El Pollo Loco Holdings Inc

This advisory (non‑binding) proposal asks shareholders to endorse the Company’s executive pay disclosures and compensation program for the named executive officers (NEOs). Management seeks approval to validate its pay-for-performance design, which relies on a mix of base salary, an annual cash incentive tied to adjusted EBITDA, revenue and unit development, and long-term equity comprised of time‑vested restricted shares, PSUs, and stock options. The Board recommends voting FOR because it believes the program aligns executive incentives with long‑term shareholder value, ties a substantial portion of target pay to performance metrics and total shareholder return, and reflects independent compensation committee oversight and external benchmarking. While the vote is advisory, the Compensation Committee commits to considering the outcome when setting future pay; historically the company received strong support on say-on-pay (≈94.5% in 2025). Key governance features—clawback policy, independent compensation consultant, and equity vesting schedules—mitigate potential incentive misalignment and excessive risk-taking. Investors should weigh that the PSUs vest on multi‑year performance targets (revenue and restaurant operating profit margin) which may better align pay with multi-year strategy but also introduce judgment in target-setting. Potential concerns include the level of total CEO pay during the period of turnaround and the interplay between short‑term and long‑term incentives if targets are not calibrated to cyclicality in the restaurant industry. Overall, a FOR vote signals shareholder support for management’s current compensation philosophy while leaving open future engagement if shareholder sentiment shifts.

This non‑binding frequency vote asks shareholders to indicate whether future advisory say‑on‑pay votes should be held every one, two, or three years. Management advocates for an annual vote, arguing that executive compensation disclosures are produced annually and that more frequent feedback gives the Board and Compensation Committee timely input to inform pay decisions and engagement. The proposal is procedural — it does not change compensation itself — but the chosen cadence affects governance responsiveness and administrative burden. Annual votes can improve accountability and allow shareholders to react to changes in pay design or company performance more quickly, while multi‑year cycles can reduce short‑termism and administrative costs. The Board’s stated approach is to treat this vote as advisory: if no option receives a majority, the Board will consider the option receiving the most votes as stockholders’ preference. When evaluating the recommendation, investors should consider the company’s stage (a brand turnaround and growth plan) and recent high say‑on‑pay support, which argue for maintaining annual engagement; conversely, longer intervals may be preferred by investors focused on long‑term strategic implementation. Given the Board’s commitment to consider results and engage with shareholders, the 'one year' recommendation aligns with current disclosure cadence and shareholder outreach practices.

This management proposal asks shareholders to approve an amendment to the Company’s Equity Incentive Plan to add 1,250,000 shares to the existing reserve (raising the plan cap to 5,750,000 shares plus the Prior Plan reserve) and to increase the incentive stock option cap accordingly. Management frames the request as necessary to support ongoing long‑term incentive grants that align employee interests with stockholders and to provide headroom to attract, retain and motivate executives and key employees, particularly given current outstanding awards and planned grant pacing; the company estimates the incremental maximum market value of new shares at roughly $17.35 million based on the April 1, 2026 closing price. The Compensation Committee’s recent grant practices include an even mix of options, time‑vested restricted shares, and PSUs; approving the increase preserves the committee’s ability to continue that mix without exhausting the plan. From a governance perspective, the plan includes anti‑repricing protections, limits on director compensation, minimum 12‑month vesting (except for a 5% carve‑out), change‑in‑control protections, and clawback language, which respond to common investor concerns. Key considerations for shareholders include dilution and burn‑rate: historical grant levels averaged ~3–3.8% of shares outstanding annually in recent years and the company projects the increase combined with expected forfeitures to provide runway into late 2027, but actual dilution will depend on future hiring and grant practices. Investors should also assess the alignment of performance metrics (notably PSUs tied to revenue and restaurant operating profit margin) and whether plan economics are conservative enough given the company’s turnaround/growth strategy. Approval supports management’s flexibility to execute compensation strategy; a withholding vote would limit that flexibility and force the company to reprioritize retention levers, potentially increasing cash compensation or altering award design.

The Accountability Board’s resolution calls for the Company to adopt a majority-vote standard in uncontested director elections, arguing that plurality voting allows directors to be elected with minimal affirmative support and reduces accountability; the proponent cites investor groups and proxy advisors in support. The Board opposes the proposal, asserting plurality voting (the Delaware default) prevents 'failed elections' that could leave board seats vacant and create governance disruption, and argues that majority voting could unintentionally complicate Nasdaq compliance and attract opportunistic 'vote-no' campaigns. Company management points to recent governance improvements — annual elections after declassification, an independent chair, proxy access, and other shareholder rights — and historical director support (average ~79–83% favorable) as evidence that the proposal would add little while increasing risk. From an investor-evaluation perspective, the trade‑off is between increased direct accountability (majority standard) and potential procedural instability in contested or transitional scenarios; the company-specific context — a recently refreshed board, high prior director vote totals, and active engagement programs — mitigates the proponent’s argument that plurality meaningfully undermines governance. The likely practical impact if adopted includes the need for post‑election governance procedures to fill seats where nominees fail to receive a majority, and potential changes to nomination and resignation processes; investors should assess whether the company’s current governance mechanisms and responsiveness render the change incremental or necessary. Given the Board’s stated concerns, proponents and investors may continue engagement to seek compromise approaches (e.g., majority-with-resignation policies) that increase accountability while limiting procedural risks.