UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant  ☒                 Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material under Rule 14a-12

DENNY’S CORPORATION

(Name of registrant as specified in its charter)

 

(Name of person(s) filing proxy statement, if other than the registrant)

Payment of Filing Fee (Check the appropriate box):

☒		No fee required.
☐		Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
		(1)		Title of each class of securities to which transaction applies:
		(2)		Aggregate number of securities to which transaction applies:
		(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
		(4)		Proposed maximum aggregate value of transaction:
		(5)		Total fee paid:
☐		Fee paid previously with preliminary materials.
☐		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
		(1)		Amount Previously Paid:
		(2)		Form, Schedule or Registration Statement No.:
		(3)		Filing Party:
		(4)		Date Filed:

 

 

 

NOTICE OF MEETING

Spartanburg, SC

April 9, 2021

 

DATE & TIME May 19, 2021 11:00 a.m. Eastern Time		PLACE Virtual Meeting (see below)		RECORD DATE March 23, 2021		ADMISSION To participate and vote at the meeting (see instructions below)

The Annual Meeting of Stockholders of Denny’s Corporation will be held virtually on Wednesday, May 19, 2021 at 11:00 a.m., Eastern Time, for the following purposes as described in the accompanying Proxy Statement:

 

 

		This year’s annual meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. You will be able to participate in the annual meeting online, vote your shares electronically and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/DENN2021. Because the annual meeting is virtual and being conducted via live webcast, stockholders will not be able to attend the annual meeting in person. Details regarding how to participate in the meeting online and the business to be conducted at the annual meeting are more fully described in the accompanying proxy statement.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE

STOCKHOLDER MEETING TO BE HELD ON MAY 19, 2021

The proxy statement and the 2020 Annual Report of Denny’s Corporation are available at http://materials.proxyvote.com/24869P.

YOUR VOTE IS IMPORTANT

Only holders of record of Denny’s Corporation common stock at the close of business on March 23, 2021 will be entitled to notice of, and to vote at, the annual meeting.

We are pleased to provide access to our proxy materials over the Internet under the U.S. Securities and Exchange Commission’s “notice and access” rules. As a result, a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy materials, including this proxy statement and our 2020 Annual Report, is being mailed to stockholders on or about April 9, 2021. The Notice also provides instructions on how stockholders can receive paper copies of our proxy materials as well as instructions on how to vote over the Internet, by telephone or by mail.

Whether or not you attend the meeting online, it is important to us that your shares be represented and voted at the meeting. I urge you to sign, date and return the enclosed proxy card or vote via telephone or the Internet as directed on the proxy card at your earliest convenience.

By order of the Board of Directors,

 

Gail Sharps Myers

Executive Vice President, Chief Legal Officer,

Chief People Officer and

Secretary

 

 

PROXY STATEMENT

April 9, 2021

GENERAL

Introduction

The Annual Meeting of Stockholders of Denny’s Corporation, a Delaware corporation, will be held virtually on Wednesday, May 19, 2021, at 11:00 a.m., Eastern Time (the “Annual Meeting”), for the purposes set forth in the accompanying Notice of Meeting. This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Denny’s Corporation (the “Board”) to be used at the upcoming Annual Meeting. The information provided herein concerns not only Denny’s Corporation, but also Denny’s, Inc., a subsidiary which Denny’s Corporation wholly owns. Substantially all operations of Denny’s Corporation are currently conducted through Denny’s, Inc. Because the Annual Meeting is virtual and being held via live webcast, stockholders will not be able to attend the Annual Meeting in person but may participate by joining the live webcast as further described below.

Stockholder Voting

You may vote at the Annual Meeting either by proxy or personally at the Annual Meeting. Only holders of record of common stock of Denny’s Corporation, par value $0.01 per share (the “Common Stock”), as of the close of business on March 23, 2021 (the “Record Date”) will be entitled to notice of, and to vote at, the Annual Meeting. This Proxy Statement is first being made available to each such stockholder beginning on or about April  9, 2021.

Voting by Proxy

To vote by proxy, you must either properly execute and return (prior to the Annual Meeting) the proxy card or follow the instructions set forth in the enclosed proxy card to vote by phone or on the Internet. Where you have appropriately specified how your proxy is to be voted, it will be voted accordingly. If no specifications are made, your proxy will be voted (i) in favor of the nine (9) nominees to the Board; (ii) in favor of the selection of KPMG LLP as the independent registered public accounting firm of Denny’s Corporation and its subsidiaries (collectively, the “Company”) for the fiscal year ending December 29, 2021; (iii) in favor of the non-binding advisory resolution to approve the compensation of the Company’s named executive officers, as described herein; and (iv) in favor of the resolution to approve the Denny’s Corporation 2021 Omnibus Incentive Plan. The Company does not know of any matter that is not referred to herein to be presented for action at the Annual Meeting. If any other matter of business is brought before the Annual Meeting, the proxy holders may vote the proxies at their discretion.

If you execute a proxy, you may revoke it at any time before it is exercised by delivering a written notice to Gail Sharps Myers, Executive Vice President, Chief Legal Officer, Chief People Officer and Secretary of Denny’s Corporation prior to the date of the Annual Meeting at Denny’s Corporation’s corporate offices, 203 East Main Street, Spartanburg, South Carolina 29319, by executing and delivering a later-dated proxy, or by participating in the virtual meeting and voting online. If you vote by telephone or by accessing the Internet voting website (which is separate from the meeting website described further below), you may also revoke your proxy by re-voting using the same procedure no later than 11:59 p.m., Eastern Time, on Tuesday, May 18, 2021.

Voting at the Meeting

Many of our stockholders hold their shares through stockbrokers, banks, or other nominees, rather than directly in their own names. If your shares are registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company, you are a stockholder of record. As a stockholder of record, you have the right to grant your voting proxy directly to the Company and vote your shares by proxy in the manner described above, or you may personally vote your shares at the Annual Meeting. To participate and vote personally at the meeting, visit www.virtualshareholdermeeting.com/DENN2021, using the 16-digit control number on the Notice of Internet Availability of Proxy Materials (the “Notice”) or proxy card. Even if you plan to participate in the meeting, we recommend that you vote in advance by proxy, in case you later change your mind and determine not to participate in the meeting.

If your shares are held in a stock brokerage account or by a bank or other nominee, you are the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker or other nominee, who is considered to be the stockholder of record. As the beneficial owner, you have the right to tell your nominee how to vote, and you are also invited to attend the Annual Meeting online. However, since you are not the stockholder of record, you may not vote your shares at the Annual Meeting online unless you obtain a legal proxy from your nominee authorizing you to do so. Your nominee has sent you instructions on how to direct the nominee’s vote. You may vote by following those instructions and the instructions in the Notice.

 

		1

General

Stockholder Voting

 

Voting Requirements

At the Annual Meeting, holders of Common Stock will have one vote per share and a quorum, consisting of a majority of the outstanding shares of Common Stock as of the Record Date, represented in person or by proxy, will be required for the transaction of business by stockholders. A quorum being present, directors will be elected and the other actions proposed in the accompanying Notice of Meeting will be decided by a majority of votes cast on the matter. Abstentions and broker non-votes will be counted for purposes of determining whether a quorum has been reached, but will not be counted in determining the number of shares voted “for” or “against” any director-nominee or on any other proposal, and therefore will not affect the outcome of any proposal. As of the close of business on the Record Date, 64,144,845 shares of Common Stock were issued and outstanding and entitled to be voted at the Annual Meeting.

Participating in the Annual Meeting

This year’s Annual Meeting will be a completely virtual meeting of stockholders and will be webcast live over the Internet. Please go to www.virtualshareholdermeeting.com/DENN2021 for instructions on how to participate in the Annual Meeting. Any stockholder may participate and listen live to the webcast of the Annual Meeting over the Internet at such site. Stockholders as of the Record Date may vote and submit questions either in advance of or while participating in the Annual Meeting via the Internet by using the 16-digit control number included in the Notice or proxy card that accompanied these proxy materials. The webcast starts at 11:00 a.m., Eastern Time. We encourage you to access the meeting prior to the start time. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting log-in page.

Why a Virtual-Only Meeting?

Denny’s has conducted virtual-only annual stockholder meetings since 2016 and will do so again in 2021. In addition to promoting the health and safety of our employees, stockholders and their families during the ongoing COVID-19 pandemic, the decision to continue to conduct virtual-only annual stockholder meetings is driven by a number of factors discussed below.

Denny’s ownership is closely held. Currently approximately 70% of Denny’s outstanding common stock is held by 20 institutional stockholders, and approximately 80% is held by 40 institutional stockholders. We maintain an active dialogue with our institutional stockholders particularly following our year-end earnings release in February of each year. Over the last five years that we conducted meetings with the traditional meeting format, only once did any of our top 40 stockholders attend our annual meeting. Conducting the annual meeting virtually increases the opportunity for all stockholders to participate and communicate their views to a much wider audience.

Minimal stockholder attendance when we utilized the traditional meeting format. Over the last five years that we conducted traditional annual meetings, we had only three retail stockholders (aside from employees and directors) who regularly attended our annual stockholders meetings. Our total stockholder attendance from 2011 to 2015 (aside from employees and directors) dwindled from eight to three. Our regular attendees have generally continued to participate in the virtual-only meetings, making comments and/or asking questions through the virtual meeting format provided.

A virtual-only meeting format offers significant time and cost savings to both the Company and its investors. Since our stock ownership is mainly held by large institutional investors, with only routine matters typically being addressed at the meeting, virtual-only meetings offer significant time and cost savings to both the Company and its investors. Organizing and conducting a traditional stockholder meeting, attended by only a handful of people, requires the efforts of approximately 15-20 additional employees and contractors beyond those who now support our Board and virtual meetings. In addition, holding the meeting virtually allows us to make much more efficient use of the time of our independent directors, who are in our offices for a limited time for a related meeting of our Board of Directors.

Virtual meetings improve participation. Without the added cost or planning involved in attending in-person stockholder meetings, we believe virtual-only meetings offer the potential for increased overall stockholder participation. Virtual meetings give stockholders more options to pose their questions to management. Stockholders can submit questions in advance in order to get a better-formulated response, or ask tough questions anonymously that they would be hesitant to ask face-to-face. Additionally, while most of our stockholders are based in the United States, virtual meetings are especially useful to investors that are traveling abroad or based in another country. Also with a traditional meeting format, stockholders would be required to attend in person to present a submitted stockholder proposal; with a virtual-only meeting, this is done virtually, thus saving the stockholder the cost, time and expense of travel to attend the meeting in person.

 

Denny’s 2021 Proxy Statement		2

General

Why a Virtual-Only Meeting?

 

Stockholder rights are not affected. We follow a set of Meeting Rules and Procedures which are posted on the virtual meeting website and afford the same treatment to all participating stockholders. Additionally, we use software that verifies the identity of each participating stockholder and ensures during the question and answer portion of the meeting that they are granted the same rights they would have at an in-person meeting. In the event stockholders representing a substantial holding communicate a desire for in-person meetings, we will consider a change in our virtual-only meeting practice.

Given the above listed factors, we feel a virtual-only meeting is the right choice for Denny’s and its stockholders at this time.

Equity Security Ownership

Principal Stockholders

The following table sets forth the beneficial ownership of Common Stock by each stockholder known by the Company as of March 23, 2021, unless otherwise indicated, to own more than 5% of the outstanding shares of Common Stock. As of March 23, 2021, 64,144,845 shares of the Common Stock were issued and outstanding and entitled to be voted at the Annual Meeting.

 

Name and Address		Amount and Nature of Beneficial Ownership				Percentage of Common Stock
Wells Fargo & Company (and related entities) 420 Montgomery Street San Francisco, CA 94163			7,024,351	(1)			11.0	%
Franklin Mutual Advisers, LLC (and related entities) 101 John F. Kennedy Parkway Short Hills, NJ 07078-2789			6,816,174	(2)			10.6	%
BlackRock, Inc. (and related entities) 55 East 52nd Street New York, NY 10055			5,007,777	(3)			7.8	%
Wellington Management Group LLP (and related entities) 280 Congress Street Boston, MA 02210			4,219,446	(4)			6.6	%
T. Rowe Price Associates, Inc. (and related entities) 100 E. Pratt Street Baltimore, MD 21202			3,381,132	(5)			5.3	%
The Vanguard Group (and related entities) 1000 Vanguard Blvd., Malvern, PA 19355			3,200,692	(6)			5.0	%

 

(1)

Based upon the Schedule 13G/A filed with the Securities and Exchange Commission (the “SEC”) on February 12, 2021, Wells Fargo & Company, a parent holding company, is the beneficial owner of 7,024,351 shares, has sole voting power and sole investment power with respect to 141,923 shares, shared voting power with respect to 1,412,314 shares, and shared investment power with respect to 6,882,428 shares. Aggregate beneficial ownership reported by Wells Fargo & Company is on a consolidated basis and includes beneficial ownership of its subsidiaries Wells Fargo Clearing Services, LLC, Wells Capital Management Incorporated, Wells Fargo Funds Management, LLC, Wells Fargo Bank, National Association, and Wells Fargo Advisors Financial Network, LLC.

 

(2)

Based upon the Schedule 13G filed with the SEC on March 10, 2021, the shares listed are beneficially owned by one or more open-end investment companies or other managed accounts that are investment management clients of Franklin Mutual Advisers, LLC (“FMA”), an indirect wholly owned subsidiary of Franklin Resources, Inc. (“FRI”). When an investment management contract (including a sub-advisory agreement) delegates to FMA investment discretion or voting power over the securities held in the investment advisory accounts that are subject to that agreement, FRI treats FMA as having sole investment discretion or voting authority, as the case may be, unless the agreement specifies otherwise. Accordingly, FMA reports on Schedule 13G that it has sole investment discretion and voting authority over the securities covered by any such investment management agreement and is therefore deemed to be the beneficial owner of the shares listed.

 

		3

General

Equity Security Ownership

 

(3)

Based upon the Schedule 13G/A filed with the SEC on January 29, 2021, BlackRock, Inc., as a parent holding company, is the beneficial owner of 5,007,777 shares and has sole voting power with respect to 4,826,609 shares and sole investment power with respect to 5,007,777 shares. Aggregate beneficial ownership reported by BlackRock, Inc. is on a consolidated basis and includes beneficial ownership of its subsidiaries Blackrock (Netherlands) B.V., BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Limited, Blackrock Japan Co., Limited, Blackrock (Luxemborg) S.A., BlackRock Life Limited, BlackRock Fund Managers Limited and BlackRock Investment Management, LLC.

 

(4)

Based upon the Schedule 13G filed with the SEC on February 3, 2021, Wellington Management Group, LLP, as a parent holding company along with Wellington Group Holdings LLP and Wellington Investment Advisors Holdings LLP are the beneficial owners of 4,219,446 shares and have shared voting power with respect to 3,754,812 shares and shared investment power with respect to 4,219,446 shares. Wellington Management Company LP, an investment adviser, is deemed to be the beneficial owner of 3,517,679 shares and has shared voting power with respect to 3,296,764 shares and shared investment power respect to 3,517,679 shares.

 

(5)	Based upon the Schedule 13G/A filed with the SEC on February 16, 2021, T. Rowe Price Associates, Inc., an investment adviser, is the beneficial owner of 3,381,132 shares and has sole voting power with respect to 802,592 shares and sole investment power with respect to 3,381,132 shares.

 

(6)

Based upon the Schedule 13G filed with the SEC on February 10, 2021, The Vanguard Group, Inc., as an investment adviser and parent holding company, is the beneficial owner of 3,200,692 shares and has shared voting power with respect to 121,406 shares, sole investment power with respect to 3,030,598 shares and shared investment power with respect to 170,094 shares. Aggregate beneficial ownership reported by The Vanguard Group, Inc. is on a consolidated basis and includes beneficial ownership of its subsidiaries Vanguard Fiduciary Trust Company, Vanguard Investments Australia, Ltd., Vanguard Asset Management, Limited, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Canada Inc, Vanguard Investments Hong Kong Limited, and Vanguard Investments UK, Limited.

Management

The following table sets forth, as of March 23, 2021, the beneficial ownership of Common Stock by: (i) each current member of the Board, (ii) each director nominee of Denny’s Corporation to the Board, (iii) each named executive officer included in the 2020 Summary Compensation Table elsewhere in this Proxy Statement, and (iv) all current directors and executive officers of Denny’s Corporation as a group. Except as otherwise noted, the persons named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them.

 

Name		Amount and Nature of Beneficial Ownership (1)				Percentage of Common Stock
Bernadette S. Aulestia			25,651					*
Olu Beck			-					*
Gregg R. Dedrick			116,578					*
José M. Gutiérrez			103,621					*
Brenda J. Lauderback			170,075					*
Robert E. Marks			294,483					*
John C. Miller			1,275,118				2.0	%
Donald C. Robinson			155,799					*
Laysha Ward			126,086					*
F. Mark Wolfinger			806,648				1.3	%
Robert P. Verostek			57,903	(2)
Christopher D. Bode			41,117					*
John W. Dillon			71,810					*
Stephen C. Dunn			112,373					*
All current directors and executive officers as a group (16 persons)			3,488,567				5.3	%

 

*	Less than 1%.

 

(1)

The Common Stock listed as beneficially owned by the following individuals includes shares of Common Stock which such individuals have the vested right to acquire (as of March 23, 2021 or within 60 days thereafter) through the conversion of either restricted stock units (“RSUs”), deferred stock units (“DSUs”) (on a designated date or upon termination of service as a director of Denny’s Corporation), or performance share units (“PSUs”) deferred pursuant to the Denny’s, Inc. Deferred Compensation Plan, as Amended and Restated effective March 1, 2017 (the

 

Denny’s 2021 Proxy Statement		4

General

Equity Security Ownership

 

“Deferred Compensation Plan”) (on a designated date or upon termination as an employee of Denny’s): (i) Ms. Aulestia (25,651 shares), (ii) Mr. Dedrick (39,310 shares), (iii) Mr. Dillon (1,171 shares), (iv) Mr. Dunn (46,972 shares), (v) Mr. Gutiérrez (79,244 shares), (vi) Ms. Lauderback (170,075 shares), (vii) Mr. Marks (192,930 shares), (viii) Mr. Miller (564,599 shares), (ix) Mr. Robinson (150,141 shares), (x) Mr. Verostek (32,065 shares), (xi) Ms. Ward (102,547 shares), and (xii) all current directors and executive officers as a group (1,430,347 shares).

 

(2)	Mr. Verostek has shared voting and investment power with respect to 14,000 of the shares shown as beneficially owned by him.

Equity Compensation Plan Information

The following table sets forth information as of December 30, 2020 with respect to compensation plans of the Company under which equity securities of Denny’s Corporation are authorized for issuance.

 

Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights				Weighted-average exercise price of outstanding options, warrants and rights (2)				Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders			4,088,681	(1)		$	3.89				2,012,399	(3)
Equity compensation plans not approved by security holders			-			$	0.00				704,166	(4)
Total			4,088,681			$	3.89				2,716,565

 

(1)	Includes shares issuable in connection with our outstanding performance share awards, restricted stock units awards and deferred stock units.

 

(2)	Includes the weighted-average exercise price of stock options only.

 

(3)	Includes shares of Common Stock available for issuance as awards of stock options, restricted stock, restricted stock units, deferred stock units and performance awards under the Denny’s Corporation 2017 Omnibus Incentive Plan.

 

(4)	Includes shares of Common Stock available for issuance as awards of stock options and restricted stock units outside of the Denny’s Incentive Plans in accordance with Nasdaq Listing Rule 5635(c)(4).

 

		5

ELECTION OF DIRECTORS

Nominees for Election as Directors of Denny’s Corporation

As permitted under the By-laws of Denny’s Corporation (the “By-laws”), the Board has set nine (9) as the number of directors, as of May 19, 2021, to constitute the Board. Accordingly, it is intended that proxies in the accompanying form will be voted at the Annual Meeting for the election of nine (9) nominees to the Board. These nominees are: Bernadette S. Aulestia, Olu Beck, Gregg R. Dedrick, José M. Gutiérrez, Brenda J. Lauderback, John C. Miller, Donald C. Robinson, Laysha Ward, and F. Mark Wolfinger, each of whom has consented to serve and be named in this Proxy Statement and will serve as a director, if elected, until the 2022 Annual Meeting of Stockholders or until his or her successor shall be elected and shall qualify, except as otherwise provided in Denny’s Corporation’s Restated Certificate of Incorporation, as amended (the “Restated Certificate of Incorporation”), and the By-laws. Each nominee, with the exception of Ms. Beck, currently serves as a director. Robert E. Marks, currently a director, will not stand for re-election.

If for any reason any nominee named above is not a candidate when the election occurs, it is intended that proxies in the accompanying form will be voted for the election of the other nominees named above and may be voted for any substitute nominee or, in lieu thereof, the Board may reduce the number of directors in accordance with the Restated Certificate of Incorporation and the By-laws.

Business Experience/Director Qualifications

The name, age, present principal occupation or employment, directorships and the material occupations, positions, offices or employments for at least the past five years, of each current director (with the exception of Mr. Marks who is not standing for reelection) and each director nominee of Denny’s Corporation are set forth below. Unless otherwise indicated, each such person has held the occupation listed opposite his or her name for at least the past five years.

 

Bernadette S. Aulestia Director Since 2018 Age 48		Occupation: Former President, Global Distribution, Home Box Office, Inc., the premium television programming subsidiary of WarnerMedia (2015-2019); Executive Vice President, Domestic Network & Digital Distribution, HBO, Inc. (2013-2015); Senior Vice President, Domestic Network & Digital Distribution, HBO, Inc. (2009-2013).   Qualifications: Ms. Aulestia’s multiple executive leadership positions during her 22 year career with Home Box Office, Inc. provide our Board with senior leadership experience in the areas of strategic planning, operations, distribution, international and the development of strategic marketing plans for the Hispanic, African-American, and Asian consumer.   Other Public Company Boards: Current - Nexstar Media Group, Inc.
Olu Beck Director Nominee Age 54		Occupation: Founder and Chief Executive Officer of The Beck Group NJ, a boutique strategic and management consulting firm (January 2013 - Current); Chief Executive Officer, Wholesome Sweeteners, Inc., a supplier of natural and organic sweeteners and snacks (January 2016-2018); Head of Global and US Marketing (Shopper) & Health and Wellness for Johnson and Johnson, a developer and manufacturer of consumer and healthcare products (2010 - 2012); Prior to Johnson and Johnson, Ms. Beck served in various executive leadership roles in finance and sales at Mars Incorporated, a manufacturer of confectionery, pet food, and food products, from 1989-2009, including serving as Chief Financial Officer of Uncle Ben’s Rice.   Qualifications: Ms. Beck has more than 25 years of experience in portfolio business management and general management, including direct experience in transformational and strategic growth - both organic and through mergers and acquisition. She brings a diversified experience base in finance, sales and marketing with global expertise from senior leadership roles managing teams in Europe, the Americas and Asia Pacific. In 2017 and 2018, she was awarded the title, Top 25 Most Influential Women CEO’s of the Mid-Market in the USA by CEO Connection. Ms. Beck has experience on private and public boards with insights into leading practices in executive compensation, corporate governance and audit.   Other Public Company Boards: Current - Freshpet, Inc.

 

Denny’s 2021 Proxy Statement		6

Election of Directors

Business Experience/Director Qualifications

 

Gregg R. Dedrick Director Since 2010 Age 62		Occupation: Co-founder of David Novak Leadership (formerly OGoLead), an online leadership development company (February 2018-present); Co-founder of Whole Strategies, an organizational consulting firm (2009-2013); Former Executive Vice President of Yum Brands, Inc., an operator and franchisor of fast food restaurants (2008-2009); President and Chief Concept Officer of KFC, a chicken restaurant chain (2003-2008).   Qualifications: Mr. Dedrick provides our Board with nearly 30 years of senior leadership experience in restaurant company general management, operations and organizational resource planning for corporate staff functions in franchised-based consumer and restaurant systems. Mr. Dedrick is a National Association of Corporate Directors (“NACD”) Board Leadership Fellow.
José M. Gutiérrez Director Since 2013 Age 59		Occupation: Retired; Senior Executive Vice President, Executive Operations, AT&T Services, Inc. (2014-2016); President of AT&T Wholesale Solutions (2012-2014), a unit of AT&T, Inc. focused on wholesale sales of communication products and services; President and Chief Executive Officer of AT&T Advertising Solutions (2010-2012), a subsidiary of AT&T, Inc., devoted to publishing and sales of Yellow and White Pages directory advertising.   Qualifications: Mr. Gutiérrez, a telecom executive with nearly 25 years of experience leading a range of AT&T business units during his tenure with the company, provides our Board with senior leadership experience in providing consumer-facing telecommunications solutions, including direct experience in investor relations, and mergers and acquisitions. Before joining AT&T, Mr. Gutiérrez worked as a licensed CPA and strategy consultant with KPMG. Mr. Gutiérrez is an NACD Board Leadership Fellow.   Other Public Company Boards: Current - Adient plc; Prior - Dr. Pepper Snapple Group, Inc.
Brenda J. Lauderback Director Since 2005 Age 70		Occupation: Retired; President of the Wholesale and Retail Group of Nine West Group, Inc., a footwear manufacturer and distributor (1995-1998); President of Wholesale Division of U.S. Shoe Corporation, a footwear manufacturer and distributor (1993-1995); Vice President and General Merchandise Manager of Target Corporation (formerly Dayton Hudson) (1982-1993).   Qualifications: Ms. Lauderback provides our Board with over 25 years of leadership experience in merchandising, marketing, product development and design and manufacturing at prominent national wholesale and retail companies. Her collective years of experience on public company boards also provides our Board with significant insight into leading practices in executive compensation and corporate governance. Ms. Lauderback is an NACD Board Leadership Fellow and was named in 2017 to the NACD Directorship 100, the annual list that recognizes the leading corporate directors, corporate-governance experts, policymakers, and influencers who significantly impact boardroom practices and performance.   Other Public Company Boards: Current - Wolverine World Wide, Inc., Select Comfort Corporation; Prior - Big Lots, Inc.
John C. Miller Director Since 2011 Age 65		Occupation: Chief Executive Officer of Denny’s Corporation (February, 2020-present); Chief Executive Officer and President of Denny’s Corporation (2011-February, 2020); Chief Executive Officer and President of Taco Bueno Restaurants, Inc., an operator and franchisor of quick-service Mexican eateries (2005-2011); President of Romano’s Macaroni Grill (1997-2004).   Qualifications: As CEO, Mr. Miller provides our Board with experience and perspective for leading the strategic direction of the Company. He is an accomplished restaurant industry veteran with over 40 years of restaurant operations and management experience. Prior to joining Denny’s, Mr. Miller served as President of Taco Bueno and spent 17 years with Brinker International where he served as President of Romano’s Macaroni Grill and President of Brinker’s Mexican Concepts.

 

		7

Election of Directors

Business Experience/Director Qualifications

 

Donald C. Robinson Director Since 2008 Age 68		Occupation: Retired; President of Potcake Holdings, LLC, a hospitality consulting firm (2015-2016); President and Chief Operating Officer of All Aboard Florida-Operations, LLC, a high-speed, passenger rail company from Miami to Orlando, Florida (2013-2015); President of Baha Mar Resorts, Ltd., a resort development in Nassau, Bahamas (2006-2012); Group Managing Director, Hong Kong Disneyland (2001-2006); Senior Vice President, Walt Disney World Operations (1998-2001).   Qualifications: Mr. Robinson provides our Board with over 40 years of operational leadership experience with companies providing hospitality consulting, rail service, lodging, entertainment and food service, including a 33-year career with Disney. Mr. Robinson is an NACD Board Leadership Fellow.   Other Public Company Boards: Prior - SeaWorld Entertainment, Inc.
Laysha Ward Director Since 2010 Age 53		Occupation: Executive Vice President and Chief External Engagement Officer, Target Corporation (2017-present); Executive Vice President & Chief Corporate Social Responsibility Officer, Target Corporation (2014-2017); President, Community Relations, Target Corporation (2008-2014); Vice President, Community Relations, Target Corporation (2003-2007).   Qualifications: Ms. Ward provides our Board with over 25 years of retail industry leadership experience at Target Corporation in external stakeholder engagement, corporate responsibility, communications, diversity and inclusion, reputation and crisis management, demographic/segmentation customer relations, and strategic planning. In 2008, President George W. Bush nominated and the U.S. Senate confirmed Ms. Ward to serve on the board of directors of the Corporation for National and Community Service (CNCS), the nation’s largest grant maker for volunteerism and service. Her term continued through the Obama Adminstration. Ms. Ward is an NACD Board Leadership Fellow.   Other Public Company Boards: Current - United Airlines Holdings, Inc.
F. Mark Wolfinger Director Since 2011 Age 65		Occupation: President of Denny’s Corporation (February, 2020-present); Executive Vice President, Chief Administrative Officer and Chief Financial Officer of Denny’s Corporation (2008-February, 2020); Executive Vice President, Growth Initiatives and Chief Financial Officer of Denny’s Corporation (2006-2008); Chief Financial Officer of Denny’s Corporation (2005-2006).   Qualifications: Mr. Wolfinger provides our Board with nearly 40 years of strategic and financial leadership experience in the retail and restaurant industries. Previous roles include Chief Financial Officer of Danka Business Systems and senior financial positions with Hollywood Entertainment, Metromedia Restaurant Group (operators of Bennigans, Ponderosa Steakhouse, and Steak & Ale), and the Grand Metropolitan PLC.

Director Term Limits and Retirement Age

We do not believe that arbitrary limits on the number of consecutive terms a director may serve are appropriate in light of the substantial benefits that result from a continued focus on the Company’s business, strategy and industry over a significant period of time. We do value fresh perspectives and ideas which enhance and benefit our brand’s competitive performance, and therefore we seek to have a mix of director short-term, mid-term and long-term tenures on our Board, as demonstrated in the bar chart below which reflects the Board’s projected composition following the election of directors at the Annual Meeting. Within these parameters, each individual’s performance and continued contribution is assessed by the Corporate Governance and Nominating Committee in connection with the annual renomination determination.

 

Denny’s 2021 Proxy Statement		8

Election of Directors

Director Term Limits and Retirement Age

 

Under the Company’s Corporate Governance Policy, the standard retirement age for the Company’s directors is 75. It is the general policy of the Corporate Governance and Nominating Committee not to nominate candidates for re-election at any annual stockholder meeting to be held after he or she has attained the applicable retirement age. The Board, however, may waive the mandatory retirement age for a specific director in its sole discretion.

Board Tenure

 

 

Corporate Governance

The Board has determined that, except as noted immediately below, each current member of the Board is independent under the Nasdaq listing standards and the rules and regulations promulgated by the SEC. Messrs. Miller and Wolfinger, as executive officers of the Company, are not deemed to be independent.

There are three standing committees of the Board: the Audit and Finance Committee, the Compensation and Incentives Committee, and the Corporate Governance and Nominating Committee. Each committee consists solely of independent directors as defined by Nasdaq listing standards applicable to each committee. The Audit and Finance Committee currently consists of Messrs. Dedrick, Gutiérrez, Marks and Robinson and Ms. Lauderback, with Mr. Gutiérrez serving as chair. The Compensation and Incentives Committee is currently comprised of Mss. Lauderback and Ward and Messrs. Dedrick and Gutiérrez, with Mr. Dedrick serving as chair. Mss. Aulestia, Lauderback and Ward and Mr. Robinson currently make up the Corporate Governance and Nominating Committee, with Mr. Robinson serving as chair. In conjunction with the election of directors at the Annual Meeting, the Board will make committee assignments for the upcoming year. For a description of our code of ethics, see the “Code of Ethics” section elsewhere in this Proxy Statement.

Set forth below is information regarding each committee of the Board.

Audit and Finance Committee

Summary of Responsibilities. The Audit and Finance Committee (the “Audit Committee”), which held ten meetings in 2020, has been established by the Board to assist the Board in fulfilling its responsibilities toward stockholders, potential stockholders and the investment community to oversee the Company’s accounting and financial reporting processes and audits of the Company’s consolidated financial statements. The Audit Committee’s primary responsibilities include overseeing (i) the adequacy of the Company’s internal controls and the integrity of the Company’s accounting and financial information reported to the public, (ii) the qualification, independence and performance of the Company’s independent registered public accounting firm and its internal auditors, (iii) the appropriateness of the Company’s accounting policies, (iv) the Company’s compliance with legal and regulatory requirements, (v) the Company’s risk assessment and management practices including, but not limited to, the Company’s fraud risk assessment practices, cybersecurity and other information technology risks, and (vi) the Company’s finance activities, including but not limited the Company’s financial structure and strategy, hedging transactions, share repurchase policies and financing arrangements, while providing and maintaining an avenue of communication among the Audit Committee, the independent registered public accounting firm, internal auditors, the Company’s compliance officer, management and the Board. The Audit Committee has a written charter, which it reviews and assesses the adequacy of at least annually and amends and updates as needed. For a complete description of the Audit Committee’s powers, duties and responsibilities, see the charter of the Audit Committee available to stockholders on the Company’s website at www.dennys.com.

The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Each member of the Audit Committee meets the definition of independence for audit committee members set forth under Nasdaq listing standards and the rules and regulations promulgated by the SEC.

 

		9

Election of Directors

Corporate Governance

 

Audit Committee Financial Experts. The Board has determined that three Board members currently serving on the Audit Committee, José M. Gutiérrez, Robert E. Marks and Donald C. Robinson, are Audit Committee Financial Experts, as that term is defined by the SEC, based upon their respective business experience and educational backgrounds. Mr. Gutiérrez has more than 20 years of accounting, business and financial experience in investor relations, audit, mergers and acquisitions which required the analysis of financial statements that present a breadth and level of complexity of the same or greater complexity as that of the Company. Mr. Marks has experience analyzing and evaluating financial statements (of the same or greater complexity as the Company’s) during his more than 30 years of work in private equity investments, serving more than 15 different industries. Mr. Robinson during his 40-plus years of operational leadership experience has had responsibility for the preparation and oversight of financial statements (of the same or greater complexity as the Company’s) particularly in connection with his role with Disney operations in Hong Kong.

Audit Committee Report. The Audit Committee fulfilled its responsibilities under and remained in compliance with its charter during the fiscal year ended December 30, 2020.

 

•

The Audit Committee has reviewed and discussed the audited financial statements with management of the Company and with KPMG LLP (“KPMG”), the Company’s independent registered public accounting firm.

 

•

The Audit Committee has discussed with KPMG the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”), including Auditing Standard No. 1301, Communications with Audit Committees, and the SEC.

 

•

The Audit Committee has received the written disclosure and the letter from KPMG, required by applicable requirements of the PCAOB regarding KPMG’s communications with the Audit Committee concerning independence, and has discussed with KPMG its independence from the Company.

 

•

The Audit Committee reviewed and discussed with management progress on the Company’s enterprise risk management processes including the evaluation of identified risks and alignment of Company processes to manage the risks within the Company’s approved strategies.

 

•

Based on the review and discussions described above, the Audit Committee has 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 30, 2020 for filing with the SEC.

Audit and Finance Committee

José M. Gutiérrez, Chair

Gregg R. Dedrick

Brenda J. Lauderback

Robert E. Marks

Donald C. Robinson

Compensation and Incentives Committee

Summary of Responsibilities. The Compensation and Incentives Committee (the “Compensation Committee”), which held six meetings in 2020, is responsible for (i) overseeing the Company’s overall compensation program and philosophy, (ii) reviewing and approving the compensation of the Chief Executive Officer and senior management of the Company, (iii) administering the Company’s short- and long-term incentive plans and other stock or stock-based plans, (iv) overseeing the Company’s executive compensation disclosure and issuing the Compensation Committee’s report as required by the applicable rules and regulations governing the Company’s annual proxy statement, (v) reviewing and making recommendations to the Board regarding director compensation, (vi) overseeing the Company’s stock ownership guidelines, and (vii) overseeing the Company’s various benefit plans. The Compensation Committee has a written charter, which it reviews and assesses the adequacy of at least annually and amends and updates as needed. For a complete description of the Compensation Committee’s power, duties and responsibilities, see the charter of the Compensation Committee which may be found on the Company’s website at www.dennys.com.

Process for Determination of Executive and Director Compensation. Executive compensation is determined by the Compensation Committee pursuant to the authority granted to it by the Board. Director compensation is determined by the Board upon recommendation by the Compensation Committee. The Compensation Committee has engaged independent consultants (Pearl Meyer from September 2014 to December 2020, and FW Cook from January 2021 to present) and considered data and analysis prepared by these consultants regarding competitive pay practices among the Company’s peer group and the restaurant industry as a guide in determining the appropriate level of director and executive officer compensation. The Compensation Committee has assessed the independence of Pearl Meyer and FW Cook in their capacity as the compensation consultant to the Compensation Committee pursuant to SEC and Nasdaq rules and concluded that no conflict of interest exists that would prevent either of them from serving as an independent consultant to the Compensation Committee.

 

Denny’s 2021 Proxy Statement		10

Election of Directors

Corporate Governance

 

The Compensation Committee considered the recommendation of the Company’s Chief Executive Officer (the “CEO”) with respect to compensation levels of executive officers other than the CEO. When making compensation decisions, the Compensation Committee annually analyzes tally sheets prepared for each of the named executive officers (“NEOs”). These tally sheets were prepared by our human resources department and our compensation consultant. Each of these tally sheets presents the dollar amount of each component of the NEOs’ compensation, including current cash compensation (base salary and bonus), accumulated deferred compensation balances, outstanding equity awards, retirement benefits, perquisites and any other compensation. These tally sheets reflect the annual compensation for the NEOs (both target and actual), as well as the potential payments under selected performance, termination, and change-in-control scenarios.

The overall purpose of these tally sheets is to bring together, in one place, all of the elements of actual and potential future compensation of our NEOs, as well as information about wealth accumulation, so that the Compensation Committee may analyze both the individual elements of compensation (including the compensation mix) as well as the aggregate total amount of actual and projected compensation. For additional information regarding the process and procedures for determining executive and director compensation, see the “Executive Compensation – Compensation Discussion and Analysis” section elsewhere in this Proxy Statement.

Compensation Risk Assessment. For 2020, a group of senior management from various departments of the Company completed a process by which an assessment was made of the level and materiality of identified risks associated with the Company’s compensation practices and policies for its employees. This assessment was under the direction of the Compensation Committee and the findings were reviewed and discussed with the committee. Specifically, the Company’s incentive plans and compensation practices were evaluated in order to identify incentive factors utilized and the potential risks, applicable controls, and the risk mitigation practices in place with respect to such factors. Based on this assessment, the Compensation Committee determined that the risks arising from the Company’s compensation practices and policies are not reasonably likely to have a material adverse impact on the Company.

Compensation Committee Interlocks and Insider Participation. The following persons served as members of the Compensation Committee during the fiscal year ended December 30, 2020: Gregg R. Dedrick, José M. Gutiérrez, Brenda J. Lauderback and Laysha Ward. No member of the Compensation Committee was an employee or officer of the Company during 2020 or anytime prior thereto. During 2020, none of the members of the Compensation Committee had any relationship, directly or indirectly, with the Company requiring disclosure under Item 404 of Regulation S-K, and none of our executive officers served on the compensation committee (or equivalent) or the board of directors of another entity whose executive officers served on our Board or Compensation Committee.

Compensation Committee Report. The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis section of this Proxy Statement and based on this review and discussion, the Compensation Committee has recommended to the Board that the “Executive Compensation – Compensation Discussion and Analysis” section 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 30, 2020.

Compensation and Incentives Committee

Gregg R. Dedrick, Chair

José M. Gutiérrez

Brenda J. Lauderback

Laysha Ward

Corporate Governance and Nominating Committee

Summary of Responsibilities. The primary responsibilities of the Corporate Governance and Nominating Committee (the “Governance Committee”), which held five meetings in 2020, include (i) developing and recommending to the Board a set of corporate governance standards in the form of the Corporate Governance Policy for the Company, (ii) maintaining and monitoring compliance with the Corporate Governance Policy, (iii) monitoring the process of assessing the effectiveness of the Board and its committees, (iv) overseeing the Company’s insider trading policy, and (v) identifying individuals qualified to become Board members and recommending director nominees to the Board for election at the annual meeting of stockholders or when necessary to fill existing vacancies on the Board. Additionally, the Governance Committee is responsible for monitoring and safeguarding the independence of the Board, monitoring and overseeing senior management succession, overseeing director education, reviewing all related party transactions while monitoring compliance with the Company’s Related Party Transaction Policy and Procedures, monitoring and overseeing the Corporate Social Responsibility (“CSR”) program of the Company which includes receiving periodic reports regarding the Company’s CSR efforts and initiatives, monitoring and receiving periodic reports regarding the Company’s minority hiring and diversity promotional initiatives, monitoring and reviewing the overall adequacy of, and providing oversight with

 

		11

Election of Directors

Corporate Governance

 

respect to the Company’s Environmental, Social & Governance (ESG) efforts and initiatives. All members of the Governance Committee are independent within the meaning of the Nasdaq listing standards and the rules and regulations promulgated by the SEC. The Governance Committee has a written charter, which it reviews and assesses the adequacy of at least annually and amends and updates as needed. For a description of the Governance Committee’s powers, duties and responsibilities, see the charter of the Governance Committee which may be found on the Company’s website at www.dennys.com.

Corporate Governance Policy and Practice. The Board and management clearly recognize the importance of a firm commitment to key corporate governance standards. Consequently, it is the goal of the Board and management to develop and adhere to a set of standards that not only complies to the letter with all applicable regulatory guidance, but implements “best practices” of corporate governance.

The Company’s Corporate Governance Policy is posted on the Company’s website at www.dennys.com.

Director Nominations Policy and Process. The Governance Committee will consider director-nominees recommended by stockholders. A stockholder who wishes to recommend a person or persons to the Board for consideration as a nominee for election to the Board must send a written notice to the Governance Committee by mail addressed to the attention of the Secretary of Denny’s Corporation at the corporate address set forth above. The written notice must set forth (i) the name of each person whom the stockholder recommends be considered as a nominee, (ii) a business address and telephone number for each nominee (e-mail address is optional), and (iii) biographical information regarding each nominee, including the person’s employment and other relevant experience. To be considered by the Governance Committee, a stockholder director-nominee recommendation must be received no later than the 120^th calendar day before the first anniversary date of Denny’s Corporation’s proxy statement prepared in connection with the previous year’s annual meeting. The Governance Committee did not receive any stockholder director-nominee recommendations by December 10, 2020, the applicable deadline for the Annual Meeting.

In addition, in accordance with the By-laws, stockholders may directly nominate persons for election to the Board at an annual meeting. Such nominations must be sent by written notice to the Secretary of Denny’s Corporation at the corporate address set forth above and must comply with the applicable timeliness and information requirements of the By-laws. Please see the “Other Matters – 2022 Stockholder Proposals” section elsewhere in this Proxy Statement for more information.

The Governance Committee believes that a nominee recommended for a position on the Board must meet the following minimum qualifications:

 

—	he or she must be at least 21 years of age;

 

—	he or she must have experience in a position with a high degree of responsibility in a business or other organization;

 

—	he or she must be able to read and understand basic financial statements;

 

—	he or she must possess integrity and have high moral character;

 

—	he or she must be willing to apply sound, independent business judgment;

 

—	he or she must have sufficient time to devote to being a member of the Board; and

 

—	he or she must be fluent in the English language.

Annually, the Governance Committee will identify the areas of expertise or skill needed on the Board for the upcoming Board term. The Governance Committee will identify potential nominees for director from (i) the slate of current directors, (ii) referrals from professional search firms, typically in those instances when the committee identifies a needed skill or expertise not possessed by the current slate of directors, and (iii) recommendations from stockholders.

The Governance Committee will evaluate a potential nominee by considering whether the potential nominee meets the minimum qualifications identified by the committee, as well as considering the following factors:

 

—	whether the potential nominee has leadership, strategic, or policy setting experience in a complex organization, including any scientific, governmental, educational, or other non-profit organization;

 

—	whether the potential nominee has experience and expertise that is relevant to the Company’s business including any specialized business experience, technical expertise, or other specialized skills, and whether the potential nominee has knowledge regarding issues affecting the Company;

 

—	whether the potential nominee is highly accomplished in his or her respective field;

 

—	whether the potential nominee has high ethical character and a reputation for honesty, integrity, and sound business judgment;

 

Denny’s 2021 Proxy Statement		12

Election of Directors

Corporate Governance

 

—

whether the potential nominee is independent, as defined by Nasdaq or other applicable listing standards and SEC rules, whether he or she is free of any conflict of interest or the appearance of any conflict of interest, and whether he or she is willing and able to represent the interests of all Denny’s stockholders;

 

—	any factor affecting the ability or willingness of the potential nominee to devote sufficient time to the Board’s activities and to enhance his or her understanding of the Company’s business; and

 

—	how the potential nominee would contribute to diversity, with a view toward the needs of the Board.

The manner in which the Governance Committee evaluates a potential nominee will not differ based on whether the potential nominee is recommended by a stockholder.

Additionally, with respect to an incumbent director whom the Governance Committee is considering as a potential nominee for re-election, the Governance Committee will review and consider the incumbent director’s service during his or her term, including the number of meetings attended, level of participation, and overall contribution to the Company.

The Company paid fees to a professional search firm to help identify and evaluate potential nominees for director for 2021.

Board Diversity. The Governance Committee and the Board are committed to a diversified membership, with a particular emphasis on individuals who satisfy the factors outlined above and individuals with a wide variety of management, operating, and restaurant experience and skills, in addition to other attributes such as race, gender and national origin, as demonstrated in the circle charts below. The Governance Committee continually looks for opportunities to develop its diversity initiatives further.

 

 

Our Board Composition

 

		13

Election of Directors

Corporate Governance

 

Succession Planning. Our Board maintains a critical focus on the Company’s succession plans. The Governance Committee has been charged with monitoring and overseeing the process of planning for CEO, senior management, and Board member succession. Under our succession planning process, the Governance Committee identifies and periodically updates the qualities and characteristics it believes are necessary for an effective CEO and senior officers. With these principles in mind, the committee periodically reviews the development and progression of potential internal candidates against these standards. Additionally, under the Company’s CEO emergency succession plans, critical advance planning for contingencies, such as the departure, death, or disability of the CEO or other top executives is set forth so that, in the event of an untimely vacancy, the Company has in place an emergency succession plan to facilitate the transition to both interim and long-term leadership. Equally important is planning for director succession. The Governance Committee periodically reviews the skills, characteristics, attributes and experiences of Board members to assure that the Board possesses the appropriate level of skill, experience and ability necessary to lead and govern the Company effectively.

Board Leadership Structure and Risk Oversight

The Company separates the positions of CEO and Board Chair and has appointed an independent Board Chair. The Company believes having a separate CEO and Board Chair is an important part of its overall commitment to the highest standards of corporate governance and believes that it allows the Board to effectively develop and oversee its business strategy and monitor risk. The separate positions also allow the Board to freely perform its management oversight function. Additionally, each member of the Board, with the exception of Messrs. Miller and Wolfinger, is independent under the applicable standards. It is the Board’s policy to appoint a Lead Director during any time when the Board Chair position is not held by an independent director. The responsibilities of the Lead Director, when applicable, would include (i) regularly meeting (by phone or in person) with the CEO to discuss the financial and operational status of the Company, (ii) staying abreast of Company issues in greater depth than required of other Board members in order to assist, if necessary, during the period of transition of Company leadership, and (iii) leading periodic executive sessions of the independent Board members. Our Board has determined that its current structure, with separate CEO and Board Chair roles and an independent Lead Director, if necessary, is in the best interests of the Company and its stockholders at this time.

The Board has the ultimate responsibility for risk management. However, the Board has delegated the responsibility of risk assessment and risk management to the Audit Committee. Periodically, with the assistance of management, the Audit Committee undertakes an extensive Company-wide risk assessment. This extensive risk assessment identifies the main strategic, operational, compliance and financial risks the Company is facing based on its strategic objectives. The assessment also identifies the steps that management is or should be taking to address and mitigate exposure to such risks, and the Audit Committee will periodically receive reports from management regarding the steps that management is taking to address and mitigate such risks.

Board Meeting Information

During 2020, there were 11 meetings of the Board. Each director serving on the Board in 2020 attended at least 75% of the meetings of the Board (and, as applicable, committees thereof) during the year. At each meeting, the Board holds a regularly scheduled executive session at which only independent directors are present.

COVID-19 Weekly and Bi-weekly calls with management. Additionally, during 2020 the Board held weekly virtual calls (from March 2020 to June 2020) with management to receive Company performance updates and to discuss issues related to the COVID-19 pandemic. Beginning in July 2020, these calls were extended to occur on a bi-weekly basis.

Communications Between Security Holders and Board of Directors

Security holders may send written communications to the Board or any one or more of the individual members of the Board by directing such communication to Denny’s Corporation by mail in the care of the Secretary, at our principal executive offices set forth above, or by e-mail to gsharpsmyers@dennys.com. All written communications will be compiled by the Secretary and promptly submitted to the individual director(s) being addressed or to the Chair of the committee whose areas of responsibility includes the specific topic addressed by such communication, or in all other cases, to the Board Chair.

Stockholder Engagement

The Company recognizes the value of the views and input of its stockholders. The Company periodically reaches out to and engages with its stockholders on various topics, including corporate governance, compensation, performance, strategy and other matters. We believe that having regular engagement with our stockholders strengthens our relationships with stockholders and helps us to better understand stockholders’ views on our policies and practices and other matters of importance to our business.

 

Denny’s 2021 Proxy Statement		14

Election of Directors

Corporate Governance

 

Board Member Attendance at Annual Meetings of Stockholders

It is the policy of Denny’s Corporation that all of the members of the Board and all nominees for election to the Board at the annual meeting of stockholders attend such meeting except in cases of extraordinary circumstances. All of the directors attended the 2020 virtual annual meeting of stockholders.

Director Compensation

For a description of the compensation of directors, please see “Executive Compensation – 2020 Director Compensation” elsewhere in this Proxy Statement.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE NINE NOMINEES TO THE BOARD OF DIRECTORS OF DENNY’S CORPORATION.

 

		15

SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

As a result of the adoption of the Sarbanes-Oxley Act of 2002, and related regulations adopted by the SEC and by each national securities exchange, audit committees of public companies are formally charged with the responsibility for the appointment, compensation, retention and oversight of the independent registered public accounting firm that serves as the Company’s independent auditor. The Audit Committee takes this responsibility very seriously and for the fiscal year 2021, the Audit Committee has selected KPMG as the independent registered public accounting firm of the Company. This selection is submitted for ratification of and approval by the stockholders at the Annual Meeting. Representatives of KPMG are expected to attend the Annual Meeting. They will have an opportunity to make a statement, if they so desire, and to respond to appropriate questions. If the stockholders do not ratify this selection, other independent registered public accounting firms will be considered by the Audit Committee.

2020 and 2019 Audit Information

The following table presents fees for professional services rendered by KPMG for the audit of our annual consolidated financial statements and the audit of the Company’s internal control over financial reporting (“ICOFR”) for 2020 and 2019. In addition, the table presents fees billed for audit-related services, tax services, and all other services rendered by KPMG to the Company for 2020 and 2019.

 

		Year ended December 30, 2020				Year ended December 25, 2019
Audit Fees		$	1,120,000	(1)		$	1,025,000	(2)
Audit-Related Fees			47,000				62,000
Tax Fees			-				-
All Other Fees			-				-
Total Fees		$	1,167,000			$	1,087,000

 

(1)	Includes additional billing of $150,000 related to the comfort letter rendered in connection with the securities offering occurring in June 2020 and $150,000 related to additional audit effort associated with hedge dedesignation, impacts of the COVID-19 pandemic, and other matters.

 

(2)	Includes additional billing of $135,000 related to the 2019 audit. The billings primarily related to additional audit effort associated with refranchising, evaluation of deficiencies, critical audit matters and other matters.

In the above table, in accordance with applicable SEC rules:

 

•

“audit fees” are fees billed by the independent registered public accounting firm for professional services for the audit of the annual Consolidated Financial Statements included in the Company’s Form 10-K, audit of ICOFR, review of the Condensed Consolidated Financial Statements included in the Company’s Form 10-Qs, and for services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements, including comfort letters, consents, and registration statements;

 

•

“audit-related fees” are fees billed by the independent registered public accounting firm for assurance and related services that are reasonably related to the performance of the audit or review of the financial statements, and generally include fees for audits of the Company’s employee benefit plans and audit or attest services not required by statute or regulation;

 

•

“tax fees” are fees billed by the independent registered public accounting firm for professional services for tax compliance, tax advice, and tax planning; and

 

•

“all other fees” are fees billed by the independent registered public accounting firm for any services not included in the first three categories above.

The Audit Committee has considered and determined that the services for which audit-related and tax fees were billed were compatible with KPMG maintaining its independence.

Audit Committee’s Pre-approval Policies and Procedures

It is the policy of the Audit Committee to pre-approve all audit and permitted non-audit services proposed to be performed by the Company’s independent registered public accounting firm. The process for such pre-approval is typically as follows. Audit Committee pre-approval is sought at one of the Audit Committee’s regularly scheduled meetings following the presentation of information at such meeting detailing the particular services proposed to be performed. Additionally, the Chair of the Audit Committee has been delegated the authority by the Audit Committee to pre-approve, where necessary, such services requiring pre-approval in between regularly scheduled Audit Committee meetings. The Chair will report any such decisions at the Audit Committee’s next scheduled meeting. In 2020, the services described above were pre-approved by the Audit Committee pursuant to the policy of the Audit Committee, and none of such services were approved pursuant to the exception provided by Rule 2-01(c)(7)(i)(C) under Regulation S-X.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION AND APPROVAL OF THE SELECTION OF KPMG AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE COMPANY FOR THE 2021 FISCAL YEAR.

 

Denny’s 2021 Proxy Statement		16

ADVISORY VOTE ON EXECUTIVE COMPENSATION

As required by Section 14A of the Exchange Act, the Company provides stockholders with the opportunity to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement. This proposal, commonly referred to as a “say on pay” proposal, gives our stockholders the opportunity to express their views on the compensation of our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our compensation program.

As described in further detail in “Executive Compensation – Compensation Discussion and Analysis,” our compensation program is designed to attract, motivate and retain top-quality leadership talent while ensuring that their interests are aligned with the interests of our stockholders and that their efforts are focused on the Company’s key strategic objectives.

It is our firm belief that our executive compensation program, with its balance of annual cash incentives designed to reward the achievement of key performance goals set for the year and longer-term equity vehicles designed to reward executives for stock price performance over a longer term, compensates our executives for performance directly linked to stockholder value creation.

In addition, the Board has enacted a number of policies – including share ownership requirements, incentive clawbacks, the elimination of employment contracts and the elimination of tax gross-ups (except for certain limited gross-ups available to most salaried employees under the Company’s broad-based relocation policy) – which ensure that the Company’s practices are aligned with market-based best practices.

Stockholders are encouraged to read the “Compensation Discussion and Analysis” section of this Proxy Statement and the accompanying compensation tables and related narrative disclosure included in the “Executive Compensation” section of this Proxy Statement for more information regarding our compensation program.

We are asking stockholders to approve the compensation of our named executive officers as disclosed herein by adopting the following advisory resolution at the Annual Meeting:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this Proxy Statement for the 2021 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

Although this vote is non-binding, the Board and the Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RESOLUTION TO APPROVE THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO ITEM 402 OF REGULATION S-K, INCLUDING THE COMPENSATION DISCUSSION AND ANALYSIS, COMPENSATION TABLES AND NARRATIVE DISCUSSION.

 

		17

APPROVAL OF THE DENNY’S CORPORATION 2021 OMNIBUS INCENTIVE PLAN

On March 31, 2021, the Compensation and Incentives Committee (the “Compensation Committee”) of the Board recommended that our Board approve the Denny’s Corporation 2021 Omnibus Incentive Plan (the “2021 Plan”) and submit the 2021 Plan to a vote of our stockholders. On that same day, our Board approved the 2021 Plan, subject to stockholder approval, and directed that the 2021 Plan be submitted to our stockholders for their approval at our Annual Meeting. If approved by our stockholders, the 2021 Plan will become effective as of the date of approval.

The 2021 Plan is intended to serve as the successor to the Denny’s Corporation 2017 Omnibus Incentive Plan (the “Prior Plan”). As of February 28, 2021, there were approximately 4.37 million shares of our Common Stock subject to outstanding awards and 770,000 shares of our Common Stock reserved and available for future awards under the Prior Plan. As noted below, the aggregate number of shares of Common Stock that may be issued under the 2021 Plan is up to 4.4 million, which represents a net increase of approximately 3.63 million shares over the number of shares remaining available for future awards under the Prior Plan. If our stockholders approve the 2021 Plan, all future equity awards will be made from the 2021 Plan, and we will not grant any additional awards under the Prior Plan after the effective date of the 2021 Plan. If stockholders do not approve the 2021 Plan, then the Prior Plan will remain in effect for purposes of granting awards to eligible participants.

A summary of the 2021 Plan is set forth below. This summary is qualified in its entirety by the full text of the 2021 Plan, which is attached to this Proxy Statement as Appendix B.

Background and Purpose of the Proposal

Equity compensation has historically been a key element of our compensation program. The ability to grant equity and equity derivative awards is essential to our ability to attract and retain highly talented employees. Without the ability to grant such awards, we would be at a disadvantage against our competitors for recruiting and retaining key talent. As of February 28, 2021, only 772,376 shares of Common Stock remain available for issuance under the Prior Plan. FW Cook, the independent compensation consultant for the Compensation Committee, assisted in determining the requested number of shares to be authorized for issuance under the 2021 Plan, including by providing its view of leading proxy advisory firms’ policies on equity-based compensation plans. For more information, please refer to “Key Data Relating to Outstanding Equity Awards and Shares Available,” below. We adopted the 2021 Plan in order to have a share reserve over approximately the next four to five years which will allow us to continue to provide equity-based incentives to eligible plan participants who are selected to receive awards under the 2021 Plan.

Promotion of Sound Corporate Governance Practices

The 2021 Plan includes a number of features intended to protect the interests of our stockholders and further reinforce and promote alignment of interests between our employees, non-employee directors and other eligible award recipients with the interests of our stockholders. These features include, but are not limited to, the following:

 

•

Limitation on Awards to Non-Employee Directors. The 2021 Plan contains annual limits on the amount of awards that may be granted to non-employee directors.

 

•

No Discounted Stock Options or Stock Appreciation Rights. Stock options and stock appreciation rights (“SARs”) may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date.

 

•

Prohibition on Repricing; No Reload Options or SARs. The exercise price of a stock option or SAR may not be reduced, directly or indirectly, without the prior approval of stockholders, including by a cash repurchase of “underwater” awards. Reload grants of stock options and SARs are prohibited under the 2021 Plan.

 

•

No Liberal Share Recycling of Stock Options or SARs. Shares retained by or delivered to the Company to pay the exercise price or to satisfy tax withholding taxes in connection with the exercise of a stock options or SARs count against the number of shares remaining available under the 2021 Plan.

 

•

No Dividends on Unearned or Unvested Awards. Dividends or dividend equivalent rights will not be paid on unearned or unvested awards under the 2021 Plan. Stock options and SARs are not eligible for dividend equivalents.

 

•

Awards Subject to Clawback Policy. Awards under the 2021 Plan will be subject to any compensation recoupment policy that the Company may adopt from time to time.

 

•

No single-trigger acceleration, “liberal” change in control definition, or excise tax gross-ups. Under the 2021 Plan, we do not automatically accelerate vesting of awards in connection with a change in control of the Company. The 2021 Plan does not include a “liberal” change in control definition. We do not provide change in control excise tax gross-ups.

 

•

No Tax Gross-Ups. The 2021 Plan does not provide for any tax gross-ups.

 

•

No Liberal Change in Control Definition. The 2021 Plan defines change in control based on the consummation of the transaction rather than the announcement or stockholder approval of the transaction.

 

Denny’s 2021 Proxy Statement		18

Approval of the Denny’s Corporation 2021 Omnibus Incentive Plan

Key Data Relating to Outstanding Equity Awards and Shares Available

 

Key Data Relating to Outstanding Equity Awards and Shares Available

The following table includes information regarding outstanding equity awards and shares available for future awards under the Prior Plan as of February 28, 2021 (and without giving effect to approval of the 2021 Plan under this Proposal):

 

		Prior Plan (as of February 28, 2021)
Total shares underlying outstanding stock options and SARs			0
Weighted average exercise price of outstanding stock options and SARs			N/A
Weighted average remaining contractual life of outstanding stock options and SARs			N/A
Total shares underlying outstanding full value awards(1)			4,368,429
Total shares currently available for grant(2)			772,376

 

1.	Includes the maximum number of shares issuable upon conversion of performance awards assuming maximum achievement of all performance goals.

 

2.

If our stockholders approve the 2021 Plan, all future equity awards will be made from the 2021 Plan, and we will not grant any additional awards under the Prior Plan. In addition, the Equity Compensation Plan Information table at page 5 lists 704,166 shares available as of December 31, 2020 for certain “inducement awards” outside of any shareholder-approved equity compensation plan. Those shares were previously registered by the Company with the SEC for purposes of such inducement awards consistent with Nasdaq listing rules, but if the 2021 Plan is approved, those shares will not be used for any awards.

The aggregate shares shown above represent a fully-diluted overhang of approximately 7.4% based on the 64,144,845 Common Shares outstanding as of February 28, 2021. If the 2021 Plan is approved, the shares available for issuance would increase the overhang to approximately 12%. We calculate the fully diluted “overhang” as the total of (a) shares underlying outstanding awards plus shares available for issuance under future equity awards, divided by (b) the total number of shares outstanding, shares underlying outstanding awards and shares available for issuance under future equity awards. The fair market value of a share of our common stock as of March 30, 2021 was $18.19.

Summary of the 2021 Plan

Purpose and Eligibility. The purpose of the 2021 Plan is to promote the success and enhance the value of the Company by linking the personal interests of employees, officers, directors and consultants of the Company and its affiliates to those of the Company’s stockholders, and by providing such participants with an incentive for outstanding performance. Any employee, officer, consultant or director of the Company or an affiliate is eligible to participate in the 2021 Plan. As of March 31, 2021, approximately 3,100 employees and seven non-employee directors were eligible to participate in the 2021 Plan.

Administration. The 2021 Plan will be administered by the Compensation Committee. The Compensation Committee will have the authority to grant awards; designate participants; determine the type or types of awards to be granted to each participant; determine all terms and conditions of such awards, including the number of awards to be granted and the number of shares or dollar value to which an award will relate; prescribe the form of award certificate; accelerate the vesting or exercisability of awards; establish, adopt or revise any rules and regulations as it may deem advisable to administer the 2021 Plan; and make all other decisions and determinations that may be required under the 2021 Plan. The Compensation Committee may delegate its authority as permitted by the 2021 Plan and applicable law.

Awards. The 2021 Plan authorizes the granting of awards in the forms described below. The Compensation Committee determines the vesting conditions for awards. Vesting conditions may include the continued employment or service of the participant, the attainment of specified individual or corporate performance goals, and/or other factors in the Compensation Committee’s discretion.

 

•

Options. Market-priced options to purchase shares of our Common Stock may be awarded under the 2021 Plan, which may be designated under the Internal Revenue Code of 1986 as currently in effect (the “Code”) as nonqualified stock options (which may be granted to all participants) or incentive stock options (which may be granted only to officers and employees). The maximum term of an option shall be determined by the Compensation Committee on the date of grant but may not exceed 10 years. The Compensation Committee will determine the method by which the exercise price may be paid, which may include cash payment, delivery of previously acquired shares, net settlement (the cancellation of a portion of the option to cover the cost of exercising the balance of the option), a broker-assisted market sale, or any other method approved by the Compensation Committee.

 

•

SARs. Stock appreciation rights give the holder the right to receive the difference (payable in cash or stock, as specified in the award agreement) between the fair market value per share of our Common Stock on the date of exercise over the base price of the award (which cannot be less than the fair market value of the underlying stock as of the grant date). The maximum term of a stock appreciation right shall be determined by the Compensation Committee on the date of grant but shall not exceed 10 years.

 

•

Restricted Stock. A restricted stock award is a grant of shares of Common Stock, which are subject to forfeiture restrictions during a restriction period if the specified vesting conditions are not satisfied. The Compensation Committee will determine the

 

		19

Approval of the Denny’s Corporation 2021 Omnibus Incentive Plan

Summary of the 2021 Plan

 

price, if any, to be paid by the participant for each share of Common Stock subject to a restricted stock award. During the restriction period, a participant will have the right to vote the shares underlying the restricted stock. Any dividends that are paid with respect to the restricted stock before it is vested will either be reinvested in the form of additional shares (which will be subject to the same vesting provisions as the underlying restricted stock) or will be held by the Company and only distributed in the event that the underlying restricted stock becomes vested. If the underlying restricted stock is forfeited prior to becoming vested, accrued dividends will be forfeited as well.

 

•

Restricted Stock Units (“RSUs”). RSUs represent the right to receive shares of Common Stock (or an equivalent value in cash or other property, as specified in the award certificate) at a designated time in the future, upon the achievement of vesting requirements.

 

•

Deferred Stock Units (“DSUs”). DSUs represent the right to receive shares of Common Stock (or an equivalent value in cash or other property, as specified in the award certificate) at a time designated in the future by the Compensation Committee or, in the case of a voluntary deferral election, by the participant.

 

•

Other Stock-Based Awards. Other stock-based awards are awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on shares of Common Stock, including purchase rights, or other rights or securities that are convertible or exchangeable into shares of Common Stock.

 

•

Dividend Equivalents. Dividend Equivalents may be granted in connection with an RSU, DSU or Other-Stock Based Award. For each unvested share of Common Stock underlying such award, a dividend equivalent entitles the participant to a payment (in cash or stock) equal to the amount of a dividend paid on a share of Common Stock, once the underlying share vests.

 

•

Performance Awards. Any award granted under the 2021 Plan, including a cash-based award, may have a performance-vesting component based on the achievement, or the level of achievement, of one or more performance goals during a specified performance period, as established by the Compensation Committee. Performance-based vesting criteria may include, but need not be limited to: net earnings; earnings per share; net sales growth; net income (before or after taxes); profit (including net operating profit, economic profit and profit margin); revenues; return measures (including, but not limited to, return on assets, capital, investment, equity, or sales, and cash flow return on assets, capital, equity, or sales); cash flow (including, but not limited to, operating cash flow and free cash flow); earnings before or after taxes, interest, depreciation and/or amortization (EBITDA); adjusted income (before or after taxes); adjusted EBITDA; internal rate of return or increase in net present value; dividend payments to parent; gross margins; gross margins minus expenses; operating margin; share price (including, but not limited to, growth measures and total shareholder return); expenses and expense targets; working capital targets relating to inventory and/or accounts receivable; planning accuracy (as measured by comparing planned results to actual results); comparisons to various stock market indices; comparisons to the performance of other companies; sales; working capital; franchise growth; market share; strategic business criteria (including, but not limited to, one or more objectives based on meeting specified market penetration, geographic business expansion goals, cost targets, reductions in errors and omissions, reductions in lost business, safety standards, management of employment practices and employee benefits, diversity goals, supervision of litigation and information technology, service or product quality, and quality audit scores); business expansion or consolidation (including, but not limited to, acquisitions and divestitures); productivity; same-store sales; customer counts; and customer satisfaction. Performance goals may be expressed in terms of Company-wide objectives or in terms of specific business units, regions, departments or functions.

Shares Available for Awards. The aggregate number of shares of Common Stock that may be issued under the 2021 Plan is (A) 4,400,000 shares minus (B) any shares with respect to awards that are granted under the Prior Plan after February 28, 2021 and before the effective date of the 2021 Plan, subject to proportionate adjustment in the event of stock splits and similar events (see “Antidilution Adjustments” below). In addition, if and to the extent that any awards granted under the Prior Plan terminate, expire, or are cancelled, cash-settled, or forfeited after the effective date of the 2021 Plan, the shares associated with such award will be added to the plan share reserve and become available for issuance under the 2021 Plan. Up to 4,400,000 shares may be awarded as incentive stock options under Section 422 of the Code.

Shares subject to awards under the 2021 Plan that terminate or expire unexercised, or are cancelled, forfeited or lapse for any reason, and shares underlying awards that are ultimately settled in cash, will again become available for future grants of awards under the 2021 Plan. In addition, shares delivered or withheld to satisfy the tax withholding requirements with respect to any award other than a stock option or stock-settled SAR (e.g., for awards of restricted stock, RSUs, DSUs, and other stock-based awards, including performance awards) will again become available for future grants of awards under the 2021 Plan. However, (i) shares delivered by the participant or withheld from an award to satisfy tax withholding requirements with respect to a stock option or stock-settled SAR, and (ii) shares delivered or withheld to pay the exercise price of an option, will not be used to replenish the plan share reserve. The total number of shares covering stock-settled SARs or net-settled options will be counted against the plan share reserve, not just the net shares issued upon exercise. The Compensation Committee may grant awards under the 2021 Plan in substitution for awards held by employees or directors of another entity who become employees or directors of the Company as a result of a business combination, and such substitute awards will not count against the plan share reserve. No awards may be granted under the 2021 Plan after May 19, 2031, the tenth anniversary of the 2021 Plan’s effective date.

 

Denny’s 2021 Proxy Statement		20

Approval of the Denny’s Corporation 2021 Omnibus Incentive Plan

Summary of the 2021 Plan

 

Non-Employee Director Limitations on Awards. No awards may be granted under the 2021 Plan during any one calendar year to a non-employee director that exceed, together with any cash compensation received for such service, (i) $500,000 for a non-employee director not serving as the Chairman, and (ii) $750,000 for a non-employee director serving as the Chairman, in either case based on the grant date fair value for accounting purposes in the case of stock options or SARs and based on the fair market value of the common stock underlying the award on the grant date for other equity-based awards. The 2021 Plan permits disinterested members of the Board to make individual exceptions to this limit in extraordinary circumstances.

Repricing Prohibition. The Compensation Committee may not, without obtaining stockholder approval, reprice options or SARs. Repricing options or SARs includes: (i) changing the terms of an option or SAR to lower its exercise price or base price; (ii) taking any other action that is treated as a “repricing” under generally accepted accounting principles; and (iii) repurchasing for cash or canceling an option or SAR at a time when its exercise price or base price is greater than the fair market value of a share in exchange for another award (unless such cancellation and exchange is in connection with a change in capitalization or similar event).

Treatment of Awards upon a Change in Control. Unless otherwise provided by the Compensation Committee:

 

•

Awards assumed or substituted by surviving entity. In the event of a change in control of the Company in which a successor entity assumes or otherwise equitably converts awards under the 2021 Plan, if within two years after the effective date of the change in control, a participant’s employment is terminated without cause or the participant resigns for good reason (as such terms are defined in the 2021 Plan), then:

 

¡

all of that participant’s outstanding options and SARs will become fully vested and exercisable;

 

¡

all time-based vesting restrictions on that participant’s outstanding awards will lapse; and

 

¡

all performance-vesting awards will be deemed vested and earned based on the greater of (A) assumed target performance or (B) actual performance measure immediately before the change in control, with a payout to the participant within 60 days following the date of termination.

 

•

Awards not assumed or substituted by surviving entity. In the event of a change in control of the Company in which a successor entity fails to assume and maintain awards under the 2021 Plan:

 

¡

all outstanding options and SARs will become fully vested and exercisable;

 

¡

all time-based vesting restrictions on participants’ outstanding awards will lapse; and

 

¡

all performance-vesting awards will be deemed vested and earned as of the effective date of change in control based on the greater of (A) assumed target performance or (B) actual performance measure immediately before the change in control, with a payout to participants within 60 days following the change in control.

As described below in the section entitled “Discretionary Adjustments,” the Compensation Committee may, in its discretion, take other actions with respect to outstanding awards in connection with a change in control.

Antidilution Adjustments. In the event of a transaction that causes the per-share value of the stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering, or large nonrecurring cash dividend), the plan share reserve under the 2021 Plan will be adjusted proportionately, and the Compensation Committee will make such adjustments to the 2021 Plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. Action by the Compensation Committee may include: (i) adjustment of the number and kind of shares that may be delivered under the 2021 Plan; (ii) adjustment of the number and kind of shares subject to outstanding awards; (iii) adjustment of the exercise price of outstanding awards or the measure to be used to determine the amount of the benefit payable on an award; and (iv) any other adjustments that the Compensation Committee determines to be equitable. However, the Compensation Committee will not make any adjustments to outstanding options or SARs that would be treated as the grant of a new stock right or change in the form of payment for purposes of Section 409A of the Code. Without limiting the foregoing, in the event of a subdivision of the outstanding stock (stock-split), a declaration of a dividend payable in shares, or a combination or consolidation of the outstanding stock into a lesser number of shares, the plan share reserve under the 2021 Plan will automatically be adjusted proportionately, and the shares then subject to each award will automatically, without the necessity for any additional action by the Compensation Committee, be adjusted proportionately without any change in the aggregate purchase price therefor.

Discretionary Adjustments. Upon or in connection with the occurrence of any corporate event or transaction involving the Company (including, without limitation, any merger, reorganization, recapitalization, change in control, combination or exchange of shares), the Compensation Committee may, in its sole discretion, provide (i) that awards will be settled in cash rather than stock, (ii) that awards will become immediately vested and non-forfeitable and exercisable (in whole or in part) and will expire after a designated period of time to the extent not then exercised, (iii) that awards will be assumed by another party to a transaction or

 

		21

Approval of the Denny’s Corporation 2021 Omnibus Incentive Plan

Summary of the 2021 Plan

 

otherwise be equitably converted or substituted in connection with such transaction, (iv) that outstanding awards may be settled by payment in cash or cash equivalents equal to the excess of the fair market value of the underlying stock, as of a specified date associated with the transaction, over the exercise or base price of the award, (v) that performance targets and performance periods for performance awards will be modified, or (vi) any combination of the foregoing. In addition, for each option and SAR with an exercise price or base price equal to or greater than the consideration offered in connection with any such transaction or event or change in control, the Company will not be required to make any payment to the person holding such option or SAR upon surrender of such option or SAR, and may cancel such option or SAR for no consideration. Such surrender shall take place as of the date of the transaction or event or change in control or such other date as the Compensation Committee may specify. The Compensation Committee’s determination need not be uniform and may be different for different participants whether or not such participants are similarly situated.

Amendments and Termination. The Board or the Compensation Committee may amend or terminate the 2021 Plan at any time without stockholder approval, except that if an amendment would, in the Board’s or the Compensation Committee’s reasonable opinion, materially increase the benefits accruing to participants, materially increase the number of shares available under the 2021 Plan, materially expand the class of participants eligible to participate in the 2021 Plan, materially extend the term of the 2021 Plan, or otherwise constitute a material change requiring stockholder approval under applicable law or exchange listing requirements, then the Board shall seek stockholder approval of such amendment. No amendment may be made to the provisions of the 2021 Plan regarding the repricing of stock options or SARs without stockholder approval. In addition, the Board may seek stockholder approval for any other amendment that the Board or Compensation Committee in its discretion believes that stockholder consent is necessary or advisable.

No termination or amendment of the 2021 Plan may, without the written consent of the participant, adversely affect an outstanding award. At any time and from time to time, the Compensation Committee may amend, modify or terminate any outstanding award without approval of the participant; provided, however that, subject to the terms of the applicable award certificate or other provisions of the 2021 Plan, such amendment, modification or termination will not, without the participant’s consent, materially reduce or diminish the value of such award determined as if the award had been exercised, vested, cashed in or otherwise settled on the date of such amendment or termination (with the per-share value of an option or SAR for this purpose being calculated as the excess, if any, of the fair market value as of the date of such amendment or termination over the exercise price or base price of such Award). Notwithstanding the foregoing, amendments may be made to the 2021 Plan or outstanding awards to bring it or them into compliance with applicable law.

Limitations on Transfer; Beneficiaries. No right or interest of a participant in any award may be pledged or encumbered to or in favor of any person other than the Company, or be subject to any lien, obligation or liability of the participant to any person other than the Company or an affiliate. Except to the extent otherwise determined by the Compensation Committee, no award may be assignable or transferable by a participant otherwise than by will or the laws of descent and distribution. A beneficiary, guardian, legal representative or other person claiming any rights under the 2021 Plan from or through a participant will be subject to all the terms and conditions of the 2021 Plan and any award agreement applicable to the participant.

Clawback Provision. Awards under the 2021 Plan will be subject to recoupment under applicable law or Company policy. In addition, the 2021 Plan gives the Compensation Committee the authority to provide in individual award agreements that a participant’s rights, payments and benefits thereunder will be subject to recoupment or forfeiture upon the occurrence of certain specified events. The 2021 Plan provides that by accepting awards under the 2021 Plan, participants agree and acknowledge that they are obligated to cooperate with, and provide any and all assistance necessary to, the Company to recover or recoup any award or amount paid under the 2021 Plan subject to clawback.

Miscellaneous. Awards do not give participants stockholder rights unless and until shares of Common Stock are issued to such participants. Awards do not entitle any employee of other service provider to continue in the service of the Company or its affiliates. Awards will be subject to the Company’s policies on stock ownership, securities trading and hedging or pledging of securities, to the extent applicable.

Federal Income Tax Consequences

The federal income tax consequences arising with respect to grants awarded under the 2021 Plan will depend on the type of grant. The following provides only a general description of the application of federal income tax laws to certain grants under the 2021 Plan. This discussion is intended for the information of stockholders considering how to vote at the Annual Meeting and not as tax guidance to participants in the 2021 Plan, as the consequences may vary with the types of grants made, the identity of the recipients, and the method of payment or settlement. The summary does not address the effects of other federal taxes (including possible “golden parachute” excise taxes) or taxes imposed under state, local, or foreign tax laws. Tax laws are subject to change.

 

Denny’s 2021 Proxy Statement		22

Approval of the Denny’s Corporation 2021 Omnibus Incentive Plan

Federal Income Tax Consequences

 

Under the Code, a grant under the 2021 Plan of options, SARs, restricted stock, RSUs or DSUs, would have no federal income tax consequence at the time of grant. Generally, all amounts taxable as ordinary income to participants under the 2021 Plan in respect of awards are expected to be deductible by the Company as compensation at the same time the participant recognizes the ordinary income, subject to certain caps on the deductibility of executive compensation imposed by Section 162(m) of the Code.

Nonqualified Stock Options. There will be no federal income tax consequences to the optionee upon the grant of a nonqualified stock option under the 2021 Plan. When the optionee exercises a nonqualified option, however, he or she will recognize ordinary income in an amount equal to the excess of the fair market value of the stock received upon exercise of the option at the time of exercise over the exercise price. Any gain that the optionee realizes when he or she later sells or disposes of the option shares will be short-term or long-term capital gain, depending on how long the shares were held.

Incentive Stock Options. There will be no federal income tax recognized by the optionee at the time of grant or upon exercise, although taxable income may arise upon exercise for alternative minimum tax purposes. The optionee will recognize taxable income in the year in which the purchased shares are sold or otherwise made the subject of certain other dispositions. For federal tax purposes, dispositions are divided into two categories: (i) qualifying, and (ii) disqualifying. A qualifying disposition occurs if the sale or other disposition is made more than two years after the date the option is granted and more than one year after the date the option is exercised for those shares. If the sale or disposition occurs before these two periods are satisfied, then a disqualifying disposition will result.

Upon a qualifying disposition, the optionee will recognize long-term capital gain in an amount equal to the excess of (i) the amount realized upon the sale or other disposition of the purchased shares over (ii) the exercise price paid for the shares. If there is a disqualifying disposition of the shares, then the excess of (i) the fair market value of those shares on the exercise date or (if less) the amount realized upon such sale or disposition over (ii) the exercise price paid for the shares will be taxable as ordinary income to the optionee. Any additional gain recognized upon the disposition will be a capital gain.

If the optionee makes a disqualifying disposition of the purchased shares, then the Company will be entitled to an income tax deduction, for the taxable year in which such disposition occurs, equal to the amount of ordinary income recognized by the optionee as a result of the disposition (subject to caps imposed by 162(m) of the Code, as noted above). The Company will not be entitled to any income tax deduction if the optionee makes a qualifying disposition of the shares.

SARs. A participant receiving a SAR under the 2021 Plan will not recognize income at the time the award is granted. When the participant exercises the SAR, the amount of cash and the fair market value of any shares of stock received will be ordinary income to the participant.

Restricted Stock. Unless a participant makes an election to accelerate recognition of the income to the date of grant as described below, a participant will not recognize income at the time a restricted stock award is granted, provided that the award is nontransferable and is subject to a substantial risk of forfeiture. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of the stock as of that date (less any cash consideration paid for the stock). If the participant files an election under Code Section 83(b) within 30 days after the date of grant of the restricted stock, he or she will recognize ordinary income as of the date of grant equal to the fair market value of the stock as of that date (less any cash consideration paid for the stock). Any future appreciation in the stock will be taxable to the participant at capital gains rates. However, if the stock is later forfeited, the participant will not be able to recover the tax previously paid pursuant to the Code Section 83(b) election.

RSUs and DSUs. A participant will not recognize income at the time an RSU or DSU award is granted. Generally, upon receipt of shares of stock (or the equivalent value in cash or other property) in settlement of an RSU or DSU award, a participant will recognize ordinary income equal to the fair market value of the stock or other property as of that date (less any cash consideration paid for the stock or property).

Other Stock-based Awards. The U.S. federal income tax consequences of other stock-based awards will depend upon the specific terms of each award.

Dividend Equivalent Rights. No taxable income is recognized upon receipt of a dividend equivalent right. A participant will recognize ordinary income in the year in which a dividend or distribution, whether in cash, securities or other property, is paid to the participant. The amount of that income will be equal to the fair market value of the cash, securities or other property received.

Tax Withholding. The Company has the right to deduct or withhold, or require a participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including employment taxes) required by law to be withheld in connection with an award under the 2021 Plan. The Company may require such obligations to be satisfied through share withholding or the delivery by the participant to the Company of previously acquired shares.

 

		23

Approval of the Denny’s Corporation 2021 Omnibus Incentive Plan

New Plan Benefits

 

New Plan Benefits

If the 2021 Plan is approved by our stockholders, awards under the 2021 Plan will be determined by the Compensation Committee in its discretion, and it is therefore not possible to predict the number, name or positions of persons who will benefit from the 2021 Plan, if it is approved by stockholders, or the terms of any such benefits.

Vote Required

This proposal will be decided by a majority of votes cast on this matter. Abstentions and broker non-votes will not be counted in determining the number of shares voted “for” or “against” this proposal, and therefore will not affect the outcome of the proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE DENNY’S CORPORATION 2021 OMNIBUS INCENTIVE PLAN.

 

 

Denny’s 2021 Proxy Statement		24

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This is an overview and analysis of the compensation objectives and policies for our named executive officers (“NEOs”) and the material compensation decisions we made with respect to these officers for 2020. This information should be read in conjunction with the compensation tables, related narratives, and notes contained in this Proxy Statement. This discussion focuses on the compensation awarded to, earned by, and paid to the following individuals, who were our NEOs for 2020:

 

Name		Position
John C. Miller		Chief Executive Officer(1)
Robert P. Verostek		Executive Vice President and Chief Financial Officer(2)
F. Mark Wolfinger		President(3)
Christopher D. Bode		Executive Vice President and Chief Operating Officer(4)
John W. Dillon		Executive Vice President and Chief Brand Officer(5)
Stephen C. Dunn		Senior Vice President and Chief Global Development Officer

 

(1)	Mr. Miller served in 2020 as our President and Chief Executive Officer (our principal executive officer) until he relinquished the role of President effective February 6, 2020.

 

(2)	Mr. Verostek served in 2020 as our Senior Vice President, Finance until he was promoted to Senior Vice President and Chief Financial Officer (our principal financial officer) effective February 6, 2020, and then to Executive Vice President and Chief Financial Officer effective February 2, 2021.

 

(3)	Mr. Wolfinger served in 2020 as our Executive Vice President, Chief Administrative Officer and Chief Financial Officer (our principal financial officer) until he was promoted to President effective February 6, 2020.

 

(4)	Mr. Bode served in 2020 as our Senior Vice President and Chief Operating Officer until he was promoted to Executive Vice President and Chief Operating Officer effective February 2, 2021.

 

(5)	Mr. Dillon served in 2020 as our Senior Vice President and Chief Brand Officer until he was promoted to Executive Vice President and Chief Brand Officer effective February 6, 2020.

The Compensation Discussion and Analysis (“CD&A”) is organized as follows:

 

 

 

		25

Executive Compensation

 

Executive Summary

2020 Challenges. As we all know, 2020 was an unusual and challenging year for everyone. It was particularly challenging for Denny’s, our associates, and our franchise partners given the sudden and severe impact that the COVID-19 pandemic had on our business operations around the world. However, as expected, our people rose to the occasion, demonstrating a “scrappiness” that not only allowed us to “Survive” (i.e., weather the storm) but to “Thrive” (i.e., through the development of innovative new products, processes, and procedures that we expect will serve us well going forward) on the other side of the pandemic for years to come. The following is just a glimpse of the investments made and the results achieved in this challenging environment:

 

Investments		Results
•  Continued salaries for all unit-level management during periods the restaurants were closed   •  Continued Medical, Dental, and Vision insurance for all covered employees while on furlough at no cost to the employee   •  Continued 401(k) safe harbor match   •  Restructured field level plans to mirror the changes made to the Corporate Incentive Plan (“CIP”)   •  Extended Employee Assistance Plan services to all employees   •  Implemented a new paid leave program to provide salary continuation during COVID-19 illness or due to exposure at work   •  Provided over $15M in financial relief to franchise partners   •  Provided additional working capital relief/assistance to franchisees		•  Implemented an enhanced communication network   •  Enabled “work from anywhere” protocol   •  Reduced operating costs   •  Refined capital structure   •  Rapidly developed alternative service delivery models/offerings   •  Streamlined menus and added new products   •  Developed two virtual restaurant concepts   •  In 2020, mitigated permanent closings to a total of 73 (approximately only double the number of closings in a normal year)   •  Generated Adjusted EBITDA of $26.6M, well above the minimum Adjusted EBITDA forecast of $15.0M

 

Denny’s 2021 Proxy Statement		26

Executive Compensation

 

The impact of the COVID-19 pandemic on our business also required swift and innovative changes to our executive compensation program, including our incentive compensation programs. These changes were necessary to align interests, preserve a strong linkage between pay and performance, and retain the talent that has delivered strong results for stockholders, all in the context of an unprecedented global health crisis that massively disrupted dine-in restaurant businesses.

In years leading up to 2020 and the pandemic, Denny’s was delivering strong results for its stockholders, highlighted by the following Adjusted EBITDA⁽¹⁾, Diluted EPS⁽¹⁾, and Total Shareholder Return⁽²⁾ metrics from 2017 to 2019:

 

 

(1)	Please refer to the reconciliation of Adjusted EBITDA and Diluted EPS in Appendix A to this Proxy Statement.

 

(2)	1 Yr. TSR from 12/26/18 - 12/25/19; 3 Yr. TSR from 12/28/16 - 12/25/19.

Executive Compensation Challenges We Faced in 2020. With regard to our executive compensation programs, the challenges faced by Denny’s were particularly acute given an aggregation of the following factors:

 

•

100% of Outstanding Long-Term Incentives, as of early 2020, were performance-based. In recent years (prior to 2020), we have provided 100% of our long-term incentive compensation opportunities for executives in the form of Performance Stock Units (PSUs) (i.e., shares only earned if three-year performance conditions are achieved), in contrast to other companies, and most of our peers, that also issue equity awards that vest based on service only.

 

•

2020 Performance Impacts Both 2018 and 2019 Long-Term Incentive Awards. The performance period on all PSUs is three years, resulting in two-thirds (2/3) of the performance period for the 2018-2020 award and one-third (1/3) of the performance period for the 2019-2021 award being completed prior to the impact of the pandemic. However, because the payout for the PSUs is cumulative, inconsistent performance during 2020 as a direct result of the pandemic would significantly impair executives’ ability to receive a payout on two years’ worth of strong performance relating to the previously issued long-term incentive grants.

 

•

50% of Outstanding PSUs were tied to an absolute financial metric. 50% of the PSUs granted in recent years were tied to company-specific financial metrics, as opposed to Relative TSR (rTSR). While rTSR retains incentive effectiveness in turbulent times because it measures performance relative to peers facing similar business conditions, company-specific performance goals established prior to the pandemic can lose their incentive value when the economic climate changes so precipitously that the metrics become unattainable. We operate in the casual dining sector, which was one of the most severely negatively impacted areas of the restaurant/consumer discretionary industry.

 

•

A significant retention risk was created for our leadership team. Our Compensation Committee concluded that the factors listed above created a significant retention risk for our leadership team as the financial portion of multiple outstanding PSU cycles were unlikely to payout for several years due to the impact of the pandemic.

Our Response to the Executive Compensation Challenges We Faced in 2020 (Why We Did; What We Did; When We Did It). To help address the retention risks described above, to motivate the management team to focus on stabilizing the business, and to address the remaining uncertainty related to the duration of the pandemic, we made the following adjustments to our compensation program in 2020:

 

•

Base Salary Reductions. Executives took voluntary base salary cuts for a quarter of 2020 to conserve cash.

 

•

Modification to 2020 Annual Cash Incentive Program. We replaced our 2020 annual Cash Incentive Program (CIP) with a “2nd Half of the year” incentive program that had a maximum payout opportunity equal to 50% of the target opportunity under the original CIP with 30% tied to key financial and operational objectives and 20% in the discretion of the Compensation Committee based on all relevant facts and circumstances.

 

		27

Executive Compensation

 

•

Tailored Design of 2020 Long-Term Incentive Program. We delayed making our 2020 long-term incentive awards until May 2020 (as opposed to our usual practice of making such awards in January/February) when we had greater visibility into the impact of the COVID-19 pandemic, making these awards at a reduced target long-term incentive value and in the form of time-vesting RSUs given the continued goal-setting challenges and the objective of enhancing near-term retention strength in a challenging environment.

 

•

Modification to 2018 PSUs. We modified the portion of the 2018-2020 PSUs (50%) that was tied to financial results (Adjusted EPS) to (i) truncate the performance period to end as of FYE 2019 (pre-pandemic) and (ii) pro-rate the payout based on that performance to two-thirds (2/3) in recognition of the shorter performance period, resulting in a payout of 100% on the Adjusted EPS component. We preserved full performance linkage on the rTSR component (50%) over the original three-year period.

 

•

Modification to 2019 PSUs. We modified the portion of the 2019-2021 PSUs (50%) that was tied to financial results (Adjusted EPS) by (i) eliminating the Adjusted EPS component, and (ii) instead, making 100% of the award tied to rTSR performance over the full three-year period, thus preserving full performance linkage on 100% of the award opportunity over the full three-year period.

In selecting these adjustments to our executive compensation program in 2020 over other alternatives, the Compensation Committee focused on the following key principles and considerations:

 

Key Principles		Key Considerations
•  Retain the leadership team   •  Retain linkage between pay and performance in a meaningful portion of our executive compensation arrangements   •  Share the pain with our stockholders   •  Do what is in the best interest of our stockholders   •  Do what is in the best interest of our associates and franchise partners   •  Be consistent with and reflective of past practices and performances but with an eye toward the future   •  Apply a consistent approach among the leadership team   •  Get this behind us so that we can focus on the future		•  The “2nd-Half of the year” incentive program retained a strong link to performance   •  Any payouts under our modified 2020 “2nd Half of the year” incentive plan were capped at 50% of the target opportunity under the original CIP   •  The modifications to PSUs retained a strong link to performance   •  The rTSR measurement against the S&P 600 Consumer Discretionary Index remains a high bar given the impact on casual dining vs. other index constituents   •  The use of RSUs for the 2020 grants enhanced near term retention   •  The use of 90-day average stock price for determining the number of RSUs granted in 2020 avoided excessive dilution given the depressed stock price   •  Everyone in the CIP and PSU programs were treated the same

Although the Compensation Committee believes that these types of interventions should seldom be considered and pursued, the Committee also believes that the unprecedented circumstances that Denny’s faced in 2020 made these interventions necessary and appropriate. The Committee also believes that the adjustments made were principles-based and appropriately balanced the needs of the Company, its franchise business partners, and its stockholders.

 

Keeping Stockholders Informed During an Uncertain Time   The Committee acknowledges the significance of these changes but believes that these actions were necessary to stabilize, motivate and retain an experienced management team and were in the best interest of stockholders during such an unprecedented time. As such, the Committee and the management team felt it important to be fully transparent about these changes in “real-time,” including by describing a number of these actions in 8-K filings on April 7 and October 1, 2020. Management also engaged in discussions with a number of our largest stockholders, representing more than 28% of our total stock ownership, specifically about the 2018 and 2019 PSU adjustments, and those stockholders indicated that they understood the rationale for the adjustments and expressed no objections.

 

Denny’s 2021 Proxy Statement		28

Executive Compensation

 

General Compensation Practices

Our Historical Pay-for-Performance Alignment. The following graph shows the CEO’s target bonus opportunity compared to his actual bonus earned over the last three years, which demonstrates the Company’s pay for performance philosophy in action. There is clear directional alignment between the Company’s TSR performance and the CEO’s annual bonus achievement over this period, during which the Company’s TSR performance was at the 64th percentile of its current peer group.

 

Our Compensation and Corporate Governance Structures Reflect Best Practices. The Company diligently listens to its stockholders and monitors and adopts best practices in its compensation structure and related areas of corporate governance. Our compensation and governance practices such as our stock ownership guidelines, compensation clawback, anti-hedging and anti-pledging policies are “best practices” and are integral parts of our compensation philosophy.

 

		29

Executive Compensation

 

Some of Our NEOs and Our Directors (On Average) Own Company Stock Well in Excess of Our Stock Ownership Guidelines. Some of our NEOs and our outside directors (on average) have satisfied our stock ownership requirements well in excess of the guidelines as demonstrated in the chart below:

 

 

 

(1)	Actual share multiple as of February 26, 2021, based upon the 50-day average trading price per share of Denny’s Common Stock of $15.64.

 

(2)	Required stock ownership/retention levels for directors and executive officers are based upon the following multiples:

 

		Multiple
Directors and CEO		5 X cash board retainer / base salary
President and Executive Vice Presidents		3 X base salary
Senior Vice Presidents and Vice Presidents		1 X base salary

For more information regarding our stock ownership guidelines applicable to the NEOs and directors, see “Compensation and Corporate Governance Best Practices - Stock Ownership Guidelines” in this CD&A.

Consideration of Previous Say-On-Pay Vote

Our Say-on-Pay vote results over the past three years demonstrate consistently strong stockholder support for our executive compensation program, as summarized in the table below:

 

Say on Pay				2020					2019					2018
Percentage in Favor(1)				97.2%					98.9%					99.5%

 

(1)	As a percentage of the votes cast for and against not including votes abstained and broker non-votes.

The Board and the Compensation Committee appreciate and value the views of our stockholders. In considering the results of the 2020 advisory say-on-pay vote, the Compensation Committee concluded that the compensation paid to our NEOs and the Company’s overall pay practices have strong stockholder support.

The Compensation Committee did not take any actions with respect to the design of the 2020 or 2021 executive compensation program based on the say-on-pay advisory vote. Future advisory votes on executive compensation will serve as an additional tool to guide the Compensation Committee in evaluating the alignment of the Company’s executive compensation programs with the interests of the Company and its stockholders.

At the 2017 annual meeting of stockholders, our stockholders expressed a preference that advisory votes on executive compensation occur annually. Consistent with this preference, the Board determined to continue having an advisory vote on executive compensation every year until the next required advisory vote on the frequency of stockholder votes on the compensation of executive officers, which will occur at the 2023 annual meeting of stockholders.

 

Denny’s 2021 Proxy Statement		30

Executive Compensation

 

Compensation Objective and Design

The Compensation Committee has developed compensation programs for the Company’s NEOs with guidance and analysis from its independent consultants, Pearl Meyer (through December 2020) and FW Cook (beginning January 2021). The overall design objectives of our compensation programs are to attract, develop, motivate and retain top-quality leadership talent, while ensuring that their interests are aligned with the interests of our stockholders and that their efforts are focused on the Company’s key strategic objectives. When evaluating and designing compensation programs, the Compensation Committee reviews market survey data, proxy statements filed by our restaurant peer group companies, and industry compensation practices.

The Company’s incentive strategy is designed to be integrated across different time frames, performance metrics, and types of payout. The goal is to reward executives for the achievement of performance goals that are directly linked to stockholder value creation. Our annual cash incentives are designed to reward the achievement of key Company performance targets set for the applicable fiscal year. Historically, longer-term equity incentives have been designed to reward executives for stock price performance relative to the Company’s peer group and earnings growth over two and three-year periods.

Historically, the Company has utilized a compensation structure consisting of the following elements:

 

During 2020, our executive officers were provided with a compensation package that included the following elements:

 

•

Base Salary, consisting of a fixed portion of cash compensation, the levels of which are based on competitive market data taking into consideration an individual’s experience and performance sustained over a substantial period of time,

 

•

Annual Cash Incentive opportunities (bonus) through the Corporate Incentive Plan (CIP), consisting of cash payments based on the Company’s achievement of certain financial and operating performance targets, with the addition of a discretionary component under the unique circumstances of 2020 (as further described under the Annual Cash Incentives section of this CD&A),

 

•

Long-Term Equity Incentives through awards granted under the Long-Term Incentive Plan (LTIP), consisting of performance share units (PSUs) in prior years, but granted as time-vested restricted stock units (RSUs) under the unique circumstances of 2020, and

 

•

Other Benefits/Perquisites that include benefits generally available to other salaried employees, such as retirement, health care, and relocation assistance designed to provide financial safeguards to executives together with limited perquisites such as car and telecommunication allowances that have a direct business purpose.

Each of these compensation elements is described and analyzed in further detail in the tables and narrative that follow. Additionally, under limited circumstances, discretionary bonuses and other awards may be utilized to recognize individual performance or for inducement during the hiring process. Such awards are intended to reward extraordinary performance and attract top executive talent while retaining executives through long-term vesting and potential wealth accumulation. The Compensation Committee generally targets market median along with the consideration of other factors when determining the appropriate level and amount of these compensation elements for each of our executive officers.

Role of Peer Companies and Competitive Market Data

To assist in evaluating and determining competitive levels of compensation for the various elements of executive pay in 2020, the Compensation Committee reviewed and considered various sources of data which included:

 

•

Published compensation surveys (covering the chain restaurant industry) and public and private executive compensation surveys specific to the retail and food services industry, which provide aggregated information on base salary, total cash compensation (base salary and bonus), and total direct compensation (base salary, bonus and long-term incentives) for various executive positions.

 

		31

Executive Compensation

 

•

Data from proxy statements collected and analyzed from a peer group of 16 restaurant companies operating in the family dining, casual and quick service segments, as further described below under “How Peer Companies are Determined.” This restaurant peer group consisted of the following companies:

 

BJ’s Restaurants, Inc.		El Pollo Loco Holdings, Inc.		Shake Shack Inc.
Bloomin’ Brands, Inc.		Fiesta Restaurant Group, Inc.		Texas Roadhouse, Inc.
Brinker International, Inc.		Jack in the Box, Inc.		The Cheesecake Factory Incorporated
Cracker Barrel Old Country Store, Inc.		Nathan’s Famous, Inc.		Wingstop Inc.
Del Taco Restaurants, Inc.		Red Robin Gourmet Burgers, Inc.
Dine Brands Global, Inc.		Ruth’s Hospitality Group, Inc.

The Compensation Committee uses a separate peer group to measure the relative TSR performance for PSU awards, although as noted above no such PSU awards were granted for 2020.

How Peer Companies are Determined. The Compensation Committee, in September 2019, reviewed the peer group to be utilized in 2020 and determined that the size of the peer group needed to be increased due to the fact that the 2019 peer group (although reasonable from the perspective of industry and size comparability) had been reduced to only 12 peers due to the elimination of companies that had been acquired or had gone “private” during 2019. Accordingly, the committee approved the addition of four companies to the peer group for 2020 (i.e., Bloomin’ Brands, Wingstop, Shake Shack, and Ruth’s Hospitality Group) in order to improve the sample size while maintaining industry and size comparability, resulting in the peer sample size of 16 companies set forth above.

We have developed this peer group for compensation purposes according to the following multiple selection criteria:

 

•

Global Industry Classification Standard code sub-industry: Restaurant companies

 

•

Franchised organization: Target restaurants with franchised sales representing a large portion of system-wide sales/units

 

•

Annual system-wide sales: Ranging from approximately one-third to three times Denny’s annual system-wide sales

 

•

Market capitalization: Ranging from approximately one-fifth to five times Denny’s market capitalization

 

•

Direct competitors: For business and management talent

Why We Use System-Wide Sales and Not Corporate Revenues When Selecting Peer Companies. We believe system-wide sales is the best measure of company size and complexity for a highly-franchised business model like ours. Although we do not own and operate most of the Denny’s restaurants, we do own the Denny’s brand, develop and help execute the overall strategy for the entire system of Denny’s restaurants, manage all research and development with respect to menu offerings, pricing and restaurant décor, provide site selection and restaurant development services to our franchise partners, and guide and recommend the adoption of technology, work processes, and staffing models that positively affect the customer experience over our entire system of restaurants. Our corporate revenue alone does not capture the full scope and complexity of effectively managing the Denny’s organization. Furthermore, we compete for talent with companies of comparable size, regardless of their business model (company-owned vs. franchised), and therefore, believe system-wide sales is the proper basis for selecting peer companies for compensation benchmarking purposes. However, as mentioned above, we also consider other important measures when selecting our restaurant peer group, including industry focus, business model, and market capitalization.

Use of Competitive Market Data. The Company strives to provide total pay opportunities that are within a competitive range relative to the median of our restaurant peer group and that are aligned with survey-based data. Company incentive plans are designed to have significant differentiation in payouts based on performance. As a result, actual compensation payouts are intended to be market appropriate and performance aligned. Benchmark data is only one of many factors that we consider when making pay determinations. Other important factors include, but are not limited to, Company performance, individual executive performance, internal equity among our leadership team, executive tenure, retention priorities, and succession planning. The Compensation Committee annually analyzes tally sheets for each NEO (as further described in the “Compensation and Incentives Committee” section of this Proxy Statement). This review helps ensure that (i) executive compensation decisions are aligned with stockholder interests, (ii) termination provisions are appropriate and aligned with market practices, and (iii) the value of executive share holdings and unvested incentives aligns with changes in stockholder value.

 

Denny’s 2021 Proxy Statement		32

Executive Compensation

 

Base Salary

How Amounts are Determined. In general, the Compensation Committee considers a variety of factors when setting base salaries for executive officers, including market information, experience, tenure with the Company, individual performance, and internal pay equity. The Compensation Committee annually reviews the performance and scope of responsibility of our NEOs to determine whether adjustments to base salaries are appropriate in light of individual and Company performance, as well as overall market conditions and peer proxy data.

Salary Adjustments for 2020. The adjustments to the annual base salaries of our NEOs in fiscal year 2020 included increases for Mr. Miller (from $900,000 to $925,000), Mr. Verostek ($300,000 to $375,000 in connection with his promotion to Senior Vice President, Chief Financial Officer), Mr. Wolfinger (from $550,000 to $575,000), Mr. Bode ($383,000 to $395,000), Mr. Dillon (from $385,000 to $400,000), and Mr. Dunn ($362,000 to $375,000) as well as the temporary reductions due to the COVID-19 pandemic noted below.

Voluntary Salary Reductions due to the COVID-19 pandemic. From April 2, 2020 through June 24, 2020, in an effort to conserve Company cash due to the financial uncertainties surrounding the COVID-19 pandemic, our NEOs and executive officers took voluntary reductions in their base salaries ranging from 15% to 50%.

Annual Cash Incentives

Initial 2020 Corporate Incentive Plan. For fiscal year 2020, the Compensation Committee, in December 2019, originally adopted the Company’s 2020 CIP providing our non-operations management and staff, including each of our NEOs, with an opportunity to earn an annual cash bonus based on the Company’s achievement of specified performance objectives set forth by two metrics: (i) US Systemwide Same-Store Sales, and (ii) Adjusted EBITDA.

The initial 2020 CIP differed from the 2019 CIP design by consolidating the 2019 CIP’s Company and Franchise Same-Store Sales metrics (weighted in 2019 at 25% and 15%, respectively) into a single US Systemwide Same-Store Sales metric weighted at 25% with the Adjusted EBITDA metric weighted at 75%. The goals utilized for the US Systemwide Same-Store Sales metric were based upon percentage increases as compared to the prior year. The initial 2020 CIP also continued the use of a modifier that could increase or decrease a participant’s annual earned bonus by 20% if the Same Store Guest Traffic metric, as measured over the year, was at least 1% above or below the benchmark performance level.

Under the initial 2020 CIP, each of our NEOs was eligible to earn a target incentive award (“Target Award”) equal to a percentage of the NEO’s base salary earned during fiscal year 2020, with the percentage varying depending on the NEO’s position. Target Awards were determined for participants based upon a review of competitive market practices and internal equity, including published survey data and proxy information from our restaurant peer group. The Target Awards for 2020 for Messrs. Miller, Verostek, Wolfinger, Bode, Dillon and Dunn were 110%, 70%, 90%, 70%, 80% and 70% of their respective base salaries earned during fiscal year 2020.

As noted above, the payouts under the initial 2020 CIP could be earned by our NEOs based on the Company’s achievement of pre-established goals under the two performance criteria, in addition to the 20% modifier. The amount of actual bonus earned could range from 0% of the Target Award, if performance fell below threshold goals, to a maximum of 200% of the Target Award, if maximum performance goals were met or exceeded. The performance goals and the levels of associated payouts for 2020 were as follows:

Initial 2020 CIP Performance Formula

 

		At Threshold								At Target								At Maximum
		Performance Goal				Payout (1)				Performance Goal				Payout (1)				Performance Goal				Payout (1)
US Systemwide Same-Store Sales (2)			0.0	%			0.0	%			+2.1	%			25	%			+6.0	%			50	%
Adjusted EBITDA (3)		$	80.2MM				0.0	%		$	100.2MM				75	%		$	120.2MM				150	%
Total (4)							0.0	%							100	%							200	%

 

(1)	As a percentage of a participant’s Target Award.

 

(2)	Based upon percentage increases as compared to the prior year.

 

(3)	Please refer to the reconciliation of Adjusted EBITDA in Appendix A to this Proxy Statement.

 

(4)	Actual results that fall between threshold, target, and maximum performance levels are interpolated to compute payout amounts.

 

		33

Executive Compensation

 

Mid-Year Adjustments to the 2020 CIP. By mid-2020, it was apparent that the dramatic effects of the COVID-19 pandemic had rendered our previously-established financial goals as irrelevant and unattainable. Our board recognized the need to reward and incentivize our non-operations management and staff, including each of our NEOs, for a performance necessary to not only “survive” the effects of the pandemic, but also to set Denny’s in a strong position to “thrive” on the other side of the pandemic. Consequently, based upon the recommendations of our compensation consultants and the Compensation Committee, in July 2020 the Board approved an adjusted 2020 CIP (the “2020 CIP - 2nd Half Plan”) that would award a fixed 30% payout opportunity, if certain objectives and criteria were achieved, subject to an additional discretionary payout between 0% and 20% (to be determined by the Compensation Committee in December 2020) for a total payout opportunity of 50% of Target Awards.

2020 CIP - 2nd Half Plan Results. The following table sets forth (i) the objectives and criteria required for payment of the 30% fixed payout under the 2020 CIP - 2nd Half Plan; and (ii) the completion results for each required objective and criteria:

 

Criteria/Objectives		Successfully Completed/Achieved
General
•  Annual Adjusted EBITDA >$15M forecast (1)(2)			✓
•  Payment of the bonus must not create default of debt covenants			✓
Reaction to COVID-19’s impact
•  Implement enhanced communication network focused on keeping our Board of Directors, Leadership Committee and Franchisees informed on a contemporary basis			✓
•  Enable “work from anywhere” protocol including continued technology, business process, and collaboration capabilities with the ability to apply more permanently where appropriate			✓
•  Streamline organizational structure, identified additional cost savings initiatives, maximized applicable governmental stimulus programs, and prioritized capital investments to bolster both Adjusted EBITDA and Adjusted Free Cash Flow			✓
•  Engage both landlords and lenders on behalf of franchisees securing over $3M in rent relief, negotiating principle and interest deferrals, and facilitating the procurement of loans to eligible franchisees through the Paycheck Protection Program (PPP)			✓
•  Reinforce capital structure through a bank amendment and equity offering to ensure compliance with debt facility covenants and to provide the necessary liquidity required to weather a prolonged COVID-19 impact (through the end of 2021)			✓
Reopening
•  Develop standards and tools required to operate restaurants impacted with capacity restrictions ensuring the health and safety of both our guests and employees			✓
•  Optimize menu to allow for efficient production of guest preferred items and backstop Brand Building Fund to allow for adequate media during the second half of the year with a focus towards value			✓
Repositioning for the Future
•  Refocus strategic initiatives towards those with the highest return in a capital constrained environment, all the while capitalizing on the emerging trends of virtual restaurant concepts, stream-lined menus, alternative dining venues and the technology to support our Company and Franchise system			✓

 

(1)	Actual Adjusted EBITDA achieved in 2020 was $26.6 million.

 

(2)	Please refer to the reconciliation of Adjusted EBITDA in Appendix A to this Proxy Statement.

In December 2020, the Compensation Committee reviewed our performance to determine whether to award any of the 20% discretionary pool amount of the 2020 CIP - 2nd Half Plan. Based upon numerous factors, highlighted by the following, the Committee determined to award an additional 20%, for a total payout under the 2020 CIP - 2nd Half Plan of 50% of Target Awards:

 

•

The Denny’s leadership and management teams performed strongly during the 2nd half of the year under extremely challenging and unprecedented circumstances.

 

•

The Denny’s leadership team took difficult actions to position the Company for successful growth after the pandemic, including actions to reduce costs, maintain financing, and ensure employee and customer safety.

 

Denny’s 2021 Proxy Statement		34

Executive Compensation

 

•

The Denny’s leadership and management teams led the Company in developing innovative responses to the business challenges created by the pandemic, including the rapid deployment of alternative service delivery models/offerings, streamlined menus, new products, and two new virtual restaurant concepts;

 

•

The Denny’s leadership and management teams ensured that the Company proactively supported its franchisees to weather the pandemic’s business impacts, including over $15 million in direct financial assistance to franchisees and other working capital relief and assistance; and

 

•

The Denny’s leadership and finance teams secured a second amendment of our credit facility as a precautionary measure to provide relief from maintenance covenants in 2021 as the resurgence in COVID-19 cases impacted our ability to drive sales beyond 70% of 2019 levels in the fourth quarter of 2020.

Payouts under the 2020 CIP - 2nd Half Plan. Payouts under the 2020 CIP - 2nd Half Plan to our NEOs were as follows:

 

Executive Officer		Target Opportunity (1)					Annual Target Award (2)					Actual Payout
John C. Miller				110	%			$	1,041,574				$	520,787
Robert P. Verostek				70	%			$	264,520				$	132,260
F. Mark Wolfinger				90	%			$	533,944				$	266,972
Christopher D. Bode				70	%			$	285,842				$	142,921
John W. Dillon				80	%			$	325,786				$	162,893
Stephen C. Dunn				70	%			$	271,196				$	135,598

 

(1)	As a percentage of a participant’s base salary earned during fiscal year 2020, not reflecting the voluntary base salary reductions during the year.

 

(2)	The Annual Target Award is based upon the NEO’s base salary earned during the year and reflects changes, if any, to their base salaries during fiscal 2020 pursuant to the terms of the 2020 CIP, not reflecting the voluntary base salary reductions during the year.

Our 2021 Bifurcated CIP Structure. For 2021, the Compensation Committee approved, based upon recommendations from the Company’s compensation consultants, a bifurcated 2021 CIP structure of two six-month programs measuring the following:

 

Denny’s 2021 Bifurcated CIP Program

 

January - June 2021		July - December 2021
Net Openings (10%)		Sales as a % of 2019 (30%)
Adjusted EBITDA (10%)		Adjusted EBITDA (30%)
Net Credit Facility Balance (10%)
Virtual Restaurants Opened (10%)

Key Design Features:

 

•

All metrics are objective and quantifiable;

 

•

The metrics for the 2nd half of the year (July - December 2021) have a heavier weighting (totaling 60%) with a potential maximum of 120%;

 

•

The maximum payout associated with performance against the 1st half metrics in the aggregate cannot exceed target, or 40% of the total payout for the year;

 

•

As such the program has a total January to December 2021 potential payout of 160%, versus the traditional CIP payout maximum percentage of 200%.

The decision to bifurcate the 2021 CIP was based primarily upon the following factors:

 

•

It acknowledges the difficulty of setting reasonable annual financial goals in light of continued uncertainty related to the pandemic and our ability to open locations, especially given our heavy concentration of restaurants in California;

 

•

Bifurcation of short-term bonus programs into two six-month periods grants more line of sight to participants;

 

•

Allows management to focus on key initiatives to stabilize operations; and

 

•

The metrics utilized will balance financial obligations, company profitability, and new concept design and consumer trends.

Once the environment permits, the Committee intends to shift back to a more traditional annual incentive program.

 

		35

Executive Compensation

 

Long-Term Equity Incentives

Overview. A key component of the total compensation package of our executive officers is a long-term equity incentive program designed to meet the following objectives:

 

•

Reward long-term Company profitability and growth

 

•

Promote increased stockholder value and align our executives’ interests with the interests of our stockholders

 

•

Offer competitive awards aligned with market practice

 

•

Promote stock ownership among executives

 

•

Encourage a long-term perspective among executive officers

 

•

Provide an incentive for executives to remain with the Company

One-Time Adjustments to Our 2020 Long-Term Incentive Plan (LTIP). Timing of the adoption of the 2020 LTIP was delayed from its normal January/February timeframe due to a redesign of our overall LTI program only to find that the economic and financial impact of the COVID-19 pandemic on the restaurant industry made adoption of the program even more difficult as the year progressed. Common concerns facing companies that had delayed their LTI awards in 2020 were with (i) the ability to set multi-year goals for PSUs in the existing environment of a pandemic, (ii) granting equity when the company’s stock price is depressed, and (iii) the optics of granting equity when other compensation elements were being reduced.

Given these concerns, along with the fact that many of the companies that we benchmarked (among industries severely impacted by the pandemic), were, in response to the COVID-19 pandemic, changing their equity award mix (i.e., not awarding PSUs) and/or changing their methodology for determining the size of awards to grant, we determined for 2020 to make the following one-time LTI design adjustments:

 

•

Awarded the 2020 LTIP award as time-vested RSUs: The Compensation Committee determined not to use any PSUs for the 2020 LTIP because the business environment was too challenging and uncertain to establish meaningful multi-year performance goals.

 

•

Used a two-year cliff vesting schedule: The Compensation Committee believed that a two-year cliff vesting schedule, with vesting to occur in May 2022, appropriately encouraged retention and was a balanced approach given the reduced target value used for the awards.

 

•

Used a 90-day average stock price for determining the number of RSUs granted: Given the significant and sudden drop in our stock price triggered by market concerns and uncertainty about the pandemic, the Compensation Committee decided to use a 90-day trailing average stock price to determine the number of RSUs granted, rather than a “snap shot” grant date closing price. Because the 90-day average price was greater than the grant date price, this resulted, as intended, in the grant of fewer RSUs than had this adjustment not been made. The grant date fair values of these awards in the Summary Compensation Table are therefore lower than the dollar value used by the Compensation Committee in approving the awards.

 

•

Used a reduced dollar value for determining the RSU awards: Using a 90-day trailing average stock price to determine the number of RSUs granted resulted in a reduced grant value of the awards (i.e., approximately 86% of the target grant value).

In 2020, Adjustments were made to the 2018 and 2019 LTI Programs. LTIP awards for 2018 and 2019 were made to our NEOs 100% as PSUs earned over three-year performance periods based on our performance against two equally-weighted goals, one based on our Adjusted EPS Growth and the other on our Relative TSR. The 2020 business disruptions resulting from the COVID-19 pandemic, which could not have been foreseen when the 2018 and 2019 PSU awards were granted, rendered the threshold Adjusted EPS Growth goals for these awards unattainable, even though performance during 2018-2019 had been tracking above the maximum goals. To address the loss of retentive and incentive value due to these unforeseen events, the Compensation Committee took the following actions on the 2018 and 2019 PSUs:

 

•

2018 PSUs: The EPS Growth metric for the 2018 EPS Growth PSUs was measured for the first two years of the performance period, 2018-2019, before the onset of the COVID-19 pandemic. That performance was above the maximum goal that had been set. Consequently, that portion of the award was then prorated to two-thirds (since two-thirds of the performance period had been completed before the pandemic). The resulting amount, which equals 100% of target (i.e., 150% performance times two-thirds), vested and was paid out on December 30, 2020, subject to continued employment. There was no modification to the relative TSR portion of the 2018 PSUs, which was achieved at 117.9% of Target, as described further below.

 

•

2019 PSUs: The Compensation Committee approved removal of the EPS Growth metric from the 2019 PSUs and will instead apply the rTSR metric to 100% of that award.

 

Denny’s 2021 Proxy Statement		36

Executive Compensation

 

In making these adjustments, the Compensation Committee carefully and extensively considered various factors, including: (i) the successful progress made against long-term financial targets prior to the unforeseen COVID-19-related business disruptions, (ii) the important steps taken by our NEOs and other leadership team members and employees to manage our business through the crisis by focusing their efforts on protecting the health and well-being of our guests, employees, franchisees and stockholders, and (iii) the need to ensure that we retain and motivate key employees to successfully drive our business forward beyond the pandemic to create additional long-term stockholder value. The Compensation Committee also considered how these adjustments fit within broader Company actions on compensation for our employees in the face of the pandemic, including (i) reduced executive base salaries, (ii) continued salaries for all Company unit-level management during periods Company restaurants were closed, (iii) continued medical, dental and vision insurance for all covered employees while on furlough at no cost to the employees, (iv) extended Employee Assistance Plan services to all employees , and (v) implementation of a new paid leave program to provide salary continuation during COVID-related illness or due to exposure at work.

 

Proactive Stockholder Engagement   In connection with the decision to adjust the 2018 and 2019 PSUs, we proactively engaged in September 2020 with a number of our largest stockholders representing more than 28% of our total stock ownership. Those stockholders acknowledged the rationale for the actions taken, especially given the challenging environment facing the Company, the strong performance leading up to the pandemic, the need to retain an experienced management team and the continued performance orientation of the modified awards. None of those stockholders indicated any objections.

These modifications to the 2018 and 2019 PSUs resulted in certain incremental accounting charges under applicable accounting rules. These incremental accounting charges appear as additional 2020 compensation in the Summary Compensation Table and as separate awards in the Grants of Plan-Based Awards Table as required by SEC rules.

2018 LTIP Performance Results, Payout and Deferral. Under the terms of the original 2018 LTIP, the number of PSUs earned was based upon two equally weighted metrics: (i) Relative Total Shareholder Return (“TSR PSUs”), and (ii) Adjusted EPS Growth (“Adjusted EPS Growth PSUs”), over a period of three fiscal years ending December 30, 2020. As referenced above, in September 2020, the Board of Directors modified the 2018 PSUs due to the COVID-19 pandemic and the resulting business disruptions. This modification reduced the measurement period (from the original three-year performance period) of the Adjusted EPS Growth PSUs to a two-year performance period measuring our actual performance through the end of the 2019 fiscal year, but with the payout prorated to two-thirds to reflect only two-thirds of the performance period having been measured.

The Adjusted EPS Growth⁽³⁾ metric was calculated and determined the corresponding payout levels as shown in the following table for the two-year adjusted performance period:

 

Degree of Performance		Denny’s Adjusted EPS CAGR (1)		Payout as a % of Target Award of Adjusted EPS PSUs (2)
Below Threshold		<9.00% growth		0%
Threshold		9.00% growth		50%
Target		12.00% growth		100%
Maximum		15.00% growth		150%

 

(1)	Calculated to measure the year-over-year growth rate of Adjusted EPS calculated over the adjusted two-year performance period.

 

(2)	Linear interpolation utilized to determine payouts which fall between given points on this scale.

 

(3)	Please refer to the reconciliation of Adjusted EPS in Appendix A to this Proxy Statement.

Actual Adjusted EPS Growth for 2018-2019 was 15.7%, which exceeded the maximum performance results. The 2018 Adjusted EPS Growth PSUs were therefore earned at 150% of target, but were then prorated to two-thirds, and paid out at 100% of target.

 

		37

Executive Compensation

 

The three-year performance period under the 2018 LTIP for the TSR PSUs concluded on December 30, 2020. The Company’s TSR for this period was 1.3% and in the 64th percentile compared to the peer group (described on page 24 of the 2019 Proxy Statement), resulting in TSR achieved at 117.9% of target based on the scale set forth below:

 

Degree of Performance		Denny’s TSR Performance Ranking vs. Peers		Payout as a % of Target (1)
Below Threshold		<25th %ile		0%
Threshold		25th %ile		50%
Target		50th %ile		100%
Maximum		90th %ile		150%

Accordingly, 2018 LTIP performance referenced above resulted in a payouts to our NEOs as follows:

 

Executive Officer		Target Adjusted EPS Growth Metric				Target TSR Metric				Earned Adjusted EPS Growth PSUs				Earned TSR PSUs				Total Earned PSUs Paid Out (1)				Earned PSUs Deferred (2)
John C. Miller			77,683				68,106				77,683				80,297				157,980				-
Robert P. Verostek			9,416				8,255				9,416				9,733				9,574				9,575
F. Mark Wolfinger			21,578				18,918				21,578				22,305				43,883				-
Christopher D. Bode			12,021				10,539				12,021				12,426				24,447				-
John W. Dillon			11,519				10,099				11,519				11,907				22,255				1,171
Stephen C. Dunn			11,362				9,961				11,362				11,745				23,107				-

 

(1)	PSUs are payable on a one-for-one basis in shares of Common Stock, net of shares withheld for tax withholding.

 

(2)	Reflects PSUs that were deferred pursuant to the Deferred Compensation Plan and are payable on a one-for-one basis in Denny’s Common Stock upon the NEO’s termination of service.

For a further description of the 2018 LTIP prior to the COVID-19 pandemic related adjustments, see pages 23-24 of the Company’s 2019 Proxy Statement.

Our 2021 LTIP Structure. The uncertainty of the timing of recovery from the effects of the COVID-19 pandemic, coupled with the impact on outstanding performance awards, has led to emerging trends among the hardest hit industries to seek to add balance to long-term incentives and a relative performance measurement. Consequently, for 2021, the Compensation Committee, based upon the recommendation of our compensation consultants, adopted a more balanced approach for the Company’s LTIP structure for 2021, albeit maintaining a strong majority of the grant value delivered via three-year performance shares:

 

•

67% - TSR Performance Share Units measuring relative TSR against the S&P Small Cap Consumer Discretionary Index over a three-year period (2021-2023)

 

•

33% - Time-vested RSU award with three-year annual vesting

Key Design Feature:

 

•

The TSR Performance Share Units include an absolute TSR payout cap, which is designed to cap the final payout at target if Denny’s absolute TSR is negative over the performance period regardless of relative positioning

Benefits and Perquisites

In General. The Company’s executives are eligible to participate on the same basis as other salaried employees in health and welfare plans, qualified retirement and savings plans, and other benefit plans intended to provide a financial safety net of coverage for various significant life events, such as death, disability and retirement. Along with other members of the management team, our NEOs also participate in a non-qualified savings plan intended to allow them to contribute to a deferred compensation plan without regard to IRS limits on the amount of earned compensation that can be voluntarily deferred into a 401(k) retirement plan. Our NEOs also receive certain perquisites, including telecommunication allowances, car allowances and reimbursement for executive physicals. These perquisites serve a business purpose, are limited in value, and are consistent with those of restaurant companies and other companies of similar size.

 

Denny’s 2021 Proxy Statement		38

Executive Compensation

 

401(k) Plan. Generally, all employees are eligible to participate in the Company’s 401(k) plan, to which participants are able to elect to contribute up to 25% of their compensation. The plan utilizes a “safe harbor” plan design, allowing the Company match up to a maximum of 4% of compensation deferred by participants.

Deferred Compensation Plan. A non-qualified deferred compensation plan is offered to certain employees. This plan allows participants to defer up to 50% of their annual salary and up to 75% of their bonus, on a pre-tax basis. Also, beginning in 2017, we began to permit certain officers to defer under this plan all or a portion of their awarded PSUs that vest under the LTIP.

For more information regarding the deferral of compensation under the Company’s deferred compensation plan for our NEOs, please see the “2020 Nonqualified Deferred Compensation” in this Proxy Statement.

Post-Termination Payments

In General. All of our executive officers participate in the Denny’s Corporation Amended and Restated Executive and Key Employee Severance Pay Plan (the “Severance Plan”). The Severance Plan was originally adopted in January 2008 and was last amended and restated on May 9, 2017. The Severance Plan provides severance payments and benefits to our NEOs in a consistent manner. In the event of a participant’s employment termination without cause or for good reason (as such terms are defined in the Severance Plan), the Severance Plan provides for, among other items, salary continuation and health benefits for 12 months. Under the Severance Plan’s change in control provisions: (i) the Company’s chief executive officer, president and any executive vice presidents are entitled to an enhanced lump sum severance payment equal to two times base salary and CIP target bonus plus health benefits for 24 months, and (ii) the Company’s senior vice presidents receive a lump sum payment equal to one times base salary and CIP target bonus. Two events (i.e., a “double trigger”) must take place – a change in control of the Company and a qualifying associated termination of the employee – before a participant is entitled to these enhanced benefits. Under the Severance Plan, no benefits are payable following a termination for cause or voluntary termination (resignation without good reason).

We provide involuntary termination severance benefits to protect individuals from events outside their control and to offer compensation packages similar to those commonly found in the market in which we compete for executive talent. Furthermore, we provide enhanced benefits in the event of a change in control to protect against disruption during change in control activities. Potential benefits under the Severance Plan for our NEOs are discussed further under the section entitled “Summary of Termination Payments and Benefits” in this Proxy Statement.

Compensation and Corporate Governance Best Practices

Stock Ownership Guidelines. The Company has stock ownership guidelines for its directors and executive officers. The guidelines were originally effective January 25, 2011, later amended and restated as of January 1, 2014 and January 1, 2015, and most recently amended effective January 31, 2017 to (i) increase the ownership multiples of our CEO (to five times base salary), non-employee directors (to five times their annual cash retainer), and executive vice presidents (to three times base salary); and (ii) add an ownership requirement for all vice presidents of the Company.

Required stock ownership levels are the lesser of (1) a number of shares with an aggregate fair market value (based upon the current 50-day average closing price per share of Denny’s Common Stock) equal to or greater than the value of an individual’s current base salary or annual cash Board retainer times his or her designated multiple set forth below or (2) a fixed number of shares determined (as of the later of January 1, 2015, the effective date of the January 1, 2015 stock ownership guidelines amendment and restatement, or the date on which an individual becomes subject to the guidelines) by multiplying an individual’s current base salary or annual cash Board retainer times his or her designated multiple and dividing the product by the 200-day average closing price per share of Denny’s Common Stock.

Required stock ownership/retention levels for directors and officers is based upon the following multiples ⁽¹⁾:

 

		Multiple
Directors and CEO		5 X cash board retainer / base salary
President and Executive Vice Presidents		3 X base salary
Senior Vice Presidents and Vice Presidents		1 X base salary

 

(1)	Any executive officer who is also a member of the Board will be required to maintain the ownership level set for his or her executive officer position.

 

		39

Executive Compensation

 

Each officer and director is expected to attain and thereafter maintain his or her required stock ownership level within five years from the later of January 1, 2015 or the date on which such officer or director becomes subject to the guidelines. Once a required ownership level is attained, an individual is expected to maintain such level. Any officer or director who has not attained and maintained his or her stock ownership level within the five-year compliance period will not be permitted to sell Company stock received from the Company until the required level is attained and maintained.

Compensation Clawback Policy. The Company has a compensation clawback policy for NEOs and certain other key employees that provides for the recoupment by the Company under certain circumstances of annual cash bonuses, stock-based awards, performance-based compensation, and any other forms of cash or equity compensation other than base salary. In the event of a restatement of the Company’s previously-issued financial statements as a result of an error, omission, fraud or non-compliance with financial reporting requirements (but not including any restatement or adjustment due to a change in applicable accounting principles, rules or interpretations), or a determination by the Compensation Committee that a material error was made in computing the amount of any incentive compensation, the Compensation Committee has discretion to direct the Company to recover from one or more current or former NEOs and certain other key employees the incremental incentive compensation in excess of the incentive compensation that would have been earned, paid or vested based on the related or adjusted financial results.

Anti-Hedging Policy. Directors, executive officers and other employees are prohibited from engaging in hedging transactions with respect to our securities. “Hedging transactions” can be accomplished through a number of possible mechanisms, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds or through other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our securities. Because hedging transactions might permit a director, executive officer or other employee to continue to own our securities, whether obtained through our equity compensation plans or otherwise, without the full rewards and risks of ownership, such hedging transactions are prohibited.

Anti-Pledging Policy. The Company has a policy that prohibits executive officers and directors (except under limited circumstances) from holding Company securities in a margin account or pledging Company securities as collateral for a loan.

 

Denny’s 2021 Proxy Statement		40

Executive Compensation

 

2020 Summary Compensation Table

The following table sets forth the compensation paid to, or earned by, the Company’s NEOs for the fiscal years shown below.

 

Name and Principal Position		Year					Salary ($)					Stock Awards ($)					Non-Equity Incentive Plan   Compensation   ($)					All Other   Compensation   ($)					Total ($)
John C. Miller				2020					815,386	(1)				3,981,133	(2)				520,787	(3)				22,934	(4)				5,340,240
Chief Executive Officer				2019					900,000					3,313,698					900,000					30,180					5,143,878
				2018					896,154					2,474,976					606,719					24,400					4,002,249
Robert P. Verostek				2020					353,366	(1)				599,285	(2)				132,260	(3)				21,403	(4)				1,106,314
Executive Vice President and
Chief Financial Officer
F. Mark Wolfinger				2020					552,212	(1)				1,160,509	(2)				266,972	(3)				30,265	(4)				2,009,958
President				2019					550,000					1,117,947					495,000					30,180					2,193,127
				2018					546,154					687,478					332,784					29,946					1,596,362
Christopher D. Bode				2020					379,943	(1)				636,403	(2)				142,921	(3)				18,265	(4)				1,177,532
Executive Vice President and				2019					383,000					600,543					268,100					23,786					1,275,429
Chief Operating Officer				2018					381,769					382,988					180,927					29,257					974,941
John W. Dillon				2020					384,423	(1)				734,711	(2)				162,893	(3)				25,753	(4)				1,307,780
Executive Vice President and				2019					385,000					603,700					269,016					24,412					1,282,128
Chief Brand Officer				2018					365,154					366,997					173,053					23,374					928,578
Stephen C. Dunn				2020					360,520	(1)				603,136	(2)				135,598	(3)				17,875	(4)				1,117,129
Senior Vice President and Chief				2019					362,000					567,629					253,400					24,384					1,207,413
Global Development Officer				2018					360,923					361,988					171,048					23,714					917,673

 

(1)	The amounts reflect voluntary base salary reductions during 2020.

 

(2)	The amounts in this column reflect the following three items:

 

(i)

The grant date fair value of RSUs granted pursuant to our 2020 LTIP determined in accordance with FASB Accounting Standards Codification 718, “Compensation-Stock Compensation” (“FASB ASC 718”), with the value based on the closing price of our common stock on the grant date.

 

(ii)

The incremental accounting charge determined in accordance with FASB ASC 718 for the portion of the 2018 PSUs originally scheduled to be earned based on 2018-2020 Adjusted EPS Growth, which we modified in 2020 by truncating the performance period to end as of the last day of the 2019 fiscal year and pro-rating the payout based on the shorter performance period, while maintaining the service-based vesting condition through the end of the 2020 fiscal year, with the value based on the closing price of our common stock on the modification date. Because the performance period was deemed to end at the end of fiscal year 2019, and therefore only time-based vesting conditions were applied to this portion of the 2018 PSUs during our 2020 fiscal year, we refer to this portion of the 2018 PSUs as “2018 RSUs” in the tables that follow.

 

(iii)

The incremental accounting charge determined in accordance with FASB ASC 718 for the portion of the 2019 PSUs originally scheduled to be earned based on 2019-2021 Adjusted EPS Growth but which were modified in 2020 to be earned based on 2019-2021 Relative TSR, with the value based on a Monte Carlo valuation as of the modification date.

 

For each NEO, we have provided a breakdown of the amounts in the Summary Compensation Table representing the grant date fair value of the 2020 RSU awards, and the amounts representing the aggregate incremental accounting charges for the modifications to the 2018 and 2019 PSUs:

 

Named Executive Officer																	Grant Date Fair Value   of 2020 RSUs					Incremental Accounting   Charges for Modifications   to 2018 and  2019 PSUs
John C. Miller																		$	2,486,698				$	1,494,435
Robert P. Verostek																		$	403,254				$	196,031
F. Mark Wolfinger																		$	702,630				$	457,879
Christopher D. Bode																		$	386,141				$	250,262
John W. Dillon																		$	488,785				$	245,926
Stephen C. Dunn																		$	366,592				$	236,544

 

Additional information regarding the 2020 LTIP and the modifications to 2018 PSUs and 2019 PSUs can be found in the CD&A and in the 2020 Grants of Plan-Based Awards table. See also Note 12 to the Consolidated Financial Statements in our Form 10-K filed with the SEC

 

		41

Executive Compensation

 

on March 1, 2021 for descriptions of the methodologies and assumptions we use to value stock awards and the manner in which we recognize the related expense pursuant to FASB ASC Topic 718.

 

(3)	The amounts include performance-based bonuses earned under the 2020 CIP. Refer to the CD&A for more information regarding the 2020 CIP.

 

(4)

The amounts for Messrs. Miller, Verostek, Wolfinger, Bode, Dillon and Dunn include Company contributions to their 401(k) accounts of $4,154, $10,623, $11,485, $7,485, $7,896 and $7,095, respectively. The amounts also include the following perquisites: a car allowance of $18,000, $10,000, $18,000, $10,000, $17,077 and $10,000 for Messrs. Miller, Verostek, Wolfinger, Bode, Dillon and Dunn, respectively, and a telecommunications allowance of $780 for each of Messrs. Miller, Verostek, Wolfinger, Bode, Dillon and Dunn.

2020 Grants of Plan-Based Awards

The following table sets forth information concerning each grant of awards made to NEOs in the last completed fiscal year under any of the Company’s plans.

 

									Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)															Estimated Future Payouts Under Equity Incentive Plan Awards															All Other Stock Awards: Number of Shares of Stock or Units (#)					Grant Date Fair Value of Stock and Option Awards ($)(2)
Name		Award		Grant Date					Threshold ($)					Target ($)					Maximum ($)					Threshold (#)					Target (#)					Maximum (#)
John C. Miller		2020 CIP									520,787					1,041,574					2,083,148
		2020 RSU(3)				5/20/2020																																			237,734					2,486,698
		2019 PSU(4)				9/30/2020																				43,544					87,088					130,632										717,605
		2018 RSU(5)				9/30/2020																																			77,683					776,830
Robert P. Verostek		2020 CIP									132,260					264,520					529,040
		2020 RSU(3)				5/20/2020																																			38,552					403,254
		2019 PSU(4)				9/30/2020																				6,182					12,363					18,545										101,871
		2018 RSU(5)				9/30/2020																																			9,416					94,160
F. Mark Wolfinger		2020 CIP									266,972					533,944					1,067,888
		2020 RSU(3)				5/20/2020																																			67,173					702,630
		2019 PSU(4)				9/30/2020																				14,691					29,381					44,072										242,099
		2018 RSU(5)				9/30/2020																																			21,578					215,780
Christopher D. Bode		2020 CIP									142,921					285,842					571,684
		2020 RSU(3)				5/20/2020																																			36,916					386,141
		2019 PSU(4)				9/30/2020																				7,892					15,783					23,675										130,052
		2018 RSU(5)				9/30/2020																																			12,021					120,210
John W. Dillon		2020 CIP									162,893					325,786					651,572
		2020 RSU(3)				5/20/2020																																			46,729					488,785
		2019 PSU(4)				9/30/2020																				7,933					15,866					23,799										130,736
		2018 RSU(5)				9/30/2020																																			11,519					115,190
Stephen C. Dunn		2020 CIP									135,598					271,196					542,392
		2020 RSU(3)				5/20/2020																																			35,047					366,592
		2019 PSU(4)				9/30/2020																				7,459					14,918					22,377										122,924
		2018 RSU(5)				9/30/2020																																			11,362					113,620

 

(1)

Reflects threshold, target and maximum payout levels of performance-based bonuses awarded pursuant to the Company’s 2020 CIP. The actual amounts earned by each of the NEOs in 2020 are reported in the Non-Equity Incentive Plan Compensation column in the 2020 Summary Compensation Table. Refer to the CD&A for more information regarding our annual cash incentive bonus program.

 

(2)	The grant date fair value of awards is determined pursuant to FASB ASC 718. For the 2019 PSU and 2018 RSU awards, the amounts reflect the incremental accounting charge resulting from the 2020 modification to those awards. See footnote 2 of the Summary Compensation Table for additional information.

 

Denny’s 2021 Proxy Statement		42