Pursuant to the audit committee’s charter, the Board has authorized the audit committee to oversee the
Company’s risk assessment and risk management practices, and disclosures, including, without limitation, the
Company’s financial strategies, insurance plans, cyber risk, business continuity, and corporate sustainability. As
a part of its oversight responsibilities and as more specifically discussed below, the audit committee evaluates
the overall enterprise risk of the entire Company, as well as regularly and comprehensively reviews specific risk
matters which have been identified by management. This includes a rotational review of the risks relating to
specific departments within the Company. The Company’s internal auditors regularly report directly to the audit
committee on the results of internal audits, the scope and frequency of which are based on comprehensive risk
assessments which have been approved by the audit committee.
ILLUSTRATIVE DEPICTION OF ENTERPRISE RISK MANAGEMENT PROGRAM
AUDIT COMMITTEE
ERM TEAM
EXECUTIVE RISK
COMMITTEE
SUBJECT MATTER
RISK COMMITTEES
As a part of our enterprise risk management process and under the oversight of the audit committee,
the Company has formed a series of subject matter risk committees that are composed of cross-functional
leaders within the Company that specialize in specific areas of risk previously identified by the Company, which
regularly meet and report their activities to the enterprise risk management (“ERM”) team. These subject matter
risk committees focus on specific risks relating to business continuity / crisis management, food safety,
responsible alcohol service, employment compliance, information governance (including data privacy
compliance), vendor management, employee and guest safety, Americans with Disabilities Act (ADA) and
corporate sustainability. The ERM team, consisting of our Chief Legal and Administrative Officer, Vice President
of Finance, Associate General Counsel – Brand Protection, Vice President of Legendary People, Director of
18
Risk, Director of Internal Audit, and Program Director of Business Continuity and Data Privacy, meets regularly
to identify emerging risk areas and key risk areas for the Company, and serves as a liaison between the subject
matter risk committees and the executive risk committee described below. Additionally, the ERM team conducts
a periodic review of a risk register, including an in-depth focus on high priority risks, as well as evaluates the
composition of existing subject matter risk committees and/or the potential need for the creation of new subject
matter risk committees based on its review of the risk register and conducts a gap analysis with respect to the
key risks identified on the Company’s risk register to the Company’s applicable lines of available insurance
coverage. The risk register is reviewed with the audit committee and the executive risk committee. Finally, the
Company has an executive risk committee consisting of the Named Executive Officers and the Vice Presidents
of Operation for each of the Company’s three main concepts which meet throughout the year to determine risk
priorities and make decisions on key areas of risk.
Additionally, as indicated above, the ERM team regularly updates the audit committee on the results of
its risk management activities at least twice per year. Moreover, specific subject matter risk committees
periodically report to the audit committee the risk-based initiatives being performed by the applicable risk
committee. The audit committee is routinely advised of strategic, operational, financial, legal, data privacy,
corporate sustainability, responsible alcohol service, and cybersecurity risks, and the audit committee reviews
and is informed of specific activities to manage these risks, such as policies and procedures, insurance plans,
indemnification obligations, and internal controls (as and if applicable).
Pursuant to the compensation committee’s charter, the Board has authorized the compensation
committee to oversee the compensation programs for the Company’s executive officers and non-employee
directors. The compensation committee, in fulfilling its oversight responsibilities, designs the compensation
packages applicable to the Company’s executive officers and Board members. The compensation committee
also periodically consults with management on the payments of bonuses and grants of stock awards to key
employees.
The audit committee and the compensation committee jointly perform an annual risk assessment of our
compensation programs for all employees to determine whether these programs encourage unnecessary or
excessive risk taking. In conducting this review, each of our compensation programs is evaluated on a number
of criteria aimed at identifying any incentive programs that deviate from our risk management objectives. Based
on this review in 2023, both the audit committee and the compensation committee concluded that we have the
right combination of rewards and incentives to drive company performance, without encouraging unnecessary
or excessive risk taking by our employees. In connection with the foregoing, the Company has not established
a system of incentives that is reasonably likely to lead to excessive or inappropriate risk taking by employees or
create a risk reasonably likely to have a material adverse effect on the Company. Specifically, the audit and
compensation committees identified the following components of our compensation programs that mitigate the
likelihood of excessive risk taking to meet performance targets: equity incentive compensation in the form of
restricted stock units; long term contracts and a financial buy - in requirement for restaurant management; a
guaranteed base salary within our support center management personnel; minimums and maximums on profit
sharing compensation within our support center management personnel; robust internal controls; operational
focus on top line sales growth; and, a business model which focuses on a strong balance sheet, relatively low
debt, prudent growth, and sustainable long-term profitability.
The Board’s oversight roles, including the roles of the audit committee and the compensation committee,
allow the Board to effectively administer risk management policies while also effectively and efficiently
addressing Company objectives. The Board expects to continue to involve Company management in its
deliberations and decision-making in order to administer risk management policies effectively.
Cybersecurity. In the course of our operations, the Company receives and maintains sensitive
information from our guests, employees, partners and business operations. To address cybersecurity threats to
this information, the Company has used a risk-based approach to create and implement a detailed set of
information security policies and procedures that are based on frameworks established by the National Institute
of Standards and Technology. The Company’s Head of Information Security leads the Company’s cybersecurity
efforts under the direct oversight of our Chief Technology Officer. Together, these individuals have over 50 years
of experience involving information technology, including security, auditing, compliance, systems and
19
programming. Additionally, the Company engages in the use of external cybersecurity experts for training,
contingency planning, consultation and process documentation.
The Company has implemented detective and preventative controls designed to ensure the appropriate
level of protection for the confidentiality, integrity and availability of data stored on or transferred through our
information technology resources. Additionally, we have a risk assessment process to identify risks associated
with our use of third-party service providers and have implemented specific processes and controls designed to
mitigate those identified risks. Both internal and third-party audits are performed routinely to verify that these
controls are effective. Additionally, the Company has implemented trainings designed to provide best practices
for protecting our network and systems, and also routinely leads exercises for employees to reinforce the risk
and proper handling of targeted emails. The Company’s Head of Information Security is responsible for
developing and implementing these controls and training exercises with support from our information technology
department.
The Company’s enterprise risk management program has established an internal risk committee to
evaluate information governance risks. This committee comprises members of management of the Company’s
information technology, human resources, marketing, accounting, risk, procurement, training, finance and legal
functions, and is focused on performing risk assessments to identify areas of concern and implement appropriate
changes to enhance its cybersecurity and privacy policies and procedures. The internal risk committee is
informed of the Company’s risk prevention and mitigation efforts on at least a quarterly basis by the Head of
Information Security. The committee is also briefed on detection and remediation of cybersecurity incidents in a
timely manner following the detection of any potential events.
The Company has a crisis response team comprising senior members of various corporate functions to
oversee the response to various crises including potential crises arising from cybersecurity incidents that may
impact the Company and/or its vendor partners. This team conducts regular tabletop exercises to simulate
responses to cybersecurity incidents. To the extent there is a cybersecurity incident impacting the Company
and/or a vendor partner, the crisis response team’s process would be to ensure that our Head of Information
Security and Chief Technology Officer are informed immediately and that the potential impact of the incident and
remedial measures arising from the incident are communicated to the executive officers of the Company.
The Board has authorized the audit committee to oversee the Company’s risk assessment and risk
management practices and strategies. This delegation includes maintaining responsibility for overseeing the
Company’s enterprise risk management program. As a part of this oversight role, the audit committee receives
regular updates from management on cybersecurity and privacy risks impacting the Company, which includes
benchmarking these risks versus the industry. Our Board members also engage in ad hoc conversations with
management on cybersecurity-related news events, receive training specific to cybersecurity risks and threats
and regularly discuss any updates to our cybersecurity risk management and strategy programs.
Corporate Sustainability. The Board and the Company take great pride in our corporate sustainability
program and our appreciation for, and commitment to, our employees and for the communities in which we
serve. Our commitment is evident from our passion and history of dedication to corporate citizenship, diversity,
and the manner in which we often consider sustainability as part of our strategy, operating model and overall
decision-making process. This commitment also includes the continued execution of our existing corporate
sustainability activities, as well as the identification of future opportunities. We actively pursue opportunities and
partnerships that help conserve resources, reduce waste, and have a positive impact on our communities, as
well as partner with other organizations and source products from suppliers who share our commitment to
corporate sustainability. As a result, the Board reviews the Company’s corporate sustainability initiatives as a
part of their oversight role of the Company’s business strategy and risk management. In particular, the Board
receives periodic updates, at least annually, of our corporate sustainability initiatives from management. The
Company also includes an update on some of these initiatives in the Company’s Annual Report.
Additionally and as described above, risks relating to corporate sustainability are managed by the
Company as a part of the Company’s enterprise management program and under the oversight of the audit
committee. In connection with the same, the Company has established an internal subject matter risk committee
to evaluate environmental, social and governance matters. This committee is comprised of members of
20
management from the Company’s legal, human resources, communications, procurement, investor relations,
and financial reporting functions. At least annually, the corporate sustainability risk committee reports to the
audit committee of the risk-based initiatives being performed by the committee.
In 2017, we released our initial corporate sustainability report which outlined the four core pillars of our
corporate sustainability efforts: Food, Community, Employees, and Conservation. Our goal is to update our
corporate sustainability report annually. The current report is available on the Company’s website at
www.texasroadhouse.com. Unless specifically referenced in this proxy statement, the content posted on, or
accessible through, our website is not incorporated by reference into this proxy statement or any of our filings
with the Securities and Exchange Commission (the “SEC”) and may be revised by us (in whole or in part) at any
time and from time to time.
Committees of the Board
The Board has three standing committees:
(i)
the audit committee;
(ii)
the compensation committee; and
(iii)
the nominating and corporate governance committee.
The Board has adopted a written charter for each of these committees, which sets out the functions and
responsibilities of each committee. The charters of these committees are available in their entirety on our website
at www.texasroadhouse.com. Please note, however, that the information contained on the website is not
incorporated by reference in, nor considered to be a part of, this proxy statement.
Audit Committee. As described in its charter, the primary purpose of the audit committee is to assist the
Board in fulfilling its oversight responsibility relating to:
(i)
(ii)
the integrity of the Company’s consolidated financial statements;
the Company’s risk assessment and risk management practices and strategies;
(iii)
the Company’s compliance with legal and regulatory requirements;
(iv)
the independence and performance of the Company’s internal and external auditors; and
(v)
the Company’s internal controls and financial reporting practices.
The audit committee is also directly responsible for the following: (a) pre-approves all audit and permitted
non - audit related services provided by our independent auditors (which can be found on the Company’s website
at www.texasroadhouse.com), (b) the appointment, compensation, retention, and oversight of the Company’s
independent auditors, and (c) periodically reviews the Company’s independent auditors. In connection with the
audit committee’s appointment of the Company’s independent auditors, the audit committee evaluates the
service level of the incumbent independent auditor on an annual basis, which includes criteria such as prior year
quality of service, industry and technical expertise, independence, resource availability, and reasonableness and
competitiveness of fees, as well as solicits the input of key management employees during its evaluation.
The audit committee reviews all of the Company’s earning press releases, Quarterly and Annual Reports
on Form 10 - Q and Form 10 - K, respectively, prior to filing with the SEC, and such other applicable financial
disclosure documents (as and if applicable). The audit committee is also responsible for producing an annual
report on its activities for inclusion in this proxy statement. The Board evaluated the credentials of and designated
Ms. Epps and Messrs. Moore and Warfield as audit committee financial experts. The audit committee met 12
times during fiscal year 2023, which were comprised of six regular meetings of the audit committee and six
meetings solely related to the audit committee’s review of the Company’s quarterly earnings release and filings
21
with the SEC. During the 2023 fiscal year, the audit committee was comprised of Ms. Epps and
Messrs. Crawford, Jones, Moore, Warfield, and Zarley. Ms. Widmer also served on the audit committee for a
portion of the 2023 fiscal year until she stepped down from the committee in May 2023. During the 2024 fiscal
year, the audit committee is comprised of Ms. Epps and Messrs. Crawford, Jones, Moore, and Warfield.
Ms. Epps currently serves as the chairperson of the audit committee and was the chairperson of the audit
committee during the 2023 fiscal year. All of the current members of the audit committee are “independent,”
as that term is defined in the listing standards under Nasdaq Marketplace Rule 5605(a)(2) and meet the criteria
for independence under the Sarbanes - Oxley Act of 2002 and the rules adopted by the SEC, and all members
of the audit committee during the 2023 fiscal year were “independent” under such applicable rules.
Compensation Committee. As described in its charter, the compensation committee:
(i)
assists the Board in fulfilling its responsibilities relating to the design, administration and oversight
of employee compensation programs and benefit plans of the Company’s executive officers;
(ii)
discharges the Board’s duties relating to the compensation of the Company’s executive officers
and non-employee directors; and
(iii)
reviews the performance of the Company’s executive officers.
The compensation committee is also responsible for reviewing and discussing with management the
“Compensation Discussion and Analysis” in this proxy statement and recommending its inclusion in this proxy
statement to the Board, as well as performing the other duties and responsibilities described in its charter. The
compensation committee met four times during fiscal year 2023. During the 2023 fiscal year, the compensation
committee was comprised of Mss. Epps and Widmer and Messrs. Crawford, Jones, Moore, Warfield, and Zarley.
During the 2024 fiscal year, the compensation committee is comprised of Messrs. Crawford and Moore, and
Ms. Widmer. Mr. Crawford currently serves as the chairperson of the compensation committee, but Mr. Zarley
served as the chairperson of the compensation committee during the fiscal year 2023. All of the current members
of the compensation committee are “independent” under all applicable rules, including the listing standards
under Nasdaq Marketplace Rule 5605(a)(2) and the requirements of the SEC, and all members of the
compensation committee during the 2023 fiscal year were “independent” under such applicable rules.
Nominating and Corporate Governance Committee. As described in its charter, the nominating and
corporate governance committee assists the Board in:
(i)
identifying potential candidates for consideration in the event of vacancy on the Board and/or the
Board determines that a new director is necessary and screen individuals qualified to become members of the
Board consistent with the nominating and corporate governance committee’s screening guidelines and criteria;
(ii)
if a vacancy on the Board occurs, making recommendations to the Board regarding the selection
and approval of the candidate to fill such vacancy either by election by the Company’s shareholders or
appointment by the Board;
(iii)
reviewing the qualifications and independence of, approving the nominations of, and
recommending to the Board those persons to be nominated for membership on the Board and presented for
shareholder approval at the annual meeting;
(iv)
developing and recommending to the Board a set of corporate governance principles; and
(v)
periodically reporting to the Board the status of succession planning for senior management,
including guidance regarding succession in the event of an emergency or the retirement of the executive officers
and the identification and evaluation of potential successors to the executive officers and other members of
senior management.
Additionally, the nominating and corporate governance committee annually conducts on the Board’s
behalf a confidential self-assessment. As a part of the annual self-assessment, each director provides, without
22
limitation, an assessment on the effectiveness and functionality of the Board. Each director completes an
assessment form and sends it to the chairperson of the nominating and corporate governance committee, who
compiles the results and presents them to the Board. In connection with such self-assessment process and the
preparation of the Company’s D&O Questionnaires, the nominating and corporate governance committee,
together with the Chairman of the Board, evaluate each director’s upcoming professional responsibilities to
determine the committees on which such non-employee directors will serve and to evaluate each director’s ability
to perform its duties as set forth in the Company’s corporate governance guidelines.
The nominating and corporate governance committee routinely evaluates the size and composition of
the Board and the variety of professional expertise represented by the Board members in relation to the
Company’s business. To assist in this process, the nominating and corporate governance committee has
identified certain interpersonal skills and professional skills desirable for some and/or all of the directors on the
Board. The interpersonal skills are personal attributes that each director should possess and include ethics and
integrity, leadership skills, negotiation skills, and crisis management skills. The professional skills are an
assessment of governance and industry-based skill areas which should be held collectively by the Board but not
necessarily by each director and contain skills relating to (i) financial, risk, and compliance skills, (ii) governance
and management skills, and (iii) sector and industry specific skills. As a part of its review of those persons to be
nominated for membership on the Board at the Annual Meeting, the nominating and corporate governance
committee takes a holistic view of the Board to strive to have a diverse Board in terms of core skills, industry
experience, tenure and other diversity characteristics.
The nominating and corporate governance committee met four times during fiscal year 2023. During
the 2023 fiscal year, the nominating and corporate governance committee was comprised of Mss. Epps
and Widmer and Messrs. Crawford, Jones, Moore, Warfield, and Zarley. During the 2024 fiscal year, the
nominating and corporate governance committee is comprised of Mss. Epps and Widmer and Messrs. Jones
and Warfield. Mr. Warfield currently serves as the chairperson of the nominating and corporate governance
committee and was the chairperson of the nominating and corporate governance committee during the 2023
fiscal year. All of the current members of the nominating and corporate governance committee are
“independent” under all applicable rules, including the listing standards under Nasdaq Marketplace
Rule 5605(a)(2) and the requirements of the SEC, and all members of the nominating and corporate governance
committee during the 2023 fiscal year were “independent” under such applicable rules.
Policy Regarding Consideration of Candidates for Director
Shareholder recommendations for Board membership should include, at a minimum, the name of the
candidate, age, contact information, present principal occupation or employment, qualifications and skills,
background, last five years’ employment and business experience, a description of current or previous service
as director of any corporation or organization, other relevant biographical information, and the nominee’s consent
to service on the Board. Under the Company’s bylaws, in order for a shareholder nominee to be eligible for
election or reelection as a director of the Company, such shareholder nominee will be required to (i) complete
and deliver a detailed questionnaire in the form that current non-employee directors and executive officers of the
Company complete, and (ii) complete and deliver a signed written representation and agreement in the form that
current non-employee directors and executive officers of the Company have completed providing that such
proposed nominee (A) is not and will not become a party to (a) any transaction, agreement, arrangement or
understanding with, and has not given any commitment or assurance to, any person or entity as to how such
proposed nominee, if elected as a director, will act or vote on any issue or question (a “Voting Commitment”)
that has not been disclosed to the Company or (b) any Voting Commitment that could limit or interfere with such
proposed nominee’s ability to comply, if elected as a director, with such proposed nominee’s fiduciary duties
under applicable law, (B) is not, and will not become a party to, any transaction, agreement, arrangement or
understanding with any person or entity other than the Company with respect to any direct or indirect
compensation, payment, reimbursement or indemnification in connection with service or action as a director that
has not been disclosed to the Company, (C) in such proposed nominee’s individual capacity, would be in
compliance, if elected as a director, and will comply with applicable law (including applicable fiduciary duties
under state law), stock exchange listing standards and publicly disclosed corporate governance, ethics, conflict
of interest, confidentiality and stock ownership and trading policies and guidelines of the Company, and any
other Company policies and guidelines applicable to directors, (D) intends to serve a full term if elected as a
23
director and (E) will provide facts, statements and other information in all communications with the Company
and its stockholders that are or will be true and correct in all material respects, and that do not and will not omit
to state a material fact necessary in order to make the statements made, in light of the circumstances under
which they are made, not misleading.
The nominating and corporate governance committee may consider such other factors as it may deem
are in the best interest of the Company and its shareholders. The Board has adopted corporate governance
guidelines which provide that, if and when the Board determines that it is necessary or desirable to add or replace
a director, the nominating and corporate governance committee will seek diverse candidates, taking into account
diversity in all respects (including gender, race, age, board service, background, education, skill set, and financial
acumen, along with knowledge and experience in areas that are relevant to the Company’s business), when
evaluating potential nominees. The manner in which the nominating and corporate governance committee
evaluates a potential nominee will not differ based on whether the nominee is recommended by a shareholder
of the Company.
The Company currently retains a corporate recruiter to assist in identifying candidates for open positions
at the Company. Upon request, this recruiter also assists in identifying and evaluating candidates for director.
While the Company does not routinely pay an additional fee for this service, based on the recent additions to
our Board described below, we have paid certain amounts to a corporate recruiter for their assistance in our
nationwide searches.
On June 2, 2023, the nominating and corporate governance committee recommended to the Board that
the number of directors be increased by one and that Mr. Jones be appointed to the Board as an independent
director; the Board approved this recommendation. In connection with the appointment, the Board desired to
add a Board member with extensive restaurant industry experience. Mr. Jones was referred to the nominating
and corporate governance committee by our corporate recruiter following a nationwide search. Following his
referral, Mr. Jones met extensively with management of the Company and our existing members of the Board
prior to the nominating and corporate governance committee’s decision to recommend his appointment.
Mr. Jones was nominated as a non-employee director because of his chief executive and board of director
experience as well as his extensive knowledge of the restaurant industry where he has over 40 years of
experience in the industry.
Additionally, on February 28, 2024, the nominating and corporate governance committee recommended
to the Board that the number of directors be increased by one and that Ms. Abell be appointed to the Board as
an independent director; the Board approved this recommendation. In connection with the appointment, the
Board desired to add a Board member with extensive restaurant industry experience. Ms. Abell was referred to
the nominating and corporate governance committee by our corporate recruiter following a nationwide search.
Following her initial referral for service as a director, Ms. Abell met extensively with management of the Company
and our existing members of the Board prior to the nominating and corporate governance committee’s decision
to recommend her appointment. Ms. Abell was nominated as a non-employee director because of her executive
and board experience as well as her extensive knowledge of the restaurant industry where she has over 30
years of experience in the industry.
24
As discussed above, the Board seeks diverse candidates, taking into account diversity in all respects
(including gender, race, age, board service, background, education, skill set, and financial acumen, along with
knowledge and experience in areas that are relevant to the Company’s business), when evaluating potential
nominees. The chart below illustrates the composition of our Board nominees by gender, racial diversity, tenure,
and core skills:
BOARD DIVERSITY MATRIX AS OF MARCH 1, 2024
Total Number of Directors
Part 1: Gender Identity
Directors
Part 2: Demographic Background
African American or Black
Alaskan Native or Native American
Asian
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White
Two or More Races or Ethnicities
LGBTQ+
Did Not Disclose Demographics
Female
Male
9
Non-Binary Did Not Disclose
3
—
—
—
—
—
3
—
—
—
1 – 5
Years
6
1
—
—
—
—
5
—
—
—
—
—
—
—
—
—
—
—
—
—
6 – 10
Years
—
—
—
—
—
—
—
—
—
—
>10
Years
Part 3: Tenure
Directors
Restaurant Hospitality/Retail
5
International
1
Finance/Risk
3
Technology
Part 4: Core Skills
4
Directors
Compensation of Directors
6
3
4
2
As further discussed in the “Compensation Discussion and Analysis,” the compensation committee and
management of the Company did not utilize specific market targets when establishing the compensation for the
non-employee directors but utilized Equilar (the Company’s external executive and director compensation
database aggregator) to review non-director compensation of peer companies as a reference to establish non-
director compensation. This review was used in establishing the fixed dollar amount on service based restricted
stock units granted to our non-employee directors more particularly described below. Similar to our
compensation philosophy for our executive officers, we believe that issuing service based restricted stock units
to our non-employee directors aligns their interests with those of our shareholders. Specifically, since the bulk
of each non-employee director’s compensation lies in the value of the service based restricted stock units
granted, the non-employee directors are motivated to continually improve the Company’s performance in the
hope that the performance will be reflected by the stock price on the vesting date of their service based restricted
stock units. Moreover, we believe that the service based restricted stock unit awards drive director alignment
with maximizing shareholder value because the value of the service based restricted stock units varies in
response to investor sentiment regarding overall Company performance at the time of vesting.
25
As described more fully below, the following table summarizes the total compensation earned for fiscal
year 2023 for each of the non - employee directors.
2023 Director Compensation Table
Name
Michael A. Crawford
Donna E. Epps
Wayne L. Jones
Gregory N. Moore
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Fees Earned
or Paid in
Cash ($)
59,000
84,000 (2)
33,597
134,000 (4)
69,000 (5)
53,167 (6)
69,000 (7)
Grant Date
Fair Value of
Stock Awards
($)(1)
224,448
224,448
131,292 (3)
308,616
224,448
224,448
224,448
Total ($)
283,448
308,448
164,889
442,616
293,448
277,615
293,448
(1)
The compensation committee agreed that with respect to (i) the Chairman of the Board’s 2023
fiscal year service, he received an annual grant of service based restricted stock units equal to
$313,000 divided by the closing sales price of the Company’s common stock on the Nasdaq
Global Select Market on the trading day immediately preceding the date of the grant, with such
quotient being rounded up or down to the nearest 100 shares; and (ii) for each remaining non-
employee director’s 2023 fiscal year service, each received an annual grant of service based
restricted stock units equal to $223,000 divided by the closing sales price of the Company’s
common stock on the Nasdaq Global Select Market on the trading day immediately preceding
the date of the grant, with such quotient being rounded up or down to the nearest 100 shares.
Except as more particularly described below in footnote (3) for Mr. Jones, all service based
restricted stock units described in this paragraph were granted on January 8, 2023 and vested
on January 8, 2024 in accordance with the terms of a previously approved restricted stock unit
agreement.
For the service based restricted stock units described in footnote (1) (other than for Mr. Jones),
fair value is equal to the closing price of the Company’s common stock on the trading day
immediately preceding the date of the grant, which was $93.52 for the grants to the non-
employee directors. Using the formula described in the immediately foregoing paragraph of
footnote (1), Mr. Moore, as Chairman of the Board, was granted 3,300 service based restricted
stock units for his 2023 fiscal year service, and each remaining non-employee director (other
than Mr. Jones) was granted 2,400 service based restricted stock units for their respective 2023
fiscal year service. The amounts listed above represent the grant date fair value determined in
accordance with Financial Accounting Standards Board Accounting Standards Codification
Topic 718 (“ASC 718”) of restricted stock units granted under the Company’s 2021 Long-Term
Incentive Plan. Detailed information under ASC 718 is set forth in Note 14 to the consolidated
financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year
ended December 26, 2023. No other equity awards were granted to the non-employee directors
during the period of time covered by this table. The Company cautions that the amounts reported
in the Director Compensation Table for these awards may not represent the amounts that the
non-employee directors will actually realize from the awards. Whether, and to what extent, a
non-employee director realizes value will depend on fluctuation in the Company’s stock price
and the non-employee director’s continued service on the Board.
Additionally, the total compensation for any non-employee director may not exceed $500,000,
which amount shall be calculated by adding (i) the total cash compensation to be paid for
services rendered by a non-employee director in any given fiscal year to (ii) the grant date value
of any equity granted to such non-employee director in that fiscal year. This cap on Board total
compensation is included in the Company’s 2021 Long-Term Incentive Plan.
26
(2)
(3)
(4)
(5)
(6)
(7)
This amount includes the $25,000 annual fee for serving as the chairperson of the audit
committee.
Upon Mr. Jones’s appointment to the Board on June 2, 2023, he was granted 1,200 service
based restricted stock units, which represents the prorated amount of service based restricted
stock units granted to the other non-employee directors on January 8, 2023 as described in
footnote (1) above. The fair value is equal to the closing price of the Company’s common stock
on the trading day immediately preceding the grant, which was $109.41 for the grant to
Mr. Jones. These service based restricted stock units vested on January 8, 2024.
This amount includes the $75,000 annual fee for serving as the Chairman of the Board.
This amount includes the $10,000 annual fee for serving as the chairperson of the nominating
and corporate governance committee.
This amount includes a prorated amount of the annual fee for serving as a member of the audit
committee for the period of time in which Ms. Widmer served on the audit committee during the
2023 fiscal year.
This amount includes the $10,000 annual fee for serving as the chairperson of the compensation
committee.
The compensation committee established that all non-employee directors would receive the following
cash and stock compensation relating to their 2023 fiscal year service:
(i)
(ii)
each non-employee director received a base fee of $35,000;
the Chairman of the Board received a fee of $75,000;
(iii)
the chairperson of the audit committee received a fee of $25,000;
(iv)
the chairperson of the compensation committee received a fee of $10,000;
(v)
the chairperson of the nominating and corporate governance committee received a fee of
$10,000;
(vi)
each member of the audit committee received a fee of $10,000;
(vii)
each member of the compensation committee received a fee of $7,000;
(viii)
each member of the nominating and corporate governance committee received a fee of $7,000;
(ix)
the non-employee directors no longer received a fee for meeting attendance;
(x)
(xi)
the Chairman of the Board received an annual grant of service based restricted stock units equal
to $313,000 divided by the closing sales price of the Company’s common stock on the Nasdaq
Global Select Market on the trading day immediately preceding the date of the grant, with such
quotient being rounded up or down to the nearest 100 shares; and
each remaining non-employee director received an annual grant of service based restricted
stock units equal to $223,000 divided by the closing sales price of the Company’s common stock
on the Nasdaq Global Select Market on the trading day immediately preceding the date of the
grant, with such quotient being rounded up or down to the nearest 100 shares.
27
Additionally, the compensation committee established that all non-employee directors will receive the
following cash and stock compensation relating to their 2024 fiscal year service:
(i)
(ii)
each non-employee director will receive a base fee of $35,000;
the Chairman of the Board will receive a fee of $75,000;
(iii)
the chairperson of the audit committee will receive a fee of $25,000;
(iv)
the chairperson of the compensation committee will receive a fee of $10,000;
(v)
the chairperson of the nominating and corporate governance committee will receive a fee of
$10,000;
(vi)
each member of the audit committee will receive a fee of $10,000;
(vii)
each member of the compensation committee will receive a fee of $7,000;
(viii)
each member of the nominating and corporate governance committee will receive a fee of
$7,000;
(ix)
the non-employee directors will not receive a fee for meeting attendance;
(x)
(xi)
the Chairman of the Board will receive an annual grant of restricted stock units equal to $320,000
divided by the closing sales price on January 7, 2024 on the Nasdaq Global Select Market, with
such quotient being rounded up or down to the nearest 100 shares, which was $118.30. These
restricted stock units were granted on January 8, 2024 and will vest on January 8, 2025. Based
on the foregoing, the Chairman of the Board received 2,700 service based restricted stock units
for his 2024 fiscal year service; and
each remaining non-employee director will receive an annual grant of restricted stock units equal
to $230,000 divided by the closing sales price on January 7, 2024 on the Nasdaq Global Select
Market, with such quotient being rounded up or down to the nearest 100 shares, which was
$118.30. These restricted stock units were granted on January 8, 2024 and will vest on
January 8, 2025. Based on the foregoing, each remaining non-employee director (other than
Ms. Abell) received 1,900 service based restricted stock units for their respective 2024 fiscal
year service.
In connection with Ms. Abell’s appointment to the Board, on February 29, 2024, she was granted
1,300 service based restricted stock units, which represents the prorated amount of service
based restricted stock units granted to the other non-employee directors as described above.
The fair value is equal to the closing price of the Company’s common stock on the trading day
immediately preceding the grant, which was $147.77 for the grant to Ms. Abell. These service
based restricted stock units will vest on January 8, 2025.
Code of Conduct
Company Code of Conduct. The Board has approved and adopted a Code of Conduct that applies to
all directors, officers and employees, including the Company’s principal executive officer and the principal
financial officer. We are committed to Passion, Partnership, Integrity and Fun… All with Purpose! The Code of
Conduct is our guide as we apply these core values in our treatment of our fellow employees and how we run
our business. Our Code of Conduct also encompasses our principles and practices relating to the ethical
conduct of the Company’s business and commitment to complying with all laws affecting the Company’s
business.
28
We take all reported concerns or possible violations of our Code of Conduct seriously and will promptly
and thoroughly investigate each reported concern as confidentially as possible. The Code of Conduct establishes
three separate ways in which any person may submit confidential and anonymous reports of suspected or actual
violations of the Code of Conduct. If an individual files a report, then the concerns will be directed to the
appropriate personnel for investigation. We do not retaliate against any person who raises questions, reports
concerns, or who participates in an investigation related to the Code of Conduct.
The Code of Conduct is available in its entirety on the Company’s website at www.texasroadhouse.com.
The Company will post on its website any amendments to, or waivers from, its Code of Conduct, if any, that
apply to the principal executive officer, the principal financial officer, principal accounting officer or controller, or
persons performing similar functions.
Vendor Expectations. In addition to the Company’s Code of Conduct, the Company has established
vendor expectations setting forth our expectations regarding our relationship with our vendors, including the
manner in which our vendors conduct their business, the manner in which they treat their employees, and our
expectation that our vendors will comply with all applicable laws and regulations relating to their business
operations including those laws prohibiting the use of forced labor or the facilitation of slavery and human
the Company’s website at
trafficking. Our vendor expectations are available
www.texasroadhouse.com.
their entirety on
in
Stock Ownership Guidelines
Our Board has adopted stock ownership guidelines to further align the financial interests of the
Company’s executive officers and non - employee directors with the interests of our shareholders. During 2023,
the guidelines provided that our Chief Executive Officer should own, at a minimum, the lesser of 100,000 shares
or $2,500,000 in then - current market value, our President should own, at a minimum, the lesser of 40,000 shares
or $1,000,000 in then - current market value, and our other executive officers and non - employee directors should
own, at a minimum, the lesser of 10,000 shares or $500,000 in then - current market value. The executive officers
and non-employee directors were expected to achieve the stock ownership levels under these guidelines within
five years of assuming their respective positions and the Company evaluated the compliance with these stock
ownership guidelines at the end of each fiscal year. All executive officers and non - employee directors who have
been in their role for five years were in compliance with these stock ownership guidelines at the end of fiscal
2023.
On February 22, 2024 and following an annual review of our corporate governance practices, the Board
updated the stock ownership guidelines to provide for the following: (A) our Chief Executive Officer should own,
at a minimum, five (5) times the then-current amount of his or her annual base salary, (B) our President should
own, at a minimum, four (4) times the then-current amount of his or her annual base salary, (C) all other Named
Executive Officers should, own, at a minimum, three (3) times the then-current amount of his or her annual base
salary, and (D) each non-employee director should own, at a minimum, the greater of (i) five (5) times the then-
current amount of annual Board cash compensation received by each non-employee director, or (ii) $500,000 in
then - current market value. Similar to the Board’s prior stock ownership guidelines, the executive officers and
non-employee directors are expected to achieve the stock ownership levels under these guidelines within five
years of assuming their respective positions. The Company evaluates the compliance with these stock
ownership guidelines at the end of each fiscal year and it will be calculated based on the Company’s closing
stock price on the last trading day of the applicable fiscal year.
29
Succession Planning
The Board and the Company recognize the importance of continuity of leadership to ensure a smooth
transition for its employees, guests, and shareholders. In furtherance of the foregoing and as described in its
charter, the nominating and corporate governance committee is responsible for periodically reporting to the
Board the status of succession planning for senior management, including guidance regarding succession in the
event of an emergency or retirement and the evaluation of potential successors to the executive officers and
other key members of senior management. As a part of this process, both the Board and the nominating and
corporate governance committee meet with certain members of management to review the top and emerging
talent internally, their level of readiness, and development needs.
Mandatory Retirement Age for Board Service
In November 2019, the Board and the nominating and corporate governance committee determined that
it is advisable and in the best interest of the Company to establish a mandatory retirement age for the non-
employee directors on the Board. In furtherance of the foregoing, in no event shall any non-employee be elected,
re-elected, and/or appointed to the Board if such non-employee is 75 years or older at the time of such election,
re-election, and/or appointment; provided, however, any director who began serving on the Board prior to 2006
shall be permitted to be re-elected to the Board so long as they are not 80 years or older at the time of such re-
election.
In furtherance of this policy, Mr. Zarley is being nominated for re-election for the last time at the Annual
Meeting. Mr. Zarley is our longest tenured member of the Board, being appointed to the Board in 2004 as a part
of the Company’s initial public offering. He was appointed to the Board because of his chief executive and
information technology experience in developing industries, his technology experience, and his transactional
experience. During his time on the Board, he has continued to serve on each of the three committees of the
Board and has provided both formal and informal mentorship and leadership, most recently as the chairperson
of the compensation committee. The Company thanks Mr. Zarley for his almost 20 years of service to the Board
and the tremendous value that he has brought to the Company during his tenure, including during key transitional
moments in the Company’s history (specifically following the sudden passing of our founder Kent Taylor).
Shareholder Engagement
Shareholder engagement is an important component of our overall approach to corporate governance.
It provides us the opportunity to update investors on our business as well as to receive feedback from them. Our
Investor Relations team serves as our primary point of contact with investors, potential investors, and investment
analysts. Additionally, throughout the year, members of our executive team, Board, and restaurant-level
operators may participate in the investor dialogue.
Our interaction with the investment community occurs in a number of ways, including one-on-one and
group phone calls, analyst-sponsored conferences, our Annual Meeting, and our quarterly earnings calls. Topics
discussed vary but typically include corporate strategy, financial results and outlook, new restaurant
development, commodity and wage inflation, capital allocation, and various governance and corporate
sustainability matters. Investor feedback and sentiment is shared with senior management and the Board on a
regular basis.
During 2023, management of the Company interacted with shareholders owning approximately 65% of
the outstanding shares of the Company as of the end of fiscal year 2023. These interactions ranged from one-
on-one phone/video calls, face-to-face meetings at investor conferences, video calls during virtual non-deal
roadshows, participants listening to virtual fireside chats between members of management and sell-side
analysts, and conversations with stewardship teams regarding corporate governance.
30
Board Orientation and Continuing Education
The Board believes that a thorough understanding of the Company’s business is required to enable a
director to make a substantial contribution to the Board. As such, all new directors will participate in an orientation
program within a reasonable period of time following such director’s initial appointment or election to the Board.
The orientation program may consist of meetings with senior management of the Company designed to
familiarize each new director with the Company’s strategic plans, financial planning and key policies and
procedures as well as training within the Company’s restaurant facilities. Additionally, the Company, from time
to time, may provide the Board with internal training programs or presentations from internal or outside third-
party experts on topics that will assist the directors in carrying out their Board responsibilities. Finally, the
directors are encouraged to participate in continuing education and other programs provided by outside sources
and to share any applicable learnings from such programs with the other directors on the Board. As a part of
the Board’s continued education, the directors on the Board annually complete the compliance trainings that are
similar to those provided to certain employees. Further, the Company annually budgets a certain amount of
funding to reimburse directors for related costs to attend such programs.
Director Independence
The Board currently consists of nine directors – seven of whom are independent, as that term is defined
in the listing standards under Nasdaq Marketplace Rule 5605(a)(2) and meet the criteria for independence under
the Sarbanes Oxley Act of 2002 and the rules adopted by the Securities and Exchange Commission. The
nominating and corporate governance committee evaluates the relationships of each director and director
nominee and makes a recommendation to the Board as to whether to make an affirmative determination that
such director or director nominee is independent. In connection with such review, the nominating and corporate
governance committee evaluates the relevant transactions or relationships between each director, or any of his
or her family members, and the Corporation, its senior management and its independent auditors. In connection
with determining the directors to stand for re-election at the Annual Meeting (as more particularly described in
Proposal 1) and upon recommendation of the nominating and corporate governance committee, the Board has
affirmatively determined that Messrs. Moore, Crawford, Jones and Warfield and Mses. Abell, Epps and Widmer
are independent under the applicable criteria for service on the Board and the various Board committees upon
which each serves (as and if applicable). The nominating and corporate governance committee determined that
Mr. Morgan is not independent due to his service as the Company’s principal executive officer and that Mr. Zarley
is not independent due to his interest in a franchisee as described in “Related Party Transactions.”
31
STOCK OWNERSHIP INFORMATION
The following table sets forth as of March 7, 2024 certain information with respect to the beneficial
ownership of the Company’s common stock of (i) each executive officer named in the Summary Compensation
Table (the “Named Executive Officers”), (ii) each non-employee director or nominee for director of the
Company, (iii) all directors and current executive officers as a group, and (iv) each shareholder known by the
Company to be the owner of 5% or more of the Company’s common stock.
STOCK OWNERSHIP INFORMATION
Name
Directors, Nominees and Named Executive Officers:
Jane Grote Abell
Michael A. Crawford
Christopher C. Colson
Travis C. Doster
Donna E. Epps
Keith V. Humpich (2)
S. Chris Jacobsen (3)
Wayne L. Jones
D. Christopher Monroe
Gregory N. Moore
Gerald L. Morgan
Hernan E. Mujica
Tonya R. Robinson (4)
Regina A. Tobin
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Directors and All Executive Officers as a Group (14 Persons)
Other 5% Beneficial Owners**
The Vanguard Group (5)
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
Blackrock, Inc. (6)
55 East 52nd Street
New York, New York 10022
Common Stock (1)
Common
Stock
Ownership Percent
—
8,800
8,500
27,451
4,142
18,840
7,879
1,200
1,216
47,350
92,847
20,842
2,020
15,261
13,397
17,100
67,412
325,518
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
0.5 %
9.6 %
9.1 %
*
**
(1)
Represents beneficial ownership of less than 1.0% of the outstanding shares of class.
This information is based on stock ownership reports on Schedule 13G filed by each of these
shareholders with the SEC as of March 1, 2024.
Based upon information furnished to the Company by the named persons and information
contained in filings with the SEC. Under the rules of the SEC, a person is deemed to beneficially
own shares over which the person has or shares voting or investment power or has the right to
acquire beneficial ownership within 60 days, and such shares are deemed to be outstanding for
the purpose of computing the percentage beneficially owned by such person or group. However,
we do not consider shares of which beneficial ownership can be acquired within 60 days to be
outstanding when we calculate the percentage ownership of any other person. As of March 1,
2024, no director or executive officer has the right to acquire any beneficial ownership within 60
days. “Common Stock Ownership” includes (a) stock held in joint tenancy, (b) stock owned as
tenants in common, (c) stock owned or held by spouse or other members of the reporting
person’s household, and (d) stock in which the reporting person either has or shares voting
32
(2)
(3)
(4)
(5)
(6)
and/or investment power, even though the reporting person disclaims any beneficial interest in
such stock.
Mr. Humpich previously served as interim Chief Financial Officer of the Company from
January 4, 2023 following Tonya R. Robinson’s retirement from the Company as Chief Financial
Officer and continuing until Mr. Monroe’s appointment to Chief Financial Officer effective as of
June 28, 2023. Following Mr. Monroe’s appointment, Mr. Humpich remained as the principal
accounting officer of the Company.
Mr. Jacobsen resigned as Chief Marketing Officer of the Company effective as of August 3,
2023. The stock ownership information listed above was provided to the Company by
Mr. Jacobsen.
Ms. Robinson retired as Chief Financial Officer of the Company effective as of January 4, 2023.
The stock ownership information listed above was provided to the Company by Ms. Robinson.
As reported on the Schedule 13G/A filed by The Vanguard Group with the SEC on February 13,
2024, it has shared voting power with respect to 28,917 shares, sole dispositive power with
respect to 6,330,746 shares, and shared dispositive power with respect to 91,891 shares.
As reported on the Schedule 13G/A filed by Blackrock, Inc. with the SEC on January 24, 2024,
it has sole voting power with respect to 5,923,672 shares and sole dispositive power with respect
to 6,077,916 shares.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons
who beneficially own more than 10% of a registered class of the Company’s equity securities, to file with the
SEC initial reports of stock ownership and reports of changes in stock ownership and to provide the Company
with copies of all such filed forms. Based solely on its review of such copies or written representations from
reporting persons, the Company believes that all reports were filed on a timely basis during the fiscal year ended
December 26, 2023 with the exception of a Form 4 for Mr. Humpich that was filed on January 10, 2024 relating
to the acquisition of 743 service based restricted stock units received by Mr. Humpich on August 3, 2023 relating
to his Q2 2022 service and the acquisition of 653 service based restricted stock units received by Mr. Humpich
on November 2, 2023 relating to his Q3 2022 service.
33
EXECUTIVE COMPENSATION
2023 EXECUTIVE SUMMARY
The following is an executive summary of our compensation program for our 2023 fiscal year:
Compensation Philosophy
We believe that our approach to the compensation program for our Named Executive Officers provides our
Named Executive Officers with a compensation package which promotes the sustained profitability of the
Company and aligns the interests of our Named Executive Officers with those of our shareholders. The
compensation packages also reflect a pragmatic response to external market conditions; that is, total
compensation that is competitive with comparable positions in similar industries, including the casual dining
sector of the restaurant industry, but which is reasonable and in the best interests of our shareholders.
Pay Objectives
Our primary objective in setting and evaluating the compensation for our Named Executive Officers is to
promote the sustained profitability of the Company. Our compensation program is designed to achieve this
objective in the following manner:
o The creation of a more direct relationship between the compensation for our Named Executive
Officers and shareholder value since a significant portion of our Named Executive Officer’s
performance based restricted stock units and cash bonuses are based upon the achievement of
defined performance goals to be established by the compensation committee.
o The attraction and retention of top talent, while also encouraging our Named Executive Officers to
keep their focus on both long - term business development and short - term financial growth.
o The featuring of service based restricted stock unit awards, the value of which is dependent upon
the performance of the Company and the price of our common stock.
o The opportunity by the compensation committee to adjust a significant portion of the compensation
for the Named Executive Officers through the annual grant of service based restricted stock units
and/or performance based restricted stock units to more accurately reflect the overall performance
of the Company.
Key Pay Components
The compensation packages for our Named Executive Officers are divided into the following three key
components:
o Base Salary: Designed to provide a secure base of compensation and serve to motivate and retain
our Named Executive Officers.
o Cash Bonus: Designed to reward our Named Executive Officers for the success of the Company as
measured by growth in the Company’s earnings per diluted share and its overall pre - tax profit, and
for each Named Executive Officer’s individual contribution to that success.
o Restricted Stock Unit Grants: Designed to offer the Named Executive Officers a financial interest in
the long - term success of the Company and align their interests with those of our shareholders.
34
The compensation packages for our Named Executive Officers may include the following types of restricted
stock units:
o Service Based Restricted Stock Units, which grant the Named Executive Officers the conditional right
to receive shares of our common stock that vest after a defined period of service;
o
“Retention” Restricted Stock Units, which vest upon the completion of the term of an individual
Named Executive Officer’s agreement or such longer date as determined by the compensation
committee; and
o Performance Based Restricted Stock Units, which are calculated based on the achievement of
certain Company performance targets established by the compensation committee and vest over a
period of service.
Our Board has adopted stock ownership guidelines to further align the financial interests of the Company’s
executive officers with the interests of our shareholders. The guidelines previously provided that our Chief
Executive Officer should own, at a minimum, the lesser of 100,000 shares or $2,500,000 in then - current
market value, our President should own, at a minimum, the lesser of 40,000 shares or $1,000,000 in
then - current market value, and our other executive officers should own, at a minimum, the lesser of 10,000
shares or $500,000 in then - current market value. On February 22, 2024 and following an annual review of
our corporate governance practices, the Board updated the stock ownership guidelines to provide for the
following: (A) our Chief Executive Officer should own, at a minimum, five (5) times the then-current amount
of his or her annual base salary, (B) our President should own, at a minimum, four (4) times the then-current
amount of his or her annual base salary, (C) all other Named Executive Officers should, own, at a minimum,
three (3) times the then-current amount of his or her annual base salary, and (D) each non-employee director
should own, at a minimum, the greater of (i) five (5) times the then-current amount of annual Board cash
compensation received by each non-employee director, or (ii) $500,000 in then - current market value. The
executive officers are expected to achieve these levels within five years of assuming their respective
positions. The Company evaluates the compliance with these stock ownership guidelines at the end of each
fiscal year and it will be calculated based on the Company’s closing stock price on the last trading day of the applicable
fiscal year. All executive officers who have been in their role for five years are in compliance with these stock
ownership guidelines. We anticipate that any people who are new to their roles within the last five years will,
to the extent they are not currently in compliance, be in compliance with the guidelines within the established
time frame.
Setting Compensation
The compensation program for our Named Executive Officers is determined by the compensation committee.
The compensation committee evaluates the stock compensation for each Named Executive Officer on an
annual basis to determine the right combination of rewards and incentives through the issuance of service
based restricted stock units and/or performance based restricted stock units to drive company performance
without encouraging unnecessary or excessive risk taking by all of the Named Executive Officers as a whole.
Pursuant to its charter, the compensation committee may, in its sole discretion, retain or obtain advice from
a compensation consultant to assist in the establishment of executive compensation for each Named
Executive Officer.
Executive Employment Agreements
As more particularly described below, the Company and certain Named Executive Officers entered into new
Executive Employment Agreements at the beginning of fiscal year 2021. Under the Executive Employment
Agreements, the compensation committee has established the following compensation for our Named
Executive Officers:
o Base Salary: Each Executive Employment Agreement establishes an annual base salary for the term
of the respective Executive Employment Agreements, with base salary increases being left to the
discretion of the compensation committee.
35
o Cash Bonus: Each Executive Employment Agreement provides an annual short-term cash incentive
opportunity with a target bonus based on the achievement of defined goals to be established by the
compensation committee, with increases in the target bonus amount to be made at the discretion of
the compensation committee during the term of the Executive Employment Agreement.
o Restricted Stock Units: Each Executive Employment Agreement provides that the compensation
committee may grant stock awards to the Named Executive Officers during the term of the respective
Executive Employment Agreements, the types and amounts of which are subject to the
compensation committee’s discretion based on their annual review of the performance of the
Company and of the individual Named Executive Officers. While the Company previously granted
retention grants for our Named Executive Officers under prior employment agreements, the
compensation committee did not make any similar retention grants for the Named Executive Officers
under the Executive Employment Agreements. The compensation committee will evaluate whether
or not to award retention grants in the future as a part of its annual evaluation of the compensation
packages for the Named Executive Officers.
Executive Compensation
During 2021 and pursuant to the authority granted under its charter, the compensation committee engaged
FW Cook as an independent compensation consultant to advise the compensation committee on
compensation for the executive officers beginning with the 2022 fiscal year, together with analysis and
services related to such executive compensation. Specifically, the compensation committee asked the
consultant to provide market data, review the design of the executive compensation packages, and provide
guidance on cash and equity compensation for the Company’s executive officers. Based in part on the
recommendation of our third party compensation consultant and the review of the market data provided to
the compensation committee, the total compensation package established for each Named Executive Officer
for their respective 2022 fiscal year service reflected a shift in the compensation breakdown among the base
salary, bonus and equity components to a more weighted emphasis on non-equity compensation as well as
a shift from a fixed number of service based restricted stock units and/or performance based restricted stock
units to a fixed dollar amount with respect to such service based restricted stock units. FW Cook does not
currently provide any other services to the Company, and the compensation committee has determined that
FW Cook has sufficient independence from us and our executive officers to allow FW Cook to offer objective
information and/or advice. The compensation committee utilized this compensation philosophy and structure
when establishing executive compensation for each executive officer’s 2023 fiscal year service and 2024
fiscal year service, respectively.
Clawback Policy
The Company has established a clawback policy whereby the Company shall reasonably promptly recover
the Erroneously Awarded Compensation Received (as hereinafter defined) by an Executive Officer (as
hereinafter defined) in accordance with the applicable rules of The Nasdaq Stock Market and Rule 10D-1
following an Accounting Restatement (as hereinafter defined). In such an event, the compensation committee
has the discretion to determine the appropriate method of recovering such Erroneously Awarded
Compensation Received, including, without limitation, requiring reimbursement of cash incentive-based
compensation, seeking recovery of any gain realized on the vesting of any equity-based awards, offsetting
the recouped amount from any compensation otherwise owed by the Company, and/or cancelling outstanding
vested or unvested equity awards. Notwithstanding the foregoing, the Company shall not be required to take
such actions if the compensation committee determines that recovery would be impracticable and either the
committee has determined that the direct expenses paid to a third party to assist in enforcing the Company’s
clawback policy would exceed the amount to be recovered or recovery would likely cause an otherwise tax-
qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to
meet the requirements of the Internal Revenue Code.
36
2023 Financial Highlights
The following is an executive summary of our financial highlights from the 2023 fiscal year:
Historic Topline Revenue and Store Unit Growth
• Over $4.6 billion in total revenue, an increase of 15.4% over the prior year
• Comparable restaurant sales growth of 10.1% with average weekly sales at $143,837 of which
$18,088 were from to-go sales
• Opened a record 45 new systemwide locations including 30 company restaurants and 15 franchise
restaurants including the first 2 domestic franchise restaurants for Jaggers, our fast-casual concept
Key Growth in Other Financial Metrics
• Diluted Earnings Per Share growth of 14.3%
• Net income growth of 13.0%
•
Income from operations growth of 10.6%
• Store week growth of 5.8%
Acquisition Growth
• Acquired 8 domestic franchise restaurants
Return to Shareholders
• Paid dividends of $147.2 million, or $0.55 per share, an increase of 20% over the prior year
• Repurchased 455,026 outstanding shares of our common stock for $50.0 million
37
Compensation Discussion and Analysis
Bubba Who: Our Executive Officers
GERALD L. MORGAN
CHIEF EXECUTIVE OFFICER
Years with Roadhouse: 27
Age: 63
Restaurant Industry Experience: 38
Mr. Morgan is Chief Executive Officer of the Company, having
been appointed to this position in March 2021. Mr. Morgan
joined the Company in 1997, during which time he has held the
positions of Managing Partner, Market Partner and Regional
Market Partner. Mr. Morgan also previously served as
President from December 2020 until Ms. Tobin’s appointment
to President in January 2023. Mr. Morgan has more than 35
years of restaurant management experience with Texas
Roadhouse, Bennigan’s Restaurants, and Burger King.
REGINA A. TOBIN
PRESIDENT
Years with Roadhouse: 28
Age: 60
Restaurant Industry Experience: 38
Ms. Tobin is President of the Company, having been appointed
to this position in January 2023. Ms. Tobin previously served as
the Company’s Chief Learning and Culture Officer, a position
she held from June 2021 through her appointment to President.
Ms. Tobin joined the Company in 1996, during which time she
has held the positions of Managing Partner, Market Partner,
and Vice President of Training. Ms. Tobin has over 35 years of
restaurant industry experience.
D. CHRISTOPHER MONROE
CHIEF FINANCIAL OFFICER
Years with Roadhouse: 1
Age: 57
Finance Experience: 34
financial officer. Mr. Monroe
Mr. Monroe is Chief Financial Officer of the Company, having
been appointed to this position in June 2023. In this role,
Mr. Monroe is responsible for overseeing the Company’s
accounting, financial reporting, investor relations, tax, treasury,
internal audit, and finance functions, as well as serving as the
joined
Company’s principal
Southwest Airlines in September 1991, where he served in
various positions, including Director of Corporate Finance,
Assistant Treasurer and Vice President Treasurer, until his
promotion in 2017 to Senior Vice President of Finance and
Treasurer. As Senior Vice President of Finance and Treasurer,
he oversaw the overall capital strategy, planning and structure
for Southwest Airlines with
for corporate
insurance and risk management, as well as supply chain
management and corporate sustainability. Mr. Monroe has over
34 years of finance experience.
responsibility
38
CHRISTOPHER C. COLSON
CHIEF LEGAL AND ADMINISTRATIVE OFFICER;
CORPORATE SECRETARY
Years with Roadhouse: 18
Age: 47
Restaurant Industry Experience: 22
Mr. Colson is Chief Legal and Administrative Officer and
Corporate Secretary of the Company, having been appointed
to Chief Legal and Administrative Officer in January 2023 and
Corporate Secretary in August 2019. Mr. Colson previously
served as the Company’s General Counsel, a position he held
from March 2021 through his appointment to Chief Legal and
Administrative Officer. Mr. Colson joined the Company in 2005,
during which time he has held the positions of Senior Counsel,
Associate General Counsel and Executive Director of the
Global Development Group. Mr. Colson has over 20 years of
restaurant industry experience with Texas Roadhouse, Frost
Brown Todd (serving as outside counsel to the Company),
YUM! Brands and as assurance staff at KPMG.
HERNAN E. MUJICA
CHIEF TECHNOLOGY OFFICER
Years with Roadhouse: 12
Age: 62
Restaurant Industry Experience: 12
Mr. Mujica is Chief Technology Officer of the Company, having
been appointed to this position in January 2023. Mr. Mujica had
been previously designated Chief Information Officer, an
executive officer position that he held from June 2021 through
his appointment to Chief Technology Officer. Mr. Mujica joined
the Company in January 2012 as Vice President of Information
Technology and was subsequently promoted
to Chief
Information Officer. Prior to joining the Company, Mr. Mujica
held senior management positions at The Home Depot and
Arthur Andersen. Mr. Mujica has over 30 years of experience in
both industry and consulting roles.
TRAVIS C. DOSTER
CHIEF COMMUNICATIONS OFFICER
Years with Roadhouse: 18
Age: 57
Restaurant Industry Experience: 23
Mr. Doster is Chief Communications Officer of the Company,
having been appointed to this position in November 2023. In
this role, he is responsible for leading the Company’s
communications, marketing, events, public affairs, government
relations and corporate sustainability functions. Mr. Doster
joined the Company in 2006, as the Director, then Senior
Director, of Communications where he served until his
promotion to Vice President of Communications in 2018. Prior
to joining the Company, Mr. Doster was a Vice President at
FSA Public Relations, where he and his staff provided a number
of services, including public relations, crisis management and
issues management, for national clients, including, Jimmy
John’s Gourmet Sandwich Shops, Qdoba Mexican Grill, and
Cameron Mitchell Restaurants. Mr. Doster has over 30 years of
media, public relations, and industry experience.
39
Bubba What: What We Do and What We Don’t Do
WHAT WE DO
WHAT WE DON’T DO
Set and evaluate executive compensation to
the
the sustained profitability of
promote
Company
No
automatic
increases
on
executive
compensation
Conduct an Annual “Say on Pay” Vote
No excessive perquisites
Maintain stock ownership guidelines for our
executives and directors and ensure annual
compliance
No multi-year guarantees for salary increases,
bonus or equity compensation
When appropriate, engage an
independent
compensation consultant to assist with executive
compensation
No short-selling,
in derivatives or
trading
engaging in hedging transactions by executive or
directors
Limit accelerated vesting of equity awards by
requiring a “double trigger” upon a change in
control
No compensation or incentives that encourage
unnecessary or excessive risk taking
Employ a Clawback Policy
recover
performance based compensation in certain
circumstances
to
No payment of dividends on equity awards that
are not fully earned or vested
Determine executive compensation through a
fully independent compensation committee
No grant of equity awards at less than fair market
value
Allow for an annual adjustment of the bonus and
equity portions of executive compensation by the
compensation committee to more accurately
reflect the overall performance of the Company
and the individual executive
Bubba How: How We Pay
No automatic acceleration of equity awards upon
retirement
The Company’s compensation committee reviews and establishes executive compensation in
connection with each executive officer’s employment agreement. As one purpose of this discussion is to present
the compensation committee’s overall program and philosophy for executive compensation, we have generally
presented the discussion as of the end of the prior fiscal year and as of the beginning of the current fiscal year.
Initial Executive Compensation Under Executive Employment Agreements.
We entered into employment agreements with Gerald L. Morgan, Regina A. Tobin, D. Christopher
Monroe, Christopher C. Colson, Hernan E. Mujica, Travis C. Doster, Tonya R. Robinson, and S. Chris Jacobsen,
each of which are Named Executive Officers. As used herein, the employment agreements, as amended (as
and if applicable), with Messrs. Morgan, Monroe, Colson, Mujica, and Jacobsen and Mss. Tobin and Robinson
shall be referred to collectively as the “Executive Employment Agreements” and with respect to any Named
Executive Officer having an employment agreement, as a “Executive Employment Agreement”. As further
described below, the Company did not enter into an Executive Employment Agreement with Keith V. Humpich
in connection with his service as interim Chief Financial Officer and/or principal accounting officer (as applicable).
Each Executive Employment Agreement (other than with Mr. Doster) has an initial term expiring on
January 7, 2024 which automatically renews for successive one-year terms thereafter unless either party elects
40
not to renew by providing written notice to the other party at least 60 days before expiration. Mr. Doster’s
Executive Employment Agreement has an initial term expiring on January 8, 2025 which automatically renews
for successive one-year terms thereafter unless either party elects not to renew by providing written notice to
the other party at least 60 days before expiration.
As more particularly described below, on January 5, 2023, the Company entered into a Separation
Agreement and Release of Claims (the “Robinson Separation Agreement”) with Ms. Robinson relating to
Ms. Robinson’s retirement as Chief Financial Officer of the Company effective as of January 4, 2023.
Additionally and as more particularly described below, on August 3, 2023, the Company entered into a
Separation Agreement and Release of Claims (the “Jacobsen Separation Agreement”) with Mr. Jacobsen
relating to his resignation as Chief Marketing Officer of the Company effective as of August 3, 2023.
Each Executive Employment Agreement establishes an annual base salary for the term of the respective
Executive Employment Agreement. During the term of the Executive Employment Agreement, base salary
increases are at the discretion of the compensation committee; provided, however, none of the Named Executive
Officer’s base salary may be decreased during the term of the Executive Employment Agreement except for
decreases that are applied generally to the other Named Executive Officers in an amount no greater than 10%
over the prior year. Each Executive Employment Agreement also provides an annual short-term cash incentive
opportunity with a target bonus based on the achievement of defined goals to be established by the
compensation committee, with increases in the target bonus amount to be made at the discretion of the
compensation committee during the term of the Executive Employment Agreement. In addition to cash
compensation, each Executive Employment Agreement provides that the compensation committee may grant
certain stock awards to the Named Executive Officers during the term of the respective Executive Employment
Agreements, the types and amounts of which are subject to the compensation committee’s discretion based on
their annual review of the performance of the Company and of the individual Named Executive Officers. As of
the date of this proxy statement and as more particularly described below, certain Named Executive Officers
received an annual grant of service based restricted stock units relating to their 2023 year service and 2024 year
service, respectively. Additionally, certain Named Executive Officers received grants of performance based
restricted stock units relating to their 2023 year service and 2024 year service, respectively. Finally, while the
Company previously granted retention grants for our Named Executive Officers under their prior employment
agreements, the compensation committee has not made any similar retention grants for the Named Executive
Officers under the Executive Employment Agreements. The compensation committee will evaluate whether to
grant additional retention grants in the future as a part of its annual evaluation of the compensation packages
for the Named Executive Officers.
Under the Executive Employment Agreements, each Named Executive Officer has agreed not to
compete with us during the term of his or her employment and for a period of two years following his or her
termination of employment. Additionally, the Executive Employment Agreements include certain confidentiality,
non-solicitation, and non-disparagement provisions. Finally, the Executive Employment Agreement contains a
similar “clawback” provision setting forth that any compensation paid or payable to the Executive Employment
Agreement or any other agreement or arrangement with the Company shall be subject to recovery or reduction
in future payments in lieu of recovery pursuant to any Company clawback policy in effect from time to time,
whether adopted before or after the date of the Executive Employment Agreement.
The Company has established a clawback policy whereby the Company shall reasonably promptly
recover the Erroneously Awarded Compensation Received by an Executive Officer in accordance with the
applicable rules of The Nasdaq Stock Market and Rule 10D-1 following an Accounting Restatement. In such an
event, the compensation committee has the discretion to determine the appropriate method of recovering such
Erroneously Awarded Compensation Received, including, without limitation, requiring reimbursement of cash
incentive-based compensation, seeking recovery of any gain realized on the vesting of any equity-based awards,
offsetting the recouped amount from any compensation otherwise owed by the Company, and/or cancelling
outstanding vested or unvested equity awards. Notwithstanding the foregoing, the Company shall not be required
to take such actions if the compensation committee determines that recovery would be impracticable and the
compensation committee has determined that either (a) the direct expenses paid to a third party to assist in
enforcing the Company’s clawback policy would exceed the amount to be recovered or (b) recovery would likely
41
cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the
Company, to fail to meet the requirements of the Internal Revenue Code.
For the purposes of the clawback policy, (A) the term “Erroneously Awarded Compensation” means,
with respect to each Executive Officer in connection with an Accounting Restatement, the amount of Clawback
Eligible Incentive Compensation (as hereinafter defined) that exceeds the amount of incentive-based
compensation that otherwise would have been received had it been determined based on the restated amounts,
computed without regard to any taxes paid; (B) the term “Clawback Eligible Incentive Compensation” means
all incentive-based compensation received by an Executive Officer (i) on or after October 2, 2023, (ii) after
beginning service as an Executive Officer, (iii) who served as an Executive Officer at any time during the
applicable performance period relating to any Incentive-based Compensation (whether or not such Executive
Officer is serving at the time the Erroneously Awarded Compensation is required to be repaid to the Company),
(iv) while the Company has a class of securities listed on a national securities exchange or a national securities
association, and (v) during the applicable Clawback Period (as hereinafter defined); (C) the term “Clawback
Period” means, with respect to any Accounting Restatement, the three completed fiscal years of the Company
immediately preceding the restatement date, and if the Company changes its fiscal year, any transition period
of less than nine months within or immediately following those three completed fiscal years, provided that a
transition period of greater than nine months will be deemed a completed fiscal year; (D) the term “Accounting
Restatement” means an accounting restatement due to the material noncompliance of the Company with any
financial reporting requirement under the securities laws, including any required accounting restatement to
correct an error in previously issued financial statements that is material to the previously issued financial
statements (a “Big R” restatement), or that would result in a material misstatement if the error were corrected in
the current period or left uncorrected in the current period (a “little r” restatement); and (E) the term “Executive
Officer” means each individual who is currently or was previously designated as an “officer” of the Company as
defined in Rule 16a-1(f) under the Exchange Act.
Executive Compensation Starting With 2022 Fiscal Year.
During 2021 and pursuant to the authority granted under its charter, the compensation committee
engaged FW Cook as an independent compensation consultant to advise the compensation committee on
compensation for the executive officers beginning with the 2022 fiscal year, together with analysis and services
related to such executive compensation. Specifically, the compensation committee asked the consultant to
provide market data, review the design of the executive compensation packages, and provide guidance on cash
and equity compensation for the Company’s executive officers. As a part of this review, the chairperson of the
compensation committee, the independent compensation consultant and management of the Company agreed
on a list of the following 14 peer companies to evaluate their executive compensation:
BJ’s Restaurants, Inc.
Chipotle Mexican Grill, Inc.
Dave & Buster’s Entertainment,
Inc.
Jack in the Box Inc.
The Cheesecake Factory
Incorporated
PEER COMPANIES
Bloomin Brands, Inc.
Cracker Barrel Old Country Store,
Inc.
Denny’s Corporation
Brinker International, Inc.
Darden Restaurants, Inc.
Dine Brands Global, Inc.
Papa John’s International, Inc.
The Wendy’s Company
Red Robin Gourmet Burgers, Inc.
Based in part on the recommendation of our third party compensation consultant and the review of the
market data provided to the compensation committee, the total compensation package established for each
Named Executive Officer for their respective 2022 fiscal year service reflected a shift in the compensation
breakdown among the base salary, bonus, and equity components to a more weighted emphasis on non-equity
compensation as well as a shift from a fixed number of service based restricted stock units and/or performance
based restricted stock units to a fixed dollar amount with respect to such service based restricted stock units.
The compensation committee utilized this compensation philosophy and structure when establishing executive
compensation for each applicable Named Executive Officer’s 2023 fiscal year service and 2024 fiscal year
42
service, respectively. FW Cook does not currently provide any other services to the Company, and the
compensation committee has determined that FW Cook has sufficient independence from us and our executive
officers to allow FW Cook to offer objective information and/or advice.
With respect to establishing executive compensation for the 2023 fiscal year and 2024 fiscal year,
respectively, the compensation committee and management of the Company utilized the services of Equilar (the
Company’s external executive and director compensation database aggregator) to review the executive
compensation by continuing to review the same peer companies listed in the table above. Equilar does not
currently provide any other services to the Company, and the compensation committee has determined that
Equilar has sufficient independence from us and our executive officers to allow them to offer objective information
and/or advice.
Summary of Executive Compensation
The compensation packages for our Named Executive Officers offer base salaries and target cash
bonus amounts and feature restricted stock unit awards, the value of which is dependent upon the performance
of the Company and the price of our common stock. Such packages for our Named Executive Officers are
comprised of the following four main components (three of which are expressly tied to the performance of the
Company):
(i)
(ii)
(iii)
(iv)
Base Salary: An annual base salary for the term of the respective Executive Employment
Agreements, with base salary increases being left to the discretion of the compensation
committee;
Incentive Based Cash Bonus: An annual short-term cash incentive with a target bonus based
on the achievement of defined goals to be established by the compensation committee, with
increases in the target bonus amount to be made at the discretion of the compensation
committee during the term of the Executive Employment Agreement;
Service Based Restricted Stock Units: Restricted Stock Units which grant the Named Executive
Officer the conditional right to receive shares of our common stock that vest after a defined
period of service, the realized value of which shall be dependent on the performance of the
Company upon the vesting of such restricted stock units; and
Performance Based Restricted Stock Units: Restricted Stock Units that are calculated based on
the achievement of certain Company performance targets established by the compensation
committee and vest over a period of service, the realized value of which shall be dependent on
the performance of the Company upon the vesting of such restricted stock units and the
satisfaction of such performance targets.
The compensation committee evaluates the stock compensation for each specific Named Executive
Officer on an annual basis to determine the right combination of rewards and incentives through the issuance of
service based restricted stock units and/or performance based restricted stock units to drive company
performance without encouraging unnecessary or excessive risk taking by all of the Named Executive Officers
as a whole. Under this approach, the Named Executive Officers receive a combination of service based restricted
stock units and performance based restricted stock units. Additionally and by conditioning a significant portion
of the Named Executive Officer’s performance based restricted stock unit grants upon the achievement of
defined performance goals to be established by the compensation committee, combined with the stock
ownership guidelines for our Named Executive Officers more particularly described above, we have created a
more direct relationship between compensation and shareholder value. Moreover, by giving the compensation
committee the discretion to grant certain stock awards (if any) in its discretion to our Named Executive Officers
under the Executive Employment Agreements, the compensation committee has the opportunity to adjust a
significant portion of the total compensation for the Named Executive Officers on an annual basis to more
accurately reflect the overall performance of the Company, which may include the issuance of service based
restricted stock units and/or performance based restricted stock units. Overall, we believe this approach provides
the Named Executive Officers with a compensation package which promotes the sustained profitability of the
43
Company and aligns the interests of our Named Executive Officers with those of our shareholders. The
compensation packages also reflect a pragmatic response to external market conditions; that is, total
compensation that is competitive with comparable positions in similar industries, including the casual dining
sector of the restaurant industry, but which is reasonable and in the best interests of our shareholders.
We believe that the overall design of the compensation packages, along with the culture and values of
our Company, allows us to attract and retain top talent, while also keeping the Named Executive Officers focused
on both long - term business development and short - term financial growth.
In deciding to continue and modify many of our existing executive compensation practices, our
compensation committee considered that the holders of approximately 91% of the votes cast at our 2023 annual
meeting on an advisory basis approved the compensation of our Named Executive Officers as disclosed in the
proxy statement for the 2023 annual meeting. None of the Named Executive Officers, including Mr. Morgan,
participated in the creation of their own compensation packages.
Elements of Compensation
Base Salary. Base salaries for our Named Executive Officers are designed to provide a secure base of
compensation which will be effective in motivating and retaining key executives.
Each Named Executive Officer’s Executive Employment Agreement provides that the compensation
committee will establish the annual base salary for the Named Executive Officers at the commencement of the
term of their respective Executive Employment Agreement. Pursuant to each Named Executive Officer’s
Executive Employment Agreement, the compensation committee established an annual base salary for each
Named Executive Officer. During the term of the respective Executive Employment Agreement, base salary
increases are at the discretion of the compensation committee. In furtherance of the foregoing, the compensation
committee established the annual base salary for each Named Executive Officer for the 2023 fiscal year as
shown below.
Base Salary for 2023 Fiscal Year under Executive Employment Agreements
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe (1)
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster (2)
Chief Communications Officer
Keith V. Humpich (3)
Former Interim Chief Financial Officer
Tonya R. Robinson (4)
Former Chief Financial Officer
S. Chris Jacobsen
Former Chief Marketing Officer
Starting
January 8, 2023 ($)
1,200,000
650,000
500,000
500,000
500,000
500,000
—
—
500,000
(1)
As described above, in connection with Mr. Monroe’s appointment to Chief Financial Officer of
the Company on June 28, 2023, the compensation committee established Mr. Monroe’s annual
base salary at $500,000.
44
(2)
(3)
As described above, in connection with Mr. Doster’s appointment to Chief Communications
Officer of the Company on November 9, 2023, the compensation committee established
Mr. Doster’s annual base salary of $500,000. Prior to his appointment, Mr. Doster received an
annual base salary of $370,000 for his service as Vice President of Communications.
As described below, Mr. Humpich received a $100,000 per quarter stipend for his service as
interim Chief Financial Officer and/or principal accounting officer (as applicable) during the 2023
fiscal year. Mr. Humpich also received an annual base salary of $300,000 for his service as
Vice President of Finance during the 2023 fiscal year, which was increased from $258,400 on
March 1, 2023 as a part of the Company’s annual review of compensation.
(4)
As described above, Ms. Robinson retired as the Chief Financial Officer for the Company on
January 4, 2023 so no base salary was awarded to Ms. Robinson for the 2023 fiscal year.
As noted above, the compensation committee may increase each Named Executive Officer’s base
salary in its discretion. The base salary of each Named Executive Officer for their 2024 fiscal year service is set
forth in the following table:
Base Salary for 2024 Fiscal Year under Executive Employment Agreements
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster
Chief Communications Officer
Keith V. Humpich (2)
Former Interim Chief Financial Officer
Tonya R. Robinson (3)
Former Chief Financial Officer
S. Chris Jacobsen (4)
Former Chief Marketing Officer
Starting
January 8, 2024 ($)(1)
1,300,000
700,000
550,000
550,000
550,000
550,000
—
—
—
(1)
In order to align with the target percentage parameters used by management of the Company
for compensation adjustments for support center employees during the Company’s annual
review process, on February 28, 2024, the compensation committee increased the annual base
salary for certain Named Executive Officers in the following manner:
(i)
(ii)
(iii)
effective January 24, 2024, Mr. Morgan’s annual base salary was increased to
$1,300,000;
effective January 24, 2024, Ms. Tobin’s annual base salary was increased to $700,000;
and
effective January 24, 2024, the annual base salary for each of Messrs. Monroe, Colson,
Mujica and Doster was increased to $550,000.
45
(2)
(3)
(4)
Mr. Humpich will receive an annual base salary of $400,000 for his service as Vice President of
Finance during the 2024 fiscal year, which was increased from $300,000 on January 24, 2024
as a part of the Company’s annual review of compensation.
As described above, Ms. Robinson retired as the Chief Financial Officer for the Company on
January 4, 2023 so no base salary was awarded to Ms. Robinson for the 2024 fiscal year.
As described above, Mr. Jacobsen resigned as the Chief Marketing Officer for the Company on
August 3, 2023 so no base salary was awarded to Mr. Jacobsen for the 2024 fiscal year.
Incentive Bonus. Incentive bonuses are designed to reward our Named Executive Officers for the
success of the Company, as measured by growth in the Company’s earnings per diluted share (“EPS”) and
overall pre - tax profit, and for each Named Executive Officer’s individual contribution to that success. It is our
belief that a significant amount of each Named Executive Officer’s compensation should be tied to the
performance of the Company.
Under the compensation committee’s charter, the compensation committee may award an annual cash
incentive to the Named Executive Officers, which is the grant of a right to receive a payment of cash that is
subject to targets and maximums, and that is contingent on achievement of performance objectives during the
Company’s fiscal year. These cash incentives are also subject to the terms and conditions of the Executive
Employment Agreements and reflect each Named Executive Officer’s job responsibilities and individual
contribution to the success of the Company.
In furtherance of the foregoing, the compensation committee established a two - pronged approach to
tying the incentive compensation to the Company’s performance. Under this approach, 50% of the target
incentive bonus is awarded based on whether the Company achieves an annual EPS growth target of 10% (the
“EPS Performance Goal”). The other 50% is based on a profit sharing pool (the “Profit Sharing Pool”)
comprised of 1.75% of the Company’s pre - tax profits (income before taxes less net income attributable to
non - controlling interests, as reported in our audited consolidated financial statements), which pool is distributed
among our Named Executive Officers and certain other members of the Company’s director - level management
based on a pre - determined percentage interest in the pool and subject to certain pre - determined maximum
amounts. After the end of the fiscal year, the compensation committee determines whether and to what extent
the EPS Performance Goal has been met, and the portion of the Profit Sharing Pool to which each Named
Executive Officer is entitled. Depending on the level of achievement of the EPS Performance Goal each year,
50% of the incentive bonus may be reduced to a minimum of $0 or increased to a maximum of two times the
target amount. Each 1% change from the EPS Performance Goal results in an increase or decrease of 10% of
the portion of the target bonus amount attributable to the achievement of the EPS Performance Goal. For
example, if we achieve 11% EPS growth, the bonus payable would be 110% of the portion of the target bonus
attributable to the achievement of the EPS Performance Goal. Conversely, if we achieve 9% EPS growth, the
bonus payable would be 90% of the portion of the target bonus attributable to the achievement of the EPS
Performance Goal. The remaining 50% of the Named Executive Officers’ incentive bonus will fluctuate directly
with Company pre - tax profits at fixed participation percentages and maximum amounts which are determined
within 60 days following the commencement of the Company’s fiscal year.
The annual profit sharing component allows the Named Executive Officers to participate in a profit
sharing pool with other members of the Company’s director - level management team. By allowing this level of
participation in the Company’s overall profits, the compensation committee encourages responsible growth and
aligns the interests of the Named Executive Officers with those of other management employees of the
Company. This portion of the incentive bonus may be reduced to a minimum of $0 if the Company ceases to be
profitable or for other reasons that the compensation committee determines, and may be increased to a
maximum of two times the target amount established for each individual participant. Both portions of the incentive
bonus can be adjusted downward (but not upward) by the compensation committee in its discretion.
Cash incentive bonuses with respect to fiscal year 2023 were paid at 127.3% of the total target amount
for the fiscal year in which a Named Executive Officer served in such role, based on an increase in actual EPS
46
of 14.3% and an actual Profit Sharing Pool of $6,116,701 calculated on fiscal year 2023 pre-tax profit of
$349,525,785.
Each Executive Employment Agreement provides an annual short-term cash incentive opportunity with
a target bonus as set forth in the table below, with increases in the target bonus amount to be made at the
discretion of the compensation committee. During the term of each respective Executive Employment
Agreement, the performance criteria and terms of bonus awards are at the discretion of the compensation
committee as described above. As further described above, depending on the level of achievement of the goals,
the bonus may be reduced to a minimum of $0 or increased to a maximum of two times the base target amount
under the current incentive compensation policy of the compensation committee of the Board.
In connection with the foregoing, the compensation committee established an annual short-term cash
incentive opportunity with a target bonus as set forth in the table below relating to each Named Executive
Officer’s 2023 fiscal year service. The performance criteria and terms of bonus awards are at the discretion of
the compensation committee. As more particularly described above, the compensation committee continued its
two pronged approach with 50% of the target incentive bonus being based on whether the Company achieves
an annual EPS growth target of 10% and the remaining 50% being based on a Profit Sharing Pool comprised of
1.75% of the Company’s pre - tax profits (income before taxes less net income attributable to non - controlling
interests, as reported in our audited consolidated financial statements). As further described above, depending
on the level of achievement of the goals, the bonus may be reduced to a minimum of $0 or increased to a
maximum of two times the base target amount under the current incentive compensation policy of the
compensation committee of the Board.
Executive Incentive Compensation for Fiscal Year 2023
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe (1)
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster (2)
Chief Communications Officer
Keith V. Humpich (3)
Former Interim Chief Financial Officer
Tonya R. Robinson (4)
Former Chief Financial Officer
S. Chris Jacobsen
Former Chief Marketing Officer
Target
Bonus
($)
1,200,000
650,000
400,000
400,000
400,000
400,000
—
—
400,000
Minimum Maximum
Bonus
($)
—
—
—
—
—
—
—
—
—
Bonus
($)
2,400,000
1,300,000
800,000
800,000
800,000
800,000
—
—
800,000
(1)
(2)
Mr. Monroe’s target bonus described above is an annualized amount, which was prorated based
on his 2023 fiscal year service as the Company’s Chief Financial Officer commencing on
June 28, 2023 and continuing to and through December 26, 2023.
Mr. Doster’s target bonus described above is an annual amount, which was prorated based on
his 2023 fiscal year service as the Company’s Chief Communications Officer commencing on
November 9, 2023 and continuing to and through December 26, 2023. Mr. Doster also received
a bonus for his 2023 fiscal year service as the Vice President of Communications of the
Company that accrued prior to his appointment to Chief Communications Officer.
47
(3)
The compensation committee did not establish a target bonus for Mr. Humpich for the 2023
fiscal year relating to his service as the interim Chief Financial Officer. However, Mr. Humpich
did receive a target bonus of $150,000 with respect to his service as Vice President of Finance
of the Company. His target bonus was subject to the same targets as the Named Executive
Officers except his bonus could have been reduced to a minimum of 50% or increased to a
maximum of 150% of the base target amount.
(4)
As described above, Ms. Robinson retired as Chief Financial Officer of the Company on
January 4, 2023. As such, the compensation committee did not establish a target bonus for
Ms. Robinson for the 2023 fiscal year.
The compensation committee established an annual short-term cash incentive opportunity with a target
bonus as set forth in the table below relating to each Named Executive Officer’s 2024 fiscal year service. The
performance criteria and terms of bonus awards are at the discretion of the compensation committee. As more
particularly described above, the compensation committee continued its two pronged approach with 50% of the
target incentive bonus being based on whether the Company achieves an annual EPS growth target of 10% and
the remaining 50% being based on a Profit Sharing Pool comprised of 1.75% of the Company’s pre - tax profits
(income before taxes less net income attributable to non - controlling interests, as reported in our audited
consolidated financial statements). As further described above, depending on the level of achievement of the
goals, the bonus may be reduced to a minimum of $0 or increased to a maximum of two times the base target
amount under the current incentive compensation policy of the compensation committee of the Board.
Executive Incentive Compensation for Fiscal Year 2024
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster
Chief Communications Officer
Keith V. Humpich (2)
Former Interim Chief Financial Officer
Tonya R. Robinson (3)
Former Chief Financial Officer
S. Chris Jacobsen (4)
Former Chief Marketing Officer
Target
Bonus
($)(1)
1,300,000
700,000
425,000
425,000
425,000
425,000
—
—
—
Minimum Maximum
Bonus
($)(1)
—
—
—
—
—
—
—
—
—
Bonus
($)(1)
2,600,000
1,400,000
850,000
850,000
850,000
850,000
—
—
—
(1)
In order to align with the target percentage parameters used by management of the Company
for compensation adjustments for support center employees during the Company’s annual
review process, on February 28, 2024, the compensation committee increased the target bonus
amounts for certain Named Executive Officers in the following manner:
(i)
(ii)
the target bonus for Mr. Morgan relating to his 2024 fiscal year service was increased
to $1,300,000;
the target bonus for Ms. Tobin relating to her 2024 fiscal year service was increased to
$700,000; and
48
(2)
(3)
(4)
(iii)
the target bonus for each of Messrs. Monroe, Colson, Mujica and Doster relating to their
respective 2024 fiscal year service was increased to $425,000.
The compensation committee did not establish a target bonus for Mr. Humpich for the 2024
fiscal year relating to his service as the interim Chief Financial Officer. However, Mr. Humpich
did receive a target bonus of $200,000 with respect to his service as Vice President of Finance
of the Company. His target bonus is subject to the same targets as the Named Executive
Officers except his bonus can be reduced to a minimum of 50% or increased to a maximum of
150% of the base target amount.
As described above, Ms. Robinson retired as Chief Financial Officer of the Company on
January 4, 2023. As such, the compensation committee did not establish a target bonus for
Ms. Robinson for the 2024 fiscal year.
As described above, Mr. Jacobsen resigned as the Chief Marketing Officer for the Company on
August 3, 2023. As such, the compensation committee did not establish a target bonus for
Mr. Jacobsen for the 2024 fiscal year.
Stock Awards. We make equity awards in the form of restricted stock units, which represent the
conditional right to receive one share of our common stock upon satisfaction of the vesting requirements.
Restricted stock units offer the Named Executive Officers a financial interest in the Company and align their
interests with those of our shareholders. We also believe that the market price of our publicly traded common
stock represents the most appropriate metric for determining the value of the equity portion of our Named
Executive Officers’ compensation packages. The overall compensation packages for our Named Executive
Officers offer base salaries and target cash bonus amounts and feature restricted stock unit awards. While the
initial grant of restricted stock unit awards is based on a fixed dollar amount, the ultimate value of the restricted
stock unit awards is dependent upon the performance of the Company and the price of our common stock at the
time such restricted stock units vest. The compensation committee evaluates the stock compensation for each
specific Named Executive Officer on an annual basis to determine the right combination of rewards and
incentives through the issuance of service based restricted stock units and/or performance based restricted
stock units to drive company performance without encouraging unnecessary or excessive risk taking by all of
the Named Executive Officers as a whole. Under this approach, the Named Executive Officers receive a
combination of service based restricted stock units and/or performance based restricted stock units, with a
significant portion of some of the Named Executive Officer’s compensation being tied to the grant of such
performance based restricted stock units. We believe that the service based restricted stock awards are
inherently performance based since their value varies in response to investor sentiment regarding overall
Company performance at the time of vesting. Moreover, by giving the compensation committee the discretion to
grant certain stock awards (if any) in its discretion to our Named Executive Officers under the Executive
Employment Agreements, the compensation committee has the opportunity to adjust a large portion of the total
compensation for the Named Executive Officers on an annual basis to more accurately reflect the overall
performance of the Company, which may include the issuance of service based restricted stock units and/or
restricted stock units based on the achievement of defined goals to be established by the compensation
committee for any and/or all of our Named Executive Officer. While the Company previously granted retention
grants for our Named Executive Officers under their respective prior employment agreements, the Executive
Employment Agreements do not include any similar retention grants. The compensation committee will evaluate
whether to grant additional retention grants in the future as a part of its annual evaluation of the compensation
packages for the Named Executive Officers.
In addition, the Executive Employment Agreements with our Named Executive Officers permit the
compensation committee to grant in its discretion any combination of service based restricted stock units and/or
performance based restricted stock units for any portion of the term of the Executive Employment Agreements.
For the performance based awards that have or may be granted to the Named Executive Officers, the
compensation committee has established a two - pronged approach which mirrors the approach used for annual
cash incentive bonuses. Under this approach, a percentage of the target equity award is based on whether the
Company achieves the annual EPS Performance Goal, and a percentage is based on the Profit Sharing Pool
comprised of 1.75% of the Company’s pre - tax profits (income before taxes less net income attributable to
49
non - controlling interests, as reported in our audited financial statements). After the end of the fiscal year, the
compensation committee determines whether and to what extent the EPS Performance Goal has been met, and
the portion of the Profit Sharing Pool to which each officer is entitled. Each 1% change from the EPS
Performance Goal results in an increase or decrease of 10% of the portion of the target amount attributable to
the achievement of the EPS Performance Goal. For example, if we achieve 11% EPS growth, the number of
shares awarded would be 110% of the portion of the target amount attributable to the achievement of the EPS
Performance Goal. Conversely, if we achieve 9% EPS growth, the award would be 90% of the portion of the
target amount attributable to the achievement of the EPS Performance Goal. The remaining percentage of the
Named Executive Officers’ equity award will fluctuate directly with Company pre - tax profits at fixed participation
percentages and maximum amounts which are determined within 60 days following the commencement of the
Company’s fiscal year. Both portions of the performance based equity award may be reduced to a minimum of
$0 or increased to a maximum of two times the target amount for each individual participant. Both portions of
the performance based equity award can also be adjusted downward (but not upward) by the compensation
committee in its discretion.
Performance based equity awards with respect to fiscal year 2023 were paid at 127.3% of the total target
amount for the fiscal year in which a Named Executive Officer served in such role, based on an increase in
actual EPS of 14.3% and an actual Profit Sharing Pool of $6,116,701 calculated on fiscal year 2023 pre-tax profit
of $349,525,785. For discussion of the percentages assigned by the compensation committee to each
component of the performance based equity awards for Messrs. Morgan, Monroe, Colson, and Mujica, and
Ms. Tobin (as applicable), refer to the associated tables below.
The total number of service based restricted stock units and/or performance based restricted stock units
granted to each Named Executive Officer reflects each Named Executive Officer’s job responsibilities and
individual contribution to the success of the Company.
50
Service Based Restricted Stock Units. Each Executive Employment Agreement provides that the
compensation committee may grant certain stock awards to the Named Executive Officers during the term of
the respective Executive Employment Agreements. In connection with the same, the compensation committee
authorized the grant of service based restricted stock units under each Executive Employment Agreement equal
to the dollar amount described in the table below for each Named Executive Officer with respect to all or a portion
of their 2023 fiscal year service. These service based restricted stock units were calculated by dividing the dollar
amount described in the table below by the per share closing sales price of the Company’s common stock on
the Nasdaq Global Select Market on the trading day immediately preceding the date of the grant, with such
quotient being rounded up or down to the nearest 100 shares. Additionally and except as described in the
footnotes below with respect to the grant of service based restricted stock units to Mr. Monroe and Mr. Doster
(respectively), these service based restricted stock units were granted on January 8, 2023 and vested on
January 8, 2024.
Service Based Restricted Stock Units for 2023 Fiscal Year
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe (2)
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster (3)
Chief Communications Officer
Keith V. Humpich (4)
Former Interim Chief Financial Officer
Tonya R. Robinson (5)
Former Chief Financial Officer
S. Chris Jacobsen (6)
Former Chief Marketing Officer
Service Based Restricted
Stock Units Vesting on
January 8, 2024 pursuant
to Executive
Employment Agreements ($)
1,300,000
Number of Service Based
Restricted Stock Units Vesting
on January 8, 2024 pursuant
to Executive
Employment Agreements (1)
13,900
500,000
250,000
500,000
500,000
—
—
—
400,000
5,300
2,300
5,300
5,300
—
—
—
4,300
(1)
For the service based restricted stock units described in this footnote (1), fair value is equal to
the closing price of the Company’s common stock on the trading day immediately preceding the
date of the grant, which was $93.52 for these grants. Using the formula described in the
immediately foregoing paragraph prior to this table, each Named Executive Officer was granted
the number of service based restricted stock units described in the table above for their
respective 2023 fiscal year service. These are not amounts paid to or received by the Named
Executive Officers. The amounts listed above represent the grant date fair value determined in
accordance with ASC 718 of restricted stock units granted under the Company’s 2021 Long-
Term Incentive Plan. Detailed information under ASC 718 is set forth in Note 14 to the
consolidated financial statements included in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 26, 2023. The Company cautions that the amounts reported in
the table above for these awards may not represent the amounts that the Named Executive
Officers will actually realize from the awards. Whether, and to what extent, a Named Executive
Officer realizes value will depend on the Company’s actual operating performance, stock price
fluctuations and the Named Executive Officer’s continued service with the Company.
(2)
Upon Mr. Monroe’s appointment to Chief Financial Officer, the compensation committee
authorized the grant of 2,300 service based restricted stock units with a grant date of June 28,
2023 for his partial 2023 fiscal year service and with a vesting date of December 31, 2024,
provided he is still employed as of the vesting date. The number of service based restricted
stock units were calculated by dividing $250,000 by $109.32 (which was the closing sales price
of the Company’s common stock on the Nasdaq Global Select Market on June 27, 2023), with
51
such quotient being rounded up or down to the nearest 100 shares. As described in footnote
(1) above, these are not amounts paid to or received by Mr. Monroe. The amounts listed above
represent the grant date fair value determined in accordance with ASC 718 of restricted stock
units granted under the Company’s 2021 Long-Term Incentive Plan.
Upon Mr. Doster’s appointment to Chief Communications Officer on November 9, 2023, the
compensation committee did not award any additional service based restricted stock units to
Mr. Doster with respect to his 2023 fiscal year service. Rather and as more particularly shown
in the table below, the compensation committee established service based restricted stock units
for Mr. Doster with respect to his 2024 fiscal year service. However, with respect to Mr. Doster’s
2023 fiscal year service as Vice President of Communications, he received the following service
based restricted stock units: (A) 834 service based restricted stock units that were granted on
May 10, 2023 and are scheduled to vest on May 10, 2024 relating to his Q1 2023 service, (B)
837 service based restricted stock units that were granted on August 2, 2023 and are scheduled
to vest on August 2, 2024 relating to his Q2 2023 service, (C) 911 service based restricted stock
units that were granted on November 1, 2023 and are scheduled to vest on November 1, 2024
relating to his Q3 2023 service, and (D) 628 service based restricted stock units that were
granted on February 21, 2024 and are scheduled to vest on February 21, 2025 relating to his
Q4 2023 service.
The compensation committee did not award any service based restricted stock units to
Mr. Humpich relating to his service as interim Chief Financial Officer during the 2023 fiscal year.
However, in connection with his service as Vice President of Finance of the Company during
the 2023 fiscal year, the compensation committee authorized the grant of 3,426 service based
restricted stock units that were granted on February 23, 2023 and are scheduled to vest on
February 23, 2024.
As described above, Ms. Robinson retired as Chief Financial Officer of the Company on
January 4, 2023. As such, Ms. Robinson was not granted any service based restricted stock
units with respect to the 2023 fiscal year.
As described above, Mr. Jacobsen resigned as Chief Marketing Officer of the Company on
August 3, 2023. Upon his resignation, Mr. Jacobsen forfeited his right to receive the 4,300
service based restricted stock units relating to his 2023 fiscal year service vesting on January 8,
2024.
(3)
(4)
(5)
(6)
52
The compensation committee authorized the grant of service based restricted stock units under each
Executive Employment Agreement equal to the dollar amount described in the table below for each Named
Executive Officer with respect to their 2024 fiscal year service. These service based restricted stock units were
calculated by dividing the dollar amount described in the table below by the per share closing sales price of the
Company’s common stock on the Nasdaq Global Select Market on the trading day immediately preceding the
date of the grant, with such quotient being rounded up or down to the nearest 100 shares. Additionally and
except as described in the footnote below with respect to the grant of restricted stock units to Mr. Doster, these
shares were granted on January 8, 2024 and will vest on January 8, 2025, provided the Named Executive Officer
is still employed by the Company as of the vesting date.
Service Based Restricted Stock Units for 2024 Fiscal Year
Service Based Restricted
Stock Units vesting on
January 8, 2025 pursuant
to Executive
Employment Agreements ($)
1,300,000
Number of Service Based
Restricted Stock Units vesting
on January 8, 2025 pursuant
to Executive
Employment Agreements (1)
11,000
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster (2)
Chief Communications Officer
Keith V. Humpich (3)
Former Interim Chief Financial Officer
Tonya R. Robinson (4)
Former Chief Financial Officer
S. Chris Jacobsen (5)
Former Chief Marketing Officer
500,000
500,000
500,000
500,000
325,000
—
—
—
4,200
4,200
4,200
4,200
3,100
—
—
—
(1)
(2)
For the service based restricted stock units described in this footnote (1), fair value is equal to
the closing price of the Company’s common stock on the trading day immediately preceding the
date of the grant, which was $118.30 for these grants. Using the formula described in the
immediately foregoing paragraph prior to this table, each Named Executive Officer was granted
the number of service based restricted stock units described in the table above for their
respective 2024 fiscal year service. These are not amounts paid to or received by the Named
Executive Officers. The amounts listed above represent the grant date fair value determined in
accordance with ASC 718 of restricted stock units granted under the Company’s 2021 Long-
Term Incentive Plan. Detailed information under ASC 718 is set forth in Note 14 to the
consolidated financial statements included in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 26, 2023. The Company cautions that the amounts reported in
the table above for these awards may not represent the amounts that the Named Executive
Officers will actually realize from the awards. Whether, and to what extent, a Named Executive
Officer realizes value will depend on the Company’s actual operating performance, stock price
fluctuations and the Named Executive Officer’s continued service with the Company.
Upon Mr. Doster’s appointment to Chief Communications Officer, the compensation committee
authorized the grant of 3,100 service based restricted stock units with a grant date of
November 9, 2023 for his 2024 fiscal year service and with a vesting date of January 8, 2025,
provided he is still employed as of the vesting date. The number of service based restricted
stock units were calculated by dividing $325,000 by $103.41 (which was the closing sales price
of the Company’s common stock on the Nasdaq Global Select Market on November 8, 2023),
with such quotient being rounded up or down to the nearest 100 shares. As described in
footnote (1) above, these are not amounts paid to or received by Mr. Doster. The amounts listed
above represent the grant date fair value determined in accordance with ASC 718 of restricted
stock units granted under the Company’s 2021 Long-Term Incentive Plan.
53
(3)
(4)
(5)
As described above, Mr. Humpich’s service as the Company’s interim Chief Financial Officer
ended as of June 27, 2023 in connection with Mr. Monroe’s appointment to Chief Financial
Officer effective as of June 28, 2023. Mr. Humpich did not receive any grants of service based
restricted stock units for the 2024 fiscal year other than service based restricted stock units that
will be granted during the 2024 fiscal year in connection with his service as Vice President of
Finance of the Company.
As described above, Ms. Robinson retired as Chief Financial Officer of the Company on
January 4, 2023. As such, Ms. Robinson was not granted any service based restricted stock
units with respect to the 2024 fiscal year.
As described above, Mr. Jacobsen resigned as Chief Marketing Officer of the Company on
August 3, 2023. Mr. Jacobsen was not granted any service based restricted stock units with
respect to the 2024 fiscal year.
Performance Based Restricted Stock Units. Each Executive Employment Agreement provides that the
compensation committee may grant certain stock awards to the Named Executive Officers during the term of
the respective Executive Employment Agreements. The number of performance based restricted stock units
granted to Messrs. Morgan, Jacobsen, Monroe, Colson, and Mujica and Ms. Tobin for the 2023 fiscal year under
their Executive Employment Agreement, and the number of shares of common stock which actually vested
based on the Company’s performance, are shown in the table below:
Performance Based Restricted Stock Units for 2023 Fiscal Year
Target
Number of
Performance Based
Restricted Stock Units
Granted for 2023
pursuant to
Executive Employment
Agreements (1)
13,900
Minimum Number of
Performance Based
Restricted Stock Units
pursuant to
Executive Employment
Agreements
—
Maximum Number of
Performance Based
Restricted Stock Units
pursuant to
Executive Employment
Agreements
27,800
Actual Number of
Shares Issued
for 2023 following
Certification of 2023
Performance Goals (2)
17,691
4,300
1,400
3,200
3,200
—
—
—
4,300
—
—
—
—
—
—
—
—
8,600
2,800
6,400
6,400
—
—
—
5,473
1,782
4,073
4,073
—
—
—
8,600
— (6)
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe (3)
Chief Financial Officer
Christopher C. Colson
Chief Legal & Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster (4)
Chief Communications Officer
Keith V. Humpich (5)
Former Chief Financial Officer
Tonya R. Robinson (6)
Former Chief Financial Officer
S. Chris Jacobsen (7)
Former Chief Marketing Officer
(1)
The compensation committee authorized the grant of performance based restricted stock units
as described in the table above to Messrs. Morgan, Monroe, Colson, Mujica, and Jacobsen and
Ms. Tobin under their respective Executive Employment Agreements for their respective 2023
fiscal year service in the following manner:
(i)
With respect to Mr. Morgan, his 13,900 performance based restricted stock units were
calculated by dividing $1,300,000 by $93.52 (which was the closing sales price of the
Company’s common stock on the Nasdaq Global Select Market on the trading day
immediately preceding the date of the grant, with such quotient being rounded up or
down to the nearest 100 shares);
(ii)
With respect to Ms. Tobin, her 4,300 performance based restricted stock units were
calculated by dividing $400,000 by $93.52 (which was the closing sales price of the
54
(iii)
(iv)
(v)
(vi)
Company’s common stock on the Nasdaq Global Select Market on the trading day
immediately preceding the date of the grant, with such quotient being rounded up or
down to the nearest 100 shares);
With respect to Mr. Monroe, his 1,400 performance based restricted stock units were
calculated by dividing $150,000 by $109.32 (which was the closing sales price of the
Company’s common stock on the Nasdaq Global Select Market on the trading day
immediately preceding the date of the grant, with such quotient being rounded up or
down to the nearest 100 shares);
With respect to Mr. Colson, his 3,200 performance based restricted stock units were
calculated by dividing $300,000 by $93.52 (which was the closing sales price of the
Company’s common stock on the Nasdaq Global Select Market on the trading day
immediately preceding the date of the grant, with such quotient being rounded up or
down to the nearest 100 shares);
With respect to Mr. Mujica, his 3,200 performance based restricted stock units were
calculated by dividing $300,000 by $93.52 (which was the closing sales price of the
Company’s common stock on the Nasdaq Global Select Market on the trading day
immediately preceding the date of the grant, with such quotient being rounded up or
down to the nearest 100 shares); and
With respect to Mr. Jacobsen, his 4,300 performance based restricted stock units were
calculated by dividing $400,000 by $93.52 (which was the closing sales price of the
Company’s common stock on the Nasdaq Global Select Market on the trading day
immediately preceding the date of the grant, with such quotient being rounded up or
down to the nearest 100 shares).
(2)
(3)
(4)
(5)
(6)
(7)
The shares underlying the performance based restricted stock units attributable to the 2023
fiscal year were issued on February 23, 2024. The compensation committee determined that
50% of the performance based restricted stock unit award for the 2023 fiscal year would be
based on an EPS growth target of 10%, which portion would be reduced or increased by 10%
for every 1% of annual growth in EPS less than or in excess of the 10% goal, and that 50% of
the performance based restricted stock unit award for the 2023 fiscal year would be based on a
pre - tax profit target opportunity equal to the percentage payout of 1.75% of pre - tax earnings
divided by the bonus pool target set by the compensation committee for the performance period.
As described above, the target number of performance based restricted stock units granted to
Mr. Monroe reflected his partial 2023 fiscal year service as the Company’s Chief Financial
Officer commencing on June 28, 2023 and continuing to and through December 26, 2023.
As described above, Mr. Doster was appointed Chief Communications Officer of the Company
on November 9, 2023. In connection with Mr. Doster’s appointment he was not awarded any
performance based restricted stock units with respect to his 2023 fiscal year service.
Mr. Humpich was not granted any performance based restricted stock units in connection with
his service as interim Chief Financial Officer during the 2023 fiscal year.
As described above, Ms. Robinson retired as Chief Financial Officer of the Company on
January 4, 2023. As such, Ms. Robinson was not granted any performance based restricted
stock units with respect to the 2023 fiscal year.
As described above, Mr. Jacobsen resigned as Chief Marketing Officer of the Company on
August 3, 2023. Upon his resignation, Mr. Jacobsen forfeited his right to receive the 4,300
performance based restricted stock units relating to his 2023 fiscal year service.
55
The compensation committee authorized the grant of performance based restricted stock units as
described in the table below to Messrs. Morgan, Monroe, Colson, Mujica, and Doster and Ms. Tobin under their
respective Executive Employment Agreements for their respective 2024 fiscal year service. These performance
based restricted stock units will be calculated by dividing the target dollar amount described in the table below
by the per share closing sales price of the Company’s common stock on the Nasdaq Global Select Market on
the trading day immediately preceding the date of the grant, with such quotient being rounded up or down to the
nearest 100 shares. Additionally and except as described below with respect to Mr. Doster’s performance based
restricted stock units, these performance based restricted stock units were granted to each respective executive
officer on January 8, 2024 and will vest on January 8, 2025, subject to the achievement of defined goals
established by the compensation committee of the Board. The actual number of shares that will be issued to
each of Messrs. Morgan, Monroe, Colson, Mujica, and Doster and Ms. Tobin for fiscal year 2024 based on
achievement of the performance goals assigned to these grants by the compensation committee will not be
calculated until the first quarter of 2025.
Performance Based Restricted Stock Units for 2024 Fiscal Year
Target
Performance
Based Restricted
Stock Units
vesting on
January 8, 2025
pursuant to
Executive Employment
Agreements ($)(1)
1,300,000
Minimum
Performance
Based Restricted
Stock Units
pursuant to
Executive Employment
Agreements ($)
—
Maximum
Performance
Based Restricted
Stock Units
pursuant to
Executive Employment
Agreements ($)
2,600,000
Target Number
of Performance
Based Restricted
Stock Units vesting on
January 8, 2025
pursuant to
Executive Employment
Agreements (2)
11,000
400,000
300,000
300,000
300,000
175,000
—
—
—
—
—
—
—
—
—
—
—
800,000
600,000
600,000
600,000
350,000
—
—
—
3,400
2,500
2,500
2,500
1,700 (3)
—
—
—
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe
Chief Financial Officer
Christopher C. Colson
Chief Legal & Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster
Chief Communications Officer
Keith V. Humpich (4)
Former Interim Chief Financial Officer
Tonya R. Robinson (5)
Former Chief Financial Officer
S. Chris Jacobsen (6)
Former Chief Marketing Officer
(1)
(2)
The compensation committee determined that 50% of the performance based restricted stock
unit award for 2024 would be based on an EPS growth target of 10%, which portion would be
reduced or increased by 10% for every 1% of annual growth in EPS less than or in excess of
the 10% goal, and that 50% of the performance based restricted stock unit award for 2024 would
be based on a pre - tax profit target opportunity equal to the percentage payout of 1.75% of
pre - tax earnings divided by the bonus pool target set by the compensation committee for the
performance period. The performance based restricted stock unit award for Messrs. Morgan,
Monroe, Colson, Mujica, and Doster and Ms. Tobin with respect to fiscal year 2024 will be
certified in the first quarter of 2025.
Except as set forth in footnote (3) below, for the performance based restricted stock units
described in this footnote (2), fair value is equal to the closing price of the Company’s common
stock on the trading day immediately preceding the date of the grant, which was $118.30 for
these grants. Using the formula described in the immediately foregoing paragraph prior to this
table, each Named Executive Officer was granted the target number of performance based
restricted stock units described in the table above for their respective 2024 fiscal year service.
These are not amounts paid to or received by these Named Executive Officers. The amounts
listed above represent the grant date fair value determined in accordance with ASC 718 of
restricted stock units granted under the Company’s 2021 Long-Term Incentive Plan. Detailed
information under ASC 718 is set forth in Note 14 to the consolidated financial statements
included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26,
56
2023. The Company cautions that the amounts reported in the table above for these awards
may not represent the amounts that these Named Executive Officers will actually realize from
the awards.
Upon Mr. Doster’s appointment to Chief Communications Officer, the compensation committee
authorized the grant of 1,700 based restricted stock units with a grant date of November 9, 2023
for his 2024 fiscal year service and with a vesting date of January 8, 2025, subject to the
achievement of defined goals established by the Compensation Committee of the Board set
forth above. The number of performance based restricted stock units were calculated by dividing
$175,000 by $103.41 (which was the closing sales price of the Company’s common stock on
the Nasdaq Global Select Market on November 8, 2023), with such quotient being rounded up
or down to the nearest 100 shares. As described in footnote (2) above, these are not amounts
paid to or received by Mr. Doster. The amounts listed above represent the grant date fair value
determined in accordance with ASC 718 of restricted stock units granted under the Company’s
2021 Long-Term Incentive Plan.
As described above, Mr. Humpich’s service as the Company’s interim Chief Financial Officer
ended as of June 27, 2023 in connection with Mr. Monroe’s appointment to Chief Financial
Officer effective as of June 28, 2023. Mr. Humpich did not receive any grants of service based
restricted stock units for the 2024 fiscal year other than service based restricted stock units that
will be granted during the 2024 fiscal year in connection with his service as Vice President of
Finance of the Company.
As described above, Ms. Robinson retired as Chief Financial Officer as of January 4, 2023. As
such, she did not receive any grants of performance based restricted stock units for the 2024
fiscal year.
As described above, Mr. Jacobsen resigned as Chief Marketing Officer as of August 3, 2023.
As such, he did not receive any grants of performance based restricted stock units for the 2024
fiscal year.
(3)
(4)
(5)
(6)
Separation and Change in Control Arrangements
The Executive Employment Agreements generally provide that if a Named Executive Officer’s
employment is terminated during the term of the Executive Employment Agreement for a Qualifying Reason (as
defined below), the Company will pay the Named Executive Officer three months of base salary, unless the
termination occurs within 12 months following a Change in Control (as defined below), in which case the
applicable Named Executive Officer’s current base salary remaining for the then existing term of his or her
respective Executive Employment Agreement will be paid. In addition, if any Named Executive Officer’s
termination occurs for a Qualifying Reason within 12 months following a Change in Control, the applicable
Named Executive Officer shall be paid any incentive bonus earned but not yet paid for any fiscal year ended
before the date of termination, plus an incentive bonus for the year in which the date of termination occurs, equal
to the applicable Named Executive Officer’s target bonus for that year, prorated based on the number of days in
the fiscal year elapsed before the date of termination. For purposes of the Executive Employment Agreements,
termination for a “Qualifying Reason” is generally defined to be attributable to one of the following: (i) the result
of the applicable Named Executive Officer having submitted to the Company the Named Executive Officer’s
resignation in accordance with a request by the Board or the Chief Executive Officer, provided that such request
is not based on the Company’s finding that Cause (as defined below) for termination exists, (ii) a termination by
the Named Executive Officer for Good Reason (as defined below) within 12 months of a Change in Control, or
(iii) a termination by the Company for any reason other than Cause or as a result of death or disability which
entitles the Named Executive Officer to benefits under the Company’s long-term disability plan. Under the
Executive Employment Agreements, a termination by a Named Executive Officer (a separation, including a
voluntary retirement, initiated by a Named Executive Office other than per a request described above), other
than for Good Reason within 12 months following a Change in Control, shall not be a Qualifying Reason.
Additionally, termination for “Cause” means a termination by the Company for one or more of the following
reasons: (a) a Named Executive Officer’s conviction of, or being charged with having committed, a felony; (b) a
57
Named Executive Officer’s acts of dishonesty or moral turpitude that are detrimental to the business of the
Company; (c) a Named Executive Officer’s acts or omissions that such Named Executive Officer knew or should
have reasonably known were likely to damage the business of the Company; (d) a Named Executive Officer’s
failure to obey the reasonable and lawful directions of the Company, including, without limitation, the Company’s
policies and procedures (including the Company’s policies prohibiting discrimination, harassment, and
retaliation), and the Texas Roadhouse, Inc. Code of Conduct; (e) a Named Executive Officer’s failure to perform
such Named Executive Officer’s obligations under his or her Executive Employment Agreement; (f) a Named
Executive Officer’s willful breach of any agreement or covenant contained within his or her Executive
Employment Agreement or any fiduciary duty owed to the Company; and/or (g) a Named Executive Officer’s
unsatisfactory performance of such Named Executive Officer’s duties after: (A) he or she has received written
notice of the general nature of the unsatisfactory performance, and (B) he or she has failed to cure the
unsatisfactory performance within 30 days thereafter to the satisfaction of the Company.
As used in the Executive Employment Agreements, a “Change in Control” means that one of the
following events has taken place: (i) consummation of a merger or consolidation of the Company with any other
entity, other than a merger or consolidation that would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving or resulting entity) more than 50% of the combined voting power of the surviving
or resulting entity outstanding immediately after such merger or consolidation; (ii) consummation of a sale or
disposition of all or substantially all of the assets of the Company (other than such a sale or disposition
immediately after which such assets will be owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of the common stock of the Company immediately before
such sale or disposition); or (iii) any Person becomes the beneficial owner (as determined pursuant to Section
13(d) of the Exchange Act) of securities representing in excess of 50% of the aggregate voting power of the
outstanding securities of the Company as required to be disclosed in a report on Schedule 13D of the Exchange
Act. The Board has the full and final authority, in its sole discretion, to determine conclusively whether a Change
in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control,
and any incidental matters relating thereto. The Executive Employment Agreements also provide for the
reduction of Change in Control payments to the maximum amount that could be paid to the Named Executive
Officers without giving rise to the excise tax imposed by Section 4999 of the Internal Revenue Code. Additionally,
as used in the Executive Employment Agreements, “Good Reason” given by a Named Executive Officer in a
notice of termination must be based on: (a) the assignment to such Named Executive Officer of a different title
or job responsibilities that result in a substantial decrease in the level of responsibility from those in effect
immediately before the Change in Control; (b) a reduction by the Company or the surviving company in such
Named Executive Officer’s base pay as in effect immediately before the Change in Control; (c) a significant
reduction by the Company or the surviving company in total benefits available to such Named Executive Officer
under cash incentive, stock incentive and other employee benefit plans after the Change in Control compared
to the total package of such benefits as in effect before the Change in Control; (d) the requirement by the
Company or the surviving company that such Named Executive Officer be based more than 50 miles from where
such Named Executive Officer’s office is located immediately before the Change in Control, except for required
travel on company business to an extent substantially consistent with the business travel obligations which such
Named Executive Officer undertook on behalf of the Company before the Change in Control; or (e) the failure
by the Company to obtain from any Successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the Company an agreement to assume
obligations under the Executive Employment Agreement.
58
While the individual Executive Employment Agreements do not address the manner in which unvested
stock awards, if any, will be handled upon the termination of a Named Executive Officer, the specific restricted
stock unit award agreement and/or performance restricted stock unit award agreement entered into by the
Named Executive Officers upon the grant of service based restricted stock units and/or performance based
restricted stock units provide that (A) if a Change in Control occurs prior to the vesting date of such restricted
stock units and the Named Executive Officer is terminated by the Company without Cause, or (B) if the Named
Executive Officer is terminated for Good Reason within 12 months following a Change in Control, then such
unvested service based restricted stock units and/or performance based restricted stock units shall become
vested as of the date of termination. Additionally, such specific restricted stock unit award agreement and/or
performance restricted stock unit award agreement entered into by the Named Executive Officers provide that if
any Named Executive Officer’s continuous service is terminated because of death or disability prior to the vesting
date for the applicable grant of service based restricted stock units and/or performance based restricted stock
units (as and if applicable), then such applicable restricted stock units become immediately vested in an amount
equal to the total number of granted restricted stock units multiplied by a fraction, the numerator of which is the
number of calendar months or portions thereof from grant date of such restricted stock units through the date on
which such Named Executive Officer’s continuous service is terminated due to death or disability and the
denominator of which is the total number of calendar months or portion thereof in the vesting period for such
restricted stock unit grants.
The Company provides these severance payments to allow for a period of transition and are generally
contingent upon the Named Executive Officer’s execution of a full release of claims against the Company, and
continued compliance with the non-competition, non-solicitation, confidentiality and other restrictive covenants.
If the Named Executive Officer’s employment is terminated for any reason other than a Qualifying Reason (such
as the officer’s death, disability or for Cause), then the Company will pay to the Named Executive Officer only
the base salary accrued for the last period of actual employment and any accrued paid time off in accordance
with policies of the Company in effect from time to time. The salary component of the severance payments is
subject to deductions and withholdings and is to be paid to the Named Executive Officers in periodic installments
in accordance with our normal payroll practices. The fixed sum is paid in a single lump sum, and any bonus
component of the severance payments for a performance period that ended before termination is to be paid on
the same date as the payment would have been made had his or her employment not been terminated.
The estimated amounts that would have been payable to a Named Executive Officer under the Executive
Employment Agreements are more fully described in “Termination, Change of Control and Change of
Responsibility Payments.”
Additionally, the Company announced that Ms. Robinson had retired as Chief Financial Officer of the
Company effective as of January 4, 2023. On January 5, 2023, the Company entered into the Robinson
Separation Agreement with Ms. Robinson. Under the Robinson Separation Agreement, the Company agreed to
pay to Ms. Robinson an aggregate sum of $3,500,000 (less any applicable withholdings and/or deductions),
which will be paid in three installments in accordance with the following schedule: (i) $1,500,000 due and payable
no later than January 31, 2023; (ii) $500,000 due and payable on July 31, 2023; and (iii) $1,500,000 due and
payable on January 31, 2024. The Robinson Separation Agreement also provided a general release of claims
by Ms. Robinson and affirmed certain obligations under her Executive Employment Agreement, including,
without limitation, obligations pertaining to confidentiality, non-competition, non-hire, and non-solicitation.
Finally, the Board announced the resignation of Mr. Jacobsen as Chief Marketing Officer effective as of
August 3, 2023. On August 3, 2023 and in connection with Mr. Jacobsen’s resignation from the Company, the
Company and Mr. Jacobsen entered into the Jacobsen Separation Agreement with Mr. Jacobsen. Under the
Jacobsen Separation Agreement, the Company agreed to pay (i) his salary and benefits (including, but not
limited to, the payment of his incentive bonus relating to the Q2 2023 fiscal year period ending on June 27, 2023)
through August 3, 2023; (ii) a sum of $125,000 (less applicable withholdings) reflecting three months of his base
salary due and payable under his Executive Employment Agreement; and (iii) a one-time payment of $288,805
(less applicable withholdings). The Jacobsen Separation Agreement also provided a general release of claims
by Mr. Jacobsen and affirmed certain obligations under his Executive Employment Agreement, including, without
limitation, obligations pertaining to confidentiality, non-competition, non-hire, and non-solicitation
59
Hedging and Pledging Policies
The Company has a stock trading policy that, among other things, prohibits all of our employees
(including our executive officers) and our directors from engaging in speculative trading in the Company’s shares,
which prohibition includes any arrangement by which a shareholder or option holder changes his or her economic
exposure to changes in the price of the stock. Prohibited arrangements include buying standardized put or call
options, writing put or call options, selling stock short, buying or selling securities convertible into other securities,
or merely engaging in a private arrangement where the value of the agreement varies in relation to the price of
the underlying security. Such arrangements are prohibited because these transactions may give the appearance
of improper trades and look disloyal. In addition, our stock trading policy strongly discourages employees
(including our executive officers) and our directors from holding the Company’s securities in a margin account
or otherwise pledging these securities as collateral for a loan. As of the date of this proxy statement, none of our
Named Executive Officers and non-employee directors hold the Company’s securities in a margin account or
have otherwise pledged them as collateral for a loan.
Stipend for Interim Chief Financial Officer; Principal Accounting Officer
In connection with Mr. Humpich’s appointment to interim Chief Financial Officer on January 5, 2023, the
compensation committee agreed that he would receive a $100,000 stipend per fiscal quarter (or portion thereto)
in which he serves in such position, which amount will be paid in arrears. In the event Mr. Humpich only serves
as interim Chief Financial Officer for a portion of any given fiscal quarter, then the $100,000 per quarter stipend
will be prorated on a month-to-month basis. Additionally, in connection with Mr. Humpich’s continued service as
the Company’s principal accounting officer after June 28, 2023 following Mr. Monroe’s appointment as the
Company’s Chief Financial Officer, the compensation committee agreed that Mr. Humpich would continue to
receive a $100,000 stipend per fiscal quarter (or portion thereto) in which he continues to serve in such position
through the end of the 2023 fiscal year, which amount will be paid in arrears. Commencing with the 2024 fiscal
year, Mr. Humpich no longer receives such $100,000 quarterly stipend.
Signing Bonus for D. Christopher Monroe
Pursuant to Mr. Monroe’s Executive Employment Agreement and in connection with his appointment to
Chief Financial Officer, the Company agreed to pay to Mr. Monroe a one-time signing bonus in the amount of
$500,000. The signing bonus will be paid in two equal installments of $250,000 each in the following manner: (i)
the first installment was due and payable on or before July 1, 2023, and (ii) the second installment was due and
payable on or before January 1, 2024.
Compensation Committee Report
The compensation committee has reviewed and discussed the “Compensation Discussion and Analysis”
required by Item 402(b) of Regulation S - K with management. Based on such review and discussions, the
compensation committee recommended to the Board that the “Compensation Discussion and Analysis” be
included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form 10 - K
for the year ended December 26, 2023.
All members of the compensation committee concur in this report.
Michael A. Crawford, Chair
Gregory N. Moore
Kathleen M. Widmer
60
Summary Compensation Table
The following table sets forth the total compensation earned with respect to the fiscal years 2023, 2022,
and 2021 by our Named Executive Officers, which include (i) our Principal Executive Officer (the “PEO”) and
Principal Financial Officer (the “PFO”), including any interim PEO or PFO, (ii) the Company’s four most highly
compensated executive officers other than the PEO and PFO who were serving as executive officers at the end
of the last completed fiscal year, and (iii) one additional individual for whom disclosure would have been required
but for the fact that the individual was not serving as an executive officer of the registrant at the end of the last
completed fiscal year.
Name and Principal Position
Gerald L. Morgan
Chief Executive Officer
D. Christopher Monroe
Chief Financial Officer
Keith V. Humpich
Former Interim Chief Financial Officer
Tonya R. Robinson
Former Chief Financial Officer
Regina Tobin
President
S. Chris Jacobsen
Former Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster
Chief Communications Officer
Summary Compensation Table
Salary
($)(1)
1,190,000
972,500
411,269
240,385
—
—
592,000
—
—
21,154
492,500
343,269
642,500
492,500
334,423
311,538
492,500
343,269
500,000
492,500
323,077
500,000
492,500
337,707
381,538
—
—
Bonus
($)(2)
—
—
—
250,000
—
—
200
—
—
—
200
200
—
200
200
—
200
200
200
200
200
200
200
200
200
—
—
Grant Date
Fair Value
of Stock
Awards
($)(3)(4)
2,599,856
2,201,368
2,394,513
404,484
—
—
364,629
—
—
—
893,178
998,855
897,792
795,166
822,315
804,272
793,936
950,640
794,920
496,210
945,109
794,920
496,210
1,142,042
860,836
—
—
Non-equity
Incentive Plan
Compensation
($)(5)
1,527,267
1,245,138
880,832
254,545
—
—
190,908
—
—
—
366,262
446,168
827,270
498,055
238,141
275,040
498,055
410,944
509,089
498,055
319,290
509,089
498,055
284,783
269,787
—
—
All Other
Compensation
($)(6)
30,404
2,983
83,151
249,524
—
—
1,242
—
—
2,000,179
2,983
—
32,454
2,983
—
436,600
2,983
7,800
22,131
2,983
1,497
24,885
2,983
—
5,643
—
—
Total
($)(4)
5,347,527
4,421,989
3,769,765
1,398,938
—
—
1,148,979
—
—
2,021,333
1,755,123
1,788,492
2,400,016
1,788,904
1,395,079
1,827,450
1,787,674
1,712,853
1,826,340
1,489,948
1,589,173
1,829,094
1,489,948
1,764,732
1,518,004
—
—
Year
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
(1)
(2)
With respect to Mr. Humpich’s base salary for 2023, these amounts include the $100,000
quarterly stipend in which Mr. Humpich served as interim Chief Financial Officer of the Company
and/or as the principal accounting officer of the Company (as applicable).
This column represents holiday bonus awards paid to the Named Executive Officers for the
fiscal years ended December 26, 2023, December 27, 2022, and December 28, 2021.
Additionally, pursuant to Mr. Monroe’s Executive Employment Agreement and in connection
with his appointment to Chief Financial Officer, the Company agreed to pay to Mr. Monroe a
one-time signing bonus in the amount of $500,000. The signing bonus was paid in two equal
installments of $250,000 each in the following manner: (i) the first installment was due and
payable on or before July 1, 2023, and (ii) the second installment was due and payable on or
before January 1, 2024. The amount included for Mr. Monroe with respect to the 2023 fiscal
year includes the initial $250,000 portion of the signing bonus paid by the Company.
61
(3)
Reflects the grant date fair value computed in accordance with FASB ASC Topic 718 of
performance based restricted stock units and service based restricted stock units granted
pursuant to the Company’s long term incentive plan using the closing price of the Company’s
common stock on the last trading day immediately preceding the grant date.
The Company cautions that the amounts reported in the Summary Compensation Table for
these awards may not represent the amounts that the Named Executive Officers will actually
realize from the awards. Whether, and to what extent, a Named Executive Officer realizes value
will depend on the Company’s actual operating performance, stock price fluctuations and the
Named Executive Officer’s continued service with the Company. Additional information on all
outstanding stock awards is reflected in the “Grants of Plan - Based Awards Table” and the
“Outstanding Equity Awards at Fiscal Year End Table.”
(4)
With respect to Mr. Morgan, (i) amounts for the 2023 fiscal year include the performance based
restricted stock units and service based restricted stock units granted to Mr. Morgan during the
2023 fiscal year relating to his 2023 year service, (ii) amounts for the 2022 fiscal year include
the performance based restricted stock units and service based restricted stock units granted
to Mr. Morgan during the 2022 fiscal year relating to his 2022 year service, and (iii) amounts for
the 2021 fiscal year include (a) the performance based restricted stock units and service based
restricted stock units granted to Mr. Morgan during the 2021 fiscal year relating to his 2021 year
service, and (b) the service based restricted stock units granted to Mr. Morgan during the 2021
fiscal year relating to his Q4 2020 service.
With respect to Mr. Monroe, amounts for the 2023 fiscal year include the performance based
restricted stock units and service based restricted stock units granted to Mr. Monroe during the
2023 fiscal year relating to his partial 2023 year service.
With respect to Mr. Humpich, amounts for the 2023 fiscal year include the service based
restricted stock units granted to Mr. Humpich during the 2023 fiscal year relating to his 2023
fiscal year service as the Vice President of Finance of the Company. Mr. Humpich did not
receive any performance based restricted stock units and/or service based restricted stock units
for serving as the interim Chief Financial Officer during the 2023 fiscal year.
With respect to Ms. Robinson, (i) amounts for the 2022 fiscal year include the performance
based restricted stock units and service based restricted stock units granted to Ms. Robinson
during the 2022 fiscal year relating to her 2022 year service, and (ii) amounts for the 2021 fiscal
year include the performance based restricted stock units and service based restricted stock
units granted to Ms. Robinson during the 2021 fiscal year relating to her 2021 year service. As
previously described, the Company did not grant any performance based restricted stock units
and/or service based restricted stock units to Ms. Robinson in the 2023 fiscal year.
With respect to Ms. Tobin, (i) amounts for the 2023 fiscal year include the performance based
restricted stock units and service based restricted stock units granted to Ms. Tobin during the
2023 fiscal year relating to her 2023 year service, (ii) amounts for the 2022 fiscal year include
the performance based restricted stock units and service based restricted stock units granted
to Ms. Tobin during the 2022 fiscal year relating to her 2022 year service, and (iii) amounts for
the 2021 fiscal year include (a) the service based restricted stock units granted to Ms. Tobin
during the 2021 fiscal year relating to her 2021 year service including certain grants made prior
to her appointment to Chief Learning and Culture Officer, and (b) the service based restricted
stock units granted to Ms. Tobin during the 2021 fiscal year relating to her Q4 2020 service.
62
With respect to Mr. Jacobsen, (i) amounts for the 2023 fiscal year include the performance
based restricted stock units and service based restricted stock units granted to Mr. Jacobsen
during the 2023 fiscal year relating to his 2023 year service, (ii) amounts for the 2022 fiscal year
include the performance based restricted stock units and service based restricted stock units
granted to Mr. Jacobsen during the 2022 fiscal year relating to his 2022 year service, and (iii)
amounts for the 2021 fiscal year include the performance based restricted stock units and
service based restricted stock units granted to Mr. Jacobsen during the 2021 fiscal year relating
to his 2021 year service.
With respect to Mr. Colson, (i) amounts for the 2023 fiscal year include the performance based
restricted stock units and service based restricted stock units granted to Mr. Colson during the
2023 fiscal year relating to his 2023 year service, (ii) amounts for the 2022 fiscal year include
the service based restricted stock units granted to Mr. Colson during the 2022 fiscal year relating
to his 2022 year service, and (iii) amounts for the 2021 fiscal year include (a) the service based
restricted stock units granted to Mr. Colson during the 2021 fiscal year relating to his 2021 year
service including certain grants made prior to his appointment to General Counsel, and (b) the
service based restricted stock units granted to Mr. Colson during the 2021 fiscal year relating to
his Q4 2020 service.
With respect to Mr. Mujica, (i) amounts for the 2023 fiscal year include the performance based
restricted stock units and service based restricted stock units granted to Mr. Mujica during the
2023 fiscal year relating to his 2023 year service, (ii) amounts for the 2022 fiscal year include
the service based restricted stock units granted to Mr. Mujica during the 2022 fiscal year relating
to his 2022 year service, and (iii) amounts for the 2021 fiscal year include (a) the service based
restricted stock units granted to Mr. Mujica during the 2021 fiscal year relating to his 2021 year
service including certain grants made prior to his designation of an executive officer as Chief
Information Officer, and (b) the service based restricted stock units granted to Mr. Mujica during
the 2021 fiscal year relating to his Q4 2020 service.
With respect to Mr. Doster, amounts for the 2023 fiscal year include (i) the performance based
restricted stock units and service based restricted stock units granted to Mr. Doster during the
2023 fiscal year relating to his 2024 fiscal year service, (ii) the service based restricted stock
units granted to Mr. Doster during the 2023 fiscal year service relating to his 2023 year service
made prior to his appointment as Chief Communications Officer, and (iii) the service based
restricted stock units granted to Mr. Doster during the 2023 fiscal year relating to his Q4 2022
service.
(5)
As described above, Ms. Robinson retired as Chief Financial Officer of the Company on
January 4, 2023. The amount shown above reflects the bonus that she received for the first
three fiscal quarters relating to her 2022 fiscal year service. Upon her retirement and pursuant
to the Robinson Separation Agreement, Ms. Robinson forfeited her right to receive any bonus
relating to her Q4 2022 fiscal year service.
As described above, Mr. Jacobsen resigned as Chief Marketing Officer of the Company on
August 3, 2023. The amount shown above reflects the bonus that he received for the first two
fiscal quarters relating to his 2023 fiscal year service. Upon his resignation and pursuant to the
Jacobsen Separation Agreement, Mr. Jacobsen forfeited his right to receive any bonus relating
to his Q3 and Q4 2023 fiscal year service.
63
(6)
The amount included for Mr. Morgan with respect to the 2021 fiscal year includes $81,654 paid
by the Company toward Mr. Morgan’s relocation expenses to Louisville, Kentucky. Additionally,
the amount included for Mr. Monroe with respect to the 2023 fiscal year includes $230,452 paid
by the Company toward Mr. Monroe’s relocation expenses to Louisville, Kentucky, $184,881 of
which relates to the reimbursement of certain expenses arising from the sale of his home as a
part of his relocation to Louisville, Kentucky. These amounts for Mr. Monroe reflect the amount
paid to the applicable service providers.
We believe that the personal safety and security of our senior executives is of the utmost
importance to the Company and its shareholders. In connection with the same, we may from
time to time provide personal security services to certain executives. Security services include
home security systems and monitoring and, in some cases, personal security services. For fiscal
year 2023, the Company paid $5,519 toward Mr. Morgan’s personal security, and $7,569 toward
Ms. Tobin’s personal security. We also completed an executive digital assessment for certain
Named Executive Officers during the 2023 fiscal year. In connection with the same, for fiscal
year 2023, the Company paid $18,000 for such assessment for Ms. Tobin and Messrs. Morgan,
Colson, Mujica, Jacobsen, and Monroe. The amounts paid in this paragraph reflect amounts
paid to the applicable service providers.
Additionally, these amounts include payments made by the Company for life insurance
premiums maintained for the benefit of the applicable Named Executive Officers.
Finally, as more particularly described above, under the Robinson Separation Agreement, the
Company agreed to pay to Ms. Robinson an aggregate sum of $3,500,000 (less any applicable
withholdings and/or deductions), which will be paid in three installments in accordance with the
following schedule: (i) $1,500,000 due and payable no later than January 31, 2023; (ii) $500,000
due and payable on July 31, 2023; and (iii) $1,500,000 due and payable on January 31, 2024.
With respect to the 2023 fiscal year, the amount above includes the $2,000,000 paid to
Ms. Robinson during the 2023 fiscal year pursuant to the Robinson Separation Agreement.
64
Grants of Plan - Based Awards in Fiscal Year 2023
The following table presents information with respect to grants of stock awards to the applicable Named
Executive Officers during fiscal year 2023.
Grants of Plan-Based Awards Table
Estimated Future Payouts Under
Equity Incentive Plan Awards(1)
Name
Gerald L. Morgan
Grant Date
Minimum Target Maximum
All Other
Stock Awards:
Number of
Shares of Stock
or Units (2)
Grant Date
Fair Value of
Stock and
Option
Awards ($)(3)
Chief Executive Officer
Service Based RSUs vesting on January 8, 2024
Performance Based RSUs vesting on January 8, 2024
Regina A. Tobin
President
Service Based RSUs vesting on January 8, 2024
Performance Based RSUs vesting on January 8, 2024
D. Christopher Monroe
Chief Financial Officer
Service Based RSUs vesting on January 8, 2024
Performance Based RSUs vesting on January 8, 2024
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate Secretary
Service Based RSUs vesting on January 8, 2024
Performance Based RSUs vesting on January 8, 2024
Hernan E. Mujica
Chief Technology Officer
Service Based RSUs vesting on January 8, 2024
Performance Based RSUs vesting on January 8, 2024
Travis C. Doster
Chief Communications Officer
Service Based RSUs vesting on February 22, 2024
Service Based RSUs vesting on May 10, 2024
Service Based RSUs vesting on August 2, 2024
Service Based RSUs vesting on November 1, 2024
Service Based RSUs vesting on January 8, 2025
Performance Based RSUs vesting on January 8, 2025
Keith V. Humpich
Former Interim Chief Financial Officer
Service Based RSUs vesting on February 23, 2024
Tonya R. Robinson
Former Chief Financial Officer (5)
S. Chris Jacobsen
Former Chief Marketing Officer
Service Based RSUs vesting on January 8, 2024
Performance Based RSUs vesting on January 8, 2024
January 8, 2023
January 8, 2023
—
—
—
13,900 (4)
—
27,800
13,900
1,299,928
1,299,928
January 8, 2023
January 8, 2023
—
—
—
4,300 (4)
—
8,600
5,300
—
495,656
402,136
June 28, 2023
June 28, 2023
—
—
—
1,400
—
2,800
2,300
251,436
153,048
January 8, 2023
January 8, 2023
—
—
—
3,200 (4)
—
6,400
5,300
—
495,656
299,264
January 8, 2023
January 8, 2023
—
—
—
3,200 (4)
—
6,400
5,300
—
495,656
299,264
February 22, 2023
May 10, 2023
August 2, 2023
November 1, 2023
November 9, 2023
November 9, 2023
—
—
—
—
—
—
—
—
—
—
—
1,700 (4)
—
—
—
—
—
3,400
858
834
837
911
3,100
—
89,730
89,697
92,539
92,503
320,571
175,797
February 23, 2023
—
—
—
3,426
364,629
January 8, 2023
January 8, 2023
—
—
—
4,300 (4)
—
8,600
4,300
—
402,136
402,136
(1)
(2)
(3)
These amounts reflect the minimum, target, and maximum number of shares issuable under
performance awards. The related performance targets and certain results are described in detail
in the “Compensation Discussion and Analysis.”
Each stock award consists of service based restricted stock units, where each unit represents
the conditional right to receive one share of our common stock upon satisfaction of vesting
requirements. See the “Compensation Discussion and Analysis” for the conditions of
accelerated vesting upon termination of employment other than for cause.
Reflects the grant date fair value computed in accordance with ASC 718 of the target number
of performance based restricted stock units and service based restricted stock units granted to
the Named Executive Officers using the closing price of the Company’s common stock on the
last trading day immediately preceding the grant date, which was based on the following:
(i)
With respect to Mr. Morgan, 13,900 service based restricted stock units and 13,900
performance based restricted stock units granted on January 8, 2023 at $93.52.
65
(ii)
(iii)
(iv)
(v)
(vi)
With respect to Ms. Tobin, 5,300 service based restricted stock units and 4,300
performance based restricted stock units granted on January 8, 2023 at $93.52.
With respect to Mr. Monroe, 2,300 service based restricted stock units and 1,400
performance based restricted stock units granted on June 28, 2023 at $109.32.
With respect to Mr. Colson, 5,300 service based restricted stock units and 3,200
performance based restricted stock units granted on January 8, 2023 at $93.52.
With respect to Mr. Mujica, 5,300 service based restricted stock units and 3,200
performance based restricted stock units granted on January 8, 2023 at $93.52.
With respect to Mr. Doster, (A) 858 service based restricted stock units granted on
February 22, 2023 at $104.58, (B) 834 service based restricted stock units granted on
May 10, 2023 at $107.55, (C) 837 service based restricted stock units granted on
August 2, 2023 at $110.56, (D) 911 service based restricted stock units granted on
November 1, 2023 at $101.54, (E) 3,100 service based restricted stock units granted
on November 9, 2023 at $103.41, and (F) 1,700 performance based restricted stock
units granted on November 9, 2023 at $103.41.
(vii) With respect to Mr. Humpich, 3,426 service based restricted stock units granted on
February 23, 2023 at $106.43.
(viii) With respect to Mr. Jacobsen, 4,300 service based restricted stock units and 4,300
performance based restricted stock units granted on January 8, 2023 at $93.52.
These are not amounts paid to or received by the Named Executive Officers. For discussion of
the assumptions used in determining these values, see Note 14 to the consolidated financial
statements in the Company’s Annual Report on Form 10 - K for the fiscal year ended
December 26, 2023.
(4)
(5)
The amount included in the table above represents the target award opportunity. Performance
based equity awards with respect to fiscal year 2023 were paid at 127.3% of the total target
amount for the fiscal year in which a Named Executive Officer served in such role, based on an
increase in actual EPS of 14.3% and an actual Profit Sharing Pool of $6,116,701 calculated on
fiscal year 2023 pre-tax profit of $349,525,785.
As described above, Ms. Robinson retired as Chief Financial Officer as of January 4, 2023. As
such, she did not receive any grants of performance based restricted stock units and service
based restricted stock units for the 2023 fiscal year.
66
Outstanding Equity Awards
The following table presents information with respect to outstanding stock option awards, stock awards,
and equity incentive plan awards as of December 26, 2023 by the Named Executive Officers.
Outstanding Equity Awards at Fiscal Year End Table
Name
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster
Chief Communications Officer
Keith V. Humpich
Former Interim Chief Financial Officer
Tonya R. Robinson (15)
Former Chief Financial Officer
S. Chris Jacobsen (16)
Former Chief Marketing Officer
Stock Awards
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
13,900 (2)
Units of
Equity Incentive Plan Awards
Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(1)
Market Value Number of
of Shares or Shares or
Units of
Stock That Stock That
Have Not
Have Not
Vested
($)(1)
1,711,924
13,900 (3) 1,711,924
Vested
(#)
5,300 (4)
652,748
4,300 (5)
529,588
2,300 (6)
283,268
1,400 (7)
172,424
5,300 (8)
652,748
3,200 (9)
394,112
5,300 (10)
652,748
3,200 (11)
394,112
6,540 (12)
805,466
1,700 (13)
209,372
3,426 (14)
421,946
—
—
—
—
—
—
—
—
—
—
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Market value was computed using the Company’s closing stock price on the last trading day of
our fiscal year ended December 26, 2023, which was $123.16.
The vesting schedule is as follows: 13,900 service based restricted stock units on January 8,
2024.
Consists of performance awards which will vest and be earned, if at all, at the time of a
determination by our compensation committee that certain Company performance measures
have been satisfied. If and to the extent earned, the vesting schedule is as follows: 13,900
performance based restricted stock units on January 8, 2024.
The vesting schedule is as follows: 5,300 service based restricted stock units on January 8,
2024.
Consists of performance awards which will vest and be earned, if at all, at the time of a
determination by our compensation committee that certain Company performance measures
have been satisfied. If and to the extent earned, the vesting schedule is as follows: 4,300
performance based restricted stock units on January 8, 2024.
The vesting schedule is as follows: 2,300 service based restricted stock units on December 31,
2024.
Consists of performance awards which will vest and be earned, if at all, at the time of a
determination by our compensation committee that certain Company performance measures
67
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
have been satisfied. If and to the extent earned, the vesting schedule is as follows: 1,400
performance based restricted stock units on January 8, 2024.
The vesting schedule is as follows: 5,300 service based restricted stock units on January 8,
2024.
Consists of performance awards which will vest and be earned, if at all, at the time of a
determination by our compensation committee that certain Company performance measures
have been satisfied. If and to the extent earned, the vesting schedule is as follows: 3,200
performance based restricted stock units on January 8, 2024.
The vesting schedule is as follows: 5,300 service based restricted stock units on January 8,
2024.
Consists of performance awards which will vest and be earned, if at all, at the time of a
determination by our compensation committee that certain Company performance measures
have been satisfied. If and to the extent earned, the vesting schedule is as follows: 3,200
performance based restricted stock units on January 8, 2024.
The vesting schedule is as follows: (A) 858 service based restricted stock units on February 22,
2024, (B) 834 service based restricted stock units on May 10, 2024, (C) 837 service based
restricted stock units on August 2, 2024, (D) 911 service based restricted stock units granted on
November 1, 2024, and (E) 3,100 service based restricted stock units on January 8, 2025,
Consists of performance awards which will vest and be earned, if at all, at the time of a
determination by our compensation committee that certain Company performance measures
have been satisfied. If and to the extent earned, the vesting schedule is as follows: 1,700
performance based restricted stock units on January 8, 2025.
The vesting schedule is as follows: 3,426 service based restricted stock units on February 23,
2024.
As described above, Ms. Robinson resigned as Chief Financial Officer of the Company on
January 4, 2023. As such, she was not granted any service based restricted stock units and/or
performance based restricted stock units with respect to the 2023 fiscal year.
As described above, Mr. Jacobsen resigned as Chief Marketing Officer of the Company on
August 3, 2023. Upon his resignation, Mr. Jacobsen forfeited his right to receive any of the 4,300
service based restricted stock units and 4,300 performance based restricted stock units
previously granted to Mr. Jacobsen with respect to his 2023 fiscal year service.
See the “Compensation Discussion and Analysis” for the conditions of accelerated vesting upon
termination of employment other than for cause.
68
Stock Vested
The following table presents information with respect to stock awards vested during the fiscal year ended
December 26, 2023 by the Named Executive Officers.
Stock Vested Table
Number of
Shares Acquired Value Realized
on Vesting
(#)
27,391
on Vesting
($)(1)
2,561,606 (i)
Name
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster
Chief Communications Officer
Keith V. Humpich
Former Interim Chief Financial Officer
Tonya R. Robinson
Former Chief Financial Officer
S. Chris Jacobsen
Former Chief Marketing Officer
10,730
1,003,470 (ii)
—
—
5,500
514,360 (iii)
5,500
514,360 (iv)
4,940
536,154 (v)
3,396
368,497 (vi)
—
—
9,879
923,884 (vii)
(1)
The value realized upon vesting of restricted stock units represents the fair value of the
underlying shares based on the closing price of the Company’s common stock on the trading
day immediately preceding the vesting date, which is in accordance with the following:
(i)
(ii)
(iii)
(iv)
(v)
$93.52 with respect to the 12,200 service based restricted stock units which vested on
January 8, 2023, and $93.52 with respect to the 15,191 performance based restricted
stock units which vested on January 8, 2023 but became reportable on February 24,
2023.
$93.52 with respect to the 5,500 service based restricted stock units which vested on
January 8, 2023, and $93.52 with respect to the 5,230 performance based restricted
stock units which vested on January 8, 2023 but became reportable on February 24,
2023.
$93.52 with respect to the 5,500 service based restricted stock units which vested on
January 8, 2023.
$93.52 with respect to the 5,500 service based restricted stock units which vested on
January 8, 2023.
$102.20 with respect to the 1,500 service based restricted stock units which vested on
February 28, 2023, $115.86 with respect to the 1,500 service based restricted stock
units which vested on May 19, 2023, $111.94 with respect to the 1,033 service based
restricted stock units which vested on August 3, 2023, and $103.01 with respect to 907
service based restricted stock units which vested on November 2, 2023.
69
(vi)
(vii)
$102.20 with respect to the 1,000 service based restricted stock units which vested on
February 28, 2023, $115.86 with respect to the 1,000 service based restricted stock
units which vested on May 19, 2023, $111.94 with respect to the 743 service based
restricted stock units which vested on August 3, 2023, and $103.01 with respect to 653
service based restricted stock units which vested on November 2, 2023.
$93.52 with respect to the 4,400 service based restricted stock units which vested on
January 8, 2023, and $93.52 with respect to the 5,479 performance based restricted
stock units which vested on January 8, 2023 but became reportable on February 24,
2023.
Termination, Change of Control and Change of Responsibility Payments
If a Named Executive Officer had resigned or been terminated for any reason or for cause other than a
Qualifying Reason (as defined above) prior to the expiration of the term of his or her Executive Employment
Agreement, the Named Executive Officer would have received payment of his or her annual base salary then in
effect through the date of resignation or termination as well as any accrued paid time off that might be due at
such termination in accordance with policies of the Company in effect from time to time, and the Company shall
have no other severance obligations under such Executive Employment Agreement.
If a Named Executive Officer had been terminated prior to the expiration of the term of his or her
Executive Employment Agreement for a Qualifying Reason, the Company will pay the Named Executive Officer
three months of base salary, unless the termination occurs within 12 months following a Change in Control (as
defined above), in which case the applicable Named Executive Officer’s current base salary remaining for the
then existing term of his or her respective Executive Employment Agreement will be paid.
In addition, if any Named Executive Officer’s termination occurs for a Qualifying Reason within 12
months following a Change in Control, the applicable Named Executive Officer shall be paid any incentive bonus
earned but not yet paid for any fiscal year ended before the date of termination, plus an incentive bonus for the
year in which the date of termination occurs, equal to the applicable Named Executive Officer’s target bonus for
that year, prorated based on the number of days in the fiscal year elapsed before the date of termination.
While the individual Executive Employment Agreements do not address the manner in which unvested
stock awards, if any, will be handled upon the termination of a Named Executive Officer, the specific restricted
stock unit award agreement and/or performance restricted stock unit award agreement entered into by the
Named Executive Officers upon the grant of service based restricted stock units and/or performance based
restricted stock units provide that (A) if a Change in Control occurs prior to the vesting date of such restricted
stock units and the Named Executive Officer is terminated by the Company without Cause, or (B) if the Named
Executive Officer is terminated for Good Reason within 12 months following a Change in Control, then such
unvested service based restricted stock units and/or performance based restricted stock units shall become
vested as of the date of termination. Additionally, such specific restricted stock unit award agreement and/or
performance restricted stock unit award agreement entered into by the Named Executive Officers provide that if
any Named Executive Officer’s continuous service is terminated because of death or disability prior to the vesting
date for the applicable grant of service based restricted stock units and/or performance based restricted stock
units (as and if applicable), then such applicable restricted stock units become immediately vested in an amount
equal to the total number of granted restricted stock units multiplied by a fraction, the numerator of which is the
number of calendar months or portions thereof from grant date of such restricted stock units through the date on
which such Named Executive Officer’s continuous service is terminated due to death or disability and the
denominator of which is the total number of calendar months or portion thereof in the vesting period for such
restricted stock unit grants.
The following table lists the estimated amounts payable to a Named Executive Officer pursuant to the
Executive Employment Agreements if his or her employment had been terminated for a Qualifying Reason
70
unrelated to a change of control or death or disability on December 26, 2023, the last day of our fiscal year,
provided that each Named Executive Officer signed a full release of all claims against us.
Termination Payments Table
Name
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster
Chief Communications Officer
Keith V. Humpich
Former Interim Chief Financial Officer
Tonya R. Robinson
Former Chief Financial Officer
S. Chris Jacobsen
Former Chief Marketing Officer
Total
Estimated
Cash
Payments
($)(1)
300,000
162,500
125,000
125,000
125,000
125,000
— (2)
3,500,000 (3)
413,805 (4)
(1)
(2)
(3)
(4)
If the employment of any of Ms. Tobin and Messrs. Morgan, Monroe, Colson, Mujica, and Doster
is terminated under those circumstances, then the Company will pay him or her three months
of their applicable base salary.
Mr. Humpich is not subject to an Executive Employment Agreement. As such, there is no
prescribed amount to be paid to Mr. Humpich if his employment had been terminated for a
Qualifying Reason unrelated to a change of control or death or disability on December 26, 2023,
the last day of our fiscal year.
As more particularly described above, this amount includes the actual amount paid by the
Company to Ms. Robinson pursuant to the Robinson Separation Agreement and is comprised
of three installments in accordance with the following schedule: (i) $1,500,000 due and payable
no later than January 31, 2023; (ii) $500,000 due and payable on July 31, 2023; and (iii)
$1,500,000 due and payable on January 31, 2024. As previously discussed, upon her
retirement, Ms. Robinson forfeited her right to all outstanding equity awards and she reaffirmed
certain obligations under her Executive Employment Agreement, including, without limitation,
obligations pertaining to non-competition, non-hire, and non-solicitation
As more particularly described above, this amount includes the actual amount paid by the
Company to Mr. Jacobsen pursuant to the Jacobsen Separation Agreement in which the
Company paid (in addition to his salary and benefits [including, but not limited to, the payment
of his incentive bonus relating to the Q2 2023 fiscal year period ending on June 27, 2023]
through August 3, 2023), (i) a sum of $125,000 (less applicable withholdings) reflecting three
months of his base salary due and payable under his Executive Employment Agreement, and
(ii) a one-time payment of $288,805 (less applicable withholdings). As previously discussed,
upon his resignation, Mr. Jacobsen forfeited his right to all outstanding equity awards and he
71
reaffirmed certain obligations under his Executive Employment Agreement, including, without
limitation, obligations pertaining to non-competition, non-hire, and non-solicitation.
The following table lists the estimated amounts payable to a Named Executive Officer (excluding
Ms. Robinson and Messrs. Jacobsen and Humpich) pursuant to the Executive Employment Agreements and
applicable equity incentive agreements if his or her employment had been terminated without Cause following a
Change in Control or if any Named Executive Officer resigns for Good Reason within 12 months following a
Change of Control, on December 26, 2023, the last day of our fiscal year, provided that each Named Executive
Officer signed a full release of claims against us.
Change in Control, Change in Responsibilities Payments Table
Name
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster
Chief Communications Officer
Estimated Estimated Value of
Cash
Payments
($)(1)
2,812,012
Newly Vested
Stock Awards
($)(2)
Total
($)
3,423,848 6,235,860
1,523,173
1,182,336 2,705,509
1,040,899
455,692
1,496,591
1,040,899
1,046,860
2,087,759
1,040,899
1,046,860
2,087,759
982,735
1,014,838
1,997,573
(1)
If the employment of any of the Named Executive Officers listed above had been terminated
without Cause following a Change of Control, or if any of the Named Executive Officers listed
above had resigned his or her position for Good Reason within 12 months following a Change
of Control, the Named Executive Officer would have received the amount of his or her then
current base salary through the end of the term of the Named Executive Officer’s employment
agreement, together any incentive bonus earned but not yet paid for any fiscal year ended
before the date of termination, plus an incentive bonus for the year in which the date of
termination occurs, equal to the applicable Named Executive Officer’s target bonus for that year,
prorated based on the number of days in the fiscal year elapsed before the date of termination.
Had a Named Executive Officer’s employment been so terminated on December 26, 2023, each
72
of Messrs. Morgan, Jacobsen, Colson, and Mujica, and Mss. Robinson and Tobin would have
received payment through January 7, 2024.
Name
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
D. Christopher Monroe
Chief Financial Officer
Christopher C. Colson
Chief Legal and Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Travis C. Doster
Chief Communications Officer
Salary
($)
1,242,740
Bonus
($)
1,569,272
Total
Estimated
Payments
($)
2,812,012
673,151
850,022
1,523,173
517,808
523,091
1,040,899
517,808
523,091
1,040,899
517,808
523,091
1,040,899
517,808
464,927
982,735
(2)
While the individual Executive Employment Agreements do not address the manner in which
unvested stock awards, if any, will be handled upon the termination of a Named Executive
Officer, the specific restricted stock unit award agreement and/or performance restricted stock
unit award agreement entered into by the Named Executive Officers upon the grant of service
based restricted stock units and/or performance based restricted stock units provide that each
Named Executive Officer’s service based restricted stock units and performance based
restricted stock units would have become immediately vested upon a termination of his or her
employment (A) if a Change in Control occurs prior to the vesting date of such restricted stock
units and the Named Executive Officer is terminated by the Company without Cause, or (B) if
the Named Executive Officer is terminated for Good Reason within 12 months following a
Change in Control. The amounts shown in this column represent the value of the restricted stock
units at the closing price of our common stock on the last trading day of our fiscal year ended
December 26, 2023, which was $123.16. The number of service based restricted stock units
and performance based restricted stock units which would have vested on that date are shown
in the table titled “Outstanding Equity Awards at Fiscal Year End Table” set forth above.
Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
Item 402(v) of Regulation S-K, we are providing the following information about the relationship between
executive compensation actually paid and certain financial performance of our Company, illustrating pay versus
performance. The compensation actually paid (“CAP”) for the Principal Executive Officer (“PEO”) and the
average CAP for the non-PEO named executive officers is calculated by taking the Summary Compensation
Table (“SCT”) values: (a) less the grant value of equity granted during the covered fiscal year (“CFY”); (b) plus
the year-end fair value of unvested equity awards granted during the CFY; (c) plus for equity awards granted in
prior years that are outstanding and unvested at the end of the CFY, the difference between the year-end fair
value and the immediately prior year-end fair value; (d) plus for equity awards granted in the CFY that vested
during the CFY, the fair value of such awards on the vesting date; (e) plus for equity awards granted in a fiscal
year prior to the CFY that vested during the CFY, the difference between the fair value as of the vesting date
and the immediately prior year-end fair value; and (f) less for equity awards granted in a fiscal year prior to the
73
CFY that failed to meet the applicable vesting conditions during the CFY, the fair value at the end of the prior
fiscal year.
Pay Versus Performance Table
Value of Initial Fixed $100
Investment Based on:
SCT Total
Comp First
PEO
($)(1)
5,347,527
4,421,989
3,769,765
N/A
SCT Total
Comp for
Second PEO
($)(2)
N/A
N/A
4,986,164
3,620,939
CAP to
First PEO
($)(3)
6,435,377
5,725,465
3,801,740
N/A
CAP to
Second PEO
($)(4)
N/A
N/A
(2,793,754)
7,366,061
Year
2023
2022
2021
2020
Avg. SCT
Total Comp
for Non-
PEO NEOs
($)(5)
1,746,269
1,662,319
2,634,509
1,207,262
Avg. CAP to
Non-PEO
NEOs
($)(6)
1,697,782
1,823,561
1,934,435
1,773,284
Peer Group
TSR (S&P
Index)
($)(8)
154.53
134.26
145.77
118.90
Net Income
(in Millions)
($)
304.9
269.8
245.3
31.3
Diluted
EPS
($)
4.54
3.97
3.50
0.45
TSR
($)(7)
236.24
173.96
164.74
140.80
(1)
(2)
(3)
For the purposes of this table, the First Principal Executive Officer refers to Gerald L. Morgan.
On March 18, 2021, Mr. Morgan was named Chief Executive Officer of the Company following
W. Kent Taylor’s passing. The amounts described in this column relate to amounts disclosed
in the Summary Compensation Table of this proxy statement. Additionally, for the purposes of
the 2021 fiscal year, the amounts also reflect compensation received by Mr. Morgan for
positions within the Company before assuming the role of Chief Executive Officer on March 18,
2021.
For the purposes of this table, the Second Principal Executive Officer refers to W. Kent Taylor.
Mr. Taylor served as the Chief Executive Officer of the Company until his passing on March 18,
2021. The amounts described in this column relate to amounts disclosed in the Summary
Compensation Table of this proxy statement.
The dollar amounts reported in the “CAP to First PEO” column have been calculated in
accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned,
realized, or received by the First PEO. These amounts reflect the amount set forth in the
“Total” column of the “Summary Compensation Table” for each fiscal year presented, with
certain adjustments as described in the table below, in accordance with the requirements of
Item 402(v) of Regulation S-K. Amounts in the below reconciliation table may not sum to total
due to rounding:
CALCULATION OF FIRST PEO CAP
Change in
Value of
Equity Awards
Granted in
Prior Years
and Unvested
at end of
CFY
($)(d)
—
—
—
N/A
Value of
Unvested
Equity Awards
Granted during
CFY
($)(c)
3,423,848
2,297,748
2,352,525
N/A
Value of
Equity Awards
Granted and
Vested in
CFY
($)(e)
—
4,996
—
N/A
Change in
Value of
Granted in
Prior Years
and Vested in
CFY
($)(f)
263,858
1,202,100
73,963
N/A
Value of
Equity Awards
Previously
Granted that
Failed to Meet
Conditions in
CFY
($)(g)(i)
—
—
—
N/A
SCT
Total
Comp
($)(a)
SCT
Stock
Awards
($)(b)
5,347,527 2,599,856
4,421,989 2,201,368
3,769,765 2,394,513
N/A
N/A
Year
2023
2022
2021
2020
CAP to First PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
6,435,377
5,725,465
3,801,740
N/A
(i)
For the purposes of determining the amount that should be included in column (g) of
each footnote throughout the Company’s Pay Versus Performance disclosure, the
Company has used (i) the value of the difference in the target amount of performance
based restricted stock units that an applicable officer was granted for a particular fiscal
year and the amount of performance based restricted stock units that actually vested to
the extent the same is less than such target amount, and (ii) the value of the difference
in the target amount of “retention” restricted stock units that an applicable officer was
74
granted and the amount of “retention” restricted stock units that actually vested (as and
if applicable).
(4)
CALCULATION OF SECOND PEO CAP
Change in
Value of
Equity Awards
Granted in
Prior Years
and Unvested
at end of
CFY
($)(d)
N/A
N/A
—
1,698,000
Value of
Unvested
Equity Awards
Granted during
CFY
($)(c)
N/A
N/A
—
4,737,600
Value of
Equity Awards
Granted and
Vested in
CFY
($)(e)
N/A
N/A
1,909,885
—
Change in
Value of
Equity Awards
Granted in
Prior Years
and Vested in
CFY
($)(f)
N/A
N/A
880,222
668,322
Value of
Equity Awards
Previously
Granted that
Failed to Meet
Conditions in
CFY
($)(g)
N/A
N/A
5,816,825
—
SCT
Total
Comp
($)(a)
N/A
N/A
SCT
Stock
Awards
($)(b)
N/A
N/A
4,986,164 4,753,200
3,620,939 3,358,800
Year
2023
2022
2021
2020
CAP to Second PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
N/A
N/A
(2,793,754)
7,366,061
(5)
For the purposes of the 2020 fiscal year, the Non-Principal Executive Officers include Tonya R.
Robinson, Doug W. Thompson, S. Chris Jacobsen, and Gerald L. Morgan.
For the purposes of the 2021 fiscal year, the Non-Principal Executive Officers include Tonya R.
Robinson, Doug W. Thompson, S. Chris Jacobsen, Christopher C. Colson, Hernan E. Mujica
and Regina A. Tobin.
For the purposes of the 2022 fiscal year, the Non-Principal Executive Officers include Tonya R.
Robinson, S. Chris Jacobsen, Christopher C. Colson, Hernan E. Mujica and Regina A. Tobin.
For the purposes of the 2023 fiscal year, the Non-Principal Executive Officers include Regina
A. Tobin, D. Christopher Monroe, Keith V. Humpich, Tonya R. Robinson, Travis C. Doster, S.
Chris Jacobsen, D. Christopher Monroe, Christopher C. Colson, and Hernan E. Mujica.
(6)
CALCULATION OF 2020 NON-PEO CAP
SCT
SCT
Stock
Total
Awards
Comp
($)(b)
($)(a)
671,760
920,732
1,818,256 1,679,400
671,760
924,889
291,726
1,165,170
828,662
1,207,262
Value of
Unvested
Equity Awards
Granted during
CFY
($)(c)
947,520
2,368,800
947,520
394,800
1,164,660
Non PEO
Robinson
Thompson
Jacobsen
Morgan
Average
Change in
Value of
Equity Awards
Granted in
Prior Years
and Unvested
at end of
CFY
($)(d)
226,400
283,000
226,400
—
183,950
Value of
Equity Awards
Granted and
Vested in
CFY
($)(e)
—
—
—
—
—
Change in
Value of
Equity Awards
Granted in
Prior Years
and Vested in
CFY
($)(f)
(3,400)
265,278
92,317
(169,900)
46,074
Value of
Equity Awards
Previously
Granted that
Failed to Meet
Conditions in
CFY
($)(g)
—
—
—
—
—
CAP to Non-PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
1,419,492
3,055,934
1,519,366
1,098,344
1,773,284
75
CALCULATION OF 2021 NON-PEO CAP
SCT
SCT
Stock
Total
Awards
Comp
($)(b)
($)(a)
1,788,492
998,855
7,556,722 2,376,600
950,640
1,712,853
822,315
1,395,079
1,589,173
945,109
1,764,732 1,142,043
2,634,509 1,205,927
Value of
Unvested
Equity Awards
Granted during
CFY
($)(c)
1,120,250
—
1,075,440
761,770
873,795
1,064,238
815,916
Non PEO
Robinson
Thompson
Jacobsen
Tobin
Colson
Mujica
Average
Change in
Value of
Equity Awards
Granted in
Prior Years
and Unvested
at end of
CFY
($)(d)
—
—
—
—
—
—
—
Value of
Equity Awards
Granted and
Vested in
CFY
($)(e)
—
—
—
—
—
—
—
Change in
Value of
Equity Awards
Granted in
Prior Years
and Vested in
CFY
($)(f)
5,234
6,192
4,020
56,190
66,566
140,529
46,455
Value of
Equity Awards
Previously
Granted that
Failed to Meet
Conditions in
CFY
($)(g)
147,497
1,475,289
516,319
—
—
—
356,518
CAP to Non-PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
1,767,624
3,711,025
1,325,354
1,390,724
1,584,425
1,827,456
1,934,435
CALCULATION OF 2022 NON-PEO CAP
Change in
Value of
Equity Awards
Granted in
Prior Years
and Unvested
at end of
CFY
($)(d)
—
—
—
—
—
—
Value of
Unvested
Equity Awards
Granted during
CFY
($)(c)
932,283
828,696
913,449
517,935
517,935
742,060
Value of
Equity Awards
Granted and
Vested in
CFY
($)(e)
—
—
—
—
—
—
Change in
Value of
Equity Awards
Granted in
Prior Years
and Vested in
CFY
($)(f)
205,623
403,536
(11,380)
(6,458)
(20,710)
114,122
Value of
Equity Awards
Previously
Granted that
Failed to Meet
Conditions in
CFY
($)(g)
—
—
—
—
—
—
CAP to Non-PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
1,999,851
2,225,970
1,895,807
1,505,215
1,490,963
1,823,561
SCT
Total
Comp
($)(a)
1,755,123
1,787,674
1,788,904
1,489,948
1,489,948
1,662,319
SCT
Stock
Awards
($)(b)
893,178
793,936
795,166
496,210
496,210
694,940
Non PEO
Robinson
Jacobsen
Tobin
Colson
Mujica
Average
CALCULATION OF 2023 NON-PEO CAP
SCT
Total
Comp
($)(a)
2,400,016
1,398,938
1,148,979
2,021,333
1,518,004
1,827,450
1,826,340
1,829,094
1,746,269
SCT
Stock
Awards
($)(b)
897,792
404,484
364,629
—
860,836
804,272
794,920
794,920
615,232
Value of
Unvested
Equity Awards
Granted during
CFY
($)(c)
1,182,336
455,692
421,946
—
1,014,838
—
1,046,860
1,046,860
646,067
Non PEO
Tobin
Monroe
Humpich
Robinson
Doster
Jacobsen
Colson
Mujica
Average
Change in
Value of
Equity Awards
Granted in
Prior Years
and Unvested
at end of
CFY
($)(d)
—
—
—
—
—
—
—
—
—
Value of
Equity Awards
Granted and
Vested in
CFY
($)(e)
—
—
—
—
—
—
—
—
—
Change in
Value of
Equity Awards
Granted in
Prior Years
and Vested in
CFY
($)(f)
90,021
—
48,696
—
70,954
95,188
(3,575)
(3,575)
37,214
Value of
Equity Awards
Previously
Granted that
Failed to Meet
Conditions in
CFY
($)(g)
—
—
—
932,283
—
—
—
—
116,535
CAP to Non-PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
2,774,581
1,450,146
1,254,992
1,089,050
1,742,960
1,118,366
2,074,705
2,077,459
1,697,782
(7)
(8)
For the purposes of calculating the Company’s total shareholder return (“TSR”), the Company’s
TSR increased 40.8% in fiscal year 2020, increased 17.0% in fiscal year 2021, increased 5.6%
in fiscal year 2022, and increased 35.8% in fiscal year 2023.
As more particularly shown in the Company’s Annual Report on Form 10-K for the year ended
December 28, 2021, we presented a performance graph by comparing our cumulative TSR
against the Russell 3000 Restaurant Index. In connection with our Annual Report on Form 10-
K for the year ended December 28, 2021, December 27, 2022 and December 26, 2023, the
Company presented a performance graph by comparing our cumulative TSR against the S&P
Composite 1500 Restaurant Sub-Index (the “S&P Index”). For the purposes of the table above,
we have shown the TSR for the Company’s peer companies using the S&P Index. In
furtherance of the foregoing, using the S&P Composite 1500 Restaurant Sub-Index, the TSR of
76
the Company’s peer companies increased 18.9% in fiscal year 2020, increased 22.6% in fiscal
year 2021, decreased 7.9% in fiscal year 2022, and increased 15.1% in fiscal year 2023.
As shown in the charts as discussed further below, the relationship between the Compensation Actually
Paid to the Principal Executive Officer and the Average Compensation Actually Paid to the Non-Principal
Executive Officers in the 2020 fiscal year, 2021 fiscal year, 2022 fiscal year, and 2023 fiscal year, respectively,
to each of (i) net income, (ii) total shareholder return, and (iii) diluted earnings per share demonstrates that such
compensation fluctuates to the extent the Company is achieving its goals and increasing value for shareholders
in line with the Company’s compensation philosophy and performance-based objectives. For the purposes of
the charts below, the Principal Executive Officer is determined in the following manner: (i) for fiscal year 2020,
the Principal Executive Officer represented is W. Kent Taylor, (ii) for fiscal year 2021, the Principal Executive
Officer represented is the aggregate compensation of W. Kent Taylor and Gerald L. Morgan, and (iii) for fiscal
years 2022 and 2023 the Principal Executive Officer represented is Gerald L. Morgan.
P
A
C
)
s
n
o
i
l
l
i
m
n
I
(
)
s
n
o
i
l
l
i
m
n
I
(
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
$1.0
$0.0
CAP vs. Net Income 2020-2023
$245.3
$269.8
$304.9
$31.3
$7.4
$1.8
$1.0
$1.9
$5.7
$1.8
$6.4
$1.7
2020
2021
2022
2023
Year
Compensation Actually Paid to First PEO
Average Compensation Actually Paid to Non-PEO NEOs
Net Income ($)
$350.0
$300.0
$250.0
$200.0
$150.0
$100.0
$50.0
$-
e
m
o
c
n
I
t
e
N
77
P
A
C
)
s
n
o
i
l
l
i
m
n
I
(
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
$1.0
$0.0
CAP vs. TSR 2020-2023
$164.74
$145.77
$173.96
$134.26
$140.80
$118.90
$236.24
$154.53
$7.4
$1.8
$1.0
$1.9
$5.7
$1.8
$6.4
$1.7
2020
2021
2022
2023
Year
Compensation Actually Paid to First PEO
Average Compensation Actually Paid to Non-PEO NEOs
TSR (TXRH)
TSR (S&P Composite 1500 Restaurant Index)
CAP vs. Diluted EPS 2020-2023
$4.54
$3.50
$3.97
$0.45
$7.4
$1.8
$1.0
$1.9
$5.7
$1.8
$6.4
$1.7
2020
2021
2022
2023
Year
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
$1.0
$-
P
A
C
)
s
n
o
i
l
l
i
m
n
I
(
$240.00
$220.00
$200.00
$180.00
$160.00
$140.00
$120.00
$100.00
R
S
T
)
s
'
$
(
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
S
P
E
)
s
'
$
(
Comp. Actually Paid to First PEO ($)(3)
Avg. Comp. Actually Paid to Non-PEO NEOs ($)(6)
Diluted EPS
The following table lists the three financial performance measures that we believe represent the most
important financial measures to link compensation actually paid to our Named Executive Officers in 2023 to our
performance.
Most Important Performance Measures
1) Diluted Earnings Per Share Growth
2) Profit Growth
3) Change in Stock Price
78
CEO Pay Ratio
Under Section 953(b) of the Dodd Frank Wall Street Reform and Consumer Protection Act, a U.S.
publicly traded corporation is required to disclose the ratio between their Chief Executive Officer’s annual total
compensation to the total compensation of such corporation’s median employee after excluding the Chief
Executive Officer’s compensation. To identify our median employee, we used the 2023 total cash compensation
for all individuals (other than Mr. Morgan, our Chief Executive Officer) who were employed by us as of
December 26, 2023, the last day of our 2023 fiscal year. For the purposes of calculating our employee’s total
cash compensation, we used our employee’s base wages identified on our employees’ W-2 forms. As a part of
our calculation, we included all employees, whether employed by us on a full-time or part-time basis, and we
annualized the compensation of any employee whom we hired during our 2023 fiscal year and who was working
for us at the end of our fiscal year. As of December 26, 2023, approximately 74% of our employees were part-
time employees and our average employee worked approximately 18 hours per week.
We identified our median employee as a server in Rockwall, Texas who worked an average of
approximately 20 hours per week. After identifying our median employee, we calculated the annual total
compensation for such employee as $18,523, which is determined using the same methodology we used for our
Named Executive Officers as set forth in the 2023 Summary Compensation Table described above.
As more particularly described in the 2023 Summary Compensation Table, the annual total
compensation for Mr. Morgan, our Chief Executive Officer, for our 2023 fiscal year is $5,347,527 and the ratio
between the compensation for our Chief Executive Officer and the compensation for our median employee is
289 to 1. Note that since the SEC rules allow companies to use various methodologies and assumptions, apply
certain exclusions, and make reasonable estimates relating to a specific company’s employee base when
identifying the median employee, the CEO pay ratio disclosed by other companies may not be comparable with
the CEO pay ratio disclosed in this paragraph. Additionally, the pay ratio between our Chief Executive Officer
and our median employee may vary year to year based, in part, on the grant date value of any restricted stock
units granted to our Chief Executive Officer in any given year.
79
AUDIT COMMITTEE REPORT
As of the date of this proxy statement, the audit committee of the Board (the “Committee”) is currently
composed of five directors, all of whom meet the criteria for independence under the applicable Nasdaq and
Securities & Exchange Commission (the “SEC”) rules and the Sarbanes - Oxley Act. The Committee acts under
a written charter adopted by the Board, a copy of which is available on the Company’s website at
www.texasroadhouse.com. During the 2023 fiscal year, the Committee was comprised of Ms. Epps and
Messrs. Crawford, Jones, Moore, Warfield, and Zarley. Ms. Widmer also served on the Committee for a portion
of the 2023 fiscal year until she stepped down from the Committee in May 2023. During the 2024 fiscal year, the
Committee is comprised of Ms. Epps and Messrs. Crawford, Jones, Moore, and Warfield. Ms. Epps currently
serves as the chairperson of the Committee and was the chairperson of the Committee during the 2023 fiscal
year. The Board evaluated the credentials of and designated Ms. Epps and Messrs. Moore and Warfield as audit
committee financial experts.
The Committee has prepared the following report on its activities and with respect to the Company’s
audited consolidated financial statements for the fiscal year ended December 26, 2023 (the “Audited Financial
Statements”).
• The Committee met 12 times during fiscal year 2023, which were comprised of six regular meetings
of the Committee and six meetings solely related to the Committee’s review of the Company’s
quarterly earnings release and filings with the SEC. The Committee’s meetings included private
sessions with the Company’s independent auditors and internal auditors (as needed), as well as
executive sessions consisting of only Committee members. The Committee also met periodically in
private sessions with management, including Named Executive Officers (as needed);
• The Committee reviewed the acknowledgement process for the Company’s Code of Conduct and
the corresponding results;
• The Committee reviewed the scope, plans, and results of the testing performed by the Company’s
internal auditors and independent auditors in their assessments of internal control over financial
reporting and the consolidated financial statements;
• The Committee evaluated and reviewed the Company’s internal audit function, including, without
limitation, the independence, competence, staffing adequacy and authority of the function; the ability
of the internal audit function to raise issues to the appropriate level of authority; and the reporting
relationships among the Company’s internal auditors, financial management, and the Committee;
• The Committee reviewed matters submitted to it via the Company’s whistleblower hotline and/or
other reporting mechanisms regarding concerns about allegedly questionable financial, accounting,
and/or auditing matters (if any);
• The Committee reviewed the Company’s risk assessment and risk management policies, practices,
and disclosures, including, without limitation, the Company’s financial strategies, insurance plans,
cyber risk, business continuity, and corporate sustainability with management, the Company’s Chief
Legal and Administrative Officer, the Company’s internal and independent auditors, and the
Company’s enterprise risk management team;
• The Committee was advised on risks and the Company’s related mitigation efforts in accordance
with acceptable risk tolerance, including, without limitation, strategic, operational, financial, legal,
data privacy, corporate sustainability, responsible alcohol service, and cybersecurity risks both
during and outside of regularly scheduled meetings;
• As a part of the Committee’s oversight responsibilities, during the 2023 fiscal year, the Committee
received reports on risks relating to certain business functions within the Company, together with
reports from the Company’s employment compliance risk subcommittee, vendor risk subcommittee,
80
food safety risk subcommittee, crisis and business continuity risk subcommittee, and corporate
sustainability risk subcommittee;
• The Committee reviewed the Company’s legal, regulatory, and ethical compliance programs;
• The Committee reviewed with the Company’s Chief Legal and Administrative Officer the Company’s
disclosures with respect to current lawsuits (as and if applicable);
• The Committee reviewed comment letters received from the SEC, if any, together with
management’s response to such letters;
• The Committee pre - approved all audit, audit-related, and permissible non - audit services provided
to the Company by KPMG LLP, the Company’s independent auditors, for the 2023 fiscal year, before
management engaged the independent auditors for those purposes, pursuant to and in accordance
with the Texas Roadhouse, Inc. Policy for Pre-Approval of Services Provided by External Audit Firm
(which is available on the Company’s website at www.texasroadhouse.com);
• On a quarterly basis, the Committee discussed with KPMG LLP the matters required to be discussed
by the Public Company Accounting Oversight Board’s Auditing Standard No. 1301, Communications
with Audit Committees;
• The Committee discussed with KPMG LLP their written disclosures and letter required by the Public
Company Accounting Oversight Board regarding the independent auditor’s communications with
the Committee concerning independence;
• The Committee reviewed the selection, application, and disclosure of critical accounting policies;
• The Committee reviewed with KPMG LLP the selection and disclosure of the critical audit matter(s)
set forth in the independent auditor’s report of the Company’s Form 10-K;
• The Committee reviewed the Company’s quarterly earnings press releases prior to issuance;
• The Committee reviewed and discussed the Company’s Audited Financial Statements for the 2023
fiscal year with management and the independent auditors;
• As mentioned above, the Committee reviewed the Company’s Quarterly and Annual Reports on
Form 10 - Q and Form 10 - K prior to filing with the SEC and acknowledged that the Committee did
not have any objections to the filing of the same;
• The Committee evaluated the appointment, compensation, retention and oversight of KPMG LLP.
In connection with such appointment, the Committee evaluated the service level of the incumbent
independent auditor, which included criteria such as prior year quality of service, industry and
technical expertise, independence, resource availability, and reasonableness and competitiveness
of fees, as well as solicited the input of key management employees during its evaluation; and
• Based on the review and discussion referred to above, and in reliance thereon, the Committee
recommended to the Board that the Audited Financial Statements be included in the Company’s
Annual Report on Form 10 - K for the fiscal year ended December 26, 2023, for filing with the SEC.
All members of the Committee concur in this report.
Donna E. Epps, Chair
Michael A. Crawford
Wayne L. Jones
Gregory N. Moore
Curtis A. Warfield
81
Related Party Transactions
The Committee’s charter provides that the Committee will review and approve any transactions between
us and any of our executive officers, non-employee directors, and 5% shareholders, or any members of their
immediate families, in which the amount involved exceeds the threshold limits established by the regulations of
the SEC. In reviewing a related - party transaction, the Committee considers the material terms of the transaction,
including whether the terms are generally available to an unaffiliated third party under similar circumstances.
Unless specifically noted, the transactions described below were either entered into before our initial public
offering in 2004 and the subsequent formation of the Committee or before the individual listed below became a
Named Executive Officer.
Grants of Franchise or License Rights
We have franchised restaurants to companies owned in part by a Named Executive Officer. The royalty
rate that is paid by these companies is set forth below, and is the amount we typically charge to franchisees. We
believe that allowing certain Named Executive Officers to have ownership interests in our restaurants provides
an ongoing benefit to the Company by these persons being more invested in the overall success of the brand.
Ownership interests of franchised restaurants by Mr. Morgan as of the end of the 2023 fiscal year are
listed below. Note that the chart below denotes ultimate beneficial ownership percentages and Mr. Morgan may
from time to time hold such interests through another legal entity such as a trust or limited liability company.
RELATED PARTY TRANSACTIONS
Management,
Restaurant
El Cajon, CA
McKinney, TX
Brownsville, TX
Oceanside, CA
Name and Ownership
Gerald L. Morgan (2.0%)
Gerald L. Morgan (2.0%)
Gerald L. Morgan (3.06%)
Gerald L. Morgan (2.0%)
Initial
Franchise Royalty
Fee
Rate
—
—
—
—
4.0 %
4.0 %
4.0 %
4.0 %
Royalties
Paid to
Us in
Fiscal Year 2023
($)
504,149
432,502
428,897
466,456
Supervision and/or
Accounting Fees
Paid to Us
in Fiscal Year 2023
($)(1)
30,366
54,063
53,612
30,366
(1)
The management, supervision and/or accounting fees described in this table are fees paid by
the operating entity of the applicable franchise location to the Company pursuant to a separate
management agreement.
For the 2023 fiscal year, the total amount of distributions received by Mr. Morgan relating to his
ownership interests in the above-referenced franchised restaurants was $150,214. This amount does not reflect
compensation paid by the Company to Mr. Morgan during the 2023 fiscal year; rather, this amount was paid by
the applicable franchise entity and reflects a return on investment in these separate restaurant locations.
The franchise agreements that we have entered into with this current Named Executive Officer contain
the same terms and conditions as those agreements that we enter into with our other Texas Roadhouse domestic
franchisees. We have the contractual right, but not the obligation, to acquire the restaurants owned in part by
such Named Executive Officer based on a pre - determined valuation formula which is the same as the formula
contained in the Texas Roadhouse domestic franchise agreements that we have entered into with other
franchisees with whom we have such rights. Once a franchise agreement has been entered into, it may be
terminated if the franchisee defaults in the performance of any of its obligations under the agreement, including
its obligations to operate the restaurant in strict accordance with our standards and specifications. A franchise
agreement may also be terminated if a franchisee becomes insolvent, fails to make its required payments,
creates a threat to the public health or safety, ceases to operate the restaurant or misuses the Texas Roadhouse
trademarks.
82
Ownership Interest in Majority-Owned Joint Venture Entities
We have a current Named Executive Officer, Gerald L. Morgan, who has an ownership interest in a
certain Texas Roadhouse restaurant that is owned by an entity that the Company controls and in which the
Company holds a 52.5% ownership interest. We believe that allowing certain Named Executive Officers to have
ownership interests in restaurants provides an ongoing benefit to the Company by making these persons more
invested in the overall success of the brand. As of the end of the 2023 fiscal year, Mr. Morgan held a 34.5%
ultimate beneficial ownership interest in the Mansfield, Texas restaurant, which such entity paid $384,319 to us
for management and supervision fees. Additionally, for the 2023 fiscal year, the total amount of distributions
received by Mr. Morgan relating to his ownership interest in the Mansfield, Texas restaurant was $577,305. This
amount does not reflect compensation paid by the Company to Mr. Morgan during the 2023 fiscal year; rather,
this amount was paid by the entity and reflects a return on investment in this restaurant location.
Other Related Transactions
On February 28, 2024, the Board and the Committee approved a related party transaction involving
Mr. Zarley’s ownership interest in a future Jaggers franchise entity as described herein. In connection with the
transaction, the Company will be entering into a development agreement with a third-party member-managed
limited liability company for the development of fifteen Jaggers franchise locations in Houston, Texas. Mr. Zarley
is the beneficial owner of 20.0% of the franchise entity. Pursuant to the development agreement, the franchise
entity will pay a $150,000 development fee to the Company and is required to pay to the Company a $45,000
franchise fee for every franchise location opened under the development agreement. Mr. Zarley agreed to
guarantee certain obligations of the franchise entity to the Company under any franchise agreement entered into
between the Company and such entity during the term of the development agreement. The franchise agreements
will contain the same terms and conditions as those agreements that we enter into with our other Jaggers
franchisees, with royalties generally at 5.0% of restaurant sales. As of the date of this proxy statement, Mr. Zarley
has not received any distributions relating to his ownership interest in the franchise entity; provided, however,
any amounts paid to Mr. Zarley will not reflect compensation paid by the Company but such amounts will be paid
by the franchise entity and will reflect a return on investment in these restaurant locations. Due to Mr. Zarley’s
ownership interest in such thirty party franchise entity, Mr. Zarley is no longer independent (as such term is
defined in the listing standards under Nasdaq Marketplace Rule 5605(a)(2)). In connection with the approval of
this related party transaction, the Board and the Committee considered, among other things, that (i) Mr. Zarley
does not serve on any of the Board committees, (ii) the Board remains composed by more than 75% of
independent directors, (iii) the fact that fiscal year 2024 is the last year in which Mr. Zarley will be nominated for
re-election at the Annual Meeting, and (iv) the instrumental role that Mr. Zarley will continue to play in mentoring
our newest members of the Board as he serves his final annual term under the Board’s age limit policy.
83
PRESENTATION OF PROPOSALS
PROPOSAL 1
ELECTION OF DIRECTORS
The Company’s Bylaws provide for not less than one and not more than 15 directors. Our Board currently
consists of nine directors. At the Annual Meeting, we are electing nine directors to hold office until the Annual
Meeting of Shareholders in 2025 and until a successor is elected and qualified. Although it is not anticipated that
any of the nominees listed below will decline or be unable to serve, if that should occur, the proxy holders may,
in their discretion, vote for a substitute nominee.
Nominees for Election as Directors
Set forth below are the Board members who will stand for re - election at the Annual Meeting, together
with their age, all Company positions and offices they currently hold, and the year in which they joined the Board.
NOMINEES FOR ELECTION AS DIRECTORS
Position or
Office
Director
Director
Director
Director
Chairman of the Board; Director
Chief Executive Officer; Director
Director
Director
Director
Age
57
56
60
65
74
63
56
62
79
Director
Since
2024
2020
2021
2023
2005
2021
2018
2013
2004
Name
Jane Grote Abell
Michael A. Crawford
Donna E. Epps
Wayne L. Jones
Gregory N. Moore
Gerald L. Morgan
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Recommendation
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF THE
NOMINEES FOR THE DIRECTORS OF THE COMPANY SET FORTH ABOVE.
84
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
As more particularly described in this proxy statement, the audit committee is directly responsible for
managing the Company’s independent auditors, which includes, without limitation, (i) pre-approving all audit and
permitted non - audit services provided by our independent auditors, and (ii) the appointment, compensation,
retention and oversight of the Company’s independent auditors. In connection with the audit committee’s
appointment of the Company’s independent auditors, the audit committee evaluates the service level of the
incumbent independent auditor on an annual basis, which includes criteria such as prior year quality of service,
industry and technical expertise, independence, resource availability, and reasonableness and competitiveness
of fees, as well as solicits the input of key management employees during its evaluation.
In connection with the same and pursuant to its charter, the audit committee has appointed the firm of
KPMG LLP to serve as the independent auditors to audit the consolidated financial statements and the internal
control over financial reporting of the Company for the fiscal year which ends on December 31, 2024. The Board
and the audit committee jointly agree that the continued retention of KPMG LLP is in the best interest of the
Company and its shareholders. Accordingly, a resolution will be presented at the Annual Meeting to ratify the
appointment of KPMG LLP. If the shareholders fail to ratify the appointment of KPMG LLP, the audit committee
will take this result into account when appointing an independent auditor for the 2024 fiscal year. Even if the
appointment is ratified, the audit committee in its discretion may direct the appointment of a different independent
registered public accounting firm as the Company’s independent auditors at any time during the year if the audit
committee believes that such a change would be in the best interests of the Company and its shareholders. One
or more representatives of KPMG LLP are expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.
Fees Paid to the Independent Auditors
KPMG LLP FEES FOR FISCAL YEARS 2023 AND 2022
Audit Fees
Audit - related Fees
Tax Fees
All Other Fees
2023($)
2022($)
857,797
16,000
50,500
—
924,297
913,816
16,000
66,190
—
996,006
Audit Fees. KPMG LLP charged $857,797 in fiscal year 2023 and $913,816 in fiscal year 2022 for audit
fees. These include professional services in connection with the audit of the Company’s annual consolidated
financial statements and its internal control over financial reporting. They also include reviews of the Company’s
consolidated financial statements included in the Company’s Quarterly and Annual Reports on Form 10 - Q and
Form 10 - K and for services that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for the fiscal years shown. In addition, the fees for fiscal years 2023 and 2022
contain approximately $12,797 and $18,816, respectively, related to statutory audits. Finally, the fees for fiscal
year 2022 contain $80,000 relating to the testing of general information technology and automated controls
related to an accounting software upgrade which the Company completed during fiscal 2022.
85
Audit-related Fees. KPMG LLP charged $16,000 in fiscal year 2023 and 2022 for their consent to
include the Company’s annual consolidated financial statements in both of our franchise disclosure documents.
Tax Fees. KPMG LLP charged $50,500 in fiscal year 2023 and $66,190 in fiscal year 2022 for
consulting and compliance services. The fees charged in fiscal years 2023 and 2022 include $30,000 and
$40,000, respectively, for tax structuring related services.
All Other Fees. KPMG LLP did not charge any additional amounts during either fiscal year 2023 or fiscal
year 2022.
Pre - approval Policies and Procedures
The audit committee pre - approved all audit, audit - related, and permissible non - audit services provided
to the Company by KPMG LLP before management engaged the auditors for those purposes. The policy of the
audit committee is to review all engagement letters for accounting firms for non - audit services.
Recommendation
THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF KPMG LLP AS THE
COMPANY’S INDEPENDENT AUDITORS FOR THE 2024 FISCAL YEAR.
86
PROPOSAL 3
ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION
The Board requests shareholder approval of the compensation of the Company’s Named Executive
Officers as described in the “Compensation Discussion and Analysis,” the Executive Compensation section and
the other related executive compensation tables and related discussions in this proxy statement. As an advisory
vote, the outcome of the voting on this Proposal 3 is not binding upon the Company; however, the compensation
committee, which is responsible for establishing and administering the Company’s executive compensation
program, values the opinions expressed by shareholders on this Proposal 3 and will consider the outcome of
the vote when making future compensation decisions for the Company’s executive officers. Additionally, the
compensation committee invites shareholders to express any questions or concerns regarding the Company’s
compensation philosophy for our executive officers by correspondence addressed to Texas Roadhouse, Inc.
Compensation Committee, 6040 Dutchmans Lane, Louisville, Kentucky 40205.
The objective of the compensation committee in setting and evaluating the compensation of our
executive officers is to promote the sustained profitability of the Company. Compensation for the Named
Executive Officers is divided into three key components: (1) base salary, which provides a secure base of
compensation and serves to motivate and retain our Named Executive Officers; (2) a cash bonus, which rewards
our Named Executive Officers for the success of the Company as measured by growth in the Company’s
earnings per diluted share and its overall pre - tax profit, and for each Named Executive Officer’s individual
contribution to that success; and (3) grants of restricted stock units, which offer the Named Executive Officers a
financial interest in the long - term success of the Company and align their interests with those of our
shareholders. The types of restricted stock units that may be granted by the compensation committee in its
discretion are (i) service based restricted stock units, which grant the Named Executive Officers the conditional
right to receive shares of our common stock that vest after a defined period of service, (ii) “retention” restricted
stock units, which vest upon the completion of the term of an individual Named Executive Officer’s agreement
or such longer date as determined by the compensation committee, and (iii) performance based restricted stock
units, which are calculated based on the achievement of certain Company performance targets established by
the compensation committee and vest over a period of service. While “retention” restricted stock units were
granted by the compensation committee under the prior employment agreements, the compensation committee
has not made any similar retention grants for the Named Executive Officers under the Executive Employment
Agreements. The compensation committee will evaluate whether to grant additional retention grants in the future
as a part of its annual evaluation of the compensation packages for the Named Executive Officers.
The compensation packages for our Named Executive Officers offer base salaries and target cash
bonus amounts and feature restricted stock unit awards. While the initial grant of restricted stock unit awards is
based on a fixed dollar amount, the ultimate value of such restricted stock unit awards is dependent upon the
performance of the Company and the price of our common stock at the time such restricted stock units vest.
Under the Executive Employment Agreements, the compensation committee has flexibility in establishing the
compensation for our Named Executive Officers. Specifically, each Executive Employment Agreement
establishes an annual base salary for the term of the respective Executive Employment Agreements, with base
salary increases being left to the discretion of the compensation committee. Additionally, each Executive
Employment Agreement provides an annual short-term cash incentive opportunity with a target bonus based on
the achievement of defined goals to be established by the compensation committee, with increases in the target
bonus amount to be made at the discretion of the compensation committee during the term of the Executive
Employment Agreement. Finally and in addition to cash compensation, each Executive Employment Agreement
provides that the compensation committee may grant certain stock awards to the Named Executive Officers
during the term of the respective Executive Employment Agreements, the types and amounts of which are
subject to the compensation committee’s discretion based on their annual review of the performance of the
Company and of the individual Named Executive Officers.
The compensation committee evaluates the stock compensation for each specific Named Executive
Officer on an annual basis to determine the right combination of rewards and incentives through the issuance of
service based restricted stock units and/or performance based restricted stock units to drive company
performance without encouraging unnecessary or excessive risk taking by all of the Named Executive Officers
87
as a whole. Under this approach, the Named Executive Officers receive service based restricted stock units
and/or performance based restricted stock units, with a significant portion of some of the Named Executive
Officers’ compensation being tied to the grant of such performance based restricted stock units. By conditioning
a significant portion of certain Named Executive Officer’s performance based restricted stock unit grants upon
the achievement of defined performance goals to be established by the compensation committee, combined
with the stock ownership guidelines for our Named Executive Officers more particularly described above, we
have created a more direct relationship between compensation and shareholder value. Additionally, by giving
the compensation committee the discretion to grant certain stock awards (if any) in its discretion to our Named
Executive Officers under their Executive Employment Agreements, the compensation committee has the
opportunity to adjust a significant portion of the total compensation for the Named Executive Officers on an
annual basis to more accurately reflect the overall performance of the Company, which may include the issuance
of service based restricted stock units and/or performance based restricted stock units. Overall, we believe this
approach provides the Named Executive Officers with a compensation package which promotes the sustained
profitability of the Company and aligns the interests of our Named Executive Officers with those of our
shareholders. The compensation packages also reflect a pragmatic response to external market conditions; that
is, total compensation that is competitive with comparable positions in similar industries, including the casual
dining sector of the restaurant industry, but which is reasonable and in the best interests of our shareholders.
This structure, along with the culture and values of our Company, allows the Company to attract and
retain top talent, while also encouraging our Named Executive Officers to keep their focus on both long - term
business development and short - term financial growth. The Board was pleased to receive shareholder approval
of the compensation packages of our Named Executive Officers in the advisory vote at the 2023 annual meeting
and again requests approval of the compensation packages of our Named Executive Officers.
Recommendation
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE EXECUTIVE
COMPENSATION DETAILED IN THIS PROXY STATEMENT.
88
PROPOSAL 4
VOTE TO AMEND THE COMPANY’S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
TO REMOVE CLASS B SHARES
General
We are seeking approval to amend our Amended and Restated Certificate (as hereinafter defined) to
remove any and all references to shares of $0.001 par value Class B Common Stock (“Class B shares”).
Background and Rationale for the Recommendation
In connection with the Company’s initial public offering, the Company executed the Amended and
Restated Certificate of Incorporation of Texas Roadhouse, Inc. dated October 4, 2004. We subsequently
amended such Amended and Restated Certificate of Incorporation pursuant to the Amendment to Amended and
Restated Certificate of Incorporation of Texas Roadhouse, Inc. dated May 19, 2016 and such Amended and
Restated Certificate of Incorporation and related amendment are collectively referred to herein as the “Amended
and Restated Certificate.” Article IV of the Amended and Restated Certificate initially authorized the Company
to issue 100,000,000 shares of $0.001 par value Class A Common Stock (“Class A shares”) and 8,000,000
Class B shares. The holders of our Class A shares and Class B shares generally had identical rights except that
(1) on all matters to be voted on by our shareholders, holders of our Class A shares were – and currently still
are – entitled to one vote per share, while holders of our Class B shares were entitled to 10 votes per share, and
(2) holders of our Class A shares were not entitled to vote on any alteration of the powers, preferences or special
rights of the Class B shares that would not adversely affect the holders of our Class A shares. Under Article IV,
Section B(4) of the Amended and Restated Certificate, each share of Class B stock automatically converted into
one share of Class A stock upon the earliest of (i) the date such Class B shares ceased to be beneficially owned
by W. Kent Taylor, (ii) the date that Mr. Taylor ceased to beneficially own at least 20% of the outstanding shares
of the total shares of the Company, (iii) upon the death or permanent and total disability of Mr. Taylor, or (iv)
September 30, 2009 (reflecting approximately five years following the completion of our initial public offering).
As of October 1, 2009, any and all outstanding Class B shares were converted into Class A shares, and,
accordingly, as of the date of this proxy statement, there are no outstanding Class B shares and the Company
does not have the authority to re-issue any Class B shares. In addition, pursuant to Article IV, Section A(4) of
the Amended and Restated Certificate, upon the conversion of all of the outstanding Class B shares into Class
A shares, the Class A shares were automatically re-designated as “common stock.”
In connection with the Company’s annual review of its corporate governance practices, the Company
and the Board regularly review our governing documents and consider possible changes. One such item that
was identified by the Company and the Board was the removal of any and all references to Class B shares in
the Amended and Restated Certificate. On February 22, 2024, the Board unanimously approved certain
revisions of our Amended and Restated Certificate to remove all references to Class B shares (subject to
approval by our shareholders at the Annual Meeting). Given that the Company is unable to issue any additional
Class B shares and there are no outstanding Class B shares as of the date of this proxy statement, the Board
determined that the Class B share provisions are no longer necessary and could potentially lead to confusion
with our shareholders.
For the reasons stated above, the Board determined that the proposed revisions to the Company’s
Amended and Restated Certificate are advisable and in the best interest of our Company and our shareholders
and authorized and approved the proposed revisions to be considered at the Annual Meeting.
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Proposed Revisions to Article IV of our Amended and Restated Certificate
Article IV of the Amended and Restated Certificate currently references Class B shares that were
authorized and issued at the time of our initial public offering but have subsequently been converted into Class
A shares, which were then re-designated as shares of common stock. As such, the references to Class B shares
are no longer applicable and could inadvertently confuse our shareholders. Therefore, the Board determined
that the proposed revisions to the Company’s Amended and Restated Certificate set forth below are advisable
and in the best interest of our Company and our shareholders and authorized and approved the proposed
revisions to be considered at the Annual Meeting.
We propose to amend Article IV of our Amended and Restated Certificate so that Article IV would state
in its entirety as follows:
ARTICLE IV
Capital Stock
The Corporation shall have the authority to issue One Hundred Million (100,000,000) shares of
$0.001 par value Common Stock (the “Common Stock”), and One Million (1,000,000) shares of $0.001 par
value Preferred Stock (the “Preferred Stock”). The number of authorized shares of any class or classes of
stock may be increased or decreased (but not below the number of shares thereof outstanding) by the
affirmative vote of the holders of a majority of the voting power of the stock of the Corporation entitled to vote,
irrespective of Del. Code Ann. tit. 8, Section 242(b)(2).
A statement of the designations of each class and the powers, preferences and rights, and
qualifications, limitations or restrictions thereof is as follows:
A. Common Stock
(1)
Dividends. The holders of Common Stock shall be entitled to receive dividends if, as and
when declared from time to time by the Board of Directors.
(2)
Liquidation. In the event of the voluntary or involuntary liquidation, dissolution, distribution of
assets or winding-up of the Corporation, the holders of Common Stock shall be entitled to receive all the
assets of the Corporation of whatever kind available for distribution to stockholders, after the rights of the
holders of the Preferred Stock have been satisfied.
(3)
Voting. Each holder of Common Stock shall be entitled to one vote for each share of Common
Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the
stockholders of the Corporation.
B. Preferred Stock.
The Preferred Stock may be issued from time to time in one or more series. The Board of Directors
is expressly authorized, by resolution adopted and filed in accordance with law, to fix the number of shares
in each series, the designation thereof, the powers (including voting powers, full or limited, if any), the
preferences and relative participating, optional or other special rights thereof, and the qualifications or
restrictions thereon, of each series and the variations in such voting powers (if any) and preferences and
rights as between series. Any shares of any class or series of Preferred Stock purchased, exchanged,
converted or otherwise acquired by the Corporation, in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock, without designation as to series, and may be reissued
as part of any series of Preferred Stock created by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth in this Certificate of Incorporation or in such resolution
or resolutions.
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Proposed Revision to Article XII of our Amended and Restated Certificate
Article XII of the Amended and Restated Certificate currently references Class B shares that were
authorized and issued at the time of our initial public offering but have subsequently been converted into Class
A shares, which were then re-designated as shares of common stock. As such, the references to Class B shares
are no longer applicable and could inadvertently confuse our shareholders. Therefore, the Board determined
that the proposed revisions to the Company’s Amended and Restated Certificate set forth below are advisable
and in the best interest of our Company and our shareholders and authorized and approved the proposed
revisions to be considered at the Annual Meeting.
We propose to amend Article XII of our Amended and Restated Certificate so that Article XII would state
in its entirety as follows:
ARTICLE XII
Reservation of Rights
The Corporation reserves the right to amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, in the manner now or hereafter prescribed by the General
Corporation Law of Delaware, and all rights conferred upon stockholders herein are granted
subject to this reservation above.
The full text of the proposed amendment is set forth above and in Appendix A. In Appendix A,
additions are marked with bold, underlined text and deletions are indicated by struck- out text.
Timing and Effect of Revisions to Amended and Restated Certificate
If our shareholders approve the amendments to the Amended and Restated Certificate contemplated
by Proposal 4, they will become effective upon the filing of a certificate of amendment to our Amended and
Restated Certificate with the Delaware Secretary of State, which we anticipate doing as soon as practicable
following shareholder approval of the Proposal 4. In addition, we intend to file an Amended and Restated
Certificate of Incorporation to integrate the amendments to the Amended Restated Certificate discussed in
Proposals 4 and 5 (to the extent approved by the Corporation’s shareholders) into a single document. If the
proposed changes to the Amended and Restated Certificate set forth in this Proposal 4 are not approved by our
shareholders at the Annual Meeting, then our Amended and Restated Certificate will not be amended to remove
references to Class B shares, and any references to Class B shares will remain in our Amended and Restated
Certificate.
Required Vote
The affirmative vote of the holders of a majority of our common stock outstanding as of the Record Date
and entitled to vote on Proposal 4 is required to approve this Proposal 4. As a result, abstentions and broker
non-votes will have the effect of a vote against this Proposal 4.
Recommendation
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” TO PERMIT THE COMPANY
TO AMEND THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO
REMOVE ALL REFERENCES TO CLASS B SHARES.
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PROPOSAL 5
VOTE TO AMEND THE COMPANY’S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION TO PROVIDE FOR
EXCULPATION OF OUR OFFICERS AS PERMITTED BY DELAWARE LAW
Background
The State of Delaware, which is the Company’s state of incorporation, recently enacted legislation that
permits Delaware corporations to limit the personal liability of certain of their officers for monetary damages
associated with claims of breach of the duty of care in limited circumstances under Section 102(b)(7) of the
Delaware General Corporation Law (the “DGCL”). Previously, DGCL 102(b)(7) permitted corporations to limit
the personal liability of directors for monetary damages associated with breaches of the duty of care in limited
circumstances. However, the statute had not previously contemplated providing similar protection for officers.
Article VI of our Amended and Restated Certificate (as defined in Proposal 4) currently provides for the
exculpation of directors from personal liability for monetary damages associated with breaches of the duty of
care, but our Amended and Restated Certificate does not have a similar limitation of personal liability for our
officers. With this new statutory amendment, Delaware corporations are now permitted to include an exculpation
provision in their certificates of incorporation to cover their officers as well, but only with respect to direct claims
by shareholders for breach of an officer’s fiduciary duty of care, including, without limitation, class action lawsuits;
provided, however, such amendment would not allow for the elimination of an officer’s monetary liability for
breach of fiduciary claims brought by the Company itself or for derivative claims brought by shareholders in the
name of the Company. Moreover and similar to what is set forth in Article VI of the Amended and Restated
Certificate with respect to directors, the limitation of personal liability of our officers would not apply to breaches
of the duty of loyalty to the Company or our shareholders, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, and/or any transaction in which the officer derived an
improper personal benefit. As permitted by the DGCL, the officers that would be exculpated under the revisions
proposed in this Proposal 5 fall into three categories: (1) the Company’s president; chief executive officer; chief
operating officer; chief financial officer; chief legal officer; controller; treasurer; or chief accounting officer; (2)
individuals who are or were identified in our public filings as the most highly compensated officers of the
Company; and (3) individuals who, by written agreement with the Company, consented to be identified as officers
for purposes of accepting service of process.
In connection with the Company’s annual review of its corporate governance practices, the Company
and the Board identified the disparate treatment of the Company’s officers and the Company’s directors. Based
on the foregoing and the change in the DGCL, on February 22, 2024, the Board approved certain revisions to
the Amended and Restated Certificate more particularly shown below to amend Article VI of the Amended and
Restated Certificate to provide for exculpation of the officers of the Company from personal liability for monetary
damages associated with claims of breach of the duty of care as is now permitted by the DGCL (subject to
shareholder approval at the Annual Meeting). When evaluating its decision to approve such revisions to the
Amended and Restated Certificate, the Board evaluated the benefits the Board believes would accrue to the
Company by providing such exculpation of its officers in accordance with DGCL Section 102(b)(7) including,
without limitation, the ability to attract and retain key officers and the potential to reduce litigation costs associated
with frivolous lawsuits. The Board believes that these revisions to the Amended and Restated Certificate are in
the best interest of the Company and our shareholders and authorized and approved the proposed revisions to
be considered at the Annual Meeting.
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Proposed Revision to Article VI of Amended and Restated Certificate
Our Amended and Restated Certificate currently provides for the exculpation of directors and does not
include a provision allowing for the exculpation of officers. We propose to amend Article VI of our Amended and
Restated Certificate so that it would state in its entirety as follows:
No director or officer of the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director or officer (as
applicable); except for liability:(a) as a director or officer, for any breach of such director’s or
officer’s duty of loyalty to the Corporation or its stockholders; (b) as a director or officer, for any
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation
of the law; (c) as a director, under Section 174 of the General Corporation Law of the State of
Delaware; (d) as a director or officer, for any transaction from which the director and/or officer
(as applicable) derived an improper personal benefit; or (e) as an officer, in any action by or in
the right of the corporation. If the General Corporation Law of the State of Delaware shall be
amended to permit further elimination or limitation of the personal liability of directors and/or
officers (as applicable), then the liability of a director and/or officer (as applicable) of the
Corporation shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware as so amended. Any repeal or modification of this
Article VI by the stockholders of the Corporation shall not adversely affect any right or protection
of a director and/or officer (as applicable) of the Corporation existing at the time of, or increase
the liability of any director and/or officer (as applicable) of the Corporation with respect to any
acts or omissions occurring prior to, such repeal or modification.
The full text of the proposed amendment is set forth above and in Appendix B. In Appendix B,
additions are marked with bold, underlined text and deletions are indicated by struck- out text.
Rationale for Revisions to Amended and Restated Certificate
The DGCL has long permitted Delaware corporations to exculpate directors from certain personal
liabilities for monetary damages associated with claims of breach of the duty of care in limited circumstances,
and our Amended and Restated Certificate has included such an exculpation provision for directors in
accordance with DGCL Section 102(b)(7). However, until 2022, when the changes to the DGCL were enacted,
Delaware corporations were unable to provide similar protections to their officers – which caused unequal and
inconsistent treatment of directors and officers associated with claims related to an alleged breach of the duty
of care. In the course of the Company’s ongoing evaluation of the Company’s corporate governance practices,
the Board and the Company identified this disparate treatment, and after careful consideration, the Board
approved certain revisions to the Company’s Amended and Restated Certificate to incorporate an exculpation
provision of our officers in our Amended and Restated Certificate in accordance with the DGCL (subject to
approval by our shareholders at the Annual Meeting).
The Board believes that it is in the best interest of the Company and our shareholders to provide our
officers with the exculpatory protection from certain personal liabilities and expenses that is similar to what our
directors are entitled to receive for monetary damages associated with claims of breach of the duty of care in
limited circumstances pursuant to our Amended and Restated Certificate. The nature of the role of directors
and officers often requires them to make decisions on crucial matters. Frequently, directors and officers must
make decisions in response to time-sensitive opportunities and challenges, which can create a substantial risk
of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight.
Without such exculpation protections, particularly amidst the recent trend of plaintiffs increasingly naming
corporate officers as defendants in shareholder litigation, our existing officers may be deterred from making such
business decisions that involve risk due to potential monetary liability for our business decisions and/or
prospective officers may be deterred from serving as an officer of the Company. The Board also considered
when approving such revisions to the Amended and Restated Certificate that many Delaware corporations have
already adopted exculpation clauses limiting the personal liability of their officers in their certificates of
incorporation and that such exculpation of officers is only limited to claims arising from a breach of their
respective duty of care and such limitation of liability would not apply to breaches of the duty of loyalty to the
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Company or our shareholders, acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, and/or any transaction in which the officer derived an improper personal benefit. In
addition, the revised provision of the DGCL only permits, and our proposed revisions to the Amended and
Restated Certificate, would only permit, exculpation for direct claims for officers (as opposed to derivative claims
made by stockholders on behalf of the Company).
For the reasons stated above, the Board determined that the proposed revisions to the Company’s
Amended and Restated Certificate are advisable and in the best interest of our Company and our shareholders
and authorized and approved the proposed revisions to be considered at the Annual Meeting. Please note that
the proposed revisions set forth in this Proposal 5 are not being proposed in anticipation or response to any
specific resignation, threat of resignation or refusal to serve by any officer nor is it being proposed in anticipation
or response to any litigation or threat of litigation.
Timing and Effect of Revisions to Amended and Restated Certificate
If our shareholders approve the amendments to the Amended and Restated Certificate contemplated
by this Proposal 5, they will become effective upon the filing of a certificate of amendment to our Amended and
Restated Certificate with the Delaware Secretary of State, which we anticipate doing as soon as practicable
following shareholder approval of this Proposal 5. In addition, we intend to file an Amended and Restated
Certificate of Incorporation to integrate the amendments to the Amended Restated Certificate discussed in
Proposals 4 and 5 (to the extent approved by the Corporation’s shareholders) into a single document. If the
proposed changes to the Amended and Restated Certificate set forth in this Proposal 5 are not approved by our
shareholders at the Annual Meeting, then our Amended and Restated Certificate will not be amended to provide
for the exculpation of our officers.
Required Vote
The affirmative vote of the holders of a majority of the shares of our common stock outstanding as of
the Record Date and entitled to vote on Proposal 5 is required to approve this Proposal 5. As a result, abstentions
and broker non-votes will have the effect of a vote against this Proposal 5.
Recommendation
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE AMENDMENT TO THE
COMPANY’S AMENDED AND RESTATED CERTIFICATE TO PROVIDE FOR EXCULPATION OF OUR
OFFICERS AS PERMITTED BY DELAWARE LAW.
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PROPOSAL 6
VOTE TO AMEND THE COMPANY’S BYLAWS TO REDUCE THE
OWNERSHIP THRESHOLD REQUIRED FOR SHAREHOLDERS TO
REQUEST A SPECIAL MEETING OF SHAREHOLDERS
General
We are seeking approval to amend our Amended and Restated Bylaws of Texas Roadhouse, Inc. (the
“Bylaws”) to reduce the ownership threshold required for our shareholders to request a special meeting of
shareholders from 50% to 25%, as more particularly described herein.
Background and Rationale for the Recommendation
Article II, Section 3 of our Bylaws currently provides that a special meeting of shareholders may only be
called by our Board, the Chairman of the Board, our Chief Executive Officer or President, or by the Secretary at
the written request of the holders of at least 50% in voting power of all capital stock outstanding and entitled to
cast vote at the meeting. Additionally, Article VII of our Amended and Restated Certificate and Article VIII of our
Bylaws provide that Article II, Section 3 may only be amended with the affirmative vote of the holders of at least
a majority of the voting power of the shares of capital stock of the Company issued and outstanding and entitled
to vote.
In connection with the Company’s annual review of its corporate governance practices, the Company
and the Board regularly review our governing documents and consider possible changes. One such item that
was identified by the Company and the Board was the ownership threshold required for our shareholders to
request a special meeting of shareholders – which is also a topic that was raised on our routine calls with our
shareholders as a part of our shareholder outreach program, as described earlier in this proxy statement.
Following extensive discussion regarding the proposed reduction in the voting percentage, on February 22,
2024, the Board approved certain revisions to our Bylaws more particularly shown below to modify Article II,
Section 3 to reduce the ownership threshold required for our shareholders to request a special meeting of
shareholders from 50% to 25% (subject to approval by our shareholders at the Annual Meeting). This reduction
will permit shareholders holding a sufficiently large voting interest in the Company to request a special meeting.
When making this decision, the Board recognizes that lessening the conditions required for a shareholder of the
Company to request a special meeting enhances shareholder rights. However, the Board has to balance these
enhanced shareholder rights against the risk that a small minority of shareholders, including shareholders with
special interests that are not shared generally by the majority of our Company’s shareholders, could request that
the Company call special meeting(s) – which could result in unnecessary financial expense and disruption to the
Company’s business operations.
For the reasons stated above, the Board determined that the proposed revisions to the Company’s
Bylaws are advisable and in the best interest of our Company and our shareholders and authorized and
approved the proposed revisions to be considered at the Annual Meeting.
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Proposed Revisions to Article II, Section 3 of our Bylaws
As noted above, Article II, Section 3 of our Bylaws currently provide that “[u]nless otherwise prescribed
by law or by the Certificate of Incorporation, special meetings of stockholders may be called at any time and for
any purpose, by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President,
or by the Secretary at the written request of the holders of at least 50% in voting power of all capital stock
outstanding and entitled to cast votes at the meeting.” We propose to amend Article II, Section 3 of our Bylaws
to reduce the applicable percentage threshold so that it would state in its entirety as follows:
Section 3. SPECIAL MEETINGS. Unless otherwise prescribed by law or by the Certificate of
Incorporation, special meetings of stockholders may be called at any time and for any purpose,
by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the
President, or by the Secretary at the written request of the holders of at least 25% in voting
power of all capital stock outstanding and entitled to cast votes at the meeting. Such written
request shall be addressed to the Secretary of the Corporation and shall state the purpose of
the proposed meeting, which must be a proper matter for stockholder action under the General
Corporation Law of the State of Delaware, and shall contain such other information as would be
required under Section 9 of Article II hereof were it to be brought before a meeting called by the
Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President. In
the case of any special meeting so requested by holders of at least 25% in voting power of all
capital stock outstanding and entitled to cast votes at the meeting, the Board of Directors shall
promptly, but in all events within 10 days after the date on which such written request is received,
adopt a resolution fixing a date for such special meeting, which meeting date shall be no more
than 90 days from the date of such resolution. If the Board of Directors fails to take such action,
the record date shall be the 120th day after the date on which the written request was received.
No business shall be conducted at any special meeting of stockholders other than the items of
business stated in the notice of special meeting given in accordance with Section 4 of this
Article II.
The full text of the proposed amendment is set forth above and in Appendix C. In Appendix C, additions
are marked with bold, underlined text and deletions are indicated by struck- out text.
Timing and Effect of Revisions to Bylaws
If this Proposal 6 to amend our Bylaws to reduce the ownership threshold required for our shareholders
to request a special meeting of shareholders from 50% to 25% is approved by our shareholders, then the
revisions in this Proposal 6 will be incorporated into the Second Amended and Restated Bylaws of Texas
Roadhouse, Inc., which we would expect to adopt promptly after the Annual Meeting. Except to the extent our
Bylaws are amended pursuant to this Proposal 6, the remaining provisions to our Bylaws will be unchanged
following the adoption of the Second Amended and Restated Bylaws of Texas Roadhouse, Inc. If the proposed
changes to our Bylaws set forth in this Proposal 6 are not approved by our shareholders at the Annual Meeting,
our Bylaws will not be amended to reduce the ownership threshold for our shareholders to request a special
meeting of shareholders, and the ownership threshold to request a special meeting of shareholders will remain
at 50%.
Required Vote
The affirmative vote of the holders of at least 50% of the shares of our common stock outstanding as of
the Record Date and entitled to cast votes at the Annual Meeting is required to approve this Proposal 6. As a
result, abstentions and broker non-votes will have the effect of a vote against this Proposal 6.
Recommendation
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE AMENDMENT TO THE
COMPANY’S BYLAWS TO REDUCE THE OWNERSHIP PERCENTAGE REQUIRED FOR SHAREHOLDERS
TO REQUEST A SPECIAL MEETING OF SHAREHOLDERS FROM 50% TO 25%.
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PROPOSAL 7
ADVISORY VOTE ON A SHAREHOLDER PROPOSAL
REGARDING THE ISSUANCE OF A CLIMATE REPORT AND TO SET REDUCTION
TARGETS BY THE COMPANY
Boston Trust Walden Company is the beneficial owner of at least $2,000 in market value of shares of
our Common Stock, and, on November 21, 2023, Boston Trust Walden Company notified the Company of its
intention to present a resolution to our shareholders for voting at the Annual Meeting. Concurrently following the
Company’s receipt of the shareholder proposal from Boston Trust Walden Company, on November 22, 2023,
the Company received notice from the Trustee of the New York State Common Retirement Fund of its intention
to co-file the following shareholder proposal with Boston Trust Walden Company. We will provide the proponents’
respective address and shareholdings (to our Company’s knowledge) to any shareholder promptly upon oral or
written request made to Texas Roadhouse, Inc., c/o Christopher C. Colson, Corporate Secretary, 6040
Dutchmans Lane, Louisville, Kentucky 40205, (502) 426-9984. The text of the proponents’ joint resolution and
supporting statement appear below, printed verbatim from its submission. We disclaim all responsibility for the
content of the proposal and the supporting statement, including sources referenced therein.
Shareholder Proposal
“Whereas: The Intergovernmental Panel on Climate Change has advised that greenhouse gas (GHG)
emissions must be halved by 2030 and reach net zero by 2050 to limit global warming to 1.5°C.
Every incremental increase in temperature above 1.5°C will entail increasingly severe physical and
transition risks to companies, investors, and the economy. Climate change mitigation is critical to
address investment risks and avert the economic losses projected if sufficient action is not taken.
The global food system contributes one third of global GHG emissions. Left unmitigated, these
emissions can derail efforts to limit warming to 1.5°C. The 2018 National Climate Assessment identified
rising temperatures as “the largest contributing factor to declines in the productivity of U.S. agriculture”
and noted that “climate change presents numerous challenges to sustaining and enhancing crop
productivity [and] livestock health.”
While Texas Roadhouse has disclosed operational emissions and committed to disclosing supply chain
emissions by the end of 2024, the Company has failed to mitigate climate-related financial risks by
disclosing a comprehensive strategy to reduce its total contribution to climate change. Food service
peers—including Chipotle, McDonald’s, and Yum! Brands—are addressing a broad set of climate-
related financial risks by setting and implementing 1.5°C-aligned science-based targets inclusive of their
full value chains.
By failing to proactively manage value chain emissions, Texas Roadhouse is contributing to incremental
increases in global temperature rise above 1.5°C, which will impact the Company’s access to critical
commodities, procurement and production costs,
Resolved: Shareholders request Texas Roadhouse issue a report, at reasonable cost and omitting
proprietary information, describing if and how it plans to reduce its total GHG emissions and align its
business with the Paris Agreement’s goal of limiting global temperature increases to 1.5°C.
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Supporting Statement: Shareholders recommend the report disclose, at board and management
discretion:
• Paris-aligned short-, medium-, and long-term emissions reduction targets for the Company’s full
GHG footprint, taking into consideration approaches used by advisory groups like the Science-
Based Targets Initiative; and
• a transition plan detailing how the Company intends to achieve such targets, including strategies
for mitigating physical and transition climate risks, taking into consideration criteria used by
advisory groups such as the Task Force on Climate-related Financial Disclosures, CDP,
Transition Plan Taskforce, and the We Mean Business Coalition.”
Board’s Opposition Statement
After careful consideration, the Board unanimously recommends that the shareholders vote
AGAINST this shareholder proposal.
We take corporate sustainability seriously and have been clear that our strategy is about progress, not
promises. And as we describe below, we have made great progress in our sustainability efforts with what we
believe to be a landmark year in 2023.
Our historical business strategy entails making thoughtful business and risk assessments before making
strategic decisions or taking specific action. It is and always has been about taking a deliberate and methodical
approach to our work. It is about educating ourselves on a particular topic by consulting with a number of experts
across different fields and disciplines to ensure that we have a full and complete view of the risk presented,
feasibility of options, and/or business opportunities available now or in the future. We believe that our studied
approach of seeking to understand business opportunities before establishing an action plan (or, even further,
making public commitments or setting targets) has been an instrumental part of our 30-year success. Our
corporate sustainability work is no different. And, as outlined below, we continue to execute against the plan we
shared with our shareholders last year.
As disclosure controls, federal and state regulation, risk management, public marketing of sustainability
initiatives, and varying views on fiduciary responsibility continue to evolve and come under greater scrutiny, we
believe that any external target-setting and broad-based commitment should be treated with as much care,
consideration, and responsibility as other forms of disclosure and/or financial guidance by public companies.
While we maintain internal goals, we do not set broad, public targets or commitments with respect to many of
our company performance / financial metrics. We do not believe that setting of climate related targets should be
treated any differently. In fact, after careful consideration of the issues in the context of our overall approach to
corporate sustainability, we have concluded that the setting of premature or unsubstantiated targets without
clarity on a prevailing federal and state regulatory framework or first having a well-conceived (and achievable)
plan poses substantial reputational, legal, and financial risk and is not in the best interest of our shareholders.
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Texas Roadhouse has already taken significant steps to enhance GHG emissions disclosures
and grow our sustainability efforts.
Consistent with our strategy, and as we shared in our opposition response to essentially the same
shareholder proposal last year, we set forth our strategic plan and approach for the next two years with respect
to our efforts to measure and manage our GHG emissions. As shown in the table below, we shared certain
actions with our shareholders regarding the steps we planned to take and which we have completed.
2023
Status
2023 PROXY GHG PLANNED ACTIONS
• Publicly disclose Scope 1 and 2 GHG emissions (which were calculated in
accordance with the World Resource Institute / World Business Council on
Sustainable Development and the Corporate Accounting and Report
Standard of the Greenhouse Gas Protocol)
• Engage a third-party consultant to discuss ways to reduce Scope 1 and 2
GHG emissions consistent with our operating model
• Engage a third-party consultant to measure Scope 3 GHG emissions
2024
• Continue to publicly disclose Scope 1 and 2 GHG emissions for the 2023
fiscal year
• Publicly disclose Scope 3 GHG emissions
In Progress
The majority of our shareholders supported the plan we set forth in last year’s proxy statement as
evidenced by their voting support at our 2023 Annual Meeting. We also believe that many of the shareholders
that voted in favor of the shareholder proposal last year were focused on our previous lack of disclosure – which
we have addressed as more particularly described below – rather than the demand for broad public commitments
or target setting. This belief was consistently reinforced throughout our shareholder engagement leading up to
our 2023 Annual Meeting and throughout the remainder of the 2023 fiscal year as a majority of our shareholders
with whom we had discussions focused on their desire for additional quantitative disclosure for our corporate
sustainability metrics rather than targets and commitments. Therefore, we still believe our plan, strategy, and
approach is in the best interest of and in alignment with our shareholders interests and views, and we strongly
disagree with the proponents continued position and proposal.
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We, as a Company, affirm the standard that we strive to do what we say we will do and that we look for
ways to outperform and exceed expectations. Our historical financial and business results demonstrate the
success of this strategy. In this respect, we believe that 2023 was a landmark year in terms of our corporate
sustainability efforts, and we have a focused risk management strategy for our corporate sustainability program
for the remainder of 2024 and beyond. In addition to our accomplishments described in the table above, we also
took the following steps in 2023:
2023 ACCOMPLISHMENTS
Engaged a consultant to perform a materiality assessment of our corporate
sustainability program so that we can have a more directed approach to our
corporate sustainability risks.
Continued routine calls with our largest distributor and key protein vendors to
discuss (i) the steps they are taking from a sustainability standpoint to reduce
their emissions, and (ii) ways to partner on sustainability initiatives.
Formed an internal subcommittee under our corporate sustainability risk
committee to evaluate and test equipment, products, and initiatives to lower our
GHG emissions.
Began the process of piloting our first “Green” restaurant in the Southeast United
States – which is scheduled to open in the next twelve months.
Purchased almost 200,000 sustainable uniform items, which helped keep nearly
6 million 20oz plastic bottles out of landfills and oceans.
Used tree-free packaging for our Jaggers brand – which will be used to replace
Styrofoam.
Converted our gift cards from plastic to recycled paper.
Used recycled fryer oil in Jaggers, Bubba’s 33, and all new Texas Roadhouse
openings.
Installed tankless water heaters in nearly 90% of Texas Roadhouse locations.
Texas Roadhouse is investing in strategic growth through its sustainability efforts, including
taking additional actions in 2024 and beyond.
We strongly reject the proponent’s assertion that we are “failing to proactively manage value chain
emissions.” Our actions described above clearly demonstrate our level of commitment to not only sustain but
strategically grow our business through our corporate sustainability efforts. We know that our work does not end
there, and we intend to take the following actions in 2024:
• Continue to monitor and disclose our Scope 1 and 2 GHG emissions and publish our Scope 3 GHG
emissions by the end of the 2024 fiscal year;
• Analyze the results of the materiality assessment of our corporate sustainability program so that we
can have a more directed approach to our corporate sustainability risks, which assessment will be
100
a well-informed guide for allowing us to prioritize the risks identified as most impactful by our internal
and external stakeholders and analyze any related gaps to better inform our work;
• Provide new disclosure in our 2024 corporate sustainability report relating to our EEO-1 data and
our DE&I program, including the key initiatives under our program and the pillars of our DE&I
Advisory Council;
• Continue discussions with our shareholders as a part of our shareholder outreach program
described in this proxy statement to better understand their respective views on our corporate
sustainability initiatives and related disclosures;
• Continue to have routine discussions with our largest distributor and key protein vendors to discuss
(i) the steps they are taking from a sustainability standpoint to reduce their emissions, and (ii) ways
to partner on sustainability initiatives;
• Continue to evaluate operational initiatives to manage our GHG emissions, and utilize the efforts of
our internal standing task force to evaluate and test equipment, products, and initiatives in order to
assess and evaluate their performance, effectiveness, and availability together with their overall
impact on our GHG emissions; and
• Continue to evaluate the various legislation, regulations, and international accords pertaining to
climate change such as the EU’s Corporate Sustainability Reporting Directive (CSRD), California’s
Climate Corporate Data Accountability Act and Climate Related Financial Risk Act, and similar
regulations under consideration by the SEC, as well as the impact they may have on our business
and reporting.
We are providing this level of detail so that all shareholders have the entire context, and understand the
progress we have made, and continue to make, when evaluating our response to the proponent’s proposal.
Ultimately, we want to ensure that the majority of our shareholders who have long supported our deliberate,
studied, and methodical approach – which continues to consistently deliver shareholder value – understand the
steps that we are taking to evaluate, prioritize, and mitigate our corporate sustainability risks over time.
For the above-refenced reasons, the Board recommends that the shareholders vote against the
proponent’s proposal.
Recommendation
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “AGAINST” THE SHAREHOLDER
PROPOSAL REGARDING THE ISSUANCE OF A CLIMATE REPORT AND SETTING REDUCTION
TARGETS BY THE COMPANY.
101
SHAREHOLDER PROPOSALS
Under Rule 14a - 8 promulgated under the Exchange Act, shareholders may present proposals to be
included in the Company proxy statement for consideration at the next annual meeting of its shareholders by
submitting their proposals to the Company in a timely manner. Any such proposal must comply with Rule 14a - 8.
If a shareholder submitting a matter to be raised at the Company’s next annual meeting desires that such matter
be included in the Company’s proxy statement for that meeting, such matter must be submitted to the Company
no later than December 6, 2024. The rules of the SEC set forth standards for what shareholder proposals the
Company is required to include in a proxy statement for an annual meeting.
is available on
The Company’s Bylaws, a copy of which
the Company’s website at
www.texasroadhouse.com, require shareholders who intend to propose business for consideration by
shareholders at the 2025 annual meeting, other than shareholder proposals that are to be included in the proxy
statement, to deliver written notice to the principal executive offices of the Company on or before December 6,
2024 (reflecting 120 calendar days prior to the one year anniversary of the date of the Company’s proxy
statement issued in connection with the prior year’s annual meeting). This notice must include a description of
the business desired to be brought before the annual meeting, the name and address of the shareholder
proposing such business and of the beneficial owner, if any, on whose behalf the business is being brought, the
class, series and number of shares of the Company which are beneficially owned by the shareholder and such
other beneficial owner and any material interest of the shareholder and such other beneficial owner in such
business. In addition, the Bylaws require shareholders who intend to nominate a candidate for election as a
director to deliver written notice to the principal executive offices of the Company on or before December 6, 2024
(reflecting 120 day calendar days prior to the one year anniversary of the date of the Company’s proxy statement
issued in connection with the prior year’s annual meeting). The notice of nomination must include the information
set forth in the Bylaws for the candidate to be eligible for nomination. Shareholders who intend to solicit proxies
in reliance on the SEC's universal proxy rule for director nominees submitted under the advance notice
requirements of our Bylaws must comply with the additional requirements of Rule 14a-19.
Exchange Act rules permit management to vote proxies in its discretion in certain cases if the
shareholder does not comply with these deadlines, and in certain other cases notwithstanding the shareholder’s
compliance with these deadlines.
SHAREHOLDERS’ COMMUNICATIONS WITH THE BOARD
Shareholders that want to communicate in writing with the Board, or specific directors individually, may
send proposed communications to the Company’s Corporate Secretary, Christopher C. Colson, at 6040
Dutchmans Lane, Louisville, Kentucky 40205. The proposed communication will be reviewed by Mr. Colson
and/or by the audit committee (as appropriate). If the communication is appropriate and serves to advance or
improve the Company or its performance, then it will be forwarded to the Board or the appropriate director.
FORM 10 - K
The Company’s Annual Report on Form 10 - K for the fiscal year ended December 26, 2023,
accompanies this proxy statement. The Company’s Annual Report does not form any part of the material for
solicitation of proxies.
Any shareholder who wishes to obtain, without charge, a copy of the Company’s Annual Report
on Form 10 - K for the fiscal year ended December 26, 2023, which includes financial statements, and is
required to be filed with the SEC, may access it at www.texasroadhouse.com in the Investors section or
may send a written request to Christopher C. Colson, Corporate Secretary Texas Roadhouse, Inc., 6040
Dutchmans Lane, Louisville, Kentucky 40205.
102
OTHER BUSINESS
The Board is not aware of any other matters to be presented at the Annual Meeting other than those set
forth herein and routine matters incident to the conduct of the meeting. If any other matters should properly come
before the Annual Meeting or any adjournment or postponement thereof, the persons named in the proxy
statement, or their substitutes, intend to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors,
Christopher C. Colson
Corporate Secretary
Louisville, Kentucky
April 5, 2024
Please vote your shares through any of the methods described on the proxy card as promptly as possible,
whether you plan to attend the Annual Meeting in person. If you do attend the Annual Meeting, you may still vote
in person, since the proxy may be revoked at any time before its exercise by delivering a written revocation of
the proxy to the Company’s Corporate Secretary.
103
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APPENDIX A
CLASS B REMOVAL AMENDMENT
Proposed Revisions to Article IV of our Amended and Restated Certificate
ARTICLE IV
Capital Stock
The Corporation shall have the authority to issue One Hundred Million (100,000,000) shares of $0.001
par value Class A Common Stock (the "Class A Common Stock"), Eight Million (8,000,000) shares of $0.001
par value Class B Common Stock (the "Class B Common Stock," and together with the Class A Common
Stock, the "Common Stock"), and One Million (1,000,000) shares of $0.001 par value Preferred Stock (the
"Preferred Stock"). The number of authorized shares of any class or classes of stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders
of a majority of the voting power of the stock of the Ccorporation entitled to vote, irrespective of Del. Code Ann.
tit. 8, Section 242(b)(2).
A statement of the designations of each class and the powers, preferences and rights, and qualifications,
limitations or restrictions thereof is as follows:
A. Class A Common Stock
(1) Dividends. The holders of the Class A Common Stock shall be entitled to receive ,
share for share with the holders of shares of Class B Common Stock, such dividends if, as and when
declared from time to time by the Board of Directors. In the event that such dividend is paid in the form of
shares of Common Stock, holders of Class A Common Stock shall receive Class A Common Stock and
holders of Class B Common Stock shall receive Class B Common Stock.
(2) Liquidation. In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding-up of the Corporation, the holders of the Class A Common Stock shall be
entitled to receive , share for share with the holders of shares of Class B Common Stock, all the assets of
the Corporation of whatever kind available for distribution to stockholders, after the rights of the holders of the
Preferred Stock have been satisfied.
(3) Voting. Each holder of Class A Common Stock shall be entitled to one vote for each
share of Class A Common Stock held as of the applicable date on any matter that is submitted to a vote or for
the consent of the stockholders of the Corporation. Except as otherwise provided herein or by the General
Corporation Law of the State of Delaware, the holders of Class A Common Stock and the holders of
Class B Common Stock shall at all times vote on all matters (including the election of directors) together
as one class.
(4) Redesignation. Upon the conversion of all of the outstanding Class B Common
Stock into shares of Class A Common Stock, the Class A Common Stock shall be automatically
redesignated as "Common Stock."
A-1
B. Class B Common Stock
(1) Dividends. The holders of the Class B Common Stock shall be entitled to receive,
share for share with the holders of shares of Class A Common Stock, such dividends if, as and when
declared from time to time by the Board of Directors. In the event that such dividend is paid in the form
of shares of Common Stock, holders of Class A Common Stock shall receive Class A Common Stock
and holders of Class B Common Stock shall receive Class B Common Stock.
(2) Liquidation. In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding-up of the Corporation, the holders of the Class B Common Stock shall
be entitled to receive, share for share with the holders of shares of Class A Common Stock, all the assets
of the Corporation of whatever kind available for distribution to stockholders, after the rights of the
holders of the Preferred Stock have been satisfied.
(3) Voting. Each holder of Class B Common Stock shall be entitled to ten votes for
each share of Class B Common Stock held as of the applicable date on any matter that is submitted to
a vote or for the consent of the stockholders of the Corporation. Except as otherwise provided herein or
by the General Corporation Law of the State of Delaware, the holders of Class A Common Stock and the
holders of Class B Common Stock shall at all times vote on all matters (including the election of
directors) together as one class.
(4) Conversion.
(a) Each share of Class B Common Stock shall be convertible into one fully
paid and nonassessable share of Class A Common Stock at the option of the holder thereof at any time.
(b) Each share of Class B Common Stock shall automatically be converted
into one fully paid and nonassessable share of Class A Common Stock upon the earliest of (i) the date
such shares cease to be beneficially owned (as such term is defined under Section 13(d) of the Securities
Exchange Act of 1934, as amended ("Section 13(d)") by W. Kent Taylor, (ii) the date that W. Kent Taylor
ceases to beneficially own (as such term is defined under Section 13(d)) at least 20% of the outstanding
shares of Common Stock of the Company, (iii) the death or "permanent and total disability" of W. Kent
Taylor within the meaning of 26 CFR 7.105-1, or (iv) September 30, 2009.
(c) The one-to-one conversion ratio for the conversion of the Class B
Common Stock into Class A Common Stock in accordance with Section 4(a) and 4(b) of this Article IV
shall in all events be equitably adjusted in the event of any recapitalization of the Corporation by means
of a stock dividend on, or a stock split or combination of, outstanding Class A Common Stock or Class
B Common Stock, or in the event of any merger, consolidation or other reorganization of the Corporation
with another corporation.
(d) The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the
conversion of the shares of Class B Common Stock, such number of its shares of Class A Common
Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class
B Common Stock.
(e) If any shares of Class B Common Stock shall be converted pursuant to
this Section 4, the shares so converted shall be retired and returned to the authorized but unissued
shares of Class B Common Stock.
Common Stock
C. Other Matters Affecting Shareholders of Class A Common Stock and Class B
In no event shall any stock dividends or stock splits or combinations of stock be
declared or made on Class A Common Stock or Class B Common Stock unless the shares of Class A
A-2
Common Stock and Class B Common Stock at the time outstanding are treated equally and identically,
except that such dividends or stock splits or combinations shall be made in respect of shares of Class
A Common Stock and Class B Common Stock in the form of shares of Class A Common Stock or Class
B Common Stock, respectively.
B. Preferred Stock
The Preferred Stock may be issued from time to time in one or more series. The Board of
Directors is expressly authorized, by resolution adopted and filed in accordance with law, and with the consent
of the holders of a majority of the outstanding shares of Class B Common Stock, to fix the number of
shares in each series, the designation thereof, the powers (including voting powers, full or limited, if any), the
preferences and relative participating, optional or other special rights thereof, and the qualifications or restrictions
thereon, of each series and the variations in such voting powers (if any) and preferences and rights as between
series. Any shares of any class or series of Preferred Stock purchased, exchanged, converted or otherwise
acquired by the Corporation, in any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof All such shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock, without designation as to series, and may be reissued as part of any series of Preferred Stock
created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on
issuance set forth in this Certificate of Incorporation or in such resolution or resolutions.
Proposed Revision to Article XII of our Amended and Restated Certificate
ARTICLE XII
Reservation of Rights
The Corporation reserves the right to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter prescribed by the General Corporation Law of
Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation
above, provided that the rights of the Class B Common Stock may not be amended, altered, changed or
repealed without the approval of the holders of a majority of the outstanding shares of Class B Common
Stock.
A-3
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APPENDIX B
EXCULPATION AMENDMENT
Proposed Revisions to Article VI of our Amended and Restated Certificate
No director or officer of the Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director; provided, however, that the foregoing shall
not eliminate or limit the or officer (as applicable); except for liability of:(a) as a director (a)or officer, for
any breach of thesuch director’’s or officer’s duty of loyalty to the Corporation or its stockholders; (b) as a
director or officer, for any acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (c) as a director, under Section 174 of the General Corporation Law of the State
of Delaware; or (d) as a director or officer, for any transaction from which the director and/or officer (as
applicable) derived an improper personal benefit; or (e) as an officer, in any action by or in the right of the
corporation. If the General Corporation Law of the State of Delaware shall be amended to permit further
elimination or limitation of the personal liability of directors and/or officers (as applicable), then the liability of
a director and/or officer (as applicable) of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware as so amended. Any repeal or modification
of this Article VI by the stockholders of the Corporation shall not adversely affect any right or protection of a
director and/or officer (as applicable) of the Corporation existing at the time of, or increase the liability of any
director and/or officer (as applicable) of the Corporation with respect to any acts or omissionomissions
occurring prior to, such repeal or modification.
B-1
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APPENDIX C
SPECIAL MEETING AMENDMENT
Proposed Revisions to Article II, Section 3 of our Bylaws
Section 3. SPECIAL MEETINGS. Unless otherwise prescribed by law or by the Certificate of
Incorporation, special meetings of stockholders may be called at any time and for any purpose, by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the President, or by the Secretary at the
written request of the holders of at least 2550% in voting power of all capital stock outstanding and entitled to
cast votes at the meeting. Such written request shall be addressed to the Secretary of the Corporation and shall
state the purpose of the proposed meeting, which must be a proper matter for stockholder action under the
General Corporation Law of the State of Delaware, and shall contain such other information as would be required
under Section 9 of Article II hereof were it to be brought before a meeting called by the Board of Directors, the
Chairman of the Board, the Chief Executive Officer or the President. In the case of any special meeting so
requested by holders of at least 5025% in voting power of all capital stock outstanding and entitled to cast votes
at the meeting, the Board of Directors shall promptly, but in all events within 10 days after the date on which
such written request is received, adopt a resolution fixing a date for such special meeting, which meeting date
shall be no more than 90 days from the date of such resolution. If the Board of Directors fails to take such action,
the record date shall be the 120th day after the date on which the written request was received. No business
shall be conducted at any special meeting of stockholders other than the items of business stated in the notice
of special meeting given in accordance with Section 4 of this Article II.
C-1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 26, 2023
OR
For the transition period from to
Commission File Number 000-50972
Texas Roadhouse, Inc.
(Exact name of registrant specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
20-1083890
(IRS Employer
Identification Number)
6040 Dutchmans Lane
Louisville, Kentucky 40205
(Address of principal executive offices) (Zip Code)
(502) 426-9984
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.001 per share
Trading Symbol(s)
TXRH
Name of each exchange on which registered
NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No .
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No .
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☒ No ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered accounting firm that prepared or
issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No .
The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the second fiscal quarter ended June 27,
2023 was $7,271,884,191 based on the closing stock price of $109.32 on the Nasdaq Global Select Market.
The number of shares of common stock outstanding were 66,828,113 on February 14, 2024.
Non-accelerated filer
Accelerated filer
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for the registrant’s 2024 Annual Meeting of Stockholders, which is expected to be filed pursuant to
Regulation 14A within 120 days of the registrant’s fiscal year ended December 26, 2023, are incorporated by reference into Part III of this Form 10-K.
TABLE OF CONTENTS
Page
PART I
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . 36
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . 50
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . 53
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Exhibit and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Signatures
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
From time to time, in periodic reports and oral statements and in this Annual Report on Form 10-K, we present
statements about future events and expectations that constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements are based on our beliefs, assumptions and expectations of our future financial and
operating performance and growth plans, taking into account the information currently available to us. These statements
are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our
actual results to differ materially from the expectations of future results we express or imply in any forward-looking
statements. In addition to the other factors discussed under “Risk Factors” elsewhere in this report, factors that could
contribute to these differences include, but are not limited to:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
our ability to successfully execute our growth strategies;
our ability to successfully open new restaurants, acquire franchise restaurants and/or execute other strategic
initiatives;
our ability to increase and/or maintain dine-in and to-go sales as well as profits at our existing restaurants;
our ability to integrate the franchise or other restaurants which we acquire or develop;
the continued service of key management personnel;
the impact of health epidemics or pandemics on our business including restrictions or regulations on our
operations;
health, dietary and other concerns about our food products;
our ability to attract, motivate and retain qualified employees;
the impact of federal, state or local government laws and regulations relating to our employees and the sale of
food and alcoholic beverages;
the impact of litigation, including remedial actions, payment of damages and expenses and negative publicity;
disruptions to the availability and price of our principal food and beverage products and all other operating
costs;
labor shortages or increased labor costs, such as federal or state minimum wage changes, market wage levels,
health care, sick pay and workers’ compensation insurance costs;
inflationary increases in the costs of construction, including labor and material costs, and/or real estate;
changes in consumer preferences and demographic trends;
the impact of initiatives by competitors and increased competition generally;
our ability to successfully expand into new and existing domestic and international markets;
risks associated with partnering in markets with franchisees or other investment partners whose interests may
not align with ours;
risks associated with developing and successfully operating new concepts;
security breaches or technology failures including failure to protect and maintain the security of confidential
guest, vendor and employee information, either internally or by one of our vendors, compliance with privacy
and data protection laws and risks of failures or breaches of our data protection systems;
3
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the rate of growth of general and administrative expenses associated with building a strengthened corporate
infrastructure to support our initiatives;
negative publicity regarding food safety, health concerns and other food or beverage related matters, including
the integrity of our or our suppliers’ food processing;
our franchisees’ adherence to the terms of their franchise agreements;
potential fluctuation in our quarterly operating results due to seasonality and other factors;
our ability to adequately protect our intellectual property;
our ability to adequately protect the physical security of our employees, guests and restaurants;
our ability to raise capital in the future;
volatility of actuarially determined self-insurance losses and loss estimates;
adoption of new, or changes in existing, accounting policies and practices;
changes in and/or interpretations of federal and state tax laws;
adverse weather conditions which impact guest traffic at our restaurants; and
unfavorable general economic conditions in the markets in which we operate that adversely affect consumer
spending.
The words “believe,” “may,” “should,” “anticipate,” “estimate,” “expect,” “intend,” “objective,” “seek,” “plan,”
“strive,” “goal,” “projects,” “forecasts,” “will” or similar words or, in each case, their negative or other variations or
comparable terminology, identify forward-looking statements. We qualify any forward-looking statements entirely by
these cautionary factors.
Other risks, uncertainties and factors, including those discussed under “Risk Factors,” or those currently deemed
immaterial or unknown, could cause our actual results to differ materially from those projected in any forward-looking
statements we make.
We assume no obligation to publicly update or revise these forward-looking statements for any reason or to update
the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new
information becomes available in the future, except as required by applicable law.
4
ITEM 1. BUSINESS
PART I
Texas Roadhouse, Inc. (the “Company,” “we,” “our” and/or “us”) was incorporated under the laws of the state of
Delaware in 2004. The principal executive office is located in Louisville, Kentucky.
Introduction
The Company is a growing restaurant company operating predominantly in the casual dining segment. Our late
founder, W. Kent Taylor, started the business in 1993 with the opening of the first Texas Roadhouse restaurant in
Clarksville, Indiana. Since then, we have grown to three concepts with 741 restaurants in 49 states and ten foreign
countries. Our mission statement is “Legendary Food, Legendary Service®.” Our operating strategy is designed to
position each of our casual dining restaurants as the local hometown favorite for a broad segment of consumers seeking
high quality, affordable meals served with friendly, attentive service. As of December 26, 2023, we owned and operated
635 restaurants and franchised an additional 58 domestic restaurants and 48 international restaurants.
Restaurant Concepts
Of the 635 restaurants we owned and operated at the end of 2023, we operated 582 as Texas Roadhouse restaurants,
45 as Bubba’s 33 restaurants and eight as Jaggers restaurants.
Texas Roadhouse is a moderately priced, full-service, casual dining restaurant concept offering an assortment of
specially seasoned and aged steaks hand-cut daily on the premises and cooked to order over open grills. In addition to
steaks, we also offer our guests a selection of ribs, seafood, chicken, pork chops, pulled pork and vegetable plates, and
an assortment of hamburgers, salads and sandwiches. The majority of our entrées include two made-from-scratch side
items, and we offer all our dine-in guests free roasted in-shell peanuts and fresh baked yeast rolls.
Bubba’s 33 is a moderately priced, full-service, casual dining restaurant concept featuring scratch-made food for all
with a little rock ‘n’ roll, ice-cold beer and signature drinks. Our menu features burgers, pizza and wings as well as a
wide variety of appetizers, sandwiches and dinner entrées. Our first Bubba’s 33 restaurant opened in May 2013 in
Fayetteville, North Carolina.
Jaggers is a fast-casual restaurant concept offering burgers, hand-breaded chicken tenders and chicken sandwiches
served with scratch-made sauces. In addition, we offer fresh salads that are made-to-order and served with homemade
dressings. Jaggers offers drive-thru, carry-out and dine-in service options. We also offer delivery services at certain
locations. Our first Jaggers restaurant opened in December 2014 in Noblesville, Indiana.
Throughout this report, we use the term “restaurants” to include Texas Roadhouse and Bubba’s 33, unless
otherwise noted.
Segment Information
We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse,
Bubba’s 33, Jaggers and retail initiatives (including our online store and royalty-based licensing arrangements) as
separate operating segments. In addition, we have identified Texas Roadhouse and Bubba’s 33 as reportable segments.
Operating Strategy
The operating strategy that underlies the growth of our restaurants is built on the following key components:
• Offering high quality, freshly prepared food. We place a great deal of emphasis on providing our guests with
high quality, freshly prepared food. As part of our process, we have developed proprietary recipes to provide
consistency in quality and taste throughout all restaurants. We expect a management level employee to inspect
every entrée before it leaves the kitchen to confirm it matches the guest’s order and meets our standards for
quality, portion size, appearance and presentation. In addition, we employ a team of product coaches whose
function is to provide continual, hands-on training and education to our kitchen staff for the purpose of
promoting consistent adherence to recipes, food preparation procedures, food safety standards and overall food
quality.
5
• Creating a fun and comfortable atmosphere with a focus on high quality service. We believe the service
quality and atmosphere we establish in our restaurants is a key component for fostering repeat business. In our
full-service restaurants, we focus on keeping our table-to-server ratios low to allow our servers to truly focus
on their guests and serve their needs in a personal, individualized manner. Our Texas Roadhouse restaurants
feature a rustic southwestern lodge décor accentuated with hand-painted murals, neon signs, and southwestern
prints, rugs and artifacts. Additionally, our restaurants continuously play upbeat country hits. Our Bubba’s 33
restaurants feature walls lined with televisions playing sporting events and music videos and are decorated
with sports jerseys, neon signs and other local flair. Our fast-casual concept, Jaggers, offers both drive-thru
and dining room service in a modern design featuring a contemporary exterior and a comfortable and inviting
dining room.
• Offering performance-based manager compensation. As part of our effort to maintain a people-first culture,
we offer a performance-based compensation program supported by competitive benefits and health programs
to our individual restaurant managers and multi-restaurant operators, who are called “managing partners” and
“market partners,” respectively. Each of these partners earns a base salary plus a performance bonus, which
represents a percentage of each of their respective restaurant’s pre-tax income. By providing our partners with
a significant stake in the success of our restaurants, we believe that we are able to attract and retain talented,
experienced and highly motivated managing and market partners.
• Offering attractive price points. When we evaluate menu pricing, we focus on remaining disciplined as we
balance short-term pressures with long-term growth while always keeping our guest top of mind. Prices are
reviewed individually in each local market and are offered at moderate price points that we believe are as low
as or lower than those offered by our competitors without sacrificing food quality. Within each menu
category, we offer a choice of several price points with the goal of fulfilling each guest’s budget and value
expectations. Based on the results of our pricing evaluations, we will continue to take pricing actions we feel
are needed.
•
Focusing on dinner. In nearly all of our Texas Roadhouse restaurants, we limit our operating hours to dinner
only during the weekdays with approximately one half of our restaurants offering lunch on Friday. This focus
on dinner allows our restaurant teams to prepare for and manage only one shift per day during the week and to
prepare for the significant volumes of sales our restaurants generate.
Restaurant Development and Unit Economics
We consistently evaluate opportunities to develop restaurants in new and existing markets. Our site selection
process is critical to our growth strategy. In analyzing each prospective site, our real estate team and restaurant market
partners devote significant time and resources to the evaluation of local market demographics, population density,
household income levels and site-specific characteristics such as visibility, accessibility, traffic generators, proximity of
other retail activities and competitors, traffic counts and parking. We work actively with experienced real estate brokers
in target markets to select high quality sites and to maintain and regularly update our database of potential sites.
We design our restaurant prototypes to provide a relaxed atmosphere for our guests, while also focusing on
restaurant-level returns over time. Our current prototypical Texas Roadhouse restaurant consists of a freestanding
building with approximately 7,600 to 8,400 square feet with seating for approximately 270 to 325 guests and parking for
approximately 180 vehicles either on-site or in combination with some form of off-site cross parking arrangement. Our
current prototypes are adaptable to in-line and end-cap locations and/or spaces within an enclosed mall or a shopping
center.
Our current prototypical Bubba’s 33 restaurant consists of a freestanding building with approximately 7,600 square
feet with seating for approximately 270 to 330 guests. Some locations include patio seating for approximately 60 guests.
Parking is targeted for approximately 180 vehicles either on-site or in combination with some form of off-site cross
parking arrangement.
Our capital investment for new restaurants, which includes an estimate of pre-opening expense and a 10x initial
base rent factor for those sites that are leased, varies significantly depending on a number of factors. These factors
include, but are not limited to: the concept, square footage, layout, scope of required site work, geographical location,
supply chain costs, type of construction labor (union or non-union), local permitting requirements, our ability to
negotiate with landowners and/or landlords, cost of liquor and other licenses and pre-opening expense.
6
For 2023 and 2022, our average capital investment for Texas Roadhouse restaurants was $7.9 million and $6.9
million, respectively. The increase in our 2023 average capital investment was primarily due to an increase in building
and site work costs and an increase in liquor license costs. We expect our average capital investment for restaurants to
be opened in 2024 to remain flat at approximately $7.9 million.
For 2023 and 2022, our average capital investment for Bubba’s 33 restaurants was $8.2 million and $7.8 million,
respectively. The increase in our 2023 average capital investment was primarily due to an increase in pre-opening costs
at one particular site. We expect our average capital investment for restaurants to be opened in 2024 to be approximately
$8.5 million.
7
Existing Restaurant Locations
As of December 26, 2023, we had 635 company restaurants and 106 franchise restaurants in 49 states and ten
foreign countries as shown in the chart below.
Number of Restaurants
Company Franchise Total
Alabama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arizona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arkansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Connecticut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delaware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Massachusetts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mississippi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Missouri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Montana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nebraska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nevada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Hampshire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rhode Island . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vermont . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wyoming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total domestic restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bahrain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kuwait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mexico. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Qatar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Arab Emirates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total international restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total system-wide restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
10
2
20
9
8
17
5
5
44
16
6
19
28
11
7
19
10
3
14
10
21
7
3
18
2
4
4
3
10
9
22
21
2
36
10
2
27
3
9
2
18
87
10
1
22
2
4
11
2
635
—
—
—
—
—
—
—
—
—
—
—
635
—
—
—
—
11
1
—
—
—
3
—
—
8
—
1
3
1
—
—
1
3
—
—
—
1
—
—
—
—
—
—
1
1
1
—
—
6
—
—
—
1
6
1
—
—
1
3
4
—
58
1
1
8
3
3
16
1
5
5
5
48
106
10
2
20
9
19
18
5
5
44
19
6
19
36
11
8
22
11
3
14
11
24
7
3
18
3
4
4
3
10
9
22
22
3
37
10
2
33
3
9
2
19
93
11
1
22
3
7
15
2
693
1
1
8
3
3
16
1
5
5
5
48
741
Food
Menu. Our restaurants offer a wide variety of menu items at attractive prices that are designed to appeal to a broad
range of consumer tastes. At Texas Roadhouse restaurants, we offer a broad assortment of specially seasoned and aged
steaks, all cooked over open grills and all but one hand-cut daily on the premises. We also offer our guests a selection of
ribs, seafood, chicken, pork chops, pulled pork and vegetable plates, and an assortment of burgers, salads and
sandwiches. Entrée prices include roasted in-shell peanuts, fresh baked yeast rolls and most include the choice of two
made-from-scratch sides. Other menu items include specialty appetizers such as the “Cactus Blossom®” and
“Rattlesnake Bites”. We also provide a “12 & Under” menu for children that includes a selection of smaller-sized
entrées served with one side item and a beverage.
At Bubba’s 33 restaurants, we offer a broad assortment of burgers, pizza and wings as well as a wide variety of
appetizers, sandwiches and dinner entrées. Our Bubba’s 33 restaurants also offer an extensive selection of draft beer and
signature cocktails. We provide a “12 & Under” menu for children that includes a selection of items, including a
beverage.
At Jaggers restaurants, we offer fresh, authentic, scratch-made food including double stacked burgers, hand-breaded
chicken sandwiches and chicken tenders, made-to-order fresh salads and hand-spun milkshakes. We also provide a
“12 & Under” menu for children that includes a selection of smaller-sized entrées, a side, a drink and a cookie.
Most of our full-service restaurants feature a full bar that offers a selection of draft and bottled beer, major brands
of liquor and wine as well as made in-house margaritas and signature cocktails. Managing partners are encouraged to
tailor their beer selection to include regional and local brands. In 2023, alcoholic beverages at all company restaurants
accounted for 10.3% of restaurant sales.
We always strive to maintain a consistent menu at our restaurants. We continually review our menu to consider
enhancements to existing menu items or the introduction of new items. We change our menu only after guest feedback
and an extensive study of the operational and economic implications. To maintain our high levels of food quality and
service, we generally remove one menu item for every new menu item introduced to facilitate our ability to execute high
quality meals on a focused range of menu items.
We work with a third-party vendor to manage an online tool to provide nutritional information as well as help
customers identify known allergens in each of our menu items. This information is available for all concepts.
Food Quality and Safety. We are committed to serving a varied menu of high quality, great tasting food items with
an emphasis on freshness. We have developed proprietary recipes to promote consistency in quality and taste
throughout all restaurants and provide a unique flavor experience to our guests. At each domestic Texas Roadhouse
restaurant, a trained meat cutter hand cuts our steaks and other restaurant employees prepare our side items and yeast
rolls from scratch in the restaurants daily. At both Texas Roadhouse and Bubba’s 33 restaurants, we assign individual
kitchen employees to the preparation of designated food items in order to focus on quality, consistency, speed and food
safety. Additionally, we expect a management level employee to inspect every entrée before it leaves the kitchen to
confirm it matches the guest’s order and meets our standards for quality, portion size, appearance and presentation.
We employ a team of product coaches whose function is to provide continual, hands-on training and education to
the kitchen staff in all of our restaurants for the purpose of reinforcing food quality, recipe consistency, food preparation
procedures, food safety and sanitation standards, food appearance, freshness and portion size. The product coach team
supports all of our full-service domestic restaurants.
Food safety and sanitation is of utmost importance to us. We currently utilize several additional programs to help
facilitate adherence to proper food preparation procedures and food safety standards including our daily taste and
temperature procedures. We have a food team whose function, in conjunction with our product coaches, is to develop,
enforce and maintain programs designed to promote compliance with food safety guidelines. As a requirement of our
quality assurance process, primary food items are purchased from qualified vendors who are regularly audited by
reputable, outside inspection services confirming that the vendor is compliant with United States Food and Drug
Administration and United States Department of Agriculture guidelines, the results of which are reviewed by our food
safety team.
We perform regular food safety and sanitation audits on our restaurants and these results are reviewed by various
members of operations and management. To maximize adherence to food safety protocols, we have incorporated
9
Hazard Analysis Critical Control Points principles and critical procedures (such as hand washing) in each recipe. All
restaurant managers are required to complete the American National Standards Institute Certified Food Manager
training. In addition, product coaches and certain food team members are required to obtain their Certified Professional-
Food Safety designation from the National Environmental Health Association.
Procurement. Our procurement philosophy is designed to supply fresh, quality products to the restaurants at
competitive prices while maximizing operating efficiencies. We negotiate directly with suppliers for substantially all
food and beverage products to maximize quality and freshness and obtain competitive prices.
Food and supplies are ordered by and shipped directly to our domestic restaurants. Most food products used in the
operation of our restaurants are distributed to individual restaurants through an independent national distribution
company. We strive to qualify more than one supplier for all key food items and believe that beef of comparable quality
as well as all other essential food and beverage products are available, upon short notice, from alternative qualified
suppliers.
Service
Service Quality. We believe that guest satisfaction and our ability to continually evaluate and improve the guest
experience at each of our restaurants is important to our success. We employ a team of service coaches whose function
is to provide consistent, hands-on training and education to our managers and service staff in our domestic restaurants.
This training and education reinforces service quality, teamwork, responsible alcohol service, staff attentiveness and
guest interactions in the dining room as well as the implementation of new technologies and process changes.
Guest Satisfaction. Through the use of guest surveys, our various websites including “texasroadhouse.com,”
“bubbas33.com” or “eatjaggers.com,” a toll-free guest response telephone line, emails, letters, social media and personal
interaction in the restaurant, we receive valuable feedback from guests. We have implemented several programs to
evaluate guest satisfaction, with particular attention given to food, beverage and service quality, cleanliness, staff attitude
and teamwork, and manager visibility and interaction. We continue to evaluate and implement new processes and
technologies relating to guest satisfaction, including reducing guest wait times, improving host interaction with the guest
and improving the to-go experience for our guests.
Atmosphere. The atmosphere of our restaurants is intended to appeal to broad segments of the population.
Substantially all Texas Roadhouse restaurants are of our prototype design, reflecting a rustic southwestern lodge
atmosphere. The interiors feature wood walls and stained concrete floors and are decorated with hand-painted murals,
neon signs, southwestern prints, rugs and artifacts. The restaurants continuously play upbeat country hits. Guests may
also view a display-baking area, where our fresh baked yeast rolls are prepared, and a meat cooler displaying fresh cut
steaks. Once seated at a table, guests can enjoy free fresh baked yeast rolls along with roasted in-shell peanuts. Our
Bubba’s 33 restaurants feature walls lined with televisions playing a variety of sports events and music videos and are
decorated with sports jerseys, neon signs and other local flair. Our fast-casual concept, Jaggers, offers both drive-thru
and dining room service in a modern design featuring a contemporary exterior and a comfortable and inviting dining
room.
People
Management Personnel. Each of our restaurants is generally staffed with one managing partner and a combination
of operations, kitchen and service managers as well as assistant managers. Managing partners are single restaurant
operators who have primary responsibility for the day-to-day operations of the entire restaurant. Operations managers
support the managing partner in overall operations including oversight over the kitchen and service departments.
Kitchen managers have primary responsibility for managing sections of the kitchen staff and certain kitchen operations
including food production, preparation, execution and quality standards. Service managers have primary responsibility
for managing sections of the front of house staff and certain dining room, bar and to-go operations including service
quality and the guest experience. Assistant managers support our managing partners, operations managers and kitchen
and service managers. All managers are responsible for maintaining our standards of quality and performance.
We use market partners to oversee the operation of our restaurants. Each market partner oversees a group of
varying sizes of managing partners and their respective management teams. Market partners are also responsible for the
hiring and development of each restaurant’s management team and assisting in the site selection process. Through
regular visits to the restaurants, the market partners facilitate adherence to all aspects of our concepts, strategies and
standards of quality. To further facilitate adherence to our standards of quality and to maximize uniform execution
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throughout the system, we employ product coaches and service coaches who regularly visit the restaurants to assist in
training of both new and existing employees and to grade food and service quality. The attentive service and high
quality food, which results from each restaurant having a managing partner, at least two to four managers and the
hands-on assistance of a product coach and a service coach, are critical to our success.
Managing partners and market partners are required, as a condition of employment, to sign a multi-year
employment agreement. The annual compensation of our managing partners and market partners includes a base salary
plus a percentage of pre-tax income of the restaurant(s) they operate or supervise. Managing partners and market
partners are eligible to participate in our equity incentive plan and are required to make refundable deposits at the time of
hire, that reinforces an ownership mentality. Generally, the deposits are refunded after five years of continuous service.
Training and Development. All restaurant employees are required to complete varying degrees of training before
and during employment. Our comprehensive training program emphasizes our operating strategy, procedures and
standards, including responsible alcohol service, and is typically conducted individually at our restaurants or in groups
throughout the country.
Our managing and market partners are generally required to have significant experience in the full-service
restaurant industry and are generally hired at a minimum of nine months before their placement in a new or existing
restaurant to allow time to fully train in all aspects of restaurant operations. All managing partners, kitchen and service
managers and other management employees are required to complete an extensive training program of up to 20 weeks,
which includes training for every position in the restaurant. Trainees are validated at pre-determined points during their
training by a market partner, managing partner, product coach and service coach.
We have designated a number of our restaurants to be certified as training centers by our training department.
These stores are utilized to train our new and existing managers to ensure compliance with all operating procedures and
guidelines. Additionally, most restaurants are staffed with training coordinators responsible for ongoing daily training
needs.
For new restaurant openings, a full team of designated trainers, each specializing in a specific restaurant position, is
deployed to the restaurant at least ten days before opening. Formal employee training begins seven days before opening
and follows a uniform, comprehensive training course as directed by a service coach.
Marketing
Our marketing strategy aims to promote our brands while retaining a localized focus. We strive to increase
comparable restaurant sales by increasing the frequency of visits by our current guests and attracting new guests to our
restaurants and also by communicating and promoting our concepts’ food quality, the guest experience and value. We
accomplish these objectives through three major initiatives.
Local Restaurant Marketing. Given our strategy to be a neighborhood destination, local restaurant marketing is
integral in developing brand awareness in each market. Managing partners are encouraged to participate in creative
community-based marketing. We also engage in a variety of promotional activities, such as contributing time, money
and complimentary meals to charitable, civic and cultural programs. We employ marketing coordinators at the
restaurant and market level to develop and execute the majority of the local marketing strategies.
In-restaurant Marketing. A significant portion of our marketing fund is spent communicating with our guests
inside our restaurants through point of purchase materials. We believe special promotions such as Valentine’s Day,
Mother’s Day and Veterans Day drive notable repeat business. Our eight-week holiday gift card campaign is one of our
most impactful promotions.
Advertising. Our restaurants do not rely on national television or print advertising to promote our brands. Earned
local media is a critical part of our strategy that features our products and people. Our restaurants use a
permission-based email loyalty program, as well as social media and digital marketing, to promote the brand and engage
with our guests. Our approach to media aligns with our focus on local store marketing and community involvement.
Additionally, we continue to look for ways through various strategic initiatives to drive awareness and guest engagement
with our brands. This includes the introduction of branded food and retail products that are available for purchase online
or in select retailers. These products include non-royalty based food and accessories as well as licensing arrangements
for certain non-alcoholic beverages.
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Restaurant Franchise Arrangements
Franchise Restaurants. As of December 26, 2023, we had 21 franchisees that operated 106 Texas Roadhouse and
Jaggers restaurants in 20 states and ten foreign countries. Domestically, franchise rights for our Texas Roadhouse
restaurants are granted for specific restaurants only, as we have not granted any rights to develop a territory. We are
currently not accepting new domestic Texas Roadhouse franchisees. Approximately 85% of our franchise restaurants
are operated by ten franchisees and no franchisee operates more than 16 restaurants.
Our standard Texas Roadhouse domestic franchise agreement has a term of ten years with two renewal options for
an additional five years each if certain conditions are satisfied. Our current form of domestic franchise agreement
generally requires the franchisee to pay a franchise fee for each restaurant opened and royalties based on a percentage of
gross sales. In addition, domestic Texas Roadhouse franchisees are required to pay a percentage of gross sales to a
national marketing fund for system-wide promotions and related efforts.
We have entered into area development and franchise agreements for the development and operation of Texas
Roadhouse restaurants in several foreign countries and one U.S. territory. For the existing international agreements, the
franchisee is generally required to pay us a development fee for our grant of development rights in the named countries,
a franchise fee for each restaurant to be opened and royalties on the sales of each restaurant.
We have also entered into area development agreements for Jaggers, our fast-casual concept. Currently, we have
agreements in place that allow for the development and operation of restaurants in specific territories in Texas,
Oklahoma, and North Carolina. As part of these agreements, the franchisees are required to pay us a development fee
for our grant of development rights in the named territories, a franchise fee for each restaurant to be opened and royalties
based on a percentage of gross sales. We opened our first two Jaggers franchise restaurants in 2023.
Our standard Texas Roadhouse and Jaggers domestic franchise agreements give us the right, but not the obligation,
to compel a franchisee to transfer its interests to us based on pre-determined formulas included in our franchise
agreements.
Any of our area development or franchise agreements, whether domestic or international, may be terminated if the
franchisee defaults in the performance of any of its obligations under the development or franchise agreement, including
its obligations to develop the territory or operate its restaurants in accordance with our standards and specifications. A
franchise agreement may also be terminated if a franchisee becomes insolvent, fails to make its required payments,
creates a threat to the public health or safety, ceases to operate the restaurant, or misuses our trademarks.
Franchise Compliance Assurance. We have various systems in place to promote compliance with our systems and
standards, both during the development and operation of franchise restaurants. We actively work with our franchisees to
support successful franchise operations as well as compliance with our standards and procedures. During the restaurant
development phase, we consent to the selection of restaurant sites and make available copies of our prototype building
plans to franchisees. In addition, we ensure that the building design is in compliance with our standards. We provide
training to the managing partner and up to three other managers of a franchisee’s first restaurant. We also provide
trainers to assist in the opening of every domestic franchise restaurant and we provide trainers to assist our international
franchisees in the opening of their restaurants until such time as they develop an approved restaurant opening training
program. Finally, on an ongoing basis, we conduct reviews on all franchise restaurants to determine their level of
effectiveness in executing our concept at a variety of operational levels. Our franchisees are required to follow the same
standards and procedures regarding equipment and food purchases, preparation and safety procedures as we maintain in
our company restaurants. Reviews are conducted by seasoned operations teams and focus on key areas including health,
safety and execution proficiency.
Management Services. We provide management services to certain domestic franchise restaurants, some in which
we have an ownership interest and others in which we have no ownership interest. Such management services may
include accounting, operational supervision, human resources, training, and food, beverage and equipment consulting for
which we receive monthly fees. We also make available to these restaurants certain legal services, restaurant employees
and employee benefits on a pass-through cost basis.
Information Technology
All of our company restaurants utilize computerized management information systems, which are designed to
improve operating efficiencies, provide restaurant and Support Center management with timely access to financial and
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operating data and reduce administrative time and expense. With our current information systems, we have the ability to
query, report and analyze this intelligent data on a daily, weekly, monthly, quarterly and year-to-date basis and beyond,
on a company-wide, concept, regional, market or individual restaurant basis. Together, this enables us to closely
monitor sales and operating expenses at each of our restaurants throughout all concepts. We have a number of systems
and reports that provide comparative information that enables both restaurant and Support Center management to
supervise the financial and operational performance of our restaurants and to recognize and understand trends in the
business. Restaurant hardware and software support for all of our restaurants is provided and coordinated from the
restaurant Support Center in Louisville, Kentucky.
In the course of business, we gather and maintain sensitive information from our guests, employees, partners and
business operations. To protect this information, we have created and implemented a detailed set of procedures that are
informed by recognized national and international standards. We have implemented extensive detective and
preventative controls designed to ensure the appropriate level of protection for the confidentiality, integrity and
availability of data stored on or transferred through our information technology resources. Additionally, we guard
against business interruption by maintaining a disaster recovery plan, which includes, among other things, storing critical
business information off-site, maintaining a redundant data center, testing the disaster recovery plan and providing
on-site power backup.
In addition to cash, we accept credit cards, debit cards and gift cards as payment at our restaurants. We have
systems and processes in place that focus on the protection of our guests’ credit and debit card information and other
private information that we are required to protect, such as our employees’ personal information. Our systems have been
carefully designed and configured to safeguard against data loss or compromise. We submit our systems to regular audit
and review, ensuring compliance with the requirements of Payment Card Industry Data Security Standards and to assess
vulnerability in our systems. See Risk Factors in Item 1A of this Form 10-K for a discussion of risks associated with
breaches of security related to confidential guest and/or employee information.
We have made several digital enhancements to improve the guest experience and better support increased volumes
at our restaurants. These enhancements include a new, fully customized digital experience that allows our guests to get
on the waitlist or place an order for pickup or curbside service. The new digital experience also has added gift card and
payment functionality. We have also implemented texting systems which allows our dine-in guests to wait outside or in
their cars and has improved the to-go experience. In addition, we have implemented systems that enable touchless
menus and contactless payments, providing a smoother guest checkout experience and enhanced turnaround times.
Finally, we have started implementing digital display systems in our kitchens that increase kitchen efficiency, allow us to
handle increased volumes and enhance the employee experience.
We believe that our current systems and practice of implementing regular updates will position us well to support
our current needs and future growth. Information systems projects are prioritized based on strategic, financial,
regulatory and other business advantage criteria.
Competition
Competition in the restaurant industry is intense. We compete with well-established food service companies on the
basis of taste, quality and price of the food offered, service, atmosphere, location, take-out and delivery options as well
as the overall dining experience. Our competitors include a large and diverse group of restaurant chains and individual
restaurants that range from independent local operators that have opened restaurants in various markets to
well-capitalized national restaurant chains. We also face competition from meal kit delivery services as well as the
supermarket industry. In addition, improving product offerings of fast casual and quick-service restaurants and better
execution of to-go sales, together with negative economic conditions could cause consumers to choose less expensive
alternatives. Although we believe that we compete favorably with respect to each of the above channels, other
restaurants and retail establishments compete for the same casual dining guests, quality site locations and
restaurant-level employees as we do. We expect intense competition to continue across all aspects of the restaurant
industry.
Trademarks
Our registered trademarks and service marks include, among others, our trade names and logos and proprietary
rights related to certain core menu offerings. We have registered all of our significant marks for our restaurants with the
United States Patent and Trademark Office. We have registered or have registrations pending for our most significant
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trademarks and service marks in multiple foreign jurisdictions. To better protect our brands, we have also registered
various Internet domain names. We believe that our trademarks, service marks and other proprietary rights have
significant value and are important to our brand-building efforts and the marketing of our restaurant concepts.
Government Regulation
We are subject to a variety of federal, state, local and international laws affecting our business. For a discussion of
the risks and potential impact on our business of a failure by us to comply with applicable laws and regulations, see
Item 1A, Risk Factors.
Each of our restaurants is subject to permitting and licensing requirements and regulations by a number of
government authorities, which may include, among others, alcoholic beverage control, health and safety, sanitation,
labor, zoning and public safety agencies in the state and/or municipality in which each restaurant is located. The
development and operation of restaurants depends on selecting and acquiring suitable sites that satisfy our financial
targets, which are subject to zoning, land use, environmental, traffic and other regulations.
In addition to domestic regulations, our international business exposes us to additional regulations, including
antitrust and tax requirements, anti-boycott legislation, import/export and customs regulations and other international
trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act. We are also subject to laws and
regulations relating to the preparation and sale of food, including regulations regarding product safety, nutritional
content and menu labeling.
In order to serve alcoholic beverages in our restaurants, we must comply with alcoholic beverage control
regulations which require each of our restaurants to apply to a state authority, and, in certain locations, county or
municipal authorities, for a license or permit to sell alcoholic beverages on the premises. These licenses or permits must
be renewed annually and may be revoked or suspended for cause at any time. We are also subject in certain states to
“dram shop” statutes, which generally provide a person injured by an intoxicated person the right to recover damages
from an establishment that served alcoholic beverages to the intoxicated person. Consistent with industry standards, we
focus on responsible alcohol service training and carry liquor liability coverage as part of our existing comprehensive
general liability insurance as well as excess umbrella coverage.
Our restaurant operations are also subject to federal and state labor laws governing such matters as minimum and
tipped wage requirements, overtime pay, health benefits, unemployment taxes, workers’ compensation, work eligibility
requirements, working conditions, safety standards and hiring and employment practices. A significant number of our
hourly restaurant personnel receive tips as part of their compensation and are paid at or above a minimum wage rate after
giving effect to applicable tips. We rely on our employees to accurately disclose the full amount of their tip income. We
base our FICA tax reporting on the disclosures provided to us by our tipped employees.
Our facilities must comply with the applicable requirements of the Americans with Disabilities Act of 1990
(“ADA”) and related state accessibility statutes. Under the ADA and related state laws, we must provide equivalent
service to disabled persons and make reasonable accommodation for their employment. In addition, when constructing
or undertaking remodeling of our restaurants, we must make those facilities accessible.
We are subject to laws relating to information security, privacy, cashless payments and consumer credit protection
and fraud. An increasing number of governments and industry groups worldwide have established data privacy laws and
standards for the protection of personal information, including social security numbers, financial information (including
credit and debit card numbers) and health information.
Seasonality
Our business is subject to seasonal fluctuations. Historically, sales in most of our restaurants have been higher
during the winter months of each year. Holidays, changes in weather, severe weather and similar conditions may impact
sales volumes seasonally in some operating regions. As a result, our quarterly operating results and comparable
restaurant sales may fluctuate due to seasonality. Accordingly, results for any one quarter are not necessarily indicative
of results to be expected for any other quarter or for any year and comparable restaurant sales for any particular future
period may fluctuate.
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Human Capital Management
At Texas Roadhouse, we take pride in being a people-first company. As of December 26, 2023, we employed
approximately 91,000 people. This included 845 executive and administrative personnel and 3,507 restaurant
management personnel, while the remainder were full and part-time hourly restaurant personnel. None of our employees
are covered by a collective bargaining agreement and we consider our employee relations to be good.
Our business relies on our ability to attract and retain talented employees. To attract and retain talent, we strive to
maintain our people-first culture through shared core values, a performance-based compensation program supported by
competitive benefits and health programs with opportunities for our employees to grow and develop in their careers.
Additionally, we believe that diversity and inclusion are vital parts of our culture and what truly makes us
legendary. We value and welcome employees of all walks of life to share their talents, gifts and strengths while working
in our restaurants and the Support Center, as we strive to reflect the communities we are proud to serve. As a result, we
are committed to attracting, retaining, engaging and developing a workforce that mirrors the diversity of our guests and
is committed to upholding our shared values. The table below shows the gender and racial and ethnic diversity of our
employees as of December 26, 2023:
December 26, 2023
Support Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hourly Restaurant Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Women
People of Color (1)
11 %
24 %
40 %
54 %
39 %
57 %
(1) Denotes employees at company restaurants and our Support Center that identify as American Indian/Alaskan
Native, Asian, Black/African American, Hispanic/Latino, Native Hawaiian/Pacific Islander or two or more races.
Maintaining our Culture and Core Values. In our restaurants and at our Support Center, we are committed to our
shared “Core Values of Passion, Partnership, Integrity, and Fun…all with Purpose”. These Core Values form the
foundation of who we are as a company and how we interact with respect, appreciation, and fairness towards one another
every day.
Performance-based Compensation and Benefits. We support our employees by offering competitive wages and
benefits for eligible employees. In addition to salaries, these programs (which vary by employee level) include, among
other items, bonuses, stock awards, retirement savings plans with employer matching contributions, healthcare and
insurance benefits, health savings and flexible spending accounts, tuition reimbursement, paid time off, paid parental
leave and various employee assistance programs.
We also offer a performance-based compensation program to our managing partners and market partners. Each of
these positions earn a base salary plus a performance bonus, which represents a percentage of each of their respective
restaurant’s pre-tax income. By providing our partners with a significant stake in the success of our restaurants, we
believe that we are able to attract and retain talented, experienced and highly motivated managing and market partners.
Personal Development. We motivate and develop our employees by providing them with opportunities for
increased responsibilities and advancement. We provide numerous training opportunities for our employees, with a
focus on continuous learning and development. With thousands of leadership positions across our restaurants, we
provide a pathway and training for thousands of individuals across the country to advance from entry-level jobs into
management roles. In addition, our geographic footprint often allows us to offer our restaurant team members relocation
options at similar roles due to personal circumstances.
Health and Safety. The health and safety of our employees is a top priority and we are committed to providing a
safe workplace, ensuring the safety and well-being of all team members while also ensuring that we are in compliance
with all laws and regulations as well as internal policies. This commitment includes the deployment of specific
protocols and standards to our restaurants that focus on maintaining the health and safety of our employees.
Andy’s Outreach. Founded in 2005, Andy’s Outreach is a non-profit, tax-exempt organization whose mission is to
provide financial support to employees of Texas Roadhouse and their families in times of severe hardship or crisis and in
15
cases of tragic or catastrophic need. Andy’s Outreach is mainly funded by the support of Texas Roadhouse employees
through payroll contributions, a domestic franchise store that is owned by Andy’s Outreach and other fundraising efforts.
Since its inception, Andy’s Outreach has assisted over 20,000 employees and distributed over $26 million.
Corporate Sustainability
Our corporate sustainability mission is to leave every community better than we found it by focusing on four
pillars – food, community, employees and conservation. As we test and roll out new programs, we continue to build
champions who are invested in furthering our sustainability efforts. Ongoing initiatives such as our meat cutter program,
support of non-profits, employee development and focus on conservation, create steady progress for our overall
corporate sustainability program and are integrated into our daily operations. Additional information about our
corporate sustainability mission is available through our website at www.texasroadhouse.com, under the corporate
sustainability section.
Website Access to Reports
We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and
amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, available, free of charge on or through our website, www.texasroadhouse.com, as soon as reasonably practical
after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). The
SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC.
Information about our Executive Officers
Set forth below are the name, age, position and a brief account of the business experience of each of our executive
officers. Executive officers are appointed by our Board of Directors (the “Board”) and serve until their successors are
appointed or until resignation or removal, in accordance with their employment agreements. There are no family
relationships among any of our executive officers.
Name
Gerald L. Morgan . . . . . . . . . . . . . . . . . . . . . . .
Regina A. Tobin . . . . . . . . . . . . . . . . . . . . . . . .
Christopher C. Colson . . . . . . . . . . . . . . . . . . . .
Hernan E. Mujica . . . . . . . . . . . . . . . . . . . . . . .
D. Christopher Monroe . . . . . . . . . . . . . . . . . . .
Travis C. Doster . . . . . . . . . . . . . . . . . . . . . . . .
Age
63
60
47
62
57
57
Chief Executive Officer
President
Position
Chief Legal and Administrative Officer
Chief Technology Officer
Chief Financial Officer
Chief Communications Officer
Gerald L. Morgan. Mr. Morgan was appointed Chief Executive Officer in March 2021. Mr. Morgan joined Texas
Roadhouse in 1997, during which time he has held the positions of Managing Partner, Market Partner and Regional
Market Partner. Mr. Morgan also served as President from December 2020 to January 2023. Mr. Morgan has more than
35 years of restaurant management experience with Texas Roadhouse, Bennigan’s Restaurants and Burger King.
Regina A. Tobin. Ms. Tobin was appointed President in January 2023. Ms. Tobin joined Texas Roadhouse in
1996, during which time she has held the positions of Managing Partner, Market Partner, Vice President of Training and
served as Chief Learning and Culture Officer from June 2021 through her appointment as President. Ms. Tobin has
more than 30 years of restaurant management experience.
Christopher C. Colson. Mr. Colson was appointed Chief Legal and Administrative Officer in January 2023 and
Corporate Secretary in August 2019. Mr. Colson joined Texas Roadhouse in 2005, during which time he has held the
positions of Senior Counsel, Associate General Counsel, Executive Director of the Global Development Group, and
General Counsel, a position he held from March 2021 through his appointment as Chief Legal and Administrative
Officer. Mr. Colson has over 20 years of restaurant industry experience with Texas Roadhouse, Frost Brown Todd
(serving as outside counsel to Texas Roadhouse), YUM! Brands and KPMG.
Hernan E. Mujica. Mr. Mujica was appointed Chief Technology Officer in January 2023. Mr. Mujica joined
Texas Roadhouse in January 2012 as Vice President of Information Technology and then Chief Information Officer, a
position he held from March 2021 through his appointment as Chief Technology Officer. Prior to joining Texas
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Roadhouse, Mr. Mujica held senior management positions at The Home Depot and Arthur Andersen. Mr. Mujica has
over 30 years of experience in both industry and consulting roles.
D. Christopher Monroe. Mr. Monroe was appointed Chief Financial Officer in June 2023 when he joined Texas
Roadhouse. Prior to joining Texas Roadhouse, Mr. Monroe held various senior level financial positions, most recently
as Senior Vice President of Finance and Treasurer, at Southwest Airlines. Mr. Monroe has over 30 years of financial
experience.
Travis C. Doster. Mr. Doster was appointed Chief Communications Officer in November 2023. Mr. Doster joined
Texas Roadhouse in 2006 as the Director, then Senior Director and Vice President of Communications, a position he
held from 2018 through his appointment as Chief Communications Officer. Prior to joining Texas Roadhouse,
Mr. Doster held a senior management position at FSA Public Relations where he provided services for national clients
including Jimmy John’s, Qdoba and Cameron Mitchell Restaurants. Mr. Doster has over 30 years of media, public
relations and industry experience.
ITEM 1A. RISK FACTORS
Careful consideration should be given to the risks described below. If any of the risks and uncertainties described
in the cautionary factors described below actually occur, our business, financial condition, results of operations, liquidity
and the trading price of our common stock could be materially and adversely affected. Moreover, we operate in a very
competitive and rapidly changing environment. New factors emerge from time to time and it is not possible to predict
the impact of all these factors on our business, financial condition, results of operations or liquidity.
Risks Related to our Growth and Operating Strategy
Our growth strategy, which primarily depends on our ability to open new restaurants that are profitable, is subject to
many factors, some of which are beyond our control.
We cannot assure you that we will be able to open new restaurants that are profitable in accordance with our
expansion plans. We have experienced delays in opening some of our restaurants in the past and may experience delays
in the future. These delays impact the timing of new restaurant openings and the related pre-opening expenses. Delays
or failures in opening new restaurants could adversely affect our growth strategy. One of our biggest challenges in
executing our growth strategy may be locating and securing an adequate supply of suitable new restaurant sites that
satisfy our financial targets. Competition for suitable restaurant sites in our target markets may be intense.
Once opened, we anticipate that our new restaurants will generally take several months to reach planned operating
levels due to start-up inefficiencies typically associated with new restaurants. We cannot assure you that any restaurant
we open will be profitable or obtain operating results similar to those of our existing restaurants. Some of our new
restaurants will be located in areas where we have little or no meaningful experience. Those new markets may have
smaller trade areas and different competitive conditions, consumer tastes and discretionary spending patterns than our
traditional, existing markets, which may cause our new store locations to be less successful than restaurants in our
existing market areas. Restaurants opened in new markets may open at lower average weekly sales volume than
restaurants opened in existing markets and may have higher restaurant-level operating expense ratios than in existing
markets. Sales at restaurants opened in new markets may take longer to reach average unit volume, if at all, thereby
affecting our overall profitability. Our localized marketing strategy may not result in brand awareness and guest
engagement. Additionally, the opening of a new restaurant could negatively impact sales at one or more of our existing
nearby restaurants, which could adversely affect our results of operations.
Our ability to open new restaurants that are profitable will also depend on numerous other factors, many of which
are beyond our control, including, but not limited to, the following:
•
•
•
our ability to hire, train and retain qualified operating personnel, especially market partners, managing
partners, and/or other restaurant management personnel who can execute our business strategy and maintain
our culture and brand standards;
our ability to negotiate suitable purchase or lease terms to execute our business strategy;
the availability and cost of construction materials, equipment and labor;
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•
•
•
•
•
•
•
•
•
•
our ability to control construction and development costs of new restaurants (including increased site, supply
chain and distribution costs);
our ability to secure required governmental approvals and permits in a timely manner, or at all;
road construction and other factors limiting access to the restaurant;
delays by our landlord or other developers in constructing other parts of a development adjacent to our
premises in a timely manner;
redevelopment of other parts of a development adjacent to our premises that affect the parking available for
our restaurant;
our ability to secure liquor licenses;
competitive and economic conditions, consumer tastes and discretionary spending patterns that are different
from and more difficult to predict or satisfy than in our existing markets;
changes in federal, state and/or local tax laws;
the cost and availability of capital to fund construction costs and pre-opening expenses; and
the impact of inclement weather, natural disasters and other calamities.
You should not rely on past changes in our average unit volume or our comparable restaurant sales as an indication
of our future results of operations because they may fluctuate significantly.
A number of factors have historically affected, and will continue to affect, our average unit volume and comparable
restaurant sales, including, among other factors:
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consumer awareness and understanding of our concepts;
our ability to execute our business strategy effectively;
our ability to maintain higher levels of to-go sales at our restaurants;
competition, from our competitors in the restaurant industry, our own restaurants, and/or other food service
providers (such as delivery services and grocery stores);
the impact of permanent changes in weather patterns that can cause inclement weather, natural disasters and
other calamities which impact guest traffic or product availability at our restaurants;
consumer trends and seasonality;
our ability to increase menu prices without adversely impacting guest traffic counts or per person average
check growth;
introduction of new menu items;
loss of parking and/or access rights due to government action (such as eminent domain actions) or through
private transactions;
closures and/or dining rooms operating at limited capacity due to government mandated restaurant closures
and/or limited availability of staff to meet our business standards;
negative publicity regarding food safety, health concerns, quality of service, and other food or beverage related
matters, including the integrity of our or our suppliers’ food processing;
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general economic conditions, including an economic recession, which can affect restaurant traffic, local labor
costs and prices we pay for the food and beverage products and other supplies we use;
legislation that impacts our suppliers’ ability to maintain compliance with laws and regulations and impacts
our ability to source product; and
effects of actual or threatened terrorist attacks (including cyber and/or ransomware attacks).
Our average unit volume and comparable restaurant sales may not increase at rates achieved in the past, which may
affect our sales growth and will continue to be a critical factor affecting our profitability. Our business is also subject to
seasonal fluctuations. Historically, sales in most of our restaurants have been higher during the winter months of each
year. Holidays, changes in weather, severe weather and similar conditions may impact sales volumes seasonally in some
operating regions. Accordingly, results for one quarter are not necessarily indicative of results to be expected for any
other quarter or for any year and comparable restaurant sales for any particular future period may decrease. In the
future, operating results may fall below the expectations of securities analysts and investors. In that event, the price of
our common stock could decrease.
The development and/or acquisition of new restaurant concepts may not contribute to our growth.
The development of new restaurant concepts, including Bubba’s 33 and Jaggers, created internally or acquired as a
part of our other strategic initiatives may not be as successful as our experience in the development of the Texas
Roadhouse concept. These concepts may have lower brand awareness and less operating experience than most Texas
Roadhouse restaurants. In addition, they may have a higher initial investment cost and/or a lower per person average
check amount. As a result, the development and/or acquisition of new restaurant concepts may not contribute to our
average unit volume growth and/or profitability in an incremental way. We can provide no assurance that new units will
be accepted in the markets targeted for expansion and/or that we or our franchisees will be able to achieve our targeted
returns when opening new locations. In the future, we may determine not to move forward with any further expansion
and/or acquisition of new restaurant concepts. These decisions could limit or delay our overall long-term growth.
Additionally, expansion and/or acquisition of new restaurant concepts might divert our management’s attention from
other business concerns or initiatives and could have an adverse impact on our core Texas Roadhouse business.
Our expansion into international markets presents increased economic, political, regulatory and other risks.
As of December 26, 2023, our operations include 48 Texas Roadhouse franchise restaurants in ten countries outside
the United States, and we expect to have further international expansion in the future with one or more of our concepts.
The entrance into international markets may not be as successful as our experience in the development of the Texas
Roadhouse concept domestically or any success we have had with the Texas Roadhouse concept in other international
markets. In addition, operating in international markets may require significant resources and management attention and
will subject us to economic, political and regulatory risks that are different from and incremental to those in the United
States. In addition to the risks that we face in the United States, our international operations involve risks that could
adversely affect our business, including:
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the need to adapt our concepts for specific cultural and language differences;
new and different sources of competition;
the ability to identify appropriate business partners;
difficulties and costs associated with staffing and managing foreign operations;
difficulties in adapting and sourcing product specifications for international restaurant locations;
fluctuations in currency exchange rates, which could impact royalties, revenue and expenses of our
international operations and expose us to foreign currency exchange rate risk;
difficulties in complying with local laws, regulations and customs in foreign jurisdictions;
unexpected changes in regulatory requirements or tariffs on goods needed to construct and/or operate our
restaurants;
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political or social unrest, economic instability and destabilization of a region;
effects of actual or threatened terrorist attacks;
health concerns from global pandemics;
compliance with U.S. laws such as the Foreign Corrupt Practices Act, and similar laws in foreign jurisdictions;
differences in the registration and/or enforceability of intellectual property and contract rights;
adverse tax consequences;
profit repatriation and other restrictions on the transfer of funds; and
different and more stringent user protection, data protection, privacy and other laws.
Our failure to manage any of these risks successfully could harm our future international operations and our overall
business and results of our operations.
We are also subject to governmental regulations throughout the world impacting the way we do business with our
international franchisees. These include antitrust and tax requirements, anti-boycott regulations, import/export/customs,
tariffs and other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act. Failure to
comply with any such legal requirements could subject us to monetary liabilities and other sanctions, which could
adversely impact our business and financial performance.
Acquisition of existing restaurants from our domestic franchisees and other strategic initiatives may have
unanticipated consequences that could harm our business and our financial condition.
We plan to continue to opportunistically acquire existing restaurants from our domestic franchisees over time.
Additionally, from time to time, we evaluate potential mergers, acquisitions, joint ventures or other strategic initiatives
(including retail initiatives utilizing our intellectual property or other brand extensions) to acquire or develop additional
business channels or concepts, and/or change the business strategy regarding an existing concept. To successfully
execute any acquisition or development strategy, we will need to identify suitable acquisition or development candidates,
negotiate acceptable acquisition or development terms and possibly obtain appropriate financing.
Any acquisition or future development that we pursue, including the on-going development of new concepts or
retail initiatives utilizing our intellectual property, whether or not successfully completed, may involve risks, including:
• material adverse effects on our operating results, particularly in the fiscal quarters immediately following the
acquisition or development as the restaurants are integrated into our operations;
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risks associated with entering into new domestic markets or conducting operations where we have no or
limited prior experience;
risks associated with successfully integrating new employees, processes and systems while also maintaining
our culture and brand standards;
risks inherent in accurately assessing the value, future growth potential, strengths, weaknesses, contingent and
other liabilities and potential profitability of acquisition candidates, and our ability to achieve projected
economic and operating synergies, without impacting our underlying business; and
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the diversion of management’s attention from other business concerns.
Future acquisitions of existing restaurants from our franchisees or other strategic partners, which may be
accomplished through a cash purchase transaction, the issuance of shares of common stock or a combination of both,
could have a dilutive impact on holders of our common stock and result in the incurrence of debt and contingent
liabilities and impairment charges related to goodwill and other tangible and intangible assets, any of which could harm
our business and financial condition. Additionally, following a franchise acquisition, we may be required to incur
substantial capital improvement costs to meet company standards, which could impact our return on such acquisition.
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Additionally, we may evaluate other means to leverage our competitive strengths, including the expansion of our
products across other strategic initiatives or business opportunities (including retail initiatives utilizing our intellectual
property). The expansion of our products may damage our reputation if products bearing our brands are not of the same
quality or value that guests associate with our concepts. In addition, we may experience dilution of the goodwill
associated with our concepts as they become more common and increasingly accessible.
Approximately 21% of our company restaurants are located in Texas and Florida and, as a result, we are sensitive to
economic and other trends and developments in those states.
As of December 26, 2023, we operated a total of 87 company restaurants in Texas and 44 company restaurants in
Florida. As a result, we are particularly susceptible to adverse trends and economic conditions in those states, including
any state mandated changes in minimum and tipped wage rates and economic pressures that may result in lower sales
and profits at our restaurants. In addition, given our geographic concentration in these states, negative publicity
regarding any of our restaurants in either Texas or Florida could have a material adverse effect on our business and
operations, as could other occurrences in either Texas or Florida such as health epidemics or pandemics, local strikes,
energy shortages or extreme fluctuations in energy prices, droughts, earthquakes, hurricanes, fires or other natural
disasters.
Our franchisees could take actions that could harm our business.
Both our domestic and international franchisees are contractually obligated to operate their restaurants in
accordance with our applicable restaurant operating standards. We also provide training and support to franchisees.
However, most franchisees are independent third parties that we do not control, and these franchisees own, operate and
oversee the daily operations of their restaurants. As a result, the ultimate success and quality of any franchise restaurant
rests with the franchisee. If franchisees do not successfully operate restaurants in a manner consistent with our
standards, our image and reputation could be harmed, which in turn could adversely affect our business and operating
results.
Decreased cash flow from operations, or an inability to access credit, could negatively affect our business initiatives
or may result in our inability to execute our revenue, expense, and capital allocation strategies.
Our ability to fund our operating plans and to implement our capital allocation strategies depends on sufficient cash
flow from operations and/or other financing, including the use of funding under our credit facility. We also may seek
access to the debt and/or equity capital markets. There can be no assurance, however, that these sources of financing
will be available on terms favorable to us, or at all. Our capital allocation strategies include, but are not limited to, new
restaurant development, payment of dividends, refurbishment or relocation of existing restaurants, repurchases of our
common stock and franchise acquisitions. If we experience decreased cash flow from operations, our ability to fund our
operations and planned initiatives, and to take advantage of growth opportunities, may be delayed or negatively affected.
In addition, these disruptions or a negative effect on our revenue could affect our ability to borrow or comply with our
covenants under our credit facility. If we are unable to raise additional capital, our growth could be impeded.
Our existing credit facility limits our ability to incur additional debt.
The lenders’ obligation to extend credit under our credit facility depends on our maintaining certain financial
covenants. If we are unable to maintain these covenants, we would be unable to obtain additional financing under this
credit facility. The credit facility permits us to incur additional secured or unsecured indebtedness outside the credit
facility, except for the incurrence of secured indebtedness that in the aggregate is equal to or greater than $125.0 million
and 20% of our consolidated tangible net worth or circumstances where the incurrence of secured or unsecured
indebtedness would prevent us from complying with our financial covenants. If we are unable to borrow additional
capital or have sufficient liquidity to either repay or refinance the then outstanding balance at the expiration of our credit
facility, or upon violation of the covenants, our growth could be impeded and our financial performance could be
significantly adversely affected.
We are subject to all of the risks associated with leasing space subject to long-term non-cancelable leases, as well as
risks related to renewal.
The majority of our company restaurants are located on leased premises. Additional sites that we lease are likely to
be subject to similar long-term non-cancelable leases. In connection with the relocation, other operational changes or
closure of any restaurant, we may nonetheless be committed to perform on our obligations under the applicable lease
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including, among other things, paying the base rent and real estate taxes for the balance of the lease term. We also are
subject to landlord actions that could negatively impact our business or operations.
In addition, as each of our leases expires, there can be no assurance we will be able to renew our expiring leases
after the expiration of all remaining renewal options, either on commercially acceptable terms or at all. As a result, at
the end of the lease term and expiration of all renewal periods, we may be unable to renew the lease without substantial
additional cost, if at all. As a result, we may be required to relocate or close a restaurant, which could subject us to
construction and other costs and risks and may have an adverse effect on our results of operations.
We may be required to record additional impairment charges in the future.
In accordance with accounting guidance as it relates to the impairment of long-lived assets, we make certain
estimates and projections with regard to company restaurant operations, as well as our overall performance in connection
with our impairment analysis for long-lived assets. When impairment triggers are deemed to exist for any company
restaurant, the estimated undiscounted future cash flows for the restaurant are compared to its carrying value. If the
carrying value exceeds the undiscounted cash flows, an impairment charge would be recorded equal to the difference
between the carrying value and the estimated fair value.
We review the value of our goodwill on an annual basis and also when events or changes in circumstances indicate
that the carrying value of goodwill may exceed its fair value. The estimates of fair value are based upon the best
information available as of the date of the assessment and incorporate management assumptions about expected future
cash flows and contemplate other valuation measurements and techniques.
The estimates of fair value used in these analyses require the use of judgment, certain assumptions and estimates of
future operating results. If actual results differ from our estimates or assumptions, additional impairment charges may be
required in the future. If impairment charges are significant, our results of operations could be adversely affected.
Risks Related to Consumer Discretionary Spending and Macroeconomic Conditions
Changes in consumer preferences and discretionary spending could adversely affect our business.
Our success depends, in part, upon the popularity of our food products. Continued social concerns or shifts in
consumer preferences away from our restaurants or food offerings, particularly beef, could harm our business.
Consumer preferences regarding food sourcing in response to environmental or welfare concerns could also harm our
business. Additionally, our success depends to a significant extent on discretionary consumer spending, which is
influenced by general economic conditions, including high inflationary periods, and the availability of discretionary
income. Accordingly, we may experience declines in sales during economic downturns, pandemics or other periods of
uncertainty. Any material decline in the amount of discretionary spending could have a material adverse effect on our
business, results of operations, financial condition or liquidity.
Our objective to increase sales and profits at existing restaurants could be adversely affected by macroeconomic
conditions.
In future periods, the U.S. and global economies could further suffer from a downturn in economic activity.
Recessionary economic cycles, higher interest rates, higher fuel and other energy costs, sustained labor inflation,
increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other
changes in tax laws, financial market volatility, social unrest, government spending, a low or stagnant pace of economic
recovery and growth, or other economic factors that may affect consumer spending or buying habits could adversely
affect the demand for our products. In addition, there is no assurance that any governmental plans to stimulate the
economy will foster growth in consumer spending or buying habits. As in the past, we could experience reduced guest
traffic or we may be unable or unwilling to increase the prices we charge for our products to offset higher costs or fewer
transactions, either of which could reduce our sales and profit margins. Also, landlords or other tenants in the shopping
centers in which some of our restaurants are located may experience difficulty as a result of macroeconomic trends or
cease to operate, which could in turn negatively affect guest traffic at our restaurants. All of these factors could have a
material adverse impact on our business, results of operations, financial condition or liquidity.
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Risks Related to Government Regulation and Litigation
We may not be able to obtain and maintain licenses and permits necessary to operate our restaurants and compliance
with governmental laws and regulations could adversely affect our operating results.
The restaurant industry is subject to various federal, state and local government regulations, including those relating
to the sale of food and alcoholic beverages. Such regulations are subject to change from time to time, sometimes
without notice to us. The failure to obtain and maintain these licenses, permits and approvals, including liquor licenses,
could adversely affect our operating results. Difficulties or failure to obtain the required licenses and approvals could
delay or result in our decision to cancel the opening of new restaurants. Local authorities may revoke, suspend or deny
renewal of our liquor licenses if they determine that our conduct violates applicable regulations.
In addition to our having to comply with these licensing requirements, various federal and state labor laws govern
our relationship with our employees and affect operating costs. These laws include minimum and tipped wage
requirements, overtime pay, health benefits, unemployment taxes, workers’ compensation, work eligibility requirements
and working conditions. A number of factors could adversely affect our operating results, including:
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additional government-imposed increases in minimum and/or tipped wages, hourly and overtime pay, paid
leaves of absence, sick leave, and mandated health benefits;
increased tax reporting and tax payment requirements for employees who receive gratuities;
any failure of our employees to comply with laws and regulations governing work authorization or residency
requirements resulting in disruption of our work force and adverse publicity;
a reduction in the number of states that allow gratuities to be credited toward minimum wage requirements, or
a federal mandate prohibiting such credits; and
increased litigation including claims under federal and/or state wage and hour laws.
The federal Americans with Disabilities Act prohibits discrimination on the basis of disability in public
accommodations and employment. Although our restaurants and other places of accommodation are designed to be
accessible to the disabled, we could be required to make unexpected modifications to provide service to, or make
reasonable accommodations, for disabled persons.
We are subject to increasing legal complexity and could be party to litigation that could adversely affect us.
Increasing legal complexity will continue to affect our operations and results. We could be subject to legal
proceedings that may adversely affect our business, including class actions, administrative proceedings, government
investigations, employment and personal injury claims, claims alleging violations of federal and state laws regarding
consumer, workplace and employment matters, wage and hour claims, discrimination and similar matters,
landlord/tenant disputes, disputes with current and former suppliers, claims by current and former franchisees, data
privacy claims and intellectual property claims (including claims that we infringed upon another party’s trademarks,
copyrights or patents). Additionally, we are subject to Securities and Exchange Commission (“SEC”) and NASDAQ
reporting and disclosure requirements. Inconsistent standards imposed by governmental authorities can adversely affect
our business and increase our exposure to litigation which could result in significant judgments, including punitive and
liquidated damages, and injunctive relief.
Occasionally, our guests file complaints or lawsuits against us alleging that we are responsible for an illness or
injury they suffered as a result of a visit to our restaurants, or that we have problems with food quality or operations. As
a Company, we take responsible alcohol service seriously. However, we are subject to “dram shop” statutes. These
statutes generally allow a person injured by an intoxicated person to recover damages from an establishment that served
alcoholic beverages to the intoxicated person. Some litigation against restaurant chains has resulted in significant
judgments, including punitive damages, under dram shop statutes. Because a plaintiff may seek punitive damages,
which may not be covered by insurance, this type of action could have an adverse impact on our financial condition and
results of operations.
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Litigation involving our relationship with franchisees and the legal distinction between our franchisees and us for
employment law purposes, if determined adversely, could increase costs, negatively impact the business prospects of our
franchisees and subject us to incremental liability for their actions.
Our operating results could also be affected by the following:
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The relative level of our defense costs and nature and procedural status of pending proceedings;
The cost and other effects of settlements, judgments or consent decrees, which may require us to make
disclosures or to take other actions that may affect perceptions of our brands and products;
• Adverse results of pending or future litigation, including litigation challenging the composition and
preparation of our products, or the appropriateness or accuracy of our marketing or other communication
practices; and
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The scope and terms of insurance or indemnification protections that we may have (if any).
Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend
and may divert time, attention and money away from our operations and hurt our performance. A judgment significantly
in excess of any applicable insurance coverage could have significant adverse effect on our financial condition or results
of operations. Further, adverse publicity resulting from these claims may hurt our business.
Our current insurance may not provide adequate levels of coverage against claims.
We currently maintain insurance customary for businesses of our size and type. However, there are types of losses
we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Such damages
could have a material adverse effect on our business, results of operations and/or liquidity. In addition, we self-insure a
significant portion of expected losses under our health, workers’ compensation, general liability, employment practices
liability, cybersecurity and property insurance programs. Unanticipated changes in our claims experience and/or the
actuarial assumptions and management estimates underlying our reserves for these losses could result in significantly
different amounts of expense under these programs, which could have a material adverse effect on our financial
condition, results of operations and liquidity. Additionally, if our insurance costs increase, there can be no assurance we
will be able to successfully offset the effect of such increases and our results of operations may be adversely affected.
Changes in tax laws and unanticipated tax liabilities could adversely affect our financial results.
We are primarily subject to federal, state and local income and other taxes in the United States. Our effective
income tax rate and other taxes in the future could be affected by a number of factors, including changes in the valuation
of deferred tax assets and liabilities, changes in tax laws or other legislative changes and the outcome of income tax
audits. Any significant increases in income tax rates, changes in and/or interpretations of income tax laws or
unfavorable resolution of tax matters could have a material adverse impact on our results of operations, financial
condition or liquidity.
Failure to adequately address environmental, social and/or governance (“ESG “) matters could adversely affect our
brand, business, results of operations and financial condition.
Entities across all industries are facing increased interest related to ESG matters including packaging and waste,
animal health and welfare, human rights, climate change, greenhouse gases and land, energy and water use. In addition,
we have faced enhanced pressure to provide expanded disclosures around ESG matters and establish goals or targets
with respect to ESG matters. In response to the heightened level of expectation for expanded ESG disclosure, we have
published a Corporate Sustainability Report detailing our ESG efforts and which we update regularly.
Evolving consumer and investor interest and preferences as well as governmental regulation may result in
additional disclosure, due diligence, reporting and specific target-setting with regard to our business and supply chain
that could result in additional costs to comply with such demands. Failure to comply with the increased demands could
result in consumer or investor scrutiny and/or litigation and could have an adverse effect on our business. Establishing
targets or making other public commitments due to these demands, without a full or complete understanding of the cost
or operational impact of changes in our supply chain or operating model, could also adversely affect our business and
financial condition.
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Risks Related to Human Capital
Failure to retain the services of our key management personnel, or to successfully execute succession planning and
attract additional qualified personnel could harm our business.
Our future success depends on the continued services and performance of our key management personnel and our
ability to develop future successors of such personnel as a part of our succession planning. Our future performance will
depend on our ability to motivate and retain these and other key officers, employees and managers, particularly regional
market partners, market partners and managing partners. Competition for these employees is intense. The unplanned
loss of the services of members of our senior management team or other key officers or managers or the inability to
attract additional qualified personnel as needed could significantly harm our business. In addition, our business could
suffer from any actual or alleged misconduct of any of our key personnel.
Our business could be adversely affected by increased labor costs or labor shortages.
Labor is a primary component in the cost of operating our business. We devote significant resources to recruiting
and training our restaurant managers and hourly employees. Increased labor costs due to competition, unionization,
increased minimum and tipped wages, changes in hourly and overtime pay, state unemployment rates, sick pay or other
employee benefits costs (including workers’ compensation and health insurance), company staffing initiatives or
otherwise any regulatory changes resulting from any of the foregoing would adversely impact our operating expenses.
In addition, failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest
satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our results of operations.
Increased competition for qualified employees caused by a shortage in the labor pool exerts upward pressure on
wages paid to attract and retain such personnel, resulting in higher labor costs, together with greater recruitment and
training expense. We could suffer from significant indirect costs, including restaurant disruptions due to management or
hourly labor turnover and potential delays in new restaurant openings. A shortage in the labor pool could also cause our
restaurants to be required to operate with reduced staff which could negatively impact our ability to provide adequate
service levels to our guests resulting in adverse guest reactions and a possible reduction in guest traffic counts.
Additionally, personal or public health concerns might make some existing personnel or potential candidates reluctant to
work in enclosed restaurant environments.
We have many restaurants located in states or municipalities where the minimum and/or tipped wage is greater than
the federal minimum and/or tipped wage. We anticipate that additional legislation increasing minimum and/or tipped
wage standards will be enacted in future periods either federally or in state and local jurisdictions. In addition,
regulatory actions which result in changes to healthcare eligibility, design and cost structure could occur. Any increases
in minimum and/or tipped wages or increases in employee benefits costs will result in sustained higher labor costs.
Our operating margin will be adversely affected to the extent that we are unable or are unwilling to offset any
increase in these labor costs through higher prices on our products. Our distributors and suppliers also may be affected
by higher minimum wage and benefit standards which could result in higher costs for goods and services supplied to us.
Our success depends on our ability to attract, motivate and retain qualified employees to keep pace with our growth
strategy. If we are unable to do so, our results of operations may also be adversely affected.
Risks Related to Technology, Privacy and Intellectual Property
We rely heavily on information technology, and any material failure, weakness, ransomware or interruption could
prevent us from effectively operating our business.
We rely heavily on information systems in all aspects of our operations, including point-of-sale systems, digital
apps, financial systems, marketing programs, e-commerce and various other processes and transactions. This reliance
has significantly increased in recent years as we have had to rely to a greater extent on systems such as online ordering,
contactless payments, online waitlists, and systems supporting a more remote workforce as our guests are increasingly
using our website and digital applications to place and pay for their orders. Our point-of-sale processing in our
restaurants includes collection of cash, credit cards, debit cards, gift cards and other processes and procedures. Our
ability to efficiently and effectively manage our business depends significantly on the reliability, security and capacity of
these systems. As our business needs continue to evolve, these systems will require upgrading and maintenance over
time, consequently requiring significant future commitments of resources and capital. Additionally, as we become
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increasingly reliant on digital ordering and payment as a sales channel, our business could be negatively impacted if we
are unable to successfully implement, execute or maintain our consumer-facing digital initiatives.
The failure of these systems to operate effectively, maintenance problems, upgrading or transitioning to new
platforms or a material breach in the security of these systems could result in delays or errors to guest service and reduce
efficiency in our operations. In addition, as we implement new technology platforms to improve productivity and
overall guest experience, there can be no guarantees that these platforms will operate as reliably or be as operationally
impactful as intended.
We have disaster recovery procedures and business continuity plans in place to address events of a crisis nature,
including tornadoes and other natural disasters, and back up off-site locations for recovery of electronic and other forms
of data information. However, if we are unable to fully implement our disaster recovery plans, we may experience
delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance,
failures to adequately support field operations and other breakdowns in normal communication and operating procedures
that could have a material adverse effect on our financial condition, results of operations and exposure to administrative
and other legal claims.
Our ability to expand and update our information technology infrastructure in response to our growing and
changing needs would be inhibited in the event of a cybersecurity incident. This could lead to a delayed implementation
of new service offerings, disruptions to guest experiences including via our website and applications and the diversion of
resources that would otherwise be invested in expanding our business and operations. Additionally, we could be subject
to litigation and government enforcement actions as a result of any such failure. Any such claim or proceeding could
cause us to incur significant unplanned expenses in excess of our insurance coverage, which could have a material
impact on our financial condition and results of operations. In addition, if there are malfunctions or other problems with
our processing vendors, billing software or payment processing systems, it may cause interruption of normal business
performance. These vendors may also experience interruptions to their information technology systems that could
adversely affect us and which we may have limited or no control.
We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in
business and increased costs.
Some business processes are currently outsourced to third parties, including such processes as information
technology, gift card tracking, credit and debit card authorization and processing, insurance claims processing,
unemployment claims processing, payroll tax filings, vendor payment processing and other accounting processes. We
continually evaluate our other business processes to determine if additional outsourcing is a viable, and the most
appropriate, option to accomplish our goals. We make a diligent effort to validate that all providers of outsourced
services maintain customary internal controls, such as redundant processing facilities and adequate security frameworks
to guard against breaches or data loss; however, there are no guarantees that failures will not occur. Failure of third
parties to provide adequate services or internal controls over their processes could have an adverse effect on our results
of operations, financial condition or ability to accomplish our financial and management reporting.
We may incur increased costs to comply with privacy and data protection laws and, if we fail to comply or our systems
are compromised by a security breach, we could be subject to government enforcement actions, private litigation and
adverse publicity.
New, modified and existing privacy and data protection laws and regulations may result in significant costs and
compliance challenges and adversely affect our business and financial condition. These privacy laws and regulations,
which are constantly evolving, may be interpreted by regulatory authorities in new and differing manners, including the
issuing of rulings that invalidate prior laws or regulations or increase penalties, and such interpretations may be
inconsistent among jurisdictions. We may incur increased costs to comply with increasingly demanding privacy laws
and regulations and such compliance may impede the development and offering of new products or services and may
adversely impact the guest experience. We could also be subject to government enforcement actions, private litigation
and adverse publicity including reputational damage and loss of guest confidence.
We receive and maintain certain personal, financial or other information about our guests, vendors and employees.
In 2023, approximately 88% of our transactions were by credit or debit cards. In addition, certain of our vendors receive
and/or maintain certain personal, financial and other information about our employees and guests on our behalf. The use
and handling, including security, of this information is regulated by privacy and data protection laws and regulations in
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various jurisdictions, as well as by certain third-party contracts, frameworks and industry standards, such as the Payment
Card Industry Data Security Standard. Hardware, software or other applications we develop and procure from third
parties or vendor’s third-party applications could be subject to vulnerabilities or cybersecurity incidents or may contain
defects in design or manufacture or other problems that could unexpectedly compromise information security.
Unauthorized parties may also attempt to gain access to our systems and facilities through fraud, trickery or other forms
of deceiving our employees or vendors.
In addition, if our security and information systems are compromised as a result of data corruption or loss,
cybersecurity incident or a network security incident, or if our employees or vendors (or other persons or entities with
which we do business with) fail to comply with such laws and regulations or fail to meet industry standards and this
information is obtained by unauthorized persons or used inappropriately, it could result in liabilities and penalties and
could damage our reputation, cause interruption of normal business performance, cause us to incur substantial costs and
result in a loss of guest confidence, which could adversely affect our results of operations and financial condition.
Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive
position or the value of our brand.
We own certain common law trademark rights and a number of federal and international trademark and service
mark registrations, including our trade names and logos, and proprietary rights relating to certain of our core menu
offerings. We believe that our trademarks and other proprietary rights are important to our success and our competitive
position. Therefore, we devote appropriate resources to the protection of our trademarks and proprietary rights.
However, the protective actions that we take may not be enough to prevent unauthorized usage or imitation by others,
which could harm our image, brand or competitive position and, if we commence litigation to enforce our rights, cause
us to incur significant legal fees. Our inability to register or protect our marks and other proprietary rights in foreign
jurisdictions could adversely affect our competitive position in international markets.
We cannot assure you that third parties will not claim that our trademarks or menu offerings infringe upon their
proprietary rights. Any such claim, whether or not it has merit, could be time-consuming, result in costly litigation,
cause delays in introducing new menu items in the future or require us to enter into royalty or licensing agreements. As
a result, any such claim could have a material adverse effect on our business, results of operations, financial condition or
liquidity.
Risks Related to the Restaurant Industry
Changes in food and supply costs and/or availability of products could adversely affect our results of operations.
Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs and/or the
availability of products necessary to operate our business, including increased costs arising from federal and/or state
mandated requirements. Any increase in food prices or loss of supply, particularly proteins, could adversely affect our
operating results. In addition, we are susceptible to increases in food costs as a result of factors beyond our control, such
as food supply constrictions, weather conditions, food safety concerns, global pandemics, product recalls, global market
and trade conditions, and government regulations. We cannot predict whether we will be able to anticipate and react to
changing food costs and/or loss of supply by adjusting our purchasing practices, menu prices or menu offerings, and a
failure to do so could adversely affect our operating results. Extreme and/or long term increases in commodity prices
could adversely affect our future results, especially if we are unable, primarily due to competitive reasons, to increase
menu prices. Additionally, if there is a time lag between the increasing commodity prices and our ability to increase
menu prices or if we believe the commodity price increase to be short in duration and we choose not to pass on the cost
increases, our short-term results could be negatively affected. Also, if we adjust pricing there is no assurance that we
will realize the full benefit of any adjustment due to changes in our guests’ menu item selections and guest traffic.
We currently purchase our beef primarily from four beef suppliers coming from the United States or Canada.
While we maintain relationships with additional suppliers, if any of these vendors were unable to fulfill its obligations
under its contracts, we could encounter supply shortages and/or incur higher costs to secure adequate supplies, either of
which would harm our business.
Our success depends on our ability to compete with many food service businesses.
The restaurant industry is intensely competitive. We compete with many well-established food service companies
on the basis of taste, quality and price of products offered, guest service, atmosphere, location, take-out and delivery
27
options and overall guest experience. Our competitors include a large and diverse group of restaurant chains and
individual restaurants that range from independent local operators that have opened restaurants in various markets to
well-capitalized national restaurant chains. We also face competition from meal kit delivery services as well as the
supermarket industry. In addition, improving product offerings of fast casual and quick-service restaurants, together
with negative economic conditions could cause consumers to choose less expensive alternatives. As our competitors
expand their operations, we expect competition to intensify. We also compete with other restaurant chains and other
retail establishments for quality site locations and employees. Additionally, our competitors may generate or better
implement business strategies that improve the value and the relevance of their brands and reputation, relative to ours.
This could include the testing of delivery via internal or third-party methods or better execution around guests’ to-go
experience.
The food service industry is affected by litigation and publicity concerning food quality, health and other issues,
which can cause guests to avoid our restaurants and result in significant liabilities or litigation costs.
Food service businesses can be adversely affected by litigation and complaints from guests, consumer groups or
government authorities resulting from food quality, illness, injury or other health concerns or operating issues stemming
from one restaurant or a limited number of restaurants. Adverse publicity about these allegations may negatively affect
us, regardless of whether the allegations are true, by discouraging guests from eating at our restaurants. We could also
incur significant liabilities if a lawsuit or claim results in a decision against us or litigation costs regardless of the result.
Health, social and environmental concerns relating to the consumption or sourcing of beef or other food products
could affect consumer preferences and could negatively impact our results of operations.
Like other restaurant chains, consumer preferences could be affected by concerns about the consumption or
sourcing of beef, the key ingredient in many of our menu items, or negative publicity concerning food quality and food
safety, including food-borne illnesses. In addition, consumer preferences may be impacted by current and future menu-
labeling requirements or social and environmental concerns about the sourcing of food products throughout our supply
chain. Future regulatory action may occur which could result in further changes in the nutritional and environmental
disclosure requirements. We cannot make any assurances regarding our ability to effectively respond to changes in
consumer perceptions and to adapt our menu offerings to prevailing trends. The imposition of menu-labeling and food
sourcing laws or regulations could have an adverse effect on our results of operations and financial position, as well as
the restaurant industry in general. The labeling and sourcing requirements and any negative publicity concerning any of
the food products we serve may adversely affect demand for our food and could result in a decrease in guest traffic to
our restaurants. If we react to labeling or sourcing requirements or negative publicity by changing our concepts or our
menu offerings or their ingredients, we may lose guests who do not prefer the new concept or products, and we may not
be able to attract sufficient new guests to produce the revenue needed to make our restaurants profitable. In addition, we
may have different or additional competitors for our intended guests as a result of a change in our concept and may not
be able to compete successfully against those competitors. A decrease in guest traffic to our restaurants as a result of
these health, social and environmental concerns or negative publicity or as a result of a change in our menu or concept
could significantly harm our business.
Food safety and sanitation, food-borne illness and health concerns may have an adverse effect on our business by
reducing demand and increasing costs.
Food safety and sanitation is a top priority, and we dedicate substantial resources to help our guests enjoy safe,
quality food products. However, food-borne illnesses and food safety issues occur in the food industry from time to
time. Any report or publicity, whether true or not, linking us to instances of food-borne illness or other food safety
issues, including food tampering or contamination, could adversely affect our concepts and reputation as well as results
of operations. In addition, instances of food-borne illness, food tampering or food contamination occurring solely at
restaurants of our competitors could result in negative publicity about the food service industry generally and adversely
impact our revenue and profits.
Furthermore, our reliance on third-party food suppliers and distributors increases the risk that food-borne illness
incidents could be caused by factors outside of our control and that multiple locations would be affected rather than a
single restaurant. While we attempt to minimize the risk, we cannot assure that all food items are properly maintained
during transport throughout the supply chain and that our employees will identify all products that may be spoiled and
should not be used in our restaurants. If our guests become ill from food-borne illnesses, we could be forced to
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temporarily close some restaurants. Furthermore, any instances of food contamination, whether or not at our restaurants,
could subject us or our suppliers to a food recall.
In addition, the United States and other countries have experienced, or may experience in the future, outbreaks of
viruses, such as COVID-19, Hepatitis A, Norovirus, Ebola, Avian Flu, SARS and H1N1. To the extent that a virus is
food-borne, future outbreaks may adversely affect the price and availability of certain food products and cause our
guests to eat less of a product which may have a significant adverse effect on our business.
Our business could be adversely affected by our inability to respond to or effectively manage social media.
As part of our marketing strategy, we utilize social media platforms to promote our concepts and attract and retain
guests. Our strategy may not be successful, resulting in expenses incurred without improvement in guest traffic or brand
relevance. In addition, a variety of risks are associated with the use of social media, including improper disclosure of
proprietary information, negative comments about us, exposure of personally identifiable information, fraud, or
dissemination of false information. The inappropriate use of social media vehicles by our guests or employees could
increase our costs, lead to litigation or result in negative publicity that could damage our reputation and adversely affect
our results of operations.
Given the marked increase in the use of social media platforms, individuals have access to a broad audience of
consumers and other interested persons. The availability of information on social media platforms is virtually immediate
as is its impact. Many social media platforms immediately publish the content their subscribers and participants post,
often without filters or checks on the accuracy of the content posted. Information concerning our Company may be
posted on such platforms at any time. This includes posts by social media influencers that have a significant number of
followers and reach on the variety of social media platforms. Additionally, social media has increasingly been utilized
to target specific companies or brands as a result of a variety of actions or inactions, or perceived actions or inactions,
that are disfavored by interest groups and such campaigns can rapidly accelerate and impact consumer behavior. If we
are unable to quickly and effectively respond to such reports, we may suffer declines in guest traffic. The impact may be
immediate without affording us an opportunity for redress or correction. These factors could have a material adverse
impact on our business.
Risks Related to Stock Ownership and Our Corporate Structure
Provisions in our charter documents and Delaware law may delay or prevent our acquisition by a third party.
Our certificate of incorporation and by-laws contain several provisions that may make it more difficult for a third
party to acquire control of us without the approval of our Board. These provisions include, among other things, advance
notice for raising business or making nominations at meetings and “blank check” preferred stock. Blank check preferred
stock enables our Board, without approval of the shareholders, to designate and issue additional series of preferred stock
with such dividend, liquidation, conversion, voting or other rights, including the right to issue convertible securities with
no limitations on conversion, as our Board may determine. The issuance of blank check preferred stock may adversely
affect the voting and other rights of the holders of our common stock as our Board may designate and issue preferred
stock with terms that are senior to our common stock. These provisions may make it more difficult or expensive for a
third party to acquire a majority of our outstanding common stock. These provisions also may delay, prevent or deter a
merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our shareholders
receiving a premium over the market price for their common stock. If we issue preferred shares in the future that have a
preference over our common stock with respect to dividends or upon liquidation, dissolution or winding up, or if we
issue preferred shares with voting rights that dilute the voting power of our common stock, the rights of our common
stockholders or the market price of our common stock may be adversely affected.
The Delaware General Corporation Law prohibits us from engaging in “business combinations” with “interested
shareholders” (with some exceptions) unless such transaction is approved in a prescribed manner. The existence of this
provision could have an anti-takeover effect with respect to transactions not approved in advance by the Board,
including discouraging attempts that might result in a premium over the market price for our common stock.
There can be no assurance that we will continue to pay dividends on our common stock or repurchase our common
stock up to the maximum amounts permitted under our previously announced repurchase program.
Payment of cash dividends on our common stock or repurchases of our common stock are subject to compliance
with applicable laws and depends on, among other things, our results of operations, financial condition, level of
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indebtedness, capital requirements, business prospects, macro-economic conditions and other factors that our Board may
deem relevant. There can be no assurance that we will continue to pay dividends or repurchase our common stock at the
same levels we have historically (if at all).
Our business could be negatively affected as a result of actions of activist shareholders, and such activism could
impact the trading value of our common stock.
We value constructive input from our shareholders and the investment community. Our Board and management
team are committed to acting in the best interests of all of our shareholders. There is no assurance that the actions taken
by our Board and management in seeking to maintain constructive engagement with our shareholders will be successful.
Responding to actions by activist shareholders can be costly and time-consuming, disrupting our operations and
diverting the attention of management and our employees. Such activities could interfere with our ability to execute our
strategic plan. The perceived uncertainties as to our future direction also resulting from activist strategies could also
affect the market price and volatility of our common stock.
Failure to achieve and maintain effective internal control over financial reporting may negatively impact our
business and our financial results.
The Company is responsible for establishing and maintaining effective internal control over financial reporting.
This includes establishing controls around the adoption of new, or changes in existing, accounting policies and practices.
Despite its inherent limitations, effective internal control over financial reporting helps provide reasonable assurance
regarding the reliability of financial reporting for external purposes. A significant accounting error correction, financial
reporting failure or material weakness in internal control over financial reporting could cause results in our consolidated
financial statements that do not accurately reflect our financial condition, a loss of investor confidence and subsequent
decline in the market price of our common stock, increase our costs and regulatory scrutiny, and lead to litigation or
result in negative publicity that could damage our reputation.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
In the course of our operations, the Company receives and maintains sensitive information from our guests,
employees, partners and business operations. To address cybersecurity threats to this information, the Company uses a
risk-based approach to create and implement a detailed set of information security policies and procedures based on
frameworks established by the National Institute of Standards and Technology. The Company’s Head of Information
Security leads the Company’s cybersecurity efforts under the direct oversight of our Chief Technology Officer.
Together, these individuals have over 50 years of experience involving information technology, including security,
auditing, compliance, systems and programming. Additionally, the Company engages in the use of external
cybersecurity experts for training, contingency planning, consultation and process documentation.
The Company has implemented detective and preventative controls designed to ensure the appropriate level of
protection for the confidentiality, integrity and availability of data stored on or transferred through our information
technology resources. The Company has a risk assessment process to identify risks associated with our use of third-
party service providers and has implemented specific processes and controls designed to mitigate those identified risks.
Both internal and third-party audits are performed routinely to verify that these controls are effective. Additionally, the
Company has implemented trainings designed to provide best practices for protecting our network and systems, and also
routinely leads exercises for employees to reinforce the risk and proper handling of targeted emails. The Company’s
Head of Information Security is responsible for developing and implementing these controls and training exercises with
support from our information technology department.
The Company’s enterprise risk management program has established an internal risk committee to evaluate
information governance risks. This committee comprises members of management of the Company’s information
technology, human resources, marketing, accounting, risk, procurement, training, finance and legal functions, and is
focused on performing risk assessments to identify areas of concern and implement appropriate changes to enhance its
30
cybersecurity and privacy policies and procedures. The internal risk committee is informed of the Company’s risk
prevention and mitigation efforts on a regular basis. The committee is also briefed on detection and remediation of
cybersecurity incidents in a timely manner following the detection of any potential events.
The Company has a crisis response team comprising senior members of various corporate functions to oversee the
response to various crises including potential crises arising from cybersecurity incidents that may impact the Company
and/or its vendor partners. This team conducts regular tabletop exercises to simulate responses to cybersecurity
incidents. To the extent there is a cybersecurity incident impacting the Company and/or a vendor partner, the crisis
response team’s process would be to ensure that our Head of Information Security and Chief Technology Officer are
informed immediately and that the potential impact of the incident and remedial measures arising from the incident are
communicated to the executive officers of the Company.
There can be no guarantee that our policies and procedures will be effective. Although our risk factors include
further detail about the material cybersecurity risks we face and how a cybersecurity incident may affect our business
strategy, results of operations or financial condition, we believe that risks from prior cybersecurity threats, including as a
result of any previous cybersecurity incident, have not materially affected our business to date. We can provide no
assurances that there will not be incidents in the future or that they will not materially affect us, including our business
strategy, results of operations or financial condition.
Governance
The Board has authorized the audit committee to oversee the Company’s risk assessment and risk management
practices and strategies. This delegation includes maintaining responsibility for overseeing the Company’s enterprise
risk management program. As a part of this oversight role, the audit committee receives regular updates from
management on cybersecurity and privacy risks impacting the Company, which includes benchmarking these risks
versus our industry. Our Board members also engage in ad hoc conversations with management on cybersecurity-related
news events, receive training specific to cybersecurity risks and threats and regularly discuss any updates to our
cybersecurity risk management and strategy programs.
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ITEM 2. PROPERTIES
Properties
Our Support Center is located in Louisville, Kentucky. We occupy this facility under a master lease with Paragon
Centre Holdings, LLC, a limited liability company in which we have a minority ownership position. As of
December 26, 2023, we leased 133,023 square feet. Our lease expires on October 31, 2048, including all applicable
extensions.
Of the 635 company restaurants in operation as of December 26, 2023, we owned 155 locations and leased 480
locations, as shown in the following table.
State
Alabama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arizona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arkansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Connecticut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delaware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Massachusetts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mississippi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Missouri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Montana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nebraska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nevada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Hampshire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rhode Island . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vermont . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wyoming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owned Leased Total
10
2
20
9
8
17
5
5
44
16
6
19
28
11
7
19
10
3
14
10
21
7
3
18
2
4
4
3
10
9
22
21
2
36
10
2
27
3
9
2
18
87
10
1
22
2
4
11
2
635
3
—
6
2
1
7
—
1
7
4
1
3
13
2
2
4
2
—
4
1
5
1
1
2
—
1
—
2
—
1
3
4
—
12
3
—
3
—
—
1
—
39
1
—
6
—
1
4
2
155
7
2
14
7
7
10
5
4
37
12
5
16
15
9
5
15
8
3
10
9
16
6
2
16
2
3
4
1
10
8
19
17
2
24
7
2
24
3
9
1
18
48
9
1
16
2
3
7
—
480
Additional information concerning our properties and leasing arrangements is included in Note 2 and Note 8 to the
Consolidated Financial Statements appearing in Part II, Item 8 of this Annual Report on Form 10-K.
32
ITEM 3. LEGAL PROCEEDINGS
Information regarding legal proceedings is included in Note 13 to the Consolidated Financial Statements appearing
in Part II, Item 8 of this Annual Report on Form 10-K.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
33
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the Nasdaq Global Select Market under the symbol TXRH.
The number of holders of record of our common stock as of February 14, 2024 was 158.
On February 14, 2024, our Board declared a quarterly dividend of $0.61 per share of common stock which will be
distributed on March 26, 2024 to shareholders of record at the close of business on March 13, 2024. The declaration and
payment of cash dividends on our common stock is at the discretion of our Board, and any decision to declare a dividend
will be based on a number of factors including, but not limited to, earnings, financial condition, applicable covenants
under our credit facility and other contractual restrictions, or other factors deemed relevant.
Unregistered Sales of Equity Securities
There were no equity securities sold by the Company during the period covered by this Annual Report on
Form 10-K that were not registered under the Securities Act of 1933, as amended.
Issuer Repurchases of Securities
In 2008, our Board approved our first stock repurchase program. From inception through December 26, 2023, we
have paid $683.5 million through our authorized stock repurchase programs to repurchase 21,496,468 shares of our
common stock at an average price per share of $31.80. On March 17, 2022, the Board approved a stock repurchase
program under which we may repurchase up to $300.0 million of our common stock. This stock repurchase program has
no expiration date. All repurchases to date have been made through open market transactions. In 2023, we paid $50.0
million to repurchase 455,026 shares of our common stock. For the 13 weeks ended December 26, 2023, we paid $4.8
million to repurchase 40,707 shares of our common stock. As of December 26, 2023, $116.9 million remains authorized
for stock repurchases.
The following table includes information regarding purchases of our common stock made by us during the quarter
ended December 26, 2023:
of Shares
Total Number Maximum Number
(or Approximate
Purchased as
Dollar Value) of
Part of Publicly Shares that May
Yet Be Purchased
Announced
Under the Plans
or Programs
Plans or
Programs
Total Number Average
of Shares
Purchased
Price Paid
per Share
Period
September 27 to October 24 . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 25 to November 21 . . . . . . . . . . . . . . . . . . . . . . . . . . .
November 22 to December 26 . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $
— $
—
—
40,707 $ 117.92
40,707
— $ 121,683,492
— $ 121,683,492
40,707 $ 116,883,508
40,707
34
Stock Performance Graph
The following graph sets forth the cumulative total shareholder return experienced by holders of the Company’s
common stock compared to the cumulative total return of the S&P 500 Index as well as the industry specific S&P
Composite 1500 Restaurant Sub-Index for the five year period ended December 26, 2023, the last trading day of our
fiscal year. The graph assumes the values of the investment in our common stock and each index was $100 on
December 26, 2018 and the reinvestment of all dividends paid during the period of the securities comprising the indices.
Note: The stock price performance shown on the graph below does not indicate future performance.
Comparison of Cumulative Total Return Since December 26, 2018
260
240
220
200
180
160
140
120
100
80
TXRH
S&P 500 Index
S&P Composite
12/26/2018 12/31/2019 12/29/2020 12/28/2021 12/27/2022 12/26/2023
Texas Roadhouse, Inc. . . . . . . . . . . . . . . . . . . . . $ 100.00 $ 101.28 $ 143.02 $ 164.44 $ 176.61 $ 235.74
S&P 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100.00 $ 140.25 $ 164.74 $ 214.60 $ 174.52 $ 221.20
S&P Composite 1500 Restaurant Sub-Index . . $ 100.00 $ 129.15 $ 153.58 $ 187.65 $ 173.39 $ 198.08
ITEM 6. RESERVED
35
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The discussion and analysis below of the financial condition and results of operations for Texas Roadhouse, Inc.
(the “Company,” “we,” “our” and/or “us”) should be read in conjunction with the consolidated financial statements and
the notes to such financial statements (pages F-1 to F-29), “Forward-looking Statements” (page 3) and Risk Factors set
forth in Item 1A. For discussion and analysis of our financial condition and results of operations for fiscal year 2022
compared to fiscal year 2021, see Part II, Item 7 of our 2022 Form 10-K.
Our Company
Texas Roadhouse, Inc. is a growing restaurant company operating predominantly in the casual dining segment. Our
late founder, W. Kent Taylor, started the business in 1993 with the opening of the first Texas Roadhouse restaurant in
Clarksville, Indiana. Since then, we have grown to three concepts with 741 restaurants in 49 states and ten foreign
countries. As of December 26, 2023, our 741 restaurants included:
•
•
635 company restaurants, of which 615 were wholly-owned and 20 were majority-owned. The results of
operations of company restaurants are included in our consolidated statements of income and comprehensive
income. The portion of income attributable to noncontrolling interests in company restaurants that are
majority-owned is reflected in the line item net income attributable to noncontrolling interests in our
consolidated statements of income and comprehensive income. Of the 635 company restaurants, we operated
582 as Texas Roadhouse restaurants, 45 as Bubba’s 33 restaurants and eight as Jaggers restaurants.
106 franchise restaurants, of which 20 we have a 5.0% to 10.0% ownership interest. The income derived from
our minority interests in these franchise restaurants is reported in the line item equity income (loss) from
investments in unconsolidated affiliates in our consolidated statements of income and comprehensive income.
Of the 106 franchise restaurants, 56 were domestic Texas Roadhouse restaurants, two were domestic Jaggers
restaurants and 48 were international Texas Roadhouse restaurants.
We have contractual arrangements that grant us the right to acquire at pre-determined formulas the remaining
interests in 18 of the 20 majority-owned company restaurants and 53 of the 58 domestic franchise restaurants.
Throughout this report, we use the term “restaurants” to include Texas Roadhouse and Bubba’s 33, unless
otherwise noted.
Presentation of Financial and Operating Data
We operate on a fiscal year that ends on the last Tuesday in December. Fiscal year 2023 and fiscal year 2022 were
both 52 weeks in length, and the fourth quarters were both 13 weeks in length.
Long-term Strategies to Grow Earnings Per Share and Create Shareholder Value
Our long-term strategies with respect to increasing net income and earnings per share, along with creating
shareholder value, include the following:
•
Expanding Our Restaurant Base. We continue to evaluate opportunities to develop restaurants in existing
markets and in new domestic and international markets. Domestically, we remain focused primarily on
markets where we believe a significant demand for our restaurants exists because of population size, income
levels, the presence of shopping and entertainment centers and a significant employment base. In addition, we
continue to pursue opportunities to acquire domestic franchise locations to expand our company restaurant
base.
We have entered into area development and franchise agreements for the development and operation of Texas
Roadhouse restaurants in numerous foreign countries and one U.S. territory. We have also entered into area
development agreements for Jaggers, our fast-casual concept. We opened our first two Jaggers franchise
restaurants in 2023.
In 2023, we opened 30 company restaurants while our franchise partners opened 15 restaurants. The company
restaurants included 22 Texas Roadhouse restaurants, five Bubba’s 33 restaurants, and three Jaggers
36
restaurants. The franchise restaurants included ten international Texas Roadhouse restaurants, three domestic
Texas Roadhouse restaurants and two domestic Jaggers restaurants.
In 2023, we also completed the acquisition of eight domestic franchise Texas Roadhouse restaurants for an
aggregate purchase price of $39.1 million.
• Maintaining and/or Improving Restaurant Level Profitability. We continue to focus on driving comparable
restaurant sales to maintain or improve restaurant level profitability. This includes a pricing strategy that
balances the impacts of inflationary pressures with our long-term value positioning. In terms of driving traffic
at our restaurants, we remain focused on encouraging repeat visits by our guests and attracting new guests
through our continued commitment to operational standards relating to food and service quality. To attract
new guests and increase the frequency of visits of our existing guests, we continue to drive various localized
marketing programs, focus on speed of service and kitchen efficiency, increase throughput by adding seats and
parking at certain restaurants and continue to enhance the guest digital experience.
At our high volume restaurants, we continue to look for opportunities to increase our dining room capacity by
adding on to our existing building and/or to increase our parking capacity by leasing or purchasing property
that adjoins our site. We also continue to make a number of building modifications and/or expansions to
existing restaurants in order to better accommodate increased dine-in and to-go sales. These modifications
include room expansions which add additional guest seating, the addition of to-go areas and cooler expansions
to accommodate higher inventory levels.
In recent years, we have relocated several existing Texas Roadhouse locations at or near the end of their
associated lease or as a result of eminent domain which allowed us to move to a better site, update them to a
current prototypical design, construct a larger building with more seats and greater number of available
parking spaces, accommodate increased to-go sales and/or obtain more favorable lease terms. We continue to
evaluate these opportunities particularly as it relates to older locations with strong sales.
Leveraging Our Scalable Infrastructure. To support our growth, we have made investments in our
infrastructure across all critical functions, including the development of new strategic initiatives. Whether we
are able to leverage our infrastructure in future years by growing our general and administrative costs at a
slower rate than our revenue will depend, in part, on our new restaurant openings, our comparable restaurant
sales growth rate going forward and the level of investment we continue to make in our infrastructure.
Returning Capital to Shareholders. We continue to evaluate opportunities to return capital to our
shareholders, including the payment of dividends and repurchase of common stock. In 2011, our Board
declared our first quarterly dividend of $0.08 per share of common stock which has consistently grown over
time. In 2023, the Board declared a quarterly cash dividend of $0.55 per share of common stock. On
February 14, 2024, the Board declared a quarterly cash dividend of $0.61 per share of common stock,
representing an 11% increase compared to the quarterly dividend declared in the prior year period.
In 2008, the Board approved our first stock repurchase program. On March 17, 2022, the Board approved a
stock repurchase program under which we may repurchase up to $300.0 million of our common stock. In
2023, we paid $50.0 million to repurchase 455,026 shares of our common stock. As of December 26, 2023,
$116.9 million remained authorized for stock repurchases. From inception through December 26, 2023, we
have paid $683.5 million through our authorized stock repurchase programs to repurchase 21,496,468 shares
of our common stock at an average price per share of $31.80.
•
•
Key Measures We Use To Evaluate Our Company
Key measures we use to evaluate and assess our business include the following:
• Comparable Restaurant Sales. Comparable restaurant sales reflect the change in sales for all company
restaurants across all concepts, unless otherwise noted, over the same period of the prior year for the
comparable restaurant base. We define the comparable restaurant base to include those restaurants open for a
full 18 months before the beginning of the period measured excluding restaurants permanently closed during
the period. Comparable restaurant sales can be impacted by changes in guest traffic counts or by changes in the
37
•
•
•
per person average check amount. Menu price changes, the mix of menu items sold and the mix of dine-in
versus to-go sales can affect the per person average check amount.
Average Unit Volume. Average unit volume represents the average annual restaurant sales for Texas
Roadhouse and Bubba’s 33 restaurants open for a full six months before the beginning of the period measured
excluding sales of restaurants permanently closed during the period. Historically, average unit volume growth
is less than comparable restaurant sales growth which indicates that newer restaurants are operating with sales
growth levels lower than the company average. At times, average unit volume growth may be more than
comparable restaurant sales growth which indicates that newer restaurants are operating with sales growth
levels higher than company average.
Store Weeks and New Restaurant Openings. Store weeks represent the number of weeks that all company
restaurants across all concepts, unless otherwise noted, were open during the reporting period. Store weeks
include weeks in which a restaurant is temporarily closed. Store week growth is driven by new restaurant
openings and franchise acquisitions. New restaurant openings reflect the number of restaurants opened during
a particular fiscal period, excluding store relocations. We consider store openings that occur simultaneously
with a store closure in the same trade area to be a relocation.
Restaurant Margin. Restaurant margin (in dollars, as a percentage of restaurant and other sales and per store
week) represents restaurant and other sales less restaurant-level operating costs, including food and beverage
costs, labor, rent and other operating costs. Restaurant margin is not a measurement determined in accordance
with U.S. generally accepted accounting principles (“GAAP”) and should not be considered in isolation, or as
an alternative, to income from operations. This non-GAAP measure is not indicative of overall company
performance and profitability in that this measure does not accrue directly to the benefit of shareholders due to
the nature of the costs excluded. Restaurant margin is widely regarded as a useful metric by which to evaluate
core restaurant-level operating efficiency and performance over various reporting periods on a consistent basis.
In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations,
including general and administrative expenses, but do not have a direct impact on restaurant-level operational
efficiency and performance. We exclude pre-opening expense as it occurs at irregular intervals and would
impact comparability to prior period results. We exclude depreciation and amortization expense, substantially
all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our
restaurants. We exclude impairment and closure expense as we believe this provides a clearer perspective of
the Company’s ongoing operating performance and a more useful comparison to prior period results.
Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in
our industry. A reconciliation of income from operations to restaurant margin is included in the Results of
Operations section below.
Other Key Definitions
Restaurant and Other Sales. Restaurant sales include gross food and beverage sales, net of promotions and
discounts, for all company restaurants. Sales taxes collected from customers and remitted to governmental authorities
are accounted for on a net basis and therefore are excluded from restaurant sales in our consolidated statements of
income and comprehensive income. Other sales include the net impact of the amortization of third-party gift card fees
and gift card breakage income, sales related to our non-royalty based retail products and content revenue related to our
tabletop kiosk devices.
Franchise Royalties and Fees. Franchise royalties consist of royalties, as defined in our franchise agreement, paid
to us by our domestic and international franchisees. Domestic and international franchisees also typically pay an initial
franchise fee and/or development fee for each new restaurant or territory.
Food and Beverage Costs. Food and beverage costs consists of the costs of raw materials and ingredients used in
the preparation of food and beverage products sold in our company restaurants. Approximately half of our food and
beverage costs relate to beef.
Restaurant Labor Expenses. Restaurant labor expenses include all direct and indirect labor costs incurred in
operations except for profit sharing incentive compensation expenses earned by our restaurant managing partners and
38
market partners. These profit sharing expenses are reflected in restaurant other operating expenses. Restaurant labor
expenses also include share-based compensation expense related to restaurant-level employees.
Restaurant Rent Expense. Restaurant rent expense includes all rent, except pre-opening rent, associated with the
leasing of real estate and includes base, percentage and straight-line rent expense.
Restaurant Other Operating Expenses. Restaurant other operating expenses consist of all other restaurant-level
operating costs, the major components of which are credit card fees, profit sharing incentive compensation for our
restaurant managing partners and market partners, utilities, supplies, general liability insurance, advertising, repairs and
maintenance, property taxes and outside services.
Pre-opening Expenses. Pre-opening expenses, which are charged to operations as incurred, consist of expenses
incurred before the opening of a new or relocated restaurant and consist principally of opening and training team
compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses. The majority of
pre-opening costs incurred relate to the hiring and training of employees due to the significant investment we make in
training our people. Pre-opening costs vary by location depending on a number of factors, including the size and
physical layout of each location; the number of management and hourly employees required to operate each restaurant;
the availability of qualified restaurant staff members; the cost of travel and lodging for different geographic areas; the
timing of the restaurant opening; and the extent of unexpected delays, if any, in obtaining final licenses and permits to
open each restaurant.
Depreciation and Amortization Expenses. Depreciation and amortization expenses include the depreciation of fixed
assets and amortization of intangibles with definite lives, substantially all of which relates to restaurant-level assets.
Impairment and Closure Costs, Net. Impairment and closure costs, net include any impairment of long-lived assets,
including property and equipment, operating lease right-of-use assets and goodwill, and expenses associated with the
closure of a restaurant. Closure costs also include any gains or losses associated with a relocated restaurant or the sale of
a closed restaurant and/or assets held for sale as well as lease costs associated with closed or relocated restaurants.
General and Administrative Expenses. General and administrative expenses comprise expenses associated with
corporate and administrative functions that support development and restaurant operations and provide an infrastructure
to support future growth. This includes salary, incentive-based and share-based compensation expense related to
executive officers and Support Center employees, salary and share-based compensation expense related to market
partners, software hosting fees, professional fees, group insurance, advertising expense and the realized and unrealized
holding gains and losses related to the investments in our deferred compensation plan.
Interest Income (Expense), Net. Interest income (expense), net includes earnings on cash and cash equivalents and
is reduced by interest expense, net of capitalized interest, on our debt or financing obligations including the amortization
of loan fees.
Equity Income from Investments in Unconsolidated Affiliates. Equity income includes our percentage share of net
income earned by unconsolidated affiliates and our share of any gain on the acquisition of these affiliates. As of
December 26, 2023 and December 27, 2022, we owned a 5.0% to 10.0% equity interest in 20 and 23 domestic franchise
restaurants, respectively.
Net Income Attributable to Noncontrolling Interests. Net income attributable to noncontrolling interests represents
the portion of income attributable to the other owners of the majority-owned restaurants. Our consolidated subsidiaries
include 20 majority-owned restaurants for all periods presented.
2023 Financial Highlights
Total revenue increased $616.8 million or 15.4% to $4.6 billion in 2023 compared to $4.0 billion in 2022 primarily
due to an increase in comparable restaurant sales and an increase in store weeks. Comparable restaurant sales and store
weeks increased 10.1% and 5.8%, respectively, at company restaurants in 2023. The increase in comparable restaurant
sales was due to an increase in guest traffic along with an increase in per person average check. The increase in store
weeks was due to new store openings and the acquisition of franchise restaurants.
Net income increased $35.1 million or 13.0% to $304.9 million in 2023 compared to $269.8 million in 2022
primarily due to higher restaurant margin dollars, as described below, partially offset by higher general and
39
administrative expenses and higher depreciation and amortization expenses. Diluted earnings per share increased 14.3%
to $4.54 from $3.97 in the prior year primarily due to the increase in net income.
Restaurant margin dollars increased $80.5 million or 12.8% to $708.0 million in 2023 compared to $627.5 million
in 2022 primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased to
15.4% in 2023 compared to 15.7% in 2022. The decrease in restaurant margin, as a percentage of restaurant and other
sales, was due to commodity inflation, wage and other labor inflation and higher general liability insurance expense
partially offset by higher sales.
We repurchased 455,026 shares of common stock for $50.0 million in 2023. We also paid a quarterly dividend of
$0.55 per share of common stock, which totaled $147.2 million.
40
2023
$
Results of Operations
Fiscal Year Ended
%
$
(In thousands)
2022
%
4,604,554
27,118
4,631,672
99.4
0.6
100.0
3,988,791
26,128
4,014,919
99.3
0.7
100.0
1,593,852
1,539,124
72,766
690,848
29,234
153,202
275
198,382
4,277,683
353,989
2,984
1,351
358,324
44,649
313,675
8,799
34.6
33.4
1.6
15.0
0.6
3.3
NM
4.3
92.4
7.6
0.1
NM
7.7
1.0
6.8
0.2
6.6
1,378,192
1,319,959
66,834
596,305
21,883
137,237
1,600
172,712
3,694,722
320,197
(124)
1,239
321,312
43,715
277,597
7,779
269,818
34.6
33.1
1.7
14.9
0.5
3.4
NM
4.3
92.0
8.0
NM
NM
8.0
1.1
6.9
0.2
6.7
Consolidated Statements of Income:
Revenue:
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . .
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and expenses:
(As a percentage of restaurant and other sales)
Restaurant operating costs (excluding depreciation
and amortization shown separately below):
Food and beverage . . . . . . . . . . . . . . . . . . . . . . . . . .
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(As a percentage of total revenue)
Pre-opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . .
Impairment and closure, net . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . .
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income (expense), net . . . . . . . . . . . . . . . . . . . . .
Equity income from investments in unconsolidated
affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income including noncontrolling interests . . . . . . . .
Net income attributable to noncontrolling interests . . . . .
Net income attributable to Texas Roadhouse, Inc. and
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
304,876
NM – Not meaningful
41
Reconciliation of Income from Operations to Restaurant Margin
Fiscal Year Ended
2023
2022
(In thousands, except per store week)
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
353,989 $
320,197
Less:
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . . . . . . .
Add:
Pre-opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . .
Impairment and closure, net . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Restaurant margin $/store week . . . . . . . . . . . . . . . . . . . . . . $
Restaurant margin (as a percentage of restaurant and
other sales) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant Unit Activity
27,118
29,234
153,202
275
198,382
707,964 $
22,090 $
15.4 %
26,128
21,883
137,237
1,600
172,712
627,501
20,721
15.7 %
Balance at December 27, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company openings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise openings - Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise openings - International . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 26, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
697
30
5
10
(1)
741
Texas
Roadhouse
652
22
3
10
(1)
686
Bubba’s 33 Jaggers
40
5
—
—
—
45
5
3
2
—
—
10
Company - Texas Roadhouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company - Bubba’s 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company - Jaggers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 26, 2023 December 27, 2022
552
40
5
597
582
45
8
635
Franchise - Texas Roadhouse - Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise - Jaggers - Domestic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise - Texas Roadhouse - International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total franchise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
2
48
106
741
62
—
38
100
697
42
Restaurant and Other Sales
Restaurant and other sales increased 15.4% in 2023 compared to 2022. The following table summarizes certain key
drivers and/or attributes of restaurant sales at company restaurants for the periods presented. Company restaurant count
activity is shown in the restaurant unit activity table above.
Company Restaurants:
Increase in store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in average unit volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total increase in restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total increase in restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
5.8 %
9.7 %
— %
15.5 %
(0.1)%
15.4 %
6.1 %
9.4 %
0.4 %
15.9 %
0.1 %
16.0 %
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32,050
30,284
10.1 %
9.7 %
Texas Roadhouse restaurants:
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
29,528
28,127
10.3 %
9.7 %
7,642
$ 6,943
Weekly sales by group:
Comparable restaurants (527 and 499 units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 147,274
Average unit volume restaurants (22 and 20 units)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 139,688
Restaurants less than six months old (33 and 33 units) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 146,614
$ 134,085
$ 128,665
$ 135,401
Bubba’s 33 restaurants:
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,167
1,936
5.5 %
10.5 %
5,921
$ 5,620
Weekly sales by group:
Comparable restaurants (34 and 30 units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 113,972
Average unit volume restaurants (3 and 4 units)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 112,698
Restaurants less than six months old (8 and 6 units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 114,312
$ 108,132
$ 107,636
$ 121,791
(1) Includes the impact of the year-over-year change in sales volume of all Jaggers restaurants, along with Texas
Roadhouse and Bubba’s 33 restaurants open less than six months before the beginning of the period measured and,
if applicable, the impact of restaurants permanently closed or acquired during the period.
(2) Average unit volume restaurants include restaurants open a full six to 18 months before the beginning of the period
measured, excluding sales from restaurants permanently closed during the period, if applicable.
The increase in restaurant sales for 2023 was primarily attributable to an increase in store weeks and an increase in
comparable restaurant sales. The increase in store weeks was driven by the opening of new restaurants and the
acquisition of franchise restaurants. The increase in comparable restaurant sales growth was driven by an increase in
guest traffic count along with an increase in our per person average check as shown in the table below.
Guest traffic counts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Per person average check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
5.4 %
4.7 %
10.1 %
1.9 %
7.8 %
9.7 %
43
The increase in 2023 guest traffic counts was driven by an increase in dining room traffic. To-go sales as a
percentage of restaurant sales were 12.6% in 2023 compared to 13.3% in 2022 and average weekly to-go sales were
$18,088 in 2023 compared to $17,504 in 2022.
Per person average check includes the benefit of menu price increases of approximately 2.2% and 2.7%
implemented in Q2 2023 and Q4 2023, respectively, as well as increases of 3.2% and 2.9% implemented in Q2 2022 and
Q4 2022, respectively.
In 2023, we opened 30 company restaurants, which included 22 Texas Roadhouse restaurants, five Bubba’s
33 restaurants and three Jaggers restaurants. We also completed the acquisition of eight domestic Texas Roadhouse
franchise restaurants.
In 2024, we expect store week growth of approximately 8% across all concepts, including a benefit of 2% from the
53rd week.
Other sales include the net impact of the amortization of third-party gift card fees and gift card breakage income,
sales related to our non-royalty based retail products and content revenue related to our tabletop kiosk devices. The net
impact of these amounts was $(12.7) million and $(6.4) million for 2023 and 2022, respectively. The change was driven
primarily by increased third-party gift card fee amortization from increased gift card sales and a decrease in our breakage
adjustment recorded in 2023 of $3.7 million compared to $6.6 million recorded in 2022. The breakage adjustment
relates to a change in our estimate of breakage due to a shift in our historic redemption pattern which indicated that the
percentage of gift cards sold that are not expected to be redeemed had increased.
Franchise Royalties and Fees
Franchise royalties and fees increased by $1.0 million or 3.8% compared to 2022 primarily due to comparable
restaurant sales growth and new store openings partially offset by decreased royalties related to the eight franchise
restaurants acquired in 2023. Franchise comparable restaurant sales increased 9.6% in 2023.
In 2023, our existing franchise partners opened three domestic Texas Roadhouse restaurants and ten international
Texas Roadhouse restaurants. Additionally, our first two domestic Jaggers franchise restaurants opened in 2023.
Food and Beverage Costs
Food and beverage costs, as a percentage of restaurant and other sales, remained flat at 34.6% in both periods
presented as the benefit of a higher guest check was offset by commodity inflation. Commodity inflation was 5.6% in
2023 primarily due to higher beef costs.
For 2024, we currently expect commodity cost inflation of approximately 5% for the year with prices locked for
approximately 40% of our forecasted costs and the remainder subject to floating market prices.
Restaurant Labor Expenses
Restaurant labor expense, as a percentage of restaurant and other sales, increased to 33.4% in 2023 compared to
33.1% in 2022. This increase was primarily due to wage and other labor inflation of 6.6% in 2023. Wage and other
labor inflation was primarily due to higher wage and benefit expense driven by labor market pressures along with
increases in state-mandated minimum and tipped wage rates and increased investment in our people. In addition, there
was an increase in group insurance expense due to unfavorable claims experience of $7.6 million, as compared to the
prior year period. The increase was partially offset by a decrease in workers’ compensation expense due to favorable
claims experience of $2.5 million, as compared to the prior year period, as well as the benefit of a higher guest check.
In 2024, we anticipate our labor costs will continue to be pressured by wage and other labor inflation of 4% to 5%
driven by labor market pressures, increases in state-mandated minimum and tipped wages and increased investment in
our people.
44
Restaurant Rent Expense
Restaurant rent expense, as a percentage of restaurant and other sales, decreased to 1.6% in 2023 compared to 1.7%
in 2022. The decrease was primarily due to an increase in average unit volume and was partially offset by higher rent
expense, as a percentage of restaurant and other sales, at our newer restaurants.
Restaurant Other Operating Expenses
Restaurant other operating expenses, as a percentage of restaurant and other sales, increased to 15.0% in 2023
compared to 14.9% in 2022. The increase was primarily due to higher general liability insurance expense partially offset
by an increase in average unit volume and lower supplies expense. The increase in general liability insurance expense in
2023 was due to unfavorable claims experience and increased retention levels which resulted in additional expense of
$9.8 million as compared to 2022 which included a benefit of $4.9 million.
Restaurant Pre-opening Expenses
Pre-opening expenses were $29.2 million in 2023 compared to $21.9 million in 2022 driven by an increase in the
number and timing of new restaurant openings. Pre-opening costs will fluctuate from period to period based on the
specific pre-opening costs incurred for each restaurant, the number and timing of restaurant openings and the number
and timing of restaurant managers hired.
Depreciation and Amortization Expenses
Depreciation and amortization expenses, as a percentage of revenue, decreased to 3.3% in 2023 compared to 3.4%
in 2022. The decrease was primarily due to the increase in average unit volume partially offset by higher depreciation
expense at our newer restaurants.
Impairment and Closure Costs, Net
Impairment and closure costs, net were $0.3 million and $1.6 million in 2023 and 2022, respectively. In 2023,
impairment and closure costs, net primarily related to ongoing closure costs of relocated stores. In 2022, impairment and
closure costs, net included $1.7 million related to the impairment of land, building and operating lease right-of-use assets
at three restaurants, two of which relocated and $0.6 million related to ongoing closure costs. This was partially offset
by a $0.7 million gain on the sale of land and building that was previously classified as assets held for sale.
General and Administrative Expenses
General and administrative expenses, as a percentage of total revenue, remained flat at 4.3% in both periods
presented. A separation payout, net of restricted stock forfeitures, of $2.6 million related to the retirement of an
executive officer in the first quarter of 2023, and increased software hosting fees were offset by an increase in average
unit volume.
Interest Income (Expense), Net
Interest income (expense), net was $3.0 million in 2023 compared to $(0.1) million in 2022. The increase was
primarily driven by increased earnings on our cash and cash equivalents and decreased borrowings on our credit facility.
Equity Income from Unconsolidated Affiliates
Equity income was $1.4 million in 2023 compared to $1.2 million in 2022. The increase was primarily due to a
$0.6 million gain on the acquisition of four of these affiliates in 2023 as compared to a $0.3 million gain on the
acquisition of one of these affiliates in 2022.
Income Tax Expense
Our effective tax rate decreased to 12.5% in 2023 compared to 13.6% in 2022. The decrease was primarily due to
an increase in the FICA tip tax credit and an increase in excess tax benefits related to share-based compensation. For
2024, we expect an effective tax rate of approximately 14% based on forecasted operating results.
45
Segment Information
We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse,
Bubba’s 33, Jaggers and our retail initiatives as separate operating segments. Our reportable segments are Texas
Roadhouse and Bubba’s 33. The Texas Roadhouse reportable segment includes the results of our domestic company
Texas Roadhouse restaurants and domestic and international franchise Texas Roadhouse restaurants. The Bubba’s 33
reportable segment includes the results of our domestic company Bubba’s 33 restaurants. Our remaining operating
segments, which include the results of our domestic company and franchise Jaggers restaurants and the results of our
retail initiatives, are included in Other.
Management uses restaurant margin as the primary measure for assessing performance of our segments. Restaurant
margin (in dollars and as a percentage of restaurant and other sales) represents restaurant and other sales less
restaurant-level operating costs, including food and beverage costs, labor, rent and other operating costs. Restaurant
margin also includes sales and operating costs related to our non-royalty based retail initiatives that is included in Other.
Restaurant margin is used by our chief operating decision maker to evaluate restaurant-level operating efficiency and
performance. A reconciliation of income from operations to restaurant margin is included in the Results of Operations
section above.
The following table presents a summary of restaurant margin by segment (in thousands):
Texas Roadhouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 671,158
33,942
Bubba’s 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,864
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 707,964
15.5 % $ 600,197
26,934
13.7
11.2
370
15.4 % $ 627,501
16.0 %
12.7
2.6
15.7 %
December 26, 2023
December 27, 2022
Fiscal Year Ended
In our Texas Roadhouse reportable segment, restaurant margin dollars increased $71.0 million or 11.8% in 2023.
The increase was primarily due to higher sales which were partially offset by commodity and wage and other labor
inflation. In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 15.5% in 2023 from
16.0% in 2022. Restaurant margin was negatively impacted by commodity inflation, driven by beef, and wage and other
labor inflation which was partially offset by the benefit of higher sales.
In our Bubba’s 33 reportable segment, restaurant margin dollars increased $7.0 million or 26.0% in 2023. In
addition, restaurant margin, as a percentage of restaurant and other sales, increased to 13.7% in 2023 from 12.7% in
2022. These increases were primarily due to higher sales and commodity deflation, driven by poultry, partially offset by
wage and other labor inflation.
Liquidity and Capital Resources
The following table presents a summary of our net cash provided by (used in) operating, investing and financing
activities (in thousands):
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . $ 564,984 $ 511,725
(263,734)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . .
(409,775)
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ (69,615) $ (161,784)
(367,167)
(267,432)
Fiscal Year Ended
2023
2022
Net cash provided by operating activities was $565.0 million in 2023 compared to $511.7 million in 2022. This
increase was due to an increase in net income, an increase in depreciation and amortization expense and a favorable
change in working capital.
Our operations have not required significant working capital and, like many restaurant companies, we have been
able to operate with negative working capital, if necessary. Sales are primarily for cash, and restaurant operations do not
require significant inventories or receivables. In addition, we receive trade credit for the purchase of food, beverages
and supplies, thereby reducing the need for incremental working capital to support growth.
46
Net cash used in investing activities was $367.2 million in 2023 compared to $263.7 million in 2022. The increase
was primarily due to higher capital expenditures, driven by the new company restaurants pipeline and the refurbishment
of existing restaurants. The increase in the new company restaurants pipeline is primarily due to an increase in new
locations currently under construction and higher average development costs per location. The increase in the
refurbishment of existing restaurants is primarily due to increased maintenance needs driven by the high sales volumes at
our restaurants.
We require capital principally for the development of new company restaurants, the refurbishment or relocation of
existing restaurants and the acquisition of franchise restaurants, if any. We either lease our restaurant site locations
under operating leases for periods generally of five to 30 years (including renewal periods) or purchase the land when
appropriate. As of December 26, 2023, 155 of the 635 company restaurants have been developed on land which we
own.
The following table presents a summary of capital expenditures (in thousands):
New company restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Refurbishment or expansion of existing restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Relocation of existing restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures related to Support Center office . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Fiscal Year Ended
2023
201,234 $
119,785
20,629
5,386
347,034 $
2022
139,210
84,414
18,478
4,019
246,121
Our future capital requirements will primarily depend on the number and mix of new restaurants we open, the
timing of those openings and the restaurant prototype developed in a given fiscal year. These requirements will include
costs directly related to new restaurants or relocating existing restaurants and may also include costs necessary to ensure
that our infrastructure is able to support a larger restaurant base.
We intend to satisfy our capital requirements over the next 12 months with cash on hand, net cash provided by
operating activities, and if needed, funds available under our revolving credit facility. In 2024, we expect our capital
expenditures to be $340 million to $350 million.
Net cash used in financing activities was $267.4 million in 2023 compared to $409.8 million in 2022. The decrease
is primarily due to a decrease in the amount of share repurchases partially offset by an increase in our quarterly dividend
payments.
On March 17, 2022, our Board approved a stock repurchase program under which we may repurchase up to
$300.0 million of our common stock. This stock repurchase program has no expiration date. All repurchases to date
under our stock repurchase programs have been made through open market transactions.
In 2023, we paid $50.0 million to repurchase 455,026 shares of our common stock. In 2022, we paid $212.9
million to repurchase 2,734,005 shares of our common stock. As of December 26, 2023, $116.9 million remained under
our authorized stock repurchase program.
On February 14, 2023, our Board authorized the payment of a quarterly dividend of $0.55 per share of common
stock compared to the quarterly dividend of $0.46 per share of common stock declared in 2022. The payment of
quarterly dividends totaled $147.2 million and $124.1 million in 2023 and 2022, respectively. On February 14, 2024,
our Board declared a quarterly cash dividend of $0.61 per share of common stock.
We paid distributions of $8.0 million and $7.8 million in 2023 and 2022, respectively, to equity holders of our
majority-owned company restaurants.
We maintain a revolving credit facility (the “credit facility”) with a syndicate of commercial lenders led by
JPMorgan Chase Bank, N.A. and PNC Bank, N.A. The credit facility is an unsecured, revolving credit agreement and
has a borrowing capacity of up to $300.0 million with the option to increase by an additional $200.0 million subject to
certain limitations, including approval by the syndicate of lenders. The credit facility has a maturity date of May 1,
2026.
47
As of December 26, 2023, we had no outstanding balance on the credit facility and had $295.3 million of
availability, net of $4.7 million of outstanding letters of credit. As of December 27, 2022, we had $50.0 million
outstanding on the credit facility, which was repaid in 2023, and $233.5 million of availability, net of $16.5 million of
outstanding letters of credit. The outstanding amount as of December 27, 2022 is included as long-term debt on our
consolidated balance sheet.
The interest rate for the credit facility as of December 26, 2023 and December 27, 2022 was 6.23% and 5.21%,
respectively.
The lenders’ obligation to extend credit pursuant to the credit facility depends on us maintaining certain financial
covenants, including a minimum consolidated fixed charge coverage ratio and a maximum consolidated leverage ratio.
The credit facility permits us to incur additional secured or unsecured indebtedness, except for the incurrence of secured
indebtedness that in the aggregate is equal to or greater than $125.0 million and 20% of our consolidated tangible net
worth. We were in compliance with all financial covenants as of December 26, 2023.
Contractual Obligations
The following table summarizes the amount of payments due under specified contractual obligations as of
December 26, 2023 (in thousands):
Payments Due by Period
Less than
More than
Total
1 year
1 - 3 Years 3 - 5 Years
5 years
2,629
2,758
Obligations under finance leases . . . . . . . . . . . . . .
2,664
4,207
Interest(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
968,299
1,332,486
Real estate operating lease obligations . . . . . . . . .
Capital obligations. . . . . . . . . . . . . . . . . . . . . . . . . .
—
237,425
Total contractual obligations(2) . . . . . . . . . . . . . . . $ 1,576,876 $ 311,259 $ 145,322 $ 146,704 $ 973,592
9
314
73,511
237,425
42
622
144,658
—
78
608
146,018
—
(1) Includes interest on our financing leases and assumes a constant interest rate until maturity.
(2) Unrecognized tax benefits under Accounting Standards Codification 740, Income Taxes, are not significant and
excluded from this amount.
We have no material minimum purchase commitments with our vendors that extend beyond a year. Refer to
Notes 5, 8 and 13 to the consolidated financial statements for details of contractual obligations.
Guarantees
As of December 26, 2023 and December 27, 2022, we were contingently liable for $10.4 million and $11.3 million,
respectively, for seven lease guarantees. These amounts represent the maximum potential liability of future payments
under the guarantees. In the event of default, the indemnity and default clauses in our assignment agreements govern our
ability to pursue and recover damages incurred. No material liabilities have been recorded as of December 26, 2023 or
December 27, 2022, as the likelihood of default was deemed to be less than probable and the fair value of the guarantees
is not considered significant.
Critical Accounting Policies and Estimates
The above discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenue and expenses and disclosures of contingent assets and liabilities. Our significant accounting policies are
described in Note 2 to the accompanying consolidated financial statements. Critical accounting policies are those that
we believe are most important to portraying our financial condition and results of operations and also require the greatest
amount of subjective or complex judgments by management. Judgments or uncertainties regarding the application of
these policies may result in significantly different amounts being reported under different conditions or using different
assumptions. We consider the following policies to be the most critical in understanding the judgments that are involved
in preparing the consolidated financial statements.
48
Impairment of Long-lived Assets. We evaluate long-lived assets related to each restaurant to be held and used in the
business, such as property and equipment, operating lease right-of-use assets and intangible assets subject to
amortization, for impairment whenever events and circumstances indicate that the carrying amount of a restaurant may
not be recoverable. For the purposes of this evaluation, we define the asset group at the individual restaurant level.
When we evaluate the restaurants, cash flows are the primary indicator of impairment. Recoverability of assets to be
held and used is measured by comparison of the carrying amount of the restaurant to estimated undiscounted future cash
flows expected to be generated by the restaurant.
Under our policies, trailing 12-month cash flow results under a predetermined amount at the individual restaurant
level signals a potential impairment. In our evaluation of restaurants that do not meet the cash flow threshold, we
estimate future undiscounted cash flows from operating the restaurant over the remaining useful life of the primary asset,
which is the building or the operating lease right-of-use asset. In the estimation of future cash flows, we consider the
period of time the restaurant has been open, the trend of operations over such period and future periods and expectations
for future sales growth. We limit assumptions about important factors such as trend of future operations and sales
growth to those that are supportable based upon our plans for the restaurant and actual results at comparable restaurants.
Both qualitative and quantitative information are considered when evaluating for potential impairments. As we assess
the ongoing expected cash flows and carrying amounts of our long-lived assets, these factors could cause us to realize a
material impairment charge. Based on our reviews performed on the cash flows of our restaurants, the carrying amount
associated with restaurants deemed at risk for impairment is not material to our consolidated financial statements.
If assets are determined to be impaired, we measure the impairment charge by calculating the amount by which the
asset carrying amount exceeds its estimated fair value. The determination of asset fair value is also subject to significant
judgment. We generally measure estimated fair value by discounting estimated future cash flows. When fair value is
measured by discounting estimated future cash flows, the assumptions used are consistent with what we believe
hypothetical market participants would use. We also use a discount rate that is commensurate with the risk inherent in
the projected cash flows. If these assumptions change in the future, we may be required to record impairment charges
for these assets.
In 2023, we recorded impairment and closure costs, net of $0.3 million related to ongoing closure costs of relocated
stores. Refer to Note 17 in the consolidated financial statements for further discussion regarding impairment and closure
costs recorded in 2023, 2022 and 2021.
Goodwill. Goodwill is tested annually for impairment and is tested more frequently if events and circumstances
indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount
exceeds the fair value of the reporting unit, up to the amount of goodwill recorded. Goodwill is required to be tested for
impairment at the reporting unit level, or the level of internal reporting that reflects the way in which an entity manages
its businesses. A reporting unit is defined as an operating segment, or one level below an operating segment. Our
reporting units are at the concept level. An entity may first assess qualitative factors in order to determine whether it is
more likely than not that the fair value of the reporting unit is less than its carrying amount. The entity may also elect to
bypass the qualitative assessment and determine the fair value of the reporting unit and compare it to its carrying
amount. The fair value of the reporting unit may be based on several valuation approaches including capitalization of
earnings, discounted cash flows, comparable public company market multiples and comparable acquisition market
multiples. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized for any
excess of the carrying amount of the reporting unit’s goodwill over the fair value of the reporting unit.
At December 26, 2023, our Texas Roadhouse reporting unit had allocated goodwill of $169.7 million. No other
reporting units had goodwill balances.
In performing the qualitative assessment, we reviewed factors such as macroeconomic conditions, industry and
market considerations, cost factors, changes in management or key personnel, sustained decreases in share price and the
overall financial performance of the Company’s Texas Roadhouse reporting unit. As a result of the qualitative
assessment, no indicators of impairment were identified, and no additional indicators of impairment were identified
through the end of the fourth quarter that would require additional testing. Changes in circumstances existing at the
measurement date or at other times in the future could result in an impairment loss.
Effects of Inflation
During recent years, we have operated during periods of high inflation, led primarily by commodity cost and wage
49
and other labor inflation. Commodity cost inflation is due to increased costs incurred by our vendors related to increased
labor, transportation, packaging, and raw materials costs. Wage and other labor inflation is driven by higher wage and
benefit expense due to labor market pressures along with increases in state-mandated minimum and tipped wage rates
and increased investment in our people. Some of the impacts of inflation have been offset by menu price increases and
other adjustments made during the year. Whether we are able and/or choose to continue to offset the effects of inflation
will determine to what extent, if any, inflation affects our restaurant profitability in future periods.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates on variable rate debt and changes in commodity
prices. Our exposure to interest rate fluctuations is limited to our outstanding bank debt. The terms of the credit facility
require us to pay interest on outstanding borrowings at SOFR, plus a fixed adjustment of 0.10%, plus a variable
adjustment of 0.875% to 1.875% depending on our leverage ratio. As of December 26, 2023, we had no outstanding
borrowings on our credit facility.
In an effort to secure high quality, low-cost ingredients used in the products sold in our restaurants, we employ
various purchasing and pricing contract techniques. When purchasing certain types of commodities, we may be subject
to prevailing market conditions resulting in unpredictable price volatility. For certain commodities, we may also enter
into contracts for terms of one year or less that are either fixed price agreements or fixed volume agreements where the
price is negotiated with reference to fluctuating market prices. We currently do not use financial instruments to hedge
commodity prices, but we will continue to evaluate their effectiveness. Extreme and/or long-term increases in
commodity prices could adversely affect our future results, especially if we are unable, primarily due to competitive
reasons, to increase menu prices. Additionally, if there is a time lag between the increasing commodity prices and our
ability to increase menu prices or if we believe the commodity price increase to be short in duration and we choose not
to pass on the cost increases, our short-term financial results could be negatively affected.
We are subject to business risk as our beef supply is highly dependent upon four vendors. If these vendors are
unable to fulfill their obligations under their contracts, we may encounter supply shortages and/or higher costs to secure
adequate supply and a possible loss of sales, any of which would harm our business.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
See Index to Consolidated Financial Statements at Item 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
50
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant
to, and as defined in, Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the
end of the period covered by this report. Based on the evaluation, performed under the supervision and with the
participation of our management, including the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the
“CFO”), our management, including the CEO and CFO, concluded that our disclosure controls and procedures were
effective as of December 26, 2023.
Changes in internal control
There were no changes in the Company’s internal control over financial reporting that occurred during the quarter
ended December 26, 2023 that materially affected or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Under Section 404 of the Sarbanes-Oxley Act of 2002, our management is required to assess the effectiveness of
the Company’s internal control over financial reporting as of the end of each fiscal year and report, based on that
assessment, whether the Company’s internal control over financial reporting is effective.
Management of the Company is responsible for establishing and maintaining adequate internal control over
financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process
designed by, or under the supervision of, our principal executive and principal financial officers and effected by our
Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. Therefore, internal control over financial reporting determined to be effective can
provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect all
misstatements.
Under the supervision and with the participation of our management, including our CEO and CFO, we assessed the
effectiveness of the Company’s internal control over financial reporting as of the end of the period covered by this
report. In this assessment, the Company applied criteria based on the “Internal Control—Integrated Framework (2013)”
issued by the Committee of Sponsoring Organizations of the Treadway Commission. These criteria are in the areas of
control environment, risk assessment, control activities, information and communication, and monitoring. The
Company’s assessment included documenting, evaluating and testing the design and operating effectiveness of its
internal control over financial reporting. Based upon this evaluation, our management concluded that our internal
control over financial reporting was effective as of December 26, 2023.
KPMG LLP, the independent registered public accounting firm that audited our Consolidated Financial Statements
included in the Annual Report on Form 10-K, has also audited the effectiveness of the Company’s internal control over
financial reporting as of December 26, 2023 as stated in their report at F-3.
51
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Plans
In accordance with the disclosure requirement set forth in Item 408 of Regulation S-K, the following table discloses
any executive officer or director who is subject to the filing requirements of Section 16 of the Securities Exchange Act
of 1934 that adopted a Rule 10b5-1 trading arrangement during the 13 weeks ended December 26, 2023. These trading
arrangements are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).
Name
Hernan E. Mujica . . . .
Title
Chief Technology Officer
Adoption Date
11/22/2023
End Date (1)
3/12/2024
Aggregate Number of
Securities to be Sold
1,740
(1) A trading plan may expire on such earlier date that all transactions under the trading plan are completed.
Other than as disclosed above, no other executive officer or director adopted, modified or terminated a Rule 10b5-1
or a non-Rule 10b5-1 trading arrangement during the 13 weeks ended December 26, 2023.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding our directors is incorporated herein by reference to the information set forth under “Election
of Directors” in our Definitive Proxy Statement to be dated on or about April 5, 2024.
Information regarding our executive officers has been included in Part I of this Annual Report under the caption
“Executive Officers of the Company.”
Information regarding our corporate governance is incorporated herein by reference to the information set forth in
our Definitive Proxy Statement to be dated on or about April 5, 2024.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 5, 2024.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 5, 2024.
Equity Compensation Plan Information
As of December 26, 2023, shares of common stock authorized for issuance under our equity compensation plans are
summarized in the following table. Refer to Note 14 to the Consolidated Financial Statements for a description of the
plans.
Plan Category
Plans approved by shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plans not approved by shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
Shares to Be
Available for
Issued Upon
Vest Date (1) Future Grants
6,414,812
—
6,414,812
478,027
—
478,027
(1) Total number of shares consist of 442,327 restricted stock units and 35,700 performance stock units. Shares in this
column are excluded from the Shares Available for Future Grants column.
52
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 5, 2024.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 5, 2024.
53
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
1. Consolidated Financial Statements
PART IV
Description
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 185) . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 26, 2023 and December 27, 2022 . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income and Comprehensive Income for the years ended December 26,
2023, December 27, 2022 and December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity for the years ended December 26, 2023,
December 27, 2022, and December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 26, 2023, December 27, 2022,
and December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page Number
in Report
F-1
F-5
F-6
F-7
F-8
F-9
2. Financial Statement Schedules
Omitted due to inapplicability or because required information is shown in our Consolidated Financial Statements
or Notes thereto.
3. Exhibits
Exhibit
No.
3.1
Amended and Restated Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1
of the Registrant’s Quarterly Report on Form 10-Q for the period ended June 28, 2016)
Description
3.2
Amended and Restated Bylaws for Texas Roadhouse, Inc. dated February 23, 2023 (incorporated by
reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated February 23, 2023)
4.1
Description of Securities (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on
Form 10-K for the year ended December 31, 2019)
10.1*
Form of Indemnification Agreement for Director and Executive Officer (incorporated by reference to
Exhibit 10.1 of Registrant’s Annual Report on Form 10-K for the year ended December 28, 2021)
10.2
Form of Limited Partnership Agreement and Operating Agreement for certain company-managed Texas
10.3
10.4
Roadhouse restaurants, including schedule of the owners of such restaurants and the aggregate interests held
by directors, executive officers and 5% stockholders who are parties to such an agreement (incorporated by
reference to Exhibit 10.10 to the Registration Statement on Form S-1 of Registrant)
Form of Franchise Agreement and Preliminary Agreement for a Texas Roadhouse restaurant franchise,
including schedule of directors, executive officers and 5% stockholders which have entered into either
agreement (incorporated by reference to Exhibit 10.14 to the Registration Statement on Form S-1 of
Registrant)
Schedule of the owners of company-managed Texas Roadhouse restaurants and the aggregate interests held
by directors, executive officers and 5% stockholders who are parties to Limited Partnership Agreements and
Operating Agreements as of December 26, 2023 the form of which is set forth in Exhibit 10.2 of this
Form 10-K
10.5
Schedule of the directors, executive officers and 5% stockholders which have entered into Franchise
Agreements or Preliminary Agreements for a Texas Roadhouse Franchise as of December 26, 2023 the
form of which is set forth in Exhibit 10.3 of this Form 10-K
10.6*
Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan (incorporated by reference from Appendix A to the
Texas Roadhouse, Inc. Proxy Statement on Schedule 14A filed with the Securities and Exchange
Commission on April 5, 2013)
10.7*
Amended and Restated Form of Restricted Stock Unit Award Agreement under the Texas Roadhouse, Inc.
2013 Long-Term Incentive Plan for non-officers (incorporated by reference to Exhibit 10.41 to the
Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014)
54
Exhibit
No.
10.8*
Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp., as
amended December 19, 2007 and December 31, 2008 (incorporated by reference to Exhibit 10.42 to the
Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014)
Description
10.9*
Third Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp.,
effective January 1, 2010 (incorporated by reference to Exhibit 10.43 to the Registrant’s Annual Report on
Form 10-K for the year ended December 30, 2014)
10.10
Master Lease Agreement dated October 26, 2018 between Paragon Centre Holdings, LLC and Texas
10.11
10.12
Roadhouse Holdings LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report
on Form 10-Q for the quarter ended September 25, 2018)
Amended and Restated Credit Agreement dated as of August 7, 2017, by and among Texas Roadhouse Inc.,
and the lenders named therein and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 7, 2017)
Assignment and Assumption Agreement between Texas Roadhouse Holdings LLC and Texas Roadhouse,
Inc. dated October 26, 2018 (incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report
on Form 10-K for the year ended December 31, 2019)
10.13
First Amendment to Paragon Centre Master Lease Agreement between Paragon Centre Holdings, LLC and
Texas Roadhouse, Inc. dated December 13, 2019 (incorporated by reference to Exhibit 10.28 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019)
10.14
First Amendment to Amended and Restated Credit Agreement, dated as of May 11, 2020, by and among
Texas Roadhouse, Inc., and the lenders named therein and JPMorgan Chase Bank, N.A. as Administrative
Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on 8-K dated May 11,
2020)
10.15* Employment Agreement between Registrant and Gerald L. Morgan entered into as of December 17, 2020
(incorporated by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for the year
ended December 29, 2020)
10.16* Employment Agreement between Registrant and S. Chris Jacobsen entered into as of December 30, 2020
(incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for the year
ended December 29, 2020)
10.17* Employment Agreement between Registrant and Tonya Robinson entered into as of December 30, 2020
(incorporated by reference to Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for the year
ended December 29, 2020)
10.18* Employment Agreement between Registrant and Christopher C. Colson entered into as of March 31, 2021
(incorporated by reference to Exhibit 10.6 of the Registrant’s Quarterly Report on Form 10-Q for the period
ended March 30, 2021)
10.19* First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Gerald L.
Morgan dated March 31, 2021, with a retroactive effective date of March 18, 2021 (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated March 31, 2021)
10.20* Employment Agreement between Registrant and Regina A. Tobin entered into as of June 15, 2021 with an
effective date of June 30, 2021 (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly
Report on Form 10-Q for the period ended June 29, 2021)
10.21* Employment Agreement between Registrant and Hernan E. Mujica entered into as of June 15, 2021 with an
10.22
effective date of June 30, 2021 (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly
Report on Form 10-Q for the period ended June 29, 2021)
Second Amendment to Amended and Restated Credit Agreement dated as of May 4, 2021 by and among
Texas Roadhouse, Inc. and the lenders named therein and JPMorgan Chase Bank, N.A. as Administrative
Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated
May 4, 2021)
10.23* Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan (incorporated by reference from Appendix A to the
Texas Roadhouse, Inc. Proxy Statement on Schedule 14A filed with the Securities and Exchange
Commission on April 2, 2021)
10.24* Form of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan Performance Stock Unit Award Agreement
(incorporated by reference to Exhibit 10.1 of Registrant’s Current Report on Form 8-K dated June 15, 2021)
10.25* Form of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement
(Officers) (incorporated by reference to Exhibit 10.1 of Registrant’s Current Report on Form 8-K dated
June 15, 2021)
55
Exhibit
No.
Description
10.26* Form of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement
(Member of Board of Directors) (incorporated by reference to Exhibit 10.1 of Registrant’s Current Report
on Form 8-K dated June 15, 2021)
10.27* Second Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Gerald
L. Morgan dated January 9, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K dated January 6, 2023)
10.28* First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Regina A.
Tobin dated January 9, 2023 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report
on Form 8-K dated January 6, 2023)
10.29* First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Hernan E.
Mujica dated January 9, 2023 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report
on Form 8-K dated January 6, 2023)
10.30* First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and
Christopher C. Colson dated January 9, 2023 (incorporated by reference to Exhibit 10.4 to the Registrant’s
Current Report on Form 8-K dated January 6, 2023)
10.31* Separation Agreement and Release of Claims dated January 5, 2023 by and between Tonya R. Robinson
and Texas Roadhouse Management Corp. (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K dated January 4, 2023)
10.32* Employment Agreement between Texas Roadhouse Management Corp. and David Christopher Monroe
dated May 17, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on
Form 8-K dated May 17, 2023)
10.33
Amendment No. 3 to Amended and Restated Credit Agreement dated May 19, 2023 by and among Texas
Roadhouse, Inc., the lenders named therein and JPMorgan Chase Bank, N.A., as Administrative Agent
(incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8‑K dated May 19, 2023)
10.34* Separation Agreement and Release of Claims dated August 3, 2023 by and between S. Chris Jacobsen and
Texas Roadhouse Management Corp. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K dated August 3, 2023)
10.35* Form of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement
(Non-Officers) (incorporated by reference to Exhibit 10.2 to Registrant’s of the Registrant’s Quarterly
Report on Form 10-Q for the period ended September 26, 2023)
10.36* Employment Agreement between Texas Roadhouse Management Corp. and Travis C. Doster dated
November 9, 2023
List of Subsidiaries
Consent of KPMG LLP, Independent Registered Public Accounting Firm
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
21.1
23.1
31.1
31.2
31.3
32.1
Sarbanes-Oxley Act of 2002
97*
Texas Roadhouse, Inc. Policy for Recovery of Incentive Compensation for Executive Officers dated
November 9, 2023
101
The following financial statements from the Texas Roadhouse, Inc. Annual Report on Form 10-K for the
year ended December 26, 2023, filed February 23, 2024, formatted in inline eXtensible Business Reporting
Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and
Comprehensive Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated
Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements.
104
Cover page, formatted in iXBRL and contained in Exhibit 101.
* Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K.
56
ITEM 16. FORM 10-K SUMMARY
Not applicable.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
TEXAS ROADHOUSE, INC.
By:
/s/ GERALD L. MORGAN
Chief Executive Officer, Director
Date: February 23, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ GERALD L. MORGAN
Gerald L. Morgan
Chief Executive Officer, Director
(Principal Executive Officer)
/s/ D. CHRISTOPHER MONROE
D. Christopher Monroe
Chief Financial Officer
(Principal Financial Officer)
/s/ KEITH V. HUMPICH
Keith V. Humpich
Vice President of Finance
(Principal Accounting Officer)
February 23, 2024
February 23, 2024
February 23, 2024
/s/ GREGORY N. MOORE
Gregory N. Moore
Chairman of the Board, Director
February 23, 2024
/s/ MICHAEL A. CRAWFORD
Michael A. Crawford
Director
/s/ DONNA E. EPPS
Donna E. Epps
/s/ WAYNE L. JONES
Wayne L. Jones
/s/ CURTIS A. WARFIELD
Curtis A. Warfield
/s/ KATHLEEN M. WIDMER
Kathleen M. Widmer
/s/ JAMES R. ZARLEY
James R. Zarley
Director
Director
Director
Director
Director
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
57
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Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Texas Roadhouse, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Texas Roadhouse, Inc. and subsidiaries (the
Company) as of December 26, 2023 and December 27, 2022, the related consolidated statements of income and
comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended
December 26, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
December 26, 2023 and December 27, 2022, and the results of its operations and its cash flows for each of the years in
the three-year period ended December 26, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 26, 2023, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission, and our report dated February 23, 2024 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates
to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.
Potential indicators of impairment of long-lived assets
As discussed in Note 2 to the consolidated financial statements, the Company assesses long-lived assets, primarily
related to restaurants held and used in the business, including property and equipment and right-of-use assets, for
potential impairment whenever events or changes in circumstances indicate that the carrying amount of a restaurant,
or asset group, may not be recoverable. Trailing 12-month cash flows under predetermined amounts at the
individual restaurant level are the Company’s primary indicator that the carrying amount of a restaurant may not be
recoverable. Property and equipment, net of accumulated depreciation, and the operating lease right-of-use assets,
net as of December 26, 2023 were $1,474.7 million and $694.0 million, respectively.
We identified the assessment of the Company’s determination of potential indicators of impairment of long-lived
assets as a critical audit matter. Subjective auditor judgement was required to evaluate the events or circumstances
F-1
indicating the carrying amount of an asset group may not be recoverable, including the determination of the cash
flow thresholds and the utilization of trailing 12-month cash flows to identify a potential impairment trigger.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls over the Company’s long-lived asset
impairment process, including controls relating to determination and identification of potential indicators of
impairment. We evaluated the Company’s methodology of using trailing 12-month cash flow results under
predetermined thresholds at the individual restaurant level as a potential indicator of impairment. Specifically, we
evaluated the Company’s assessment of the factors considered, including the cash flows at the individual restaurant
level and the cash flow thresholds used in the Company’s analysis. We tested that those restaurants with trailing
12-month cash flows were evaluated for potential impairment triggers, and we compared trailing 12-month cash
flows to historical financial data. We also assessed other events and circumstances that could have been indicative
of a potential impairment trigger by reviewing management’s development reports and related meeting minutes and
the board of directors meeting minutes.
/s/ KPMG LLP
We have served as the Company’s auditor since 1998.
Louisville, Kentucky
February 23, 2024
F-2
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Texas Roadhouse, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Texas Roadhouse, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of
December 26, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 26, 2023, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 26, 2023 and December 27, 2022, the
related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of
the years in the three-year period ended December 26, 2023, and the related notes (collectively, the consolidated
financial statements), and our report dated February 23, 2024 expressed an unqualified opinion on those consolidated
financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
F-3
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ KPMG LLP
Louisville, Kentucky
February 23, 2024
F-4
Texas Roadhouse, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
December 26, 2023 December 27, 2022
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Receivables, net of allowance for doubtful accounts of $35 at December 26,
2023 and $50 at December 27, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net of accumulated depreciation of $1,078,855 at
December 26, 2023 and $968,036 at December 27, 2022 . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net of accumulated amortization of $20,929 at December 26,
2023 and $17,905 at December 27, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue-gift cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock and other deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity:
Preferred stock ($0.001 par value, 1,000,000 shares authorized; no shares issued
104,246 $
173,861
175,474
38,320
3,262
35,172
356,474
150,264
38,015
5,097
29,604
396,841
1,474,722
694,014
169,684
1,270,349
630,258
148,732
3,483
94,999
2,793,376 $
5,607
73,878
2,525,665
27,411 $
131,638
373,913
68,062
112
42,758
101,540
745,434
743,476
—
8,893
23,104
114,958
1,635,865
25,490
105,560
335,403
54,544
434
35,264
95,315
652,010
677,874
50,000
7,979
20,979
89,161
1,498,003
or outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Common stock ($0.001 par value, 100,000,000 shares authorized, 66,789,464
and 66,973,311 shares issued and outstanding at December 26, 2023 and
December 27, 2022, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in-capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
67
—
1,141,595
1,141,662
15,849
1,157,511
2,793,376 $
67
13,139
999,432
1,012,638
15,024
1,027,662
2,525,665
See accompanying Notes to Consolidated Financial Statements.
F-5
Texas Roadhouse, Inc. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share data)
Fiscal Year Ended
December 26, December 27, December 28,
2023
2022
2021
Revenue:
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and expenses:
Restaurant operating costs (excluding depreciation and
amortization shown separately below):
Food and beverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pre-opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and closure, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity income (loss) from investments in unconsolidated affiliates . . . . .
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income including noncontrolling interests . . . . . . . . . . . . . . . . . . . . . .
Less: Net income attributable to noncontrolling interests . . . . . . . . . . . . .
Net income attributable to Texas Roadhouse, Inc. and subsidiaries . . . . .
Other comprehensive income, net of tax:
Foreign currency translation adjustment, net of tax of $—, $— and
($36), respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income per common share attributable to Texas Roadhouse, Inc.
and subsidiaries:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average shares outstanding:
$ 4,604,554 $ 3,988,791 $ 3,439,176
24,770
3,463,946
26,128
4,014,919
27,118
4,631,672
1,593,852
1,539,124
72,766
690,848
29,234
153,202
275
198,382
4,277,683
353,989
2,984
1,351
358,324
44,649
313,675
8,799
304,876 $
1,378,192
1,319,959
66,834
596,305
21,883
137,237
1,600
172,712
3,694,722
320,197
(124)
1,239
321,312
43,715
277,597
7,779
269,818 $
1,156,628
1,123,003
60,005
517,808
24,335
126,761
734
157,480
3,166,754
297,192
(3,663)
(637)
292,892
39,578
253,314
8,020
245,294
$
—
—
$
304,876 $
269,818 $
106
245,400
$
$
4.56 $
4.54 $
3.99 $
3.97 $
3.52
3.50
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66,893
67,149
67,643
67,920
$
2.20 $
1.84 $
69,709
70,098
1.20
See accompanying Notes to Consolidated Financial Statements.
F-6
Texas Roadhouse, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(tabular amounts in thousands, except share data)
Shares
Par
Value
Additional
Paid-in-
Capital
Retained
Earnings
Accumulated
Other
Total Texas
Roadhouse, Inc. Noncontrolling
145,626 $ 781,915 $
—
—
245,294
—
Comprehensive Loss and Subsidiaries
(106) $
—
106
927,505 $
245,294
106
Interests
Total
15,546 $ 943,051
253,314
8,020
106
—
—
—
595,534
(190,045)
(584,932)
Balance, December 29, 2020 . . . . . . . . . . . 69,561,861 $
—
Net income . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of tax . . .
—
Distributions to noncontrolling interest
holders . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends declared ($1.20 per share) . . . . .
Shares issued under share-based
compensation plans including tax effects . .
Indirect repurchase of shares for minimum
tax withholdings . . . . . . . . . . . . . . . . . . .
Repurchase of shares of common stock . . .
Share-based compensation . . . . . . . . . . . .
—
Balance, December 28, 2021 . . . . . . . . . . . 69,382,418 $
—
Net income . . . . . . . . . . . . . . . . . . . . . . .
Distributions to noncontrolling interest
holders . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of noncontrolling interest . . . .
Dividends declared ($1.84 per share) . . . . .
Shares issued under share-based
compensation plans including tax effects . .
Indirect repurchase of shares for minimum
tax withholdings . . . . . . . . . . . . . . . . . . .
Repurchase of shares of common stock . . .
Share-based compensation . . . . . . . . . . . .
—
Balance, December 27, 2022 . . . . . . . . . . . 66,973,311 $
Net income . . . . . . . . . . . . . . . . . . . . . . .
—
Distributions to noncontrolling interest
holders . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends declared ($2.20 per share) . . . . .
Shares issued under share-based
compensation plans including tax effects . .
Indirect repurchase of shares for minimum
tax withholdings . . . . . . . . . . . . . . . . . . .
Repurchase of shares of common stock,
including excise tax . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . .
—
Balance, December 26, 2023 . . . . . . . . . . . 66,789,464 $
—
—
—
(2,734,005)
(120,614)
(149,873)
391,793
474,771
—
—
(455,026)
70 $
—
—
—
—
—
—
(1)
—
69 $
—
—
—
—
—
—
(2)
—
67 $
—
—
—
—
—
—
—
(83,658)
—
—
(17,628)
(51,633)
38,139
114,504 $ 943,551 $
—
—
—
—
269,818
—
(1,395)
—
—
—
—
(124,137)
—
(13,576)
(123,057)
—
(89,800)
—
36,663
13,139 $ 999,432 $
—
304,876
—
—
—
(147,182)
—
—
—
—
(12,688)
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
—
— $
—
—
—
—
—
—
(83,658)
(8,206)
—
(8,206)
(83,658)
—
—
—
(17,628)
(51,634)
38,139
1,058,124 $
269,818
—
—
—
(17,628)
(51,634)
38,139
15,360 $ 1,073,484
277,597
7,779
—
(1,395)
(124,137)
(7,775)
(340)
(7,775)
(1,735)
— (124,137)
—
—
—
(13,576)
(212,859)
36,663
1,012,638 $
304,876
—
—
—
(13,576)
(212,859)
36,663
15,024 $ 1,027,662
313,675
8,799
—
(147,182)
(7,974)
(7,974)
— (147,182)
—
—
—
(12,688)
—
(12,688)
—
—
67 $
(34,681)
34,230
(15,531)
—
— $ 1,141,595 $
—
—
— $
(50,212)
34,230
1,141,662 $
—
—
(50,212)
34,230
15,849 $ 1,157,511
See accompanying Notes to Consolidated Financial Statements.
F-7
Texas Roadhouse, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Fiscal Year Ended
December 26, December 27, December 28,
2023
2022
2021
Cash flows from operating activities:
Net income including noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adjustments to reconcile net income to net cash provided by operating activities:
313,675 $
277,597 $
253,314
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposition of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and closure costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity (income) loss from investments in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . .
Distributions of income received from investments in unconsolidated affiliates . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating working capital, net of acquisitions:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue—gift cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid income taxes and income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets and lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities:
Capital expenditures—property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of franchise restaurants, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of investments in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of property and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale leaseback transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
153,202
3,115
3,783
200
(1,351)
689
(14)
34,230
(24,420)
105
(5,612)
(22,617)
23,083
37,347
13,518
1,514
6,581
(3,460)
6,313
25,103
564,984
(347,034)
(39,153)
627
2,110
16,283
(367,167)
137,237
9,456
5,206
1,770
(1,239)
1,022
33
36,663
11,062
(6,099)
(6,540)
5,775
5,408
33,799
(10,172)
5,953
1,889
2,147
5,268
(4,510)
511,725
(246,121)
(33,069)
316
2,269
12,871
(263,734)
Payments on revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to noncontrolling interest holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from restricted stock and other deposits, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indirect repurchase of shares for minimum tax withholdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of shares of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents—beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents—end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Supplemental disclosures of cash flow information:
(50,000)
—
(7,974)
—
405
(12,688)
(49,993)
(147,182)
(267,432)
(69,615)
173,861
104,246 $
(50,000)
—
(7,775)
(1,735)
307
(13,576)
(212,859)
(124,137)
(409,775)
(161,784)
335,645
173,861 $
126,761
8,896
3,167
673
637
1,071
7
38,139
(62,399)
(9,231)
(2,485)
(13,918)
27,730
67,845
12,734
(8,973)
8,624
20,352
5,553
(9,671)
468,826
(200,692)
—
—
—
5,588
(195,104)
(140,000)
(708)
(8,206)
—
602
(17,628)
(51,634)
(83,658)
(301,232)
(27,510)
363,155
335,645
Interest paid, net of amounts capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capital expenditures included in current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,119 $
39,861 $
47,550 $
1,547 $
25,910 $
34,689 $
3,186
39,789
23,087
See accompanying Notes to Consolidated Financial Statements.
F-8
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(1) Description of Business
Texas Roadhouse, Inc. and subsidiaries (collectively, the “Company,” “we,” “our” and/or “us”), is a growing
restaurant company operating predominantly in the casual dining segment. Our late founder, W. Kent Taylor, started the
business in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana.
The Company maintains three restaurant concepts operating as Texas Roadhouse, Bubba’s 33 and Jaggers. As of
December 26, 2023, we owned and operated 635 restaurants and franchised an additional 106 restaurants in 49 states and
ten foreign countries. Of the 106 franchise restaurants, there were 58 domestic and 48 international restaurants. As of
December 27, 2022, we owned and operated 597 restaurants and franchised an additional 100 restaurants in 49 states and
ten foreign countries. Of the 100 franchise restaurants, 62 were domestic and 38 were international restaurants.
(2) Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements present the financial position, results of operations and cash
flows of the Company and its majority-owned subsidiaries. All significant intercompany balances and transactions have
been eliminated in consolidation.
As of December 26, 2023 and December 27, 2022, we owned a majority interest in 20 company restaurants. The
operating results of these majority-owned restaurants are consolidated and the portion of income attributable to
noncontrolling interests is reflected in the line item net income attributable to noncontrolling interests in our
consolidated statements of income and comprehensive income.
As of December 26, 2023 and December 27, 2022, we owned a 5.0% to 10.0% equity interest in 20 and 23
domestic franchise restaurants, respectively. These unconsolidated restaurants are accounted for using the equity
method. Our investments in these unconsolidated affiliates are included in other assets in our consolidated balance
sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our consolidated
statements of income and comprehensive income under equity income (loss) from investments in unconsolidated
affiliates.
Fiscal Year
We utilize a 52 or 53 week accounting period that typically ends on the last Tuesday in December. We utilize a
13 week accounting period for quarterly reporting purposes, except in years containing 53 weeks when the fourth quarter
contains 14 weeks. Fiscal years 2023, 2022 and 2021 were 52 weeks in length.
Use of Estimates
We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reporting of
revenue and expenses during the period to prepare these consolidated financial statements in conformity with U.S.
generally accepted accounting principles (“GAAP”). Significant items subject to such estimates and assumptions
include the valuation of property and equipment, goodwill, lease liabilities and right-of-use assets, obligations related to
insurance reserves, legal reserves, income taxes and gift card breakage. Actual results could differ from those estimates.
Segment Reporting
Operating segments are defined as components of a company that engage in business activities from which it may
earn revenue and incur expenses, and for which separate financial information is available and is regularly reviewed by
the chief operating decision maker (“CODM”) to assess the performance of the individual segments and make decisions
about resources to be allocated to the segments. The Company’s operating segments have been identified in accordance
F-9
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
ASC 280, Segment Reporting.
We have identified Texas Roadhouse, Bubba’s 33, Jaggers and our retail initiatives as separate operating segments.
In addition, we have identified Texas Roadhouse and Bubba’s 33 as reportable segments. For further discussion of
segment reporting, refer to Note 19.
Cash and Cash Equivalents
We consider all highly liquid debt instruments with original maturities of three months or less to be cash
equivalents. Cash and cash equivalents also include receivables from credit card companies as these balances are highly
liquid in nature and are settled within two to three business days. These amounted to $27.8 million and $22.0 million at
December 26, 2023 and December 27, 2022, respectively.
Receivables
Receivables consist principally of amounts due from retail gift card providers, certain franchise restaurants for
reimbursement of labor costs, pre-opening and other expenses, and franchise restaurants for royalty fees.
Receivables are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is
our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the
allowance based on historical collection experience, adjusted for current and forecasted economic conditions and other
factors such as credit risk or industry trends, and the age of receivables. We review our allowance for doubtful accounts
quarterly. Past due balances over 120 days are reviewed individually for collectability. Account balances are charged
off against the allowance after all means of collection have been exhausted and the potential for recovery is considered
remote.
Inventories
Inventories, consisting principally of food, beverages and supplies, are valued at the lower of cost (first-in, first-out)
or net realizable value.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Expenditures for major renewals and
betterments are capitalized while expenditures for maintenance and repairs are expensed as incurred. Depreciation is
computed on property and equipment, including assets located on leased properties, over the shorter of the estimated
useful lives of the related assets or the underlying lease term using the straight-line method. In most cases, assets on
leased properties are depreciated over a period of time which includes both the initial term of the lease and one or more
option periods.
The estimated useful lives are:
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 - 25 years
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 - 25 years
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 - 10 years
The cost of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of
authorized liquor licenses are capitalized as indefinite-lived assets and included in Property and equipment, net.
F-10
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Cloud Computing Arrangements
The Company capitalizes cloud computing implementation costs and amortizes these costs on a straight-line basis
over the term of the related service agreement, including renewal periods that are reasonably certain to be exercised.
Capitalized cloud computing implementation costs were $3.0 million and $1.9 million, net of accumulated amortization,
as of December 26, 2023 and December 27, 2022, respectively. These costs are included in prepaid expenses and other
current assets and other assets in our consolidated balance sheets. Related amortization expense was $1.4 million, $1.0
million and $0.2 million for the years ended December 26, 2023, December 27, 2022, and December 28, 2021,
respectively, and is included in general and administrative expenses in our consolidated statements of income and
comprehensive income.
Leases
We recognize operating lease right-of-use assets and operating lease liabilities for real estate leases, including our
restaurant leases and Support Center lease, as well as certain restaurant equipment leases based on the present value of
the lease payments over the lease term. We estimate the present value based on our incremental borrowing rate which
corresponds to the underlying lease term. In addition, operating lease right-of-use assets are reduced for accrued rent
and increased for any initial direct costs recognized at lease inception. For real estate and restaurant equipment leases
commencing in 2019 and later, we account for lease and non-lease components as a single lease component. Reductions
of the right-of-use asset and the changes in the lease liability are included within the changes in operating lease right-of-
use assets and lease liabilities in our consolidated statements of cash flows.
Certain of our operating leases contain predetermined fixed escalations of the minimum rent over the lease term.
For these leases, we recognize the related total rent expense on a straight-line basis over the lease term. We may receive
rent concessions or leasehold improvement incentives upon opening a restaurant that is subject to a lease which we
consider when determining straight-line rent expense. We also may receive rent holidays, which would begin on the
possession date and end when the store opens, during which no cash rent payments are typically due under the terms of
the lease. Rent holidays are included in the lease term when determining straight-line rent expense. In recognizing
straight-line rent expense, we record the difference between amounts charged to operations and amounts paid as accrued
rent.
Certain of our operating leases contain clauses that provide for additional contingent rent based on a percentage of
sales greater than certain specified target amounts. We recognize contingent rent expense as variable rent expense prior
to the achievement of the specified target that triggers the contingent rent, provided achievement of the target is
considered probable. In addition, certain of our operating leases have variable escalations of the minimum rent that
depend on an index or rate. For these leases, we recognize operating lease right-of-use assets and operating lease
liabilities based on the index or rate at the commencement date. Any subsequent changes to the index or rate are
recognized as variable rent expense when the escalation is determinable.
Sale-leasebacks are transactions through which we sell previously acquired land at fair value and subsequently enter
into a lease agreement on the same land. The resulting lease agreement is evaluated to determine classification as an
operating or finance lease and is recorded based on the lease classification. Refer to Note 8 for further discussion of
leases.
Goodwill
Goodwill represents the excess of cost over fair value of assets of businesses acquired. In accordance with ASC
350, Intangibles—Goodwill and Other (“ASC 350”), goodwill is not subject to amortization and is evaluated for
impairment on an annual basis, or sooner if an event or other circumstance indicates that goodwill may be impaired. The
annual assessment date is the first day of our fourth quarter.
F-11
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
ASC 350 requires that goodwill be tested for impairment at the reporting unit level, or the level of internal reporting
that reflects the way in which an entity manages its businesses. A reporting unit is defined as an operating segment, or
one level below an operating segment. Our goodwill reporting units are at the concept level.
As stated in ASC 350, an entity may first assess qualitative factors in order to determine if it is necessary to perform
the quantitative test. In 2023, 2022 and 2021, we elected to perform a qualitative assessment for our annual review of
goodwill. This review included evaluating factors such as macroeconomic conditions, industry and market
considerations, cost factors, changes in management or key personnel, sustained decreases in share price and the overall
financial performance of the Company’s reporting units at the concept level. As a result of the qualitative assessment,
no indicators of impairment were identified, and no additional indicators of impairment were identified through the end
of the fiscal year that would require additional testing.
In 2023, 2022 and 2021, we determined there was no goodwill impairment. Refer to Note 7 for additional
information related to goodwill and intangible assets.
Other Assets
Other assets consist primarily of deferred compensation plan assets, investments in unconsolidated affiliates and
deposits. For further discussion of the deferred compensation plan, refer to Note 15 and Note 16.
Impairment or Disposal of Long-lived Assets
In accordance with ASC 360, Property, Plant and Equipment, long-lived assets related to each restaurant to be held
and used in the business, such as property and equipment, operating lease right-of-use assets and intangible assets
subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of a restaurant may not be recoverable. For the purposes of this evaluation, we define the asset group at
the individual restaurant level. When we evaluate the restaurants, cash flows are the primary indicator of impairment.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the restaurant
to estimated undiscounted future cash flows expected to be generated by the restaurant. Under our policies, trailing
12- month cash flow results under a predetermined amount at the individual restaurant level signals potential impairment.
In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows
from operating the restaurant over its remaining useful life, which can be for a period of over 20 years. In the estimation
of future cash flows, we consider the period of time the restaurant has been open, the trend of operations over such
period and future periods and expectations of future sales growth. Assumptions about important factors such as the trend
of future operations and sales growth are limited to those that are supportable based upon the plans for the restaurant and
actual results at comparable restaurants.
If the carrying amount of the restaurant exceeds its estimated undiscounted future cash flows, an impairment charge
is recognized by the amount by which the carrying amount exceeds the estimated fair value of the assets. We generally
measure fair value by discounting estimated future cash flows. When fair value is measured by discounting estimated
future cash flows, the assumptions used are consistent with what we believe hypothetical market participants would use.
We also use a discount rate that is commensurate with the risk inherent in the projected cash flows. The adjusted
carrying amounts of assets to be held and used are depreciated over their remaining useful life. Refer to Note 17 for
further discussion of amounts recorded as part of our impairment analysis.
F-12
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Insurance Reserves
We self-insure a significant portion of expected losses under our health, workers’ compensation, general liability,
employment practices liability, and property insurance programs. We purchase insurance for individual claims that
exceed the retention amounts listed below:
Employment practices liability (“EPL”) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
EPL Class Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Workers’ compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
General liability (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Employee healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
December 26, 2023 December 27, 2022
500,000
2,500,000
350,000
2,500,000
250,000
400,000
500,000 $
2,500,000 $
350,000 $
2,500,000 $
250,000 $
400,000 $
(1) In addition to the retention amount of $2,500,000, we have an additional retention corridor that includes claim costs
between $5,000,000 and $10,000,000 related to dram shop statutes.
We record a liability for unresolved claims and for an estimate of incurred but not reported claims based on
historical experience. The estimated liability is based on a number of assumptions and factors regarding economic
conditions, the frequency and severity of claims and claim development history and settlement practices. Our
assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances.
Revenue Recognition
We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers, which requires an
entity to allocate the transaction price received from customers to each separate and distinct performance obligation and
recognize revenue as these performance obligations are satisfied. We recognize revenue from company restaurant sales
when food and beverage products are sold. Restaurant sales include gross food and beverage sales, net of promotions
and discounts, for all company restaurants. Sales taxes collected from customers and remitted to governmental
authorities are accounted for on a net basis and therefore are excluded from restaurant sales in the consolidated
statements of income and comprehensive income.
We record deferred revenue for gift cards that have been sold but not yet redeemed. When the gift cards are
redeemed, we recognize restaurant sales and reduce deferred revenue. For some of the gift cards that are sold we have
determined that, based on our historic gift card redemption patterns, the likelihood of redemption is remote. For these
gift cards, we record a breakage adjustment and reduce deferred revenue by the amount never expected to be redeemed.
We use historic gift card redemption patterns to determine the breakage rate to utilize and recognize the expected
breakage amount in a manner generally consistent with the actual redemption pattern of the associated gift card. We
review the breakage rate on an annual basis, or sooner if circumstances indicate that the rate may have significantly
changed and update the rate accordingly as needed. In addition, we incur fees on all gift cards that are sold through
third-party retailers. These fees are also deferred and generally recorded consistent with the actual redemption pattern of
the associated gift cards.
We also recognize revenue from our franchising of Texas Roadhouse and Jaggers restaurants. This includes
franchise royalties and domestic marketing and advertising fees, initial and upfront franchise fees, domestic and
international development agreements and supervisory and administrative service fees. We recognize franchise royalties
and domestic marketing and advertising fees as franchise restaurant sales occur. For initial and upfront franchise fees
and fees from development agreements, because the services we provide related to these fees do not contain separate and
distinct performance obligations from the franchise right, these fees are recognized on a straight-line basis over the term
of the associated franchise agreement. We recognize fees from supervision and administrative services as incurred.
F-13
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Income Taxes
We account for income taxes in accordance with ASC 740, Income Taxes, under which deferred assets and
liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial
statement carrying values of assets and liabilities and their respective tax bases. We recognize both interest and penalties
on unrecognized tax benefits as part of income tax expense. A valuation allowance is established to reduce the carrying
value of deferred tax assets if it is considered more likely than not that such assets will not be realized. Any change in
the valuation allowance would be charged to income in the period such determination was made. For all years
presented, no valuation allowances have been recorded.
Advertising
We have a domestic system-wide marketing and advertising fund. We maintain control of the marketing and
advertising fund and, as such, have consolidated the fund’s activity for all the years presented. Domestic company and
franchise restaurants are required to remit a designated portion of sales to the advertising fund. Advertising
contributions related to company restaurants are recorded as a component of other operating costs. Advertising
contributions received from our franchisees are recorded as a component of franchise royalties and fees in our
consolidated statements of income and comprehensive income.
Other costs related to local restaurant area marketing initiatives are included in other operating costs in our
consolidated statements of income and comprehensive income. These costs and the company restaurant contribution
amounted to $28.3 million, $25.0 million and $21.1 million for the years ended December 26, 2023, December 27, 2022,
and December 28, 2021, respectively.
Pre-opening Expenses
Pre-opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening
of a new or relocated restaurant and consist principally of opening team and training team compensation and benefits,
travel expenses, rent, food, beverage and other initial supplies and expenses.
Comprehensive Income
ASC 220, Income Statement—Reporting Comprehensive Income, establishes standards for reporting and the
presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income
consists of net income and foreign currency translation adjustments which are excluded from net income under GAAP.
Foreign currency translation adjustment represents the unrealized impact of translating the financial statements of our
foreign investment.
Fair Value of Financial Instruments
Fair value is defined as the price that we would receive to sell an asset or pay to transfer a liability in an orderly
transaction between market participants on the measurement date. ASC 820, Fair Value Measurement, establishes a
framework for measuring fair value and expands disclosures about fair value measurements. This includes a three-level
hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable
F-14
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
inputs in measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an
asset or liability on the measurement date.
Level 1
Level 2
Level 3
Inputs based on quoted prices in active markets for identical assets.
Inputs other than quoted prices included within Level 1 that are observable
for the assets, either directly or indirectly.
Inputs that are unobservable for the asset.
Fair value measurements are separately disclosed by level within the fair value hierarchy. Refer to Note 16 for
further discussion of fair value measurement.
Recently Adopted Accounting Pronouncements
In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic
848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional
expedients and exceptions to the current guidance on contract modifications and hedge accounting. These changes are
intended to simplify the market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank
offered rates to alternative reference rates. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform
(Topic 848): Deferral of the Sunset Date of Topic 848, which defers the sunset date of Topic 848 from December 31,
2022 to December 31, 2024. We adopted this guidance during the 2023 fiscal year and the adoption did not have an
impact on our consolidated financial statements.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosure. This ASU primarily provides enhanced disclosures about significant segment expenses including
requiring segment disclosures to include a description of other segment items by reportable segment and any additional
measures of a segment’s profit or loss used by the CODM when deciding how to allocate resources. The ASU also
requires all annual disclosures currently required by Topic 280 to be included in interim periods as well as the title of the
CODM and an explanation of how the CODM uses the reported measure of segment profit or loss in assessing
performance and allocating resources. The amendments in this update are effective for fiscal years beginning after
December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are currently
assessing the impact of this new standard on our segment reporting disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax
Disclosures. This ASU primarily provides enhanced disclosures about an entity’s income tax including requiring
consistent categories and greater disaggregation of the information included in the rate reconciliation and income taxes
paid disaggregated by jurisdiction. The amendments in this update are effective for fiscal years beginning after
December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. We are currently
assessing the impact of this new standard on our income tax disclosures.
(3) Revenue
The following table disaggregates our revenue by major source:
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Franchise royalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Fiscal Year Ended
December 26, 2023 December 27, 2022 December 28, 2021
3,439,176
21,770
3,000
3,463,946
3,988,791 $
23,058
3,070
4,014,919 $
4,604,554 $
24,169
2,949
4,631,672 $
F-15
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
The following table presents a rollforward of deferred revenue-gift cards:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Gift card activations, net of third-party fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gift card redemptions and breakage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended
December 26, 2023 December 27, 2022
300,657
366,606
(331,860)
335,403
335,403 $
420,047
(381,537)
373,913
We recognized restaurant sales of $209.2 million for the year ended December 26, 2023 related to amounts in
deferred revenue as of December 27, 2022. We recognized restaurant sales of $190.5 million for the year ended
December 27, 2022 related to amounts in deferred revenue as of December 28, 2021.
(4) Acquisitions
On December 28, 2022, the first day of the 2023 fiscal year, we completed the acquisition of eight franchise Texas
Roadhouse restaurants located in Maryland and Delaware, including four in which we previously held a 5.0% equity
interest. Pursuant to the terms of the acquisition agreements, we paid a total purchase price of $39.1 million, net of cash
acquired, for 100% of the entities. The transactions in which we held an equity interest were accounted for as step
acquisitions and we recorded a gain of $0.6 million on our previous investments in equity income from investments in
unconsolidated affiliates in the consolidated statements of income and comprehensive income.
These transactions were accounted for using the acquisition method as defined in ASC 805, Business
Combinations. These acquisitions are consistent with our long-term strategy to increase net income and earnings per
share.
The following table summarizes the consideration paid for these acquisitions and the estimated preliminary fair
value of the assets acquired and the liabilities assumed at the acquisition date, which are adjusted for measurement-
period adjustments through December 26, 2023.
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue-gift cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
410
293
17,763
4,775
20,067
1,700
(1,164)
(110)
(4,665)
39,069
The aggregate purchase price is preliminary as we are finalizing working capital adjustments. Intangible assets
represent reacquired franchise rights which are being amortized over a weighted-average useful life of 2.2 years. We
expect all of the goodwill will be deductible for tax purposes and believe the resulting amount of goodwill reflects the
benefit of sales and unit growth opportunities as well as the benefit of the assembled workforce of the acquired
restaurants.
Pro forma financial detail and operating results for the year ended December 26, 2023 have not been presented as
the results of the acquired restaurants are not material to our consolidated financial position, results of operations or cash
flows.
F-16
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
On March 30, 2022, we completed the acquisition of one franchise Texas Roadhouse restaurant located in Nebraska
in which we previously held a 5.49% equity interest. Pursuant to the terms of the acquisition agreement, we paid a total
purchase price of $6.6 million, net of cash acquired, for 100% of the entity. The transaction was accounted for as a step
acquisition and we recorded a gain of $0.3 million on our previous investment in equity income from investments in
unconsolidated affiliates in the consolidated statements of income and comprehensive income.
On December 29, 2021, the first day of the 2022 fiscal year, we completed the acquisition of seven franchise Texas
Roadhouse restaurants located in South Carolina and Georgia. Pursuant to the terms of the acquisition agreements, we
paid a total purchase price of $26.5 million, net of cash acquired.
These acquisitions are consistent with our long-term strategy to increase net income and earnings per share. The
transactions were accounted for using the acquisition method as defined in ASC 805, Business Combinations.
The following table summarizes the consideration paid for these acquisitions and the estimated fair value of the
assets acquired and the liabilities assumed at the acquisition date, which are adjusted for final measurement-period
adjustments.
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue-gift cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
321
222
4,841
1,221
22,616
6,100
(947)
(47)
(1,174)
33,153
Intangible assets represent reacquired franchise rights which are being amortized over a weighted-average useful
life of 3.4 years. We expect all of the goodwill will be deductible for tax purposes and believe the resulting amount of
goodwill reflects the benefit of sales and unit growth opportunities as well as the benefit of the assembled workforce of
the acquired restaurants.
Pro forma financial detail and operating results for the year ended December 27, 2022 have not been presented as
the results of the acquired restaurants are not material to our consolidated financial position, results of operations or cash
flows.
(5) Long-term Debt
We maintain a revolving credit facility (the “credit facility”) with a syndicate of commercial lenders led by
JPMorgan Chase Bank, N.A. and PNC Bank, N.A. The credit facility is an unsecured, revolving credit agreement and
has a borrowing capacity of up to $300.0 million with the option to increase by an additional $200.0 million subject to
certain limitations, including approval by the syndicate of lenders. The credit facility has a maturity date of May 1,
2026.
On May 19, 2023, we amended the credit facility to provide for the transition from LIBOR to the Secured
Overnight Financing Rate (“SOFR”) as the benchmark rate for purposes of calculating interest on outstanding
borrowings. Pursuant to the amendment, we are required to pay interest on outstanding borrowings at the Term SOFR,
plus a fixed adjustment of 0.10% and a variable adjustment of 0.875% to 1.875% depending on our leverage ratio. At
the time of transition to the Term SOFR, we had no outstanding borrowings under the credit facility.
F-17
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
As of December 26, 2023, we had no outstanding balance on the credit facility and had $295.3 million of
availability, net of $4.7 million of outstanding letters of credit. As of December 27, 2022, we had $50.0 million
outstanding on the credit facility, which was repaid in 2023, and $233.5 million of availability, net of $16.5 million of
outstanding letters of credit. The outstanding amount as of December 27, 2022 is included as long-term debt on our
consolidated balance sheet.
The interest rate for the credit facility as of December 26, 2023 and December 27, 2022 was 6.23% and 5.21%,
respectively.
The lenders’ obligation to extend credit pursuant to the credit facility depends on us maintaining certain financial
covenants, including a minimum consolidated fixed charge coverage ratio and a maximum consolidated leverage ratio.
The credit facility permits us to incur additional secured or unsecured indebtedness, except for the incurrence of secured
indebtedness that in the aggregate is equal to or greater than $125.0 million and 20% of our consolidated tangible net
worth. We were in compliance with all financial covenants as of December 26, 2023 and December 27, 2022.
(6) Property and Equipment, Net
Property and equipment were as follows:
December 26, December 27,
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liquor licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
165,919 $
2022
148,220
1,206,930
797,058
73,639
12,538
2,238,385
(968,036)
$ 1,474,722 $ 1,270,349
1,369,400
908,489
93,527
16,242
2,553,577
(1,078,855)
For the years ended December 26, 2023, December 27, 2022 and December 28, 2021, the amount of interest
capitalized in connection with restaurant construction was $0.5 million, $1.3 million and $0.2 million, respectively.
(7) Goodwill and Intangible Assets
All of our goodwill and intangible assets reside within the Texas Roadhouse reportable segment. The gross
carrying amounts of goodwill and intangible assets were as follows:
Balance as of December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 27, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 26, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Goodwill
127,001 $
21,731
—
148,732 $
20,952
—
169,684 $
Intangible Assets
1,520
6,900
(2,813)
5,607
900
(3,024)
3,483
Intangible assets consist of reacquired franchise rights. The gross carrying amount and accumulated amortization
of the intangible assets at December 26, 2023 were $24.4 million and $20.9 million, respectively. As of December 27,
2022, the gross carrying amount and accumulated amortization of the intangible assets were $23.5 million and $17.9
million, respectively. We amortize reacquired franchise rights on a straight-line basis over the remaining term of the
F-18
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
franchise operating agreements, which varies by franchise agreement. Amortization expense for the next four years is
expected to range from zero to $2.2 million. Refer to Note 4 for discussion of the acquisitions completed for the years
ended December 26, 2023 and December 27, 2022.
(8) Leases
We recognize right-of-use assets and lease liabilities for both real estate and equipment leases that have a term in
excess of one year. As of December 26, 2023 and December 27, 2022, these amounts were as follows:
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
686,271
$
7,743
$
Real estate
December 26, 2023
Equipment
Total
694,014
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . .
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
25,812
740,446
766,258
$
1,599
3,030
4,629
$
27,411
743,476
770,887
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
625,164
$
5,094
$
Real estate
December 27, 2022
Equipment
Total
630,258
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . .
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
23,803
674,468
698,271
$
1,687
3,406
5,093
$
25,490
677,874
703,364
F-19
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Information related to our real estate operating leases for the fiscal years ended December 26, 2023 and
December 27, 2022 were as follows:
Real estate costs
Operating lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Variable lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
December 26, 2023
75,068
5,079
80,147
December 27, 2022
68,742
$
4,393
73,135
$
Fiscal Year Ended
Real estate lease liabilities maturity analysis
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total discounted operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 26, 2023
73,511
$
72,379
72,279
72,690
73,328
968,299
1,332,486
566,228
766,258
$
$
Real estate leases other information
Cash paid for amounts included in measurement
Fiscal Year Ended
December 26, 2023
68,755
$
December 27, 2022
63,269
$
of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets obtained in exchange for
$
83,310
$
54,666
new operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average remaining lease term (years) . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17.71
6.49 %
17.57
6.34 %
Operating lease payments exclude $39.2 million of future minimum lease payments for executed real estate leases
of which we have not yet taken possession. In addition to the above operating leases, as of December 26, 2023, we had
two finance leases with a right-of-use asset balance and lease liability balance of $2.0 million and $2.8 million,
respectively. As of December 27, 2022, we had two finance leases with a right-of-use asset balance and lease liability
balance of $2.1 million and $2.7 million, respectively. The right-of-use asset balance is included as a component of
other assets and the lease liability balance as a component of other liabilities in the consolidated balance sheets.
In 2023, we entered into six sale leaseback transactions that generated proceeds of $16.3 million and no gain or loss
was recognized on the transactions. In 2022, we entered into four sale leaseback that generated proceeds of $12.9
million and no gain or loss was recognized on the transactions. The resulting operating leases are included in the
operating lease right-of-use assets and lease liabilities noted above.
F-20
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(9) Income Taxes
Components of our income tax expense for the years ended December 26, 2023, December 27, 2022, and
December 28, 2021 were as follows:
December 26, 2023 December 27, 2022 December 28, 2021
Fiscal Year Ended
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . $
State . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . .
Total current . . . . . . . . . . . . . . . . . . . .
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . $
21,694 $
19,105
735
41,534
4,518
(1,403)
3,115
44,649 $
15,549 $
18,120
590
34,259
9,664
(208)
9,456
43,715 $
16,700
13,539
443
30,682
7,391
1,505
8,896
39,578
Our pre-tax income is substantially derived from domestic restaurants.
A reconciliation of the statutory federal income tax rate to our effective tax rate for December 26, 2023,
December 27, 2022, and December 28, 2021 is as follows:
Fiscal Year Ended
December 26, 2023 December 27, 2022 December 28, 2021
Tax at statutory federal rate . . . . . . . . . . .
State and local tax, net of federal benefit .
FICA tip tax credit . . . . . . . . . . . . . . . . . .
Work opportunity tax credit . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . .
Net income attributable to
noncontrolling interests . . . . . . . . . . . . .
Officers compensation . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.0 %
3.6
(11.1)
(1.0)
(0.5)
(0.4)
0.6
0.3
12.5 %
21.0 %
3.7
(10.5)
(1.3)
(0.1)
(0.4)
0.7
0.5
13.6 %
21.0 %
3.8
(9.3)
(1.2)
(1.5)
(0.5)
1.1
0.1
13.5 %
F-21
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Components of deferred tax liabilities, net were as follows:
December 26, 2023 December 27, 2022
Deferred tax assets:
Deferred revenue—gift cards . . . . . . . . . . . . . . . . . . . . $
Insurance reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and intangibles . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use asset . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . $
32,999 $
8,351
1,884
5,241
191,422
21,697
45
3,907
265,546
(90,638)
(9,116)
(171,999)
(16,897)
(288,650)
(23,104) $
29,889
6,506
1,060
5,059
173,853
17,934
2,740
2,991
240,032
(82,832)
(8,374)
(155,837)
(13,968)
(261,011)
(20,979)
As of December 27, 2022, we had a tax credit carryforward of $2.7 million primarily related to FICA tip and Work
opportunity tax credits that exceeded credit limitations. This federal carryforward was fully utilized during 2023.
A reconciliation of the beginning and ending liability for unrecognized tax benefits was as follows:
Balance at December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Additions to tax positions related to prior years . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to tax positions related to current year . . . . . . . . . . . . . . . . . . . . . . . .
Reductions due to statute expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions due to exam settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 27, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to tax positions related to prior years . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to tax positions related to current year . . . . . . . . . . . . . . . . . . . . . . . .
Reductions due to statute expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions due to exam settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 26, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,528
1,545
872
—
(20)
3,925
964
139
(246)
—
4,782
As of December 26, 2023 and December 27, 2022, the amount of unrecognized tax benefits that would impact the
effective tax rate if recognized was $2.5 million and $2.1 million, respectively.
As of December 26, 2023 and December 27, 2022, the total amount of accrued penalties and interest related to
uncertain tax provisions was recognized as a part of income tax expense and these amounts were not material.
All entities for which unrecognized tax benefits exist as of December 26, 2023 possess a December tax year-end.
As a result, as of December 26, 2023, the tax years ended December 27, 2022, December 28, 2021 and December 29,
2020 remain subject to examination by all tax jurisdictions. As of December 26, 2023, no audits were in process by a
tax jurisdiction that, if completed during the next twelve months, would be expected to result in a material change to our
unrecognized tax benefits. Additionally, as of December 26, 2023, no event occurred that is likely to result in a
significant increase or decrease in the unrecognized tax benefits through December 31, 2024.
F-22
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(10) Preferred Stock
Our Board of Directors (the “Board”) is authorized, without further vote or action by the holders of common stock,
to issue from time to time up to an aggregate of 1,000,000 shares of preferred stock in one or more series. Each series of
preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or
relative rights or privileges as shall be determined by the Board, which may include, but are not limited to, dividend
rights, voting rights, redemption and sinking fund provisions, liquidation preferences, conversion rights and preemptive
rights. There were no shares of preferred stock outstanding at December 26, 2023 and December 27, 2022.
(11) Stock Repurchase Program
On March 17, 2022, our Board approved a stock repurchase program under which we may repurchase up to $300.0
million of our common stock. This stock repurchase program has no expiration date. All repurchases to date under our
stock repurchase programs have been made through open market transactions. The timing and the amount of any
repurchases are determined by management under parameters established by the Board, based on an evaluation of our
stock price, market conditions and other corporate considerations.
For the year ended December 26, 2023, we paid $50.0 million to repurchase 455,026 shares of our common stock.
For the year ended December 27, 2022, we paid $212.9 million to repurchase 2,734,005 shares of our common stock.
This included $133.1 million repurchased under our current authorized stock repurchase program and $79.7 million
repurchased under our prior authorization. As of December 26, 2023, we had $116.9 million remaining under our
authorized stock repurchase program.
(12) Earnings Per Share
The share and net income per share data for all periods presented are based on the historical weighted-average
shares outstanding. The diluted earnings per share calculations show the effect of the weighted-average restricted stock
units outstanding from our equity incentive plans. Performance stock units are not included in the diluted earnings per
share calculation until the performance-based criteria have been met. Refer to Note 14 for further discussion of our
equity incentive plans.
For all periods presented, the weighted-average shares of nonvested stock units that were outstanding but not
included in the computation of diluted earnings per share because they would have had an anti-dilutive effect were not
significant.
The following table sets forth the calculation of earnings per share and weighted average shares outstanding as
presented in the accompanying consolidated statements of income and comprehensive income:
Fiscal Year Ended
December 26, December 27, December 28,
2023
2022
2021
Net income attributable to Texas
Roadhouse, Inc. and subsidiaries . . . . . . . . . . . $
304,876 $
269,818 $
245,294
Basic EPS:
Weighted-average common shares outstanding .
Basic EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted EPS:
Weighted-average common shares outstanding .
Dilutive effect of nonvested stock units . . . . . . .
Shares-diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
66,893
67,643
4.56 $
3.99 $
69,709
3.52
66,893
256
67,149
67,643
277
67,920
4.54 $
3.97 $
69,709
389
70,098
3.50
F-23
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(13) Commitments and Contingencies
The estimated cost of completing capital project commitments at December 26, 2023 and December 27, 2022 was
$237.4 million and $205.7 million, respectively.
As of December 26, 2023 and December 27, 2022, we are contingently liable for $10.4 million and $11.3 million,
respectively, for seven lease guarantees. These amounts represent the maximum potential liability of future payments
under the guarantees. In the event of default, the indemnity and default clauses in our assignment agreements govern our
ability to pursue and recover damages incurred. No liabilities have been recorded as of December 26, 2023 or
December 27, 2022, as the likelihood of default was deemed to be less than probable and the fair value of the guarantees
is not considered significant.
During the year ended December 26, 2023, we bought our beef primarily from four suppliers. Although there are a
limited number of beef suppliers, we believe that other suppliers could provide a similar product on comparable terms.
We have no material minimum purchase commitments with our vendors that extend beyond a year.
Occasionally, we are a defendant in litigation arising in the ordinary course of business, including “slip and fall”
accidents, employment related claims, dram shop statutes related to our service of alcohol, and claims from guests or
employees alleging illness, injury or food quality, health or operational concerns. None of these types of litigation, most
of which are covered by insurance, has had a material effect on us and, as of the date of this report, we are not party to
any litigation that we believe could have a material adverse effect on our business.
(14) Share-based Compensation
On May 13, 2021, our shareholders approved the Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan (the
“Plan”). The Plan provides for the granting of various forms of equity awards including options, stock appreciation
rights, full value awards, and performance-based awards.
The Company provides restricted stock units (“RSUs”) to employees as a form of share-based compensation. A
RSU is the conditional right to receive one share of common stock upon satisfaction of the vesting requirement. In
addition to RSUs, the Company provides performance stock units (“PSUs”) to certain members of management as a
form of share-based compensation. A PSU is the conditional right to receive one share of common stock upon meeting a
performance obligation along with the satisfaction of the vesting requirement.
The following table summarizes the share-based compensation recorded in the accompanying consolidated
statements of income and comprehensive income:
Labor expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
General and administrative expense . . . . . . . . . .
Total share-based compensation expense . . . . . . $
2023
11,470 $
22,760
34,230 $
2022
10,656 $
26,007
36,663 $
2021
10,323
27,816
38,139
December 26, December 27, December 28,
Fiscal Year Ended
We recognize expense for RSUs and PSUs over the vesting term based on the grant date fair value of the award.
We record forfeitures as they occur. Activity for our share-based compensation by type of grant for the year ended
December 26, 2023 is presented below.
F-24
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Summary Details for RSUs
Weighted-Average Weighted-Average
Grant Date Fair
Shares
Value
Remaining Contractual
Term (years)
Aggregate
Intrinsic Value
494,839 $
Outstanding at December 27, 2022 . . . . . . . . . . . .
346,013
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(38,111)
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (360,414)
Outstanding at December 26, 2023 . . . . . . . . . . . .
442,327 $
84.55
103.87
90.34
85.48
98.41
0.9 $
53,602
As of December 26, 2023, with respect to unvested RSUs, there was $20.6 million of unrecognized compensation
cost that is expected to be recognized over a weighted-average period of 0.9 years. The vesting terms of all RSUs range
from 1.0 to 5.0 years. The total intrinsic value of RSUs vested during the years ended December 26, 2023,
December 27, 2022 and December 28, 2021 was $37.8 million, $37.1 million and $54.7 million, respectively. The
excess tax benefit associated with vested RSUs for the years ended December 26, 2023, December 27, 2022 and
December 28, 2021 was $1.7 million, $0.4 million and $4.3 million, respectively, which was recognized in the income
tax provision.
Summary Details for PSUs
Weighted-Average Weighted-Average
Grant Date Fair
Remaining Contractual
Aggregate
Intrinsic Value
Outstanding at December 27, 2022 . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance shares adjustment (1) . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 26, 2023 . . . . . . . . . . . .
Shares
29,600 $
40,000
6,179
(8,700)
(31,379)
35,700 $
Value
Term (years)
87.52
95.76
85.46
91.85
87.05
94.61
0.1 $
4,324
(1) Additional shares from the January 2022 PSU grant that vested in January 2023 due to exceeding the initial 100%
target.
We grant PSUs to certain members of management subject to a one-year vesting and the achievement of certain
earnings targets, which determine the number of units to vest at the end of the vesting period. Share-based compensation
expense is recognized for the number of units expected to vest at the end of the period and is expensed beginning on the
grant date and through the performance period. For each grant, PSUs vest after meeting the performance and service
conditions. The total intrinsic value of PSUs vested during the years ended December 26, 2023, December 27, 2022 and
December 28, 2021 was $3.3 million, $5.4 million and $0.4 million, respectively.
On January 8, 2024, approximately 43,000 shares vested related to the January 2023 PSU grant and are expected to
be distributed during the 13 weeks ending March 26, 2024. As of December 26, 2023, with respect to unvested PSUs,
the amount of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 0.1
year was not significant. The allowable excess tax benefit associated with vested PSUs for the years ended
December 26, 2023, December 27, 2022 and December 28, 2021 was not significant.
(15) Employee Benefit Plans
We have a defined contribution benefit plan (“401(k) Plan”) that is available to our Support Center employees and
managers in our restaurants who meet certain compensation and eligibility requirements. The 401(k) Plan allows
participating employees to defer the receipt of a portion of their compensation and contribute such amount to one or
more investment options. Beginning in 2022, we implemented a company match of a certain percentage of the
employee contributions to the 401(k) Plan. For the year ended December 26, 2023, company contributions totaling $7.1
F-25
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
million and $1.8 million were recorded in labor expense and general and administrative expense, respectively, within the
consolidated statements of income and comprehensive income. For the year ended December 27, 2022, company
contributions totaling $5.4 million and $1.6 million were recorded in labor expense and general and administrative
expense, respectively, within the consolidated statements of income and comprehensive income.
We also have a deferred compensation plan which allows highly compensated employees to defer a portion of their
compensation and contribute such amounts to one or more investment funds held in a rabbi trust. Beginning in 2023, we
implemented a company match of a certain percentage of the employee contributions to the deferred compensation plan.
For the year ended December 26, 2023, company contributions totaling $1.6 million and $1.5 million were recorded in
labor expense and general and administrative expense, respectively, within the consolidated statements of income and
comprehensive income. Refer to Note 16 for further discussion on the fair value measurement of the deferred
compensation plan assets and liabilities.
(16) Fair Value Measurement
At December 26, 2023 and December 27, 2022, the fair values of cash and cash equivalents, accounts receivable
and accounts payable approximated their carrying values based on the short-term nature of these instruments. At
December 27, 2022, the fair value of our credit facility approximated its carrying value since it is a variable rate credit
facility (Level 2). There were no transfers among levels within the fair value hierarchy during the year ended
December 26, 2023.
The following table presents the fair values for our financial assets and liabilities measured on a recurring basis:
Deferred compensation plan—assets . . . . . . . . . . . . . . 1 $
Deferred compensation plan—liabilities . . . . . . . . . . . 1 $
Level December 26, 2023 December 27, 2022
61,835
81,316 $
(61,668)
(81,222) $
Fair Value Measurements
We report the accounts of the deferred compensation plan in other assets and the corresponding liability in other
liabilities in our consolidated financial statements. These investments are considered trading securities and are reported
at fair value based on quoted market prices. The realized and unrealized holding gains and losses related to these
investments, as well as the offsetting compensation expense, are recorded in general and administrative expense in the
consolidated statements of income and comprehensive income.
The following table presents the fair value of our assets measured on a nonrecurring basis:
Fair Value Measurements
Total gain (loss)
Fiscal Year Ended
December 26,
December 27,
December 26,
Level
2023
2022
2023
December 27,
2022
Long-lived assets held for sale . . . . . . . . .
Long-lived assets held for use . . . . . . . . .
Operating lease right-of-use assets . . . . . .
3
3
3
$
$
$
— $
— $
— $
— $
2,000 $
— $
— $
— $
— $
690
(997)
(708)
Long-lived assets held for sale included land and building at a site that relocated. These assets were sold during the
fiscal year ended December 27, 2022 and resulted in a gain of $0.7 million which is included in impairment and closure,
net in our consolidated statements of income and comprehensive income.
Long-lived assets held for use include the land and building for one underperforming restaurant that was impaired
down to fair value in 2022. These assets were valued using a Level 3 input. This impairment, which totaled $1.0
million, is included in impairment and closure costs, net in our consolidated statements of income and comprehensive
income. For further discussion of impairment charges, refer to Note 17.
Operating lease right-of-use assets as of December 27, 2022 includes the lease related assets for two restaurants that
F-26
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
were relocated in 2022. These assets were reduced to a fair value of zero in 2022. This resulted in a loss of $0.7 million
for the fiscal year ended December 27, 2022, which is included in impairment and closure, net in our consolidated
statements of income and comprehensive income.
(17) Impairment and Closure Costs
We recorded impairment and closure costs of $0.3 million, $1.6 million and $0.7 million for the years ended
December 26, 2023, December 27, 2022 and December 28, 2021, respectively.
Impairment and closure costs in 2023 included $0.3 million related to ongoing closure costs for stores which have
relocated.
Impairment and closure costs in 2022 included $1.7 million related to the impairment of the land, building and
operating lease right-of-use assets at three restaurants, two of which were relocated and $0.6 million related to ongoing
closure costs. This was partially offset by a $0.7 million gain on the sale of land and building that was previously
classified as assets held for sale.
Impairment and closure costs in 2021 included $0.7 million related to the impairment of the fixed assets and
operating lease right-of-use assets at two restaurants, both of which have relocated.
(18) Related Party Transactions
As of December 26, 2023, December 27, 2022 and December 28, 2021, we had four franchise restaurants and one
majority-owned company restaurant owned in part by a current officer of the Company. We recognized revenue of
$2.0 million, $1.8 million and $1.7 million for the years ended December 26, 2023, December 27, 2022, and
December 28, 2021, respectively, related to these restaurants.
(19) Segment Information
We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse,
Bubba’s 33, Jaggers and our retail initiatives as separate operating segments. Our reportable segments are Texas
Roadhouse and Bubba’s 33. The Texas Roadhouse reportable segment includes the results of our domestic company
Texas Roadhouse restaurants and domestic and international franchise Texas Roadhouse restaurants. The Bubba’s 33
reportable segment includes the results of our domestic company Bubba’s 33 restaurants. Our remaining operating
segments, which include the results of our domestic company and franchise Jaggers restaurants and the results of our
retail initiatives, are included in Other. In addition, Corporate-related segment assets, depreciation and amortization and
capital expenditures are also included in Other.
Management uses restaurant margin as the measure for assessing performance of our segments. Restaurant margin
represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent
and other operating costs. Restaurant margin also includes sales and operating costs related to our non-royalty based
retail initiatives. Restaurant margin is used by our CODM to evaluate core restaurant-level operating efficiency and
performance.
In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including
pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational
efficiency and performance. We exclude pre-opening expense as it occurs at irregular intervals and would impact
comparability to prior period results. We exclude depreciation and amortization expense, substantially all of which
relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants. We exclude
impairment and closure expense as we believe this provides a clearer perspective of the Company’s ongoing operating
performance and a more useful comparison to prior period results. Restaurant margin as presented may not be
comparable to other similarly titled measures of other companies in our industry.
F-27
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Restaurant and other sales for all operating segments are derived primarily from food and beverage sales. We do
not rely on any major customer as a source of sales and the customers and assets of our reportable segments are located
predominantly in the United States. There are no material transactions between reportable segments.
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,331,823 $ 247,195 $
Restaurant operating costs (excluding depreciation and
Texas
Roadhouse
Bubba’s 33
Other
25,536 $ 4,604,554
Total
amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,660,665
671,158 $
213,253
33,942 $
22,672
2,864 $
3,896,590
707,964
Fiscal Year Ended December 26, 2023
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . $
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126,719 $
2,290,213
306,599
14,210 $
232,086
27,908
12,273 $
271,077
12,527
153,202
2,793,376
347,034
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,762,884 $ 211,690 $
Restaurant operating costs (excluding depreciation and
Texas
Roadhouse
Bubba’s 33
Other
14,217 $ 3,988,791
Total
amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,162,687
600,197 $
184,756
26,934 $
13,847
370 $
3,361,290
627,501
Fiscal Year Ended December 27, 2022
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . $
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112,546 $
2,015,173
204,662
13,012 $
201,503
30,625
11,679 $
308,989
10,834
137,237
2,525,665
246,121
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,253,889 $ 174,355 $
Restaurant operating costs (excluding depreciation and
Texas
Roadhouse
Bubba’s 33
Other
10,932 $ 3,439,176
Total
amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,701,850
552,039 $
145,493
28,862 $
10,101
831 $
2,857,444
581,732
Fiscal Year Ended December 28, 2021
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . $
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
105,079 $
1,874,620
167,746
12,700 $
179,856
23,408
8,982 $
457,476
9,538
126,761
2,511,952
200,692
F-28
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
A reconciliation of restaurant margin to income from operations is presented below. We do not allocate interest
income (expense), net and equity income (loss) from investments in unconsolidated affiliates to reportable segments.
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
December 26,
2023
707,964 $
Fiscal Year Ended
December 27,
2022
627,501 $
December 28,
2021
581,732
Add:
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,118
26,128
24,770
Less:
Pre-opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and closure, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
29,234
153,202
275
198,382
353,989 $
21,883
137,237
1,600
172,712
320,197 $
24,335
126,761
734
157,480
297,192
F-29
(This page has been left blank intentionally.)
Dear
SHAREHOLDERS,
We are proud to report that 2023
was a landmark year in terms of our
sustainability progress. As we have
said since the start of our program,
our corporate sustainability strategy is
about making continual progress with
meaningful, long-term impact in each
and every community we serve.
One of the major initiatives we
undertook in 2023 was the reporting
of our Scope 1 and 2 emissions for
2021 and 2022, which were published
on our website in November. The
Scope 1 and Scope 2 emissions are
generated based on the natural gas,
propane, and electricity we use to
operate. We continue to partner
with an energy management firm to
monitor and disclose
our greenhouse gas
emissions at both our
stores and our Support
Center each year.
In addition, we hired
a consulting firm to
conduct a materiality
assessment. For the
assessment, 140 employees, vendors,
and shareholders were surveyed
and interviewed to gather opinions
and perspectives to identify which
environmental, governance, and social
topics are important to them. We will
use the assessment to help keep our
corporate sustainability efforts focused
on the most relevant areas of our
business. Finally, we hired a
consulting firm to measure our
initial Scope 3 emissions.
Operational Initiatives
We are proud of the progress we made
in 2023 with our employee and guest-
facing sustainability efforts. As a result
of our sustainable uniform program,
we kept nearly 5.5 million plastic
bottles out of landfills and oceans. Over
180,000 sustainable uniform items
were purchased, and interest continues
to grow with sustainable hats, aprons,
and uniform shirts. We will keep
exploring opportunities that make
“sense” and “cents” for our operators
and the environment.
Another exciting initiative in our
restaurants is our cooking oil
recycling program. We recycled
almost 500,000 gallons of used
cooking oil across all three of our
brands in 2023. With a Direct Connect
system, used oil is automatically sent
to a storage container for pickup. This
reduces contamination and employee
risk by not having employees manually
carry oil to the storage container.
The oil is used to feed livestock and
manufacture other products. It is
also converted to airline fuel, which
is why we refer to this process as our
“frequent fryer” program!
In 2023, Jaggers switched to molded
fiber to-go containers. These “tree-
free” containers are not only more eco-
friendly, but also maintain the quality
of our food. We are also testing the
containers in a few Texas Roadhouse
locations as a Styrofoam replacement.
In addition, we continue to work on
initiatives to reduce the use of paper
in our operations. A great example
of this is our conversion to a digital
kitchen display system. With a digital
kitchen, we can remove five ticket
printers. This means we no longer have
a need for printer paper, and saves over
1,100 pounds per year in paper weight
per location. We intend to convert
200 locations this year with the goal
of expanding systemwide over the
next few years. We are also proud of
the paper we save with our electronic
invoicing system. In 2023, paperless
invoicing saved more than 2,100
trees; 6,500 tons of water; and
reduced emissions by more than
200,000 kgCO2e.
With the completion of our 2023
Attitude and Usage Study, the results
showed that guests ranked us above
our competitors regarding how we
“care about sustainability and the
environment.” This ranking reflects
the success of our guest-facing
partnerships, including those with
the Bee Conservancy, local store efforts
around Earth Day, and our Arbor Day
Foundation tree distribution program.
Throughout the year, we share our
sustainability efforts on social media
and in our kids’ activity books. We are
proud that our guests are recognizing
our ongoing progress and the impact
we are making.
2024 and Beyond
We are approaching 2024 with a lot
of momentum and exciting initiatives
that will set us up for even more
progress for years to come. The
materiality assessment and calculating
our Scope 3 emissions will be
meaningful additions to our toolbox as
our corporate sustainability strategy
continues to evolve.
In line with making data-informed
decisions, we will build our first “green
store” in Greenville, Tennessee, which
is scheduled to open in late 2024. For
the past year, we have been focused
on strategically procuring more
sustainable equipment for this location.
This store will give us the opportunity
to pressure test and measure the
effectiveness of sustainable equipment
and materials that could be included in
future restaurants.
We have come a long way since we
launched our corporate sustainability
program in 2017, but we have
remained committed to aligning our
initiatives to our four sustainability
pillars – food, community, employees,
and conservation. As a company, we
are focused on continual progress to
leave every community better than
we found it.
Our wins from 2023 and ongoing
initiatives in each pillar are detailed
in our Corporate Sustainability
Report, which can be found at
texasroadhouse.com/sustainability.
Travis Doster
Chief Communications Officer
We make it our mission
to leave every community
we’re a part of better
than we found it.
In 2023, we reported our
Scope 1 and 2 emissions
for 2021 and 2022.
We will continue
evaluating our energy
usage to take a deeper
dive into our equipment
and buildings.
2023
Corporate
Sustainability
at a Glance
180,000 sustainable
uniform items were
purchased, keeping landfills
and oceans free of 5.5
million plastic bottles.
Over 100 Roadies
participated in our English
as a Second Language
(ESL) Program. The goal of
the program is to assist our
native Spanish speaking
Roadies in increasing their
English language fluency.
We recycled almost 500,000
gallons of used cooking oil
across all three of our brands
in 2023. The oil is converted
into airline fuel, used to
feed livestock, and used to
manufacture other products.
We raised and donated
over $3.3 million to local
non-profits, schools,
and organizations in the
communities we served
in 2023.
Jaggers rolled out “tree-
free” molded fiber To-Go
containers, which are not
only more eco-friendly,
but also maintain the
quality of our food.
We reported our EEO-1 data.
The report includes our
entire workforce composition
broken down by gender and
ethnicity. Our goal is for our
demographics to reflect the
communities we serve and
to continue evaluating our
numbers to see where there
are opportunities to develop
minority groups.
Preserving Resources
Through
Recycling
Recycling
trees saved
278,636
ELECTRICITY
SAVED
24.3M
kW-HR
waTER saved
102.2M
GALLONS
GHG EMMISSIONS
saved
52,526
MT CO2E
Source: Waste Management
BOARD OF
Directors*
GREGORY N. MOORE
Chairman of the Board, Texas Roadhouse, Inc.
Former Senior Vice President and Controller
Yum! Brands, Inc.
Gerald l. Morgan
CEO
Texas Roadhouse, Inc.
Jane Grote Abell
Executive Chairwoman and Chief Purpose Officer
Donatos Pizza
Michael A. Crawford
Chairman, President, and CEO
Hall of Fame Resort & Entertainment Co.
DONNA E. Epps
Former Partner
Deloitte LLP
Wayne L. Jones
Former CEO
Anthony’s Coal Fired Pizza
CURTIS A. WARFIELD
President and CEO
Windham Advisors LLC
KATHLEEN M. WIDMER
Former Group President of
North America and Latin America
Kenvue Inc.
JAMES R. ZARLEY
Former Chairman and CEO
Conversant, Inc.
Shareholder
Information
SUPPORT CENTER
(Corporate Office)
6040 Dutchmans Lane, Louisville, KY 40205
(800) TEX-ROAD or (800) 839-7623
ANNUAL MEETING
Thursday, May 16, 2024 – 9:00 am EDT
Texas Roadhouse Support Center
6040 Dutchmans Lane
Louisville, KY 40205
TRANSFER AGENT
Computershare
P.O. Box 43078, Providence RI 02940-3078
Phone (877) 581-5548
FINANCIAL INQUIRIES
For additional financial documents and information,
please visit our website at texasroadhouse.com. Please
contact us by phone at (502) 426-9984 or by sending us
an email to investment@texasroadhouse.com
INDEPENDENT AUDITORS
KPMG LLP
400 W. Market Street, Suite 2400
Louisville, KY 40202
Phone (502) 587-0535
MEDIA INQUIRIES
For all media requests, please contact
Travis Doster at (502) 638-5457
STOCK LISTING
Texas Roadhouse, Inc. Common Stock is listed on the
NASDAQ Stock Exchange under the symbol TXRH
*As of March 1, 2024
Restaurant
Locations
as of December 26, 2023
as of December 26, 2023
Domestic
638
International
48
Bubba’s 33
45
jaggers
10
BRAD APGAR
Texas Roadhouse
Managing Partner of the year
Rob Auw
bubba’s 33
Managing Partner of the year
Daniel Rivera
MEAT CUTTER of the year
Brooke jackson
Service Manager of the year
izzy lopez medina
KITCHen Manager of the year
Steve Zero
Roadie of the year
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All pages in this Annual Report are recyclable.
Please place in a recycling bin after use.
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