Use these links to rapidly review the document
TABLE OF CONTENTS

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

The Cheesecake Factory Incorporated

(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):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
        
 

o

 

Fee paid previously with preliminary materials.

o

 

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:
        
 

Table of Contents

LOGO

April 25, 2017

Dear Stockholder:

        You are cordially invited to attend The Cheesecake Factory Incorporated ("Company") annual meeting of stockholders on Thursday, June 8, 2017, at 10:00 a.m., Pacific Daylight Time ("Annual Meeting"). The Annual Meeting will be held at the Janet and Ray Scherr Forum Theatre, Thousand Oaks Civic Arts Plaza, 2100 Thousand Oaks Boulevard, Thousand Oaks, California 91362. The matters to be acted upon at the Annual Meeting are described in the attached Notice of Annual Meeting of Stockholders ("Notice") and Proxy Statement.

        Pursuant to rules adopted by the Securities and Exchange Commission, we are providing you access to our proxy materials over the Internet. This method allows us to deliver the proxy materials to you more quickly, lowers our costs and helps to conserve natural resources. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials ("Notice of Availability") to our stockholders who have not asked us to provide proxy materials in printed form. All stockholders receiving the Notice of Availability can request a printed set of proxy materials. All stockholders can access the proxy materials at www.proxyvote.com, irrespective of whether they receive the Notice of Availability or a printed copy of the proxy materials. Instructions on how to access the proxy materials online or request a printed copy may be found in the Notice of Availability and in the attached Proxy Statement. In addition, stockholders may request proxy materials in printed form by mail or electronically by email on an ongoing basis.

        YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting, we urge you to vote and submit your proxy online, by telephone or by mail (see below for instructions) in order to ensure the presence of a quorum. If you attend the Annual Meeting, you will have the right to revoke your proxy and vote your shares in person. If you hold your shares through an account with a brokerage firm, bank or other nominee, please follow the instructions you receive from them to vote your shares.

Sincerely,

/s/ David Overton

David Overton
Chairman of the Board and Chief Executive Officer

Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to Be Held on June 8, 2017:
The Proxy Statement and Annual Report to Stockholders are available at www.proxyvote.com.

        Voting online or by telephone is fast and convenient, and your vote is immediately confirmed and posted. To vote online or by telephone, first read the accompanying Proxy Statement and then follow the instructions below:

VOTE ONLINE   VOTE BY TELEPHONE

1. Go to www.proxyvote.com.

 

1. Using a touch-tone telephone, call 1-800-690-6903.
2. Follow the step-by-step instructions provided.   2. Follow the step-by-step instructions provided.

Table of Contents

THE CHEESECAKE FACTORY INCORPORATED
26901 Malibu Hills Road
Calabasas Hills, California 91301



NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
on
June 8, 2017



        The 2017 annual meeting of stockholders of The Cheesecake Factory Incorporated, a Delaware corporation ("Company"), will be held at the Janet and Ray Scherr Forum Theatre, Thousand Oaks Civic Arts Plaza, 2100 Thousand Oaks Boulevard, Thousand Oaks, California 91362, on Thursday, June 8, 2017, beginning at 10:00 a.m., Pacific Daylight Time ("Annual Meeting"), for the following purposes:

        The Board of Directors has fixed the close of business on April 10, 2017 as the Record Date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof.

By Order of the Board of Directors,

/s/ Debby R. Zurzolo

Debby R. Zurzolo
Secretary

Calabasas Hills, California
April 25, 2017

IF YOU PLAN TO ATTEND THE MEETING

        Attendance will be limited to stockholders. Stockholders may be asked to present valid picture identification, such as a driver's license or passport. Stockholders holding stock in brokerage accounts ("street name" holders) will need to bring with them a legal proxy issued in their name from the bank or brokerage in whose name the shares are held in order to vote in person. Cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting.


Table of Contents


TABLE OF CONTENTS

INTRODUCTION

    1  

GENERAL

   
1
 

INTERNET AVAILABILITY OF PROXY MATERIALS

    1  

VOTING; QUORUM; ABSTENTIONS AND BROKER NON-VOTES

    1  

PROXIES

    2  

SOLICITATION

    3  

ITEMS TO BE VOTED ON

   
4
 

PROPOSAL ONE

   
4
 

ELECTION OF DIRECTORS

    4  

General.

    4  

Nominees

    4  

Required Vote

    4  

PROPOSAL TWO

    5  

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

    5  

Independent Registered Public Accounting Firm Fees and Services

    5  

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Our Independent Registered Public Accounting Firm

    5  

Required Vote

    6  

PROPOSAL THREE

    7  

APPROVAL OF AN AMENDMENT TO THE 2010 STOCK PLAN

    7  

Summary

    7  

Background for the Current Request to Increase Authorized Shares

    7  

Proposed Amendment and Text of 2010 Stock Plan

    10  

Summary of the 2010 Stock Plan as Amended.

    11  

Other Provisions of the 2010 Stock Plan as Amended.

    14  

Certain Federal Income Tax Information

    16  

New Plan Benefits

    17  

Existing Plan Benefits

    17  

Required Vote

    18  

PROPOSAL FOUR

    19  

NON-BINDING, ADVISORY VOTE ON EXECUTIVE COMPENSATION

    19  

Required Vote

    19  

PROPOSAL FIVE

    20  

NON-BINDING, ADVISORY VOTE ON THE FREQUENCY OF THE STOCKHOLDER ADVISORY VOTE ON EXECUTIVE COMPENSATION

    20  

Required Vote

    20  

THE BOARD AND CORPORATE GOVERNANCE

   
21
 

OUR BOARD OF DIRECTOR NOMINEES

   
21
 

DIRECTOR INDEPENDENCE

    23  

BOARD LEADERSHIP STRUCTURE AND LEAD DIRECTOR

    23  

ROLE OF THE BOARD IN RISK OVERSIGHT

    23  

MEETING ATTENDANCE

    23  

COMMITTEES OF THE BOARD

    24  

Audit Committee

    24  

Compensation Committee

    25  

Governance Committee

    25  

i


Table of Contents

Other Committees

    25  

Committee Charters

    25  

DESIGNATION OF AUDIT COMMITTEE FINANCIAL EXPERTS

    26  

CORPORATE GOVERNANCE PRINCIPLES AND GUIDELINES; CORPORATE GOVERNANCE MATERIALS AVAILABLE ON OUR WEBSITE

    26  

STOCKHOLDER COMMUNICATIONS WITH THE BOARD

    27  

DIRECTOR NOMINATIONS PROCESS

    27  

Minimum Qualifications

    27  

Criteria for Evaluating Candidates; Diversity

    28  

Qualifications of Current Directors and Director Nominees

    29  

Stockholder Recommendations to the Governance Committee for Nomination of Directors

    30  

Evaluation of Candidates

    30  

Future Revisions to the Nominations Policy

    30  

General Nomination Right of All Stockholders

    31  

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    31  

DIRECTORS COMPENSATION

    32  

Director Eligibility for Participation in the Executive Savings Plan

    33  

Reimbursement of Expenses and Other Perquisites

    33  

INDEMNIFICATION OF OFFICERS AND DIRECTORS

    33  

DIRECTOR AND EXECUTIVE OFFICER STOCK OWNERSHIP GUIDELINES, HOLDING PERIODS AND OTHER REQUIREMENTS

    34  

Stock Ownership Guidelines for Directors

    34  

Stock Ownership Guidelines for Executive Officers; Hedging and Pledging

    34  

POLICIES REGARDING REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS

    35  

FORWARD LOOKING STATEMENTS

   
35
 

NON-GAAP FINANCIAL MEASURES

   
36
 

EXECUTIVE COMPENSATION

   
37
 

COMPENSATION DISCUSSION AND ANALYSIS

   
37
 

EXECUTIVE SUMMARY

    37  

2016 "Say-on-Pay" Advisory Vote on Executive Compensation and Changes to Executive Compensation Program

    37  

2016 Key Pay Decisions

    38  

Fiscal 2016 Business Summary

    39  

OVERVIEW OF COMPENSATION PROGRAM

    41  

Compensation Philosophy

    41  

Elements of Compensation Program

    41  

Factors Considered in Making Compensation Decisions

    42  

PAY FOR PERFORMANCE

    43  

Pay Mix

    45  

MARKET POSITIONING

    47  

Comparison Groups

    48  

PRINCIPAL ELEMENTS OF COMPENSATION

    50  

Base Salary

    50  

Annual Cash Performance Incentive Compensation

    51  

Fiscal 2016 Performance Incentive Plan Design

    51  

Fiscal 2016 Performance Objectives

    53  

Fiscal 2016 Performance Objective Achievement.

    56  

Fiscal 2017 Performance Incentive Plan Design

    58  

ii


Table of Contents

EQUITY-BASED COMPENSATION

    58  

Nonqualified Stock Options

    58  

Restricted Shares/Restricted Stock Units

    59  

Optimizing Share Usage

    59  

Equity Grants in 2016

    60  

Equity Grants in 2017

    62  

RETIREMENT PLANS

    65  

Nonqualified Deferred Compensation Plan

    65  

Pension Benefits

    65  

OTHER BENEFITS AND PERQUISITES

    65  

CHANGE IN CONTROL

    66  

OVERSIGHT OF NAMED EXECUTIVE OFFICER COMPENSATION

    67  

Compensation Committee

    67  

Role of Outside Consultants

    68  

Role of Chief Executive Officer in Compensation Decisions

    68  

Roles of Senior Vice President of Human Resources and Vice President of Compensation and Benefits in Compensation Decisions

    68  

Compensation of our Chief Executive Officer

    68  

GOVERNANCE CONSIDERATIONS

    68  

Risk Considerations

    68  

Clawback Policy

    68  

Stock Ownership Requirements

    69  

OTHER CONSIDERATIONS

    70  

Impact of Accounting and Tax Treatments on Compensation

    70  

Policy Regarding Hedging, Short Sales, Publicly Traded Derivatives, Margin Accounts and Pledges

    71  

COMPENSATION COMMITTEE REPORT

   
71
 

COMPENSATION OF NAMED EXECUTIVE OFFICERS

   
72
 

SUMMARY COMPENSATION TABLE

   
72
 

PENSION BENEFITS

    73  

NONQUALIFIED DEFERRED COMPENSATION

    73  

GRANTS OF PLAN-BASED AWARDS IN FISCAL 2016

    75  

OUTSTANDING EQUITY AWARDS

    77  

OPTION EXERCISES AND STOCK VESTED

    79  

BENEFITS PLANS

    79  

2010 Stock Plan

    79  

Performance Incentive Plan

    79  

NONQUALIFIED DEFERRED COMPENSATION PLAN

    81  

EMPLOYMENT AGREEMENTS

    81  

Named Executive Officers

    81  

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

    84  

Chief Executive Officer

    84  

Named Executive Officers other than Chief Executive Officer

    86  

Acceleration of Nonqualified Stock Options and Restricted Shares/Restricted Stock Units on Change in Control

    87  

Potential Payments upon Termination or Change in Control.

    87  

REPORT OF THE AUDIT COMMITTEE OF THE BOARD

   
90
 

OTHER INFORMATION

   
91
 

iii


Table of Contents

BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT

    91  

Equity Compensation Plan Information.

    93  

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

    93  

10B5-1 TRADING PLANS

    93  

STOCKHOLDER PROPOSALS FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS

    94  

AVAILABILITY OF ANNUAL REPORT AND FORM 10-K

    94  

ADJOURNMENT OF THE 2017 ANNUAL MEETING OF STOCKHOLDERS

    95  

OTHER MATTERS

    95  

APPENDIX A: 2010 STOCK INCENTIVE PLAN AS AMENDED EFFECTIVE JUNE 8, 2017

   
A-1
 

iv


Table of Contents

THE CHEESECAKE FACTORY INCORPORATED



PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 2017



INTRODUCTION

General

        This Proxy Statement is furnished to the stockholders of The Cheesecake Factory Incorporated, a Delaware corporation ("Company" and "we," "us" or "our"), in connection with the solicitation of proxies by our Board of Directors ("Board") for use at the annual meeting of stockholders to be held at the Janet and Ray Scherr Forum Theatre, Thousand Oaks Civic Arts Plaza, 2100 Thousand Oaks Boulevard, Thousand Oaks, California 91362, on Thursday, June 8, 2017, beginning at 10:00 a.m., Pacific Daylight Time, and at any adjournment or postponement thereof ("Annual Meeting"). We intend this Proxy Statement and proxy voting materials to be available to stockholders on or about April 25, 2017.

Internet Availability of Proxy Materials

        Pursuant to rules adopted by the Securities and Exchange Commission ("SEC"), we are providing you access to our proxy materials over the Internet. This method allows us to deliver the proxy materials to you more quickly, lowers our costs and helps to conserve natural resources. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials ("Notice of Availability") to our stockholders who have not asked us to provide proxy materials in printed form. All stockholders receiving the Notice of Availability can request a printed set of proxy materials. All stockholders can access the proxy materials at www.proxyvote.com, irrespective of whether they receive the Notice of Availability or a printed copy of the proxy materials. Instructions on how to access the proxy materials online or request a printed copy may be found in the Notice of Availability and in this Proxy Statement.

        In addition, the Notice of Availability provides instructions to stockholders regarding receiving proxy materials in printed form by mail or electronically by email on an ongoing basis in the future. Choosing to receive future proxy materials by email will save us the cost of printing and mailing documents to you, enable us to provide you with materials sooner, and reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.

Voting; Quorum; Abstentions and Broker Non-Votes

        On April 10, 2017, the record date fixed by the Board for the Annual Meeting ("Record Date"), 47,921,256 shares of our common stock were outstanding, and there were no outstanding shares of any other class of stock. Each holder of common stock is entitled to one vote for each share of common stock held of record. Only stockholders of record at the close of business on April 10, 2017 will be entitled to notice of and to vote at the Annual Meeting or any postponement or adjournment thereof.

        The required quorum for the transaction of business at the Annual Meeting is a majority of the shares entitled to vote at the Annual Meeting, present in person or represented by proxy. Shares of common stock represented by a properly signed and returned proxy will be treated as present at the Annual Meeting for

1


Table of Contents

purposes of determining a quorum, regardless of whether the proxy is marked as casting a vote or abstaining (an "abstention") or constitutes a broker non-vote.

        For Proposal 1, our Bylaws provide that, in the election of directors, the nominees receiving the highest number of votes, up to the number of directors to be elected, shall be elected; provided, that in an uncontested election, each nominee must agree that if elected, he or she will submit an irrevocable resignation promptly following the election if he or she fails to receive a majority of votes cast. An uncontested election (such as the election held at this Annual Meeting) means that there are as many candidates standing for election as there are vacancies on the Board. A majority of votes cast means that the number of shares cast "FOR" a director's election exceeds the number of votes cast "AGAINST" that director. Abstentions and broker non-votes are not considered a vote cast and, therefore, will have no effect on the outcome of the vote other than to reduce the number of affirmative votes required to elect a director. "Broker non-votes" are shares of stock held in record name by brokers or nominees for which instructions have not been received from the beneficial owners or persons entitled to vote and the broker or nominee does not have discretionary voting power under applicable rules or the instrument under which it serves in such capacity.

        Proposals 2, 3 and 4 require the approval of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions as to these proposals will count as shares present and entitled to vote on the proposals and, accordingly, will count as votes "AGAINST" the proposal. Proposal 5 requires the holders of a majority of our shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on Proposal 5 to choose among alternatives of "3 years," "2 years," "1 year" or "Abstain." The choice with the highest number of votes cast will be considered our stockholders' preference for the frequency of the stockholders' non-binding, advisory votes concerning our Named Executive Officers' compensation. Broker non-votes are not considered present and entitled to vote on the proposal and will have no effect on the outcome of the vote for the proposal, other than to reduce the number of affirmative votes required to approve the proposal.

Proxies

        Proxies delivered pursuant to this solicitation are revocable prior to their exercise and at the stockholder's option by (i) attending and voting at the Annual Meeting (although attending the Annual Meeting itself will not revoke a proxy), or (ii) filing a written notice with Debby R. Zurzolo, our Secretary, revoking the proxy, or (iii) submitting another duly executed proxy bearing a later date. Unless previously revoked, all proxies representing shares entitled to vote delivered pursuant to this solicitation will be voted at the Annual Meeting by the named attorneys-in-fact and agents, to the extent authorized, in accordance with the directions contained therein.

        If no directions are given, the shares represented by such proxies will be voted:

2


Table of Contents

        The named proxy holders may vote in their discretion upon such other matters as may properly come before the Annual Meeting, including any motion made for adjournment or postponement (including for purposes of soliciting additional votes).

Solicitation

        We pay for the cost of preparing, assembling and mailing the Notice of Internet Availability, the Notice of Annual Meeting and Proxy Statement and the cost of this solicitation. Our directors, officers and other staff members may solicit proxies, without additional remuneration, in person or by telephone, facsimile or email transmission. Banks, brokerage houses and other custodians, nominees or fiduciaries will be asked to forward soliciting material to their principals and to obtain authorization for the execution of proxies, and we will reimburse them for their reasonable out-of-pocket expenses incurred in that regard.



3


Table of Contents

ITEMS TO BE VOTED ON

PROPOSAL ONE
Election of Directors

        General.    Our Bylaws provide for a board of directors consisting of no less than five and no more than thirteen members. The exact number within this range is determined by resolution of the Board. The Board currently has set the number of directors at seven.

        Nominees.    The Corporate Governance and Nominating Committee of the Board ("Governance Committee") recommended the nomination, which the Board approved, of the following individuals for re-election to the Board for a term that will expire at the 2018 annual meeting of stockholders and until their respective successors shall be elected and duly qualified: Edie Ames; Alexander L. Cappello; Jerome I. Kransdorf; Laurence B. Mindel; David Overton; David B. Pittaway; and Herbert Simon. All nominees are current directors of the Company. For biographical information regarding the director nominees, please see the section entitled "Our Board of Director Nominees" in this Proxy Statement.

        Unless a stockholder specifies otherwise, the shares represented by each returned proxy will be voted FOR the election of Edie Ames, Alexander L. Cappello, Jerome I. Kransdorf, Laurence B. Mindel, David Overton, David B. Pittaway and Herbert Simon.

        In the event that any of the nominees becomes unable or declines to serve as a director at the time of the Annual Meeting, the proxy holders will vote the proxies for any substitute nominee designated by the Board to fill the vacancy.

        Required Vote.    Our Bylaws provide that, in the election of directors, the nominees receiving the highest number of votes, up to the number of directors to be elected, shall be elected; provided, that in an uncontested election, each nominee must agree that if elected, he or she will submit an irrevocable resignation promptly following the election if he or she fails to receive a majority of votes cast. Each of the nominees included in this proposal have so agreed. An uncontested election (such as the election held at this Annual Meeting) means that there are as many candidates standing for election as there are vacancies on the Board. A majority of votes cast means that the number of shares cast "FOR" a director's election exceeds the number of votes cast "AGAINST" that director. Abstentions and broker non-votes are not considered a vote cast and, therefore, will have no effect on the outcome of the vote other than to reduce the number of affirmative votes required to elect a director. "Broker non-votes" are shares of stock held in record name by brokers or nominees for which instructions have not been received from the beneficial owners or persons entitled to vote and the broker or nominee does not have discretionary voting power under applicable rules or the instrument under which it serves in such capacity.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EDIE AMES, ALEXANDER L. CAPPELLO, JEROME I. KRANSDORF, LAURENCE B. MINDEL, DAVID OVERTON, DAVID B. PITTAWAY AND HERBERT SIMON TO THE BOARD.

4


Table of Contents

PROPOSAL TWO
Ratification of Selection of Independent Registered Public Accounting Firm

        The Audit Committee of our Board has selected PricewaterhouseCoopers LLP ("PwC") as our independent registered public accounting firm to conduct the audit of our books and records for fiscal 2017. PwC has served as our independent registered public accounting firm since our initial public offering in 1992. While the Audit Committee periodically evaluates proposals to change our independent registered public accounting firm, the Audit Committee has determined to continue our relationship with PwC for fiscal 2017. Representatives of PwC are expected to be present at the Annual Meeting to respond to appropriate questions and to make a statement should they so desire.

        Although our governing documents do not require us to submit this matter to stockholders, the Board believes that asking stockholders to ratify the appointment is consistent with best practices in corporate governance. If stockholders do not ratify the selection of PwC, the Audit Committee will regard such vote as a direction to consider the selection of a different independent registered public accounting firm. Even if the selection of PwC is ratified by the stockholders, the Audit Committee has the discretion to select a different independent registered public accounting firm at any time if it determines that a change would be in our and our stockholders' best interests.

        Independent Registered Public Accounting Firm Fees and Services.    The following table sets forth the aggregate fees billed by PwC to us during the last two fiscal years:

 
  Fiscal 2016   Fiscal 2015  

Audit Fees

  $ 679,750   $ 707,935  

Audit-Related Fees

         

Tax Fees

    35,454     40,515  

All Other Fees

    1,800     1,800  

Total Fees

  $ 717,004   $ 750,250  

        Audit Fees represent the aggregate fees billed by PwC for the audit of our annual financial statements included in the Annual Report on Form 10-K, review of financial statements included in the Quarterly Reports on Form 10-Q, the audit of our internal control over financial reporting with the objective of obtaining reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects, and services normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings or engagements.

        Tax Fees represent the aggregate fees billed by PwC for tax compliance, advice and planning services.

        All Other Fees represent the aggregate fees billed by PwC for access to their accounting literature research tool.

        Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Our Independent Registered Public Accounting Firm.    The Audit Committee is responsible for appointing, setting compensation for and overseeing the work of our independent registered public accounting firm. The Audit Committee also approves our independent registered public accounting firm's lead engagement partner, who is rotated every five years. The Audit Committee established a policy requiring that it pre-approve all audit and permissible non-audit services provided by the independent auditor, and the Audit Committee's charter authorizes the Audit Committee to delegate to one or more of its members the authority to make such pre-approvals, provided that those members report any pre-approvals to the full Audit Committee at its next regularly scheduled meeting. The Audit Committee considers whether such services are consistent with SEC rules on auditor independence as well as whether the independent auditor can provide the most effective and efficient service, for reasons such as familiarity with our business, staff members, culture, accounting systems, risk profile and other factors, and input from our management. The

5


Table of Contents

Audit Committee delegated the authority to address any requests for pre-approval of services between Audit Committee meetings to its Chair, provided that the amount of such fees for both audit and non-audit accounting services requested does not exceed $25,000 per fiscal quarter, and the Chair is required to report any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee's charter does not provide the Audit Committee with authority to delegate to management the Audit Committee's responsibility to pre-approve permitted services of the independent registered public accounting firm. In addition, the policy prohibits our auditors from providing internal control-related services to us unless such engagement has been specifically pre-approved by the Audit Committee. The waiver of pre-approval provisions set forth in applicable rules of the SEC was not used to approve any of the services described above in fiscal 2016.

        Required Vote.    The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal 2017 requires the affirmative vote of a majority of the shares of common stock present in person or by proxy and entitled to vote on the proposal at the Annual Meeting. Abstentions will be included in the number of shares present and entitled to vote on this Proposal 2 and will have the effect of a vote "AGAINST" Proposal 2. Broker non-votes will not be considered as present and entitled to vote on this Proposal 2. Therefore, a broker non-vote will not be counted and will have no effect on this Proposal 2 other than to reduce the number of affirmative votes required to approve this proposal.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2017.

6


Table of Contents

PROPOSAL THREE
Approval of an Amendment to the 2010 Stock Plan

        Summary.    Our Board believes that a balanced approach to compensation requires both short-term and long-term incentives. We provide long-term incentives in the form of equity compensation, which we believe aligns management's interests with the interests of our stockholders and fosters an ownership mentality that drives optimal decision-making for the long-term health and profitability of our Company. Equally important, equity compensation is critical to our continuing ability to attract, retain and motivate qualified corporate executives and restaurant management, as well as other restaurant, bakery and corporate employees. Utilizing equity compensation as a part of our total compensation strategy has been important to our past success, and we expect it to be crucial to achieving our long-term growth strategy. However, the current authorization under the 2010 Stock Plan is limited, and will provide only enough shares for us to grant equity compensation in accordance with our total compensation strategy through the end of fiscal 2017 based on the current scope and structure of our equity incentive programs.

        While we use a value based approach to granting equity, even if a significant increase in our stock price occurs, we still may not have a sufficient number of shares to meet our granting requirements through the first fiscal quarter of 2018, including shares for grant to our executives in fiscal year 2018. Moreover, if our stock price were to decrease, the deficiency would be even greater. Accordingly, our Board has amended the 2010 Stock Plan by increasing its maximum share authorization by 3,500,000 shares, from 9,180,000 shares to 12,680,000 shares, along with making a few other modifications to the 2010 Stock Plan, and we are asking you to approve this amendment.

        The complete text of the 2010 Stock Plan, as amended by the Amendment (defined below), is attached as Appendix A to this Proxy Statement. Stockholders are urged to review the 2010 Stock Plan, as amended by the Amendment, together with the following information, which is qualified in its entirety by reference to Appendix A. If there is any inconsistency between this Proposal 3 and the 2010 Stock Plan terms, as amended by the Amendment, or if there is any inaccuracy in this Proposal 3, the terms of the 2010 Stock Plan, as amended by the Amendment, shall govern.

        Background for the Current Request to Increase Authorized Shares.    On April 5, 2017 (subject to stockholder approval at the Annual Meeting), the Board approved an amendment to our 2010 Stock Plan to increase the number of shares of common stock available for grant under the 2010 Stock Plan by 3,500,000 shares, which will increase the authorized shares from 9,180,000 shares to 12,680,000 shares (the "Amendment"). As of April 4, 2017, the last day of our first fiscal quarter of 2017, the following equity compensation awards were outstanding:

    2010 Stock Plan     2010 Stock Plan
and Prior Equity
Compensation Plans
 

Shares Subject to Stock Options

    1,799,725     1,926,575  

Stock Option Weighted Average Exercise Price

    42.39     40.98  

Stock Option Weighted Average Remaining Term

    4.69     4.43  

Restricted Shares and Stock Units

    1,834,330     1,834,330  

Unissued Shares Available for Future Grant (taking into account Fungible Share Counting Methodology)

    867,289     867,289  

        Except as noted above, the share amounts in the above table represent the actual number of shares and do not reflect the 2010 Stock Plan fungible share counting methodology which is described below in the "Shares Subject to the 2010 Stock Plan" section.

7


Table of Contents

        The proposed Amendment is intended to provide us with a sufficient number of shares to satisfy our equity grant requirements until our 2020 annual meeting of stockholders, based on the current scope and structure of our equity incentive programs and the rate at which we expect to grant stock options, restricted stock, stock units and/or other forms of equity compensation. If we do not receive approval of the proposed Amendment at this Annual Meeting, we expect to exhaust the shares we have available for grant before the 2018 annual meeting, which is our next opportunity to request stockholder approval of additional shares. As a result, we would not be able to make our annual equity grants to executives and other key employees in the first fiscal quarter of 2018. Without the ability to grant equity, we would need to shift our historically-successful compensation program from a balanced mix of equity and cash compensation to one that is primarily cash-based. We believe this would be detrimental to our goal of aligning executives and employees' interests with that of stockholders, as well as negatively impacting our earnings per share growth.

        The 2010 Stock Plan, with an initial share authorization of 3,800,000 shares, was originally approved by our stockholders at our 2010 annual meeting of stockholders and replaced our Amended and Restated 2001 Omnibus Stock Incentive Plan ("2001 Stock Plan") with respect to grants of future equity compensation awards to certain employees and consultants (collectively, "Selected Participants"). Any remaining authorized but unissued shares available for grant under the 2001 Stock Plan were canceled upon stockholder approval of the 2010 Stock Plan. The 2010 Stock Plan was subsequently amended, with each such amendment approved by our stockholders, so that the number of authorized shares has increased to 9,180,000 shares with stockholder approval. On April 5, 2017, our Board approved an increase (subject to stockholder approval at the Annual Meeting) of 3,500,000 shares in the number of shares available for grant under the 2010 Stock Plan, which will increase the authorized shares from 9,180,000 shares to 12,680,000 shares. This increase in the number of shares available for grant constitutes approximately 7% of our issued and outstanding shares of common stock as of the Record Date.

        When approving the increase of 3,500,000 shares in the number of shares available for grant under the 2010 Stock Plan, from 9,180,000 shares to 12,680,000 shares, the Board considered a number of factors, including those set forth below:

8


Table of Contents

9


Table of Contents

        In addition to the above increase in total shares that can be issued under the Plan, as described further below, the Amendment also includes (i) a 50% increase to the Internal Revenue Code Section 162(m) annual per person share grant limits, (ii) extends the Plan's expiration date from February 24, 2020 to February 24, 2021 and (iii) makes clear that no dividends or dividend equivalents will be paid on unvested Awards. After carefully considering each of these points, the Board strongly believes the proposed Amendment to the 2010 Stock Plan is essential for our future success and encourages stockholders to consider these points in voting to approve the proposed Amendment.

        Proposed Amendment and Text of 2010 Stock Plan.    Under the proposed Amendment, Sections 4(o), 5(a), 5(d) and 15(a) of the 2010 Stock Plan would be amended in full to read as follows (and such amended provisions are the only material amendments to the 2010 Stock Plan):

10


Table of Contents

        Background and Purpose of the 2010 Stock Plan.    The purpose of the 2010 Stock Plan is to promote our long-term success and the creation of stockholder value by:

11


Table of Contents

        Eligibility to Receive Awards.    Our employees and consultants, and those of certain of our affiliated companies, are eligible to receive awards under the 2010 Stock Plan. The 2010 Stock Plan Committee (defined below) determines, in its discretion, the Selected Participants to be granted awards under the 2010 Stock Plan. As of April 4, 2017, approximately 545 employees (including four executive officers and one executive officer who is also an employee director) and no non-employee consultants were eligible to participate in the 2010 Stock Plan. The total number of employees employed by us as of April 4, 2017 was approximately 38,500. Non-employee directors are not eligible to participate in the 2010 Stock Plan.

        Shares Subject to the 2010 Stock Plan.    If stockholders approve the proposed Amendment to the 2010 Stock Plan pursuant to this Proposal 3, the maximum number of common shares that can be issued under the 2010 Stock Plan will increase by 3,500,000 shares, from 9,180,000 shares to 12,680,000 shares. We recognize the greater intrinsic value of restricted stock and stock units and, accordingly, we designed the 2010 Stock Plan with a fungible share counting methodology such that shares issued as restricted stock and stock units, and which are not forfeited, count as two shares against this limit. The shares underlying forfeited or terminated awards become available again for issuance under the 2010 Stock Plan, but shares used to pay an award's exercise price or tax withholding obligations count against the 2010 Stock Plan's share limit.

        Administration of the 2010 Stock Plan.    The 2010 Stock Plan is administered by a committee (the "2010 Stock Plan Committee") whose members must be independent "Non-Employee Directors" under Rule 16b-3 of the Securities Exchange Act of 1934, and "outside directors" under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Board has designated its Compensation Committee as the 2010 Stock Plan Committee, all of whose members are independent outside directors in accordance with the NASDAQ Listing Rules. Subject to the terms of the 2010 Stock Plan, the 2010 Stock Plan Committee has the sole discretion, among other things, to:

        The 2010 Stock Plan Committee also may use the 2010 Stock Plan to issue shares under other plans or subplans as may be deemed necessary or appropriate, such as to provide for participation by non-U.S. employees and those of any of our subsidiaries and affiliates. In addition, awards may be subject to any policy that the Board may implement on the recoupment of compensation (referred to as a "clawback" policy) including without limitation the Company's Policy on Reimbursement of Incentive Payments. The members of the Board, the 2010 Stock Plan Committee and their delegates are indemnified by the Company to the maximum extent permitted by applicable law for actions taken or not taken with respect to the 2010 Stock Plan.

        Types of Awards.    The 2010 Stock Plan permits the discretionary award of incentive stock options ("ISOs"), nonstatutory nonqualified stock options ("nonqualified stock options"), restricted stock, stock units and/or SARs to Selected Participants. As of the Record Date, the 2010 Stock Plan has only included grants of nonqualified stock options, restricted stock and stock units. Awards issued under the 2010 Stock

12


Table of Contents

Plan are evidenced by a written agreement executed by and between the Company and the Selected Participant. The written agreement recites the specific terms and conditions of the award.

        Stock Options.    A stock option is the right to acquire shares at a fixed exercise price over a fixed period of time. The 2010 Stock Plan Committee determines the number of shares covered by each stock option and the exercise price of the shares subject to each stock option, but the per share exercise price cannot be less than the fair market value of a share of our common stock on the date of grant of the stock option.

        Stock options granted under the 2010 Stock Plan may be either ISOs or nonqualified stock options. As required by the Code and applicable regulations, ISOs are subject to various limitations not imposed on nonqualified stock options. For example, the exercise price for any ISO granted to any employee owning more than 10% of our common stock may not be less than 110% of the fair market value of the common stock on the date of grant, and such ISO must expire not later than five years after the grant date. The aggregate fair market value (determined at the date of grant) of common stock subject to all ISOs held by a participant that are first exercisable in any single calendar year cannot exceed $100,000. ISOs may not be transferred other than upon death, or to a revocable trust where the participant is considered the sole beneficiary of the stock option while it is held in trust. The 2010 Stock Plan provides that no more than 3,800,000 shares may be issued pursuant to the exercise of ISOs.

        A stock option granted under the 2010 Stock Plan generally cannot be exercised until it vests. The 2010 Stock Plan Committee establishes the vesting schedule of each stock option at the time of grant. The maximum term for stock options granted under the 2010 Stock Plan since February 2013 has been eight years from the date of grant, although the 2010 Stock Plan Committee may establish a shorter period at its discretion. The 2010 Stock Plan Committee has historically granted options with an eight-year term. As of the Record Date, no ISOs have been granted under the 2010 Stock Plan.

        The exercise price of each stock option granted under the 2010 Stock Plan must be paid in full at the time of exercise, either with cash, through a broker-assisted "cashless" exercise and sale program, or through another method approved by the 2010 Stock Plan Committee. The optionee must pay any taxes that we are required to withhold at the time of exercise. The exercise price of outstanding stock options may not be reduced or lowered without the approval of the Company's stockholders.

        Restricted Stock.    Awards of restricted stock are shares of common stock that vest in accordance with the terms and conditions established by the 2010 Stock Plan Committee. The 2010 Stock Plan Committee also determines any other terms and conditions of a restricted stock award. In determining whether a restricted stock award should be made, and/or the vesting schedule for any such award, the 2010 Stock Plan Committee may impose whatever conditions to vesting it determines to be appropriate; provided, however, that generally no vesting will be permitted until at least one year after grant. The 2010 Stock Plan Committee may determine that an award of restricted stock will vest only if we satisfy performance goals established by the 2010 Stock Plan Committee.

        Stock Units.    Stock units are the right to receive an amount of shares or cash or any combination thereof equal to the fair market value of the shares covered by the stock unit at some future date after the grant. The 2010 Stock Plan Committee determines all of the terms and conditions of an award of stock units, including the vesting period; provided, however, that generally no vesting will be permitted until at least one year after grant. Upon each vesting date of a stock unit, a Selected Participant will be entitled to receive an amount of shares or cash, or any combination thereof, equal to the then fair market value of the shares on the settlement date. The 2010 Stock Plan Committee may determine that an award of stock units will vest only if we satisfy performance goals established by the 2010 Stock Plan Committee. Settlement of stock units generally occurs within thirty days of vesting, unless the Selected Participant has timely elected to defer such compensation.

13


Table of Contents

        Stock Appreciation Rights ("SARs").    A SAR is the right to receive, upon exercise, an amount equal to the difference between the fair market value of the shares covered by the SAR on the date of exercise and the fair market value of those shares on the date of grant. The 2010 Stock Plan Committee determines the terms of SARs, including the exercise price (provided that the exercise price per share cannot be less than the fair market value of a share of our common stock on the date of grant), the vesting schedule and the term of the SAR. The maximum term for SARs granted under the 2010 Stock Plan prior to February 2013 could not exceed ten years and, thereafter, may not exceed eight years from the date of grant, subject to the 2010 Stock Plan Committee's discretion to establish a shorter period. The 2010 Stock Plan Committee may determine that a SAR will only be exercisable if we satisfy performance goals established by the 2010 Stock Plan Committee. The exercise price of outstanding SARs may not be reduced or lowered without the approval of the Company's stockholders. Settlement of a SAR may be in shares of common stock or in cash, or any combination thereof, as the 2010 Stock Plan Committee may determine. As of the Record Date, no SARs have been granted under the 2010 Stock Plan.

        Performance Conditions.    The 2010 Stock Plan specifies performance conditions that the 2010 Stock Plan Committee may include in awards intended to qualify as performance-based compensation under Code Section 162(m). These performance criteria are limited to one or more of the following target objectives involving us or a subsidiary or affiliate of ours: return on equity; earnings per share; net income; earnings per share growth; return on invested capital; return on assets; economic value added; earnings before interest and taxes ("EBIT"); revenue growth; gross margin return on inventory investment; fair market value or price of the Company's shares (including, but not limited to, growth measures and total stockholder return); operating profit; consolidated income from operations; cash flow (including, but not limited to, cash flow from operations and free cash flow); cash flow return on investments (which equals net cash flow divided by total capital); internal rate of return; net present value; costs or expenses; market share; guest satisfaction; corporate transactions including without limitation mergers, acquisitions, dispositions and/or joint ventures; product development; capital expenditures; earnings before interest, taxes, depreciation and amortization ("EBITDA"), and/or revenues.

        Dividend Rights.    In the third quarter of fiscal 2012, our Board initiated a dividend payable on shares of our common stock, including restricted stock granted under the 2010 Stock Plan and has declared a dividend each fiscal quarter since that time, including through the end of the 2016 fiscal year. Any dividends on shares of unvested Awards issued under the 2010 Stock Plan are accrued rather than paid to the holder and are subject to the same vesting conditions and restrictions as the underlying Award with respect to which the dividends are paid. Accrued dividends are payable at the time the underlying Award vests, and such dividends are forfeited if the grant does not vest according to its terms.

        Limited Transferability of Awards.    Awards granted under the 2010 Stock Plan generally are not transferrable other than upon death or pursuant to a court-approved domestic relations order. However, the 2010 Stock Plan Committee may, in its discretion, permit the transfer of awards other than ISOs. Generally, where transfers are permitted, they will be permitted only by gift to a member of the Selected Participant's immediate family or to a trust or other entity for the benefit of the Selected Participant and/or members of his or her immediate family.

        Termination of Service.    Unless an applicable award agreement or a Selected Participant's employment agreement, if any, provides otherwise, the rules of the 2010 Stock Plan govern the vesting, exercisability and the term of any outstanding awards held by a Selected Participant who experiences a termination of service. The effect of such rules depends on the cause of a Selected Participant's termination of service. For instance, a termination of service for cause may be treated differently than a termination of service due to retirement, death or disability, which may be treated differently than a termination of service for any other reason.

14


Table of Contents

        Adjustments upon Changes in Capitalization.    In the event of a stock split of our outstanding shares, stock dividend, dividend payable in a form other than shares in an amount that has a material effect on the price of the shares, consolidation, combination or reclassification of the shares, recapitalization, spin-off, or other similar occurrence, then the number and class of shares issued under the 2010 Stock Plan and subject to each award, as well as the number and class of shares available for issuance under the 2010 Stock Plan and the per-participant fiscal grant limits, shall each be equitably and proportionately adjusted by the 2010 Stock Plan Committee.

        Corporate Transaction.    In the event that we are a party to a merger or other reorganization, outstanding 2010 Stock Plan awards will be subject to the agreement of merger or reorganization. Such agreement may provide for (i) the continuation of the outstanding awards by us if we are a surviving corporation, (ii) the assumption of the outstanding awards by the surviving corporation or its parent, (iii) full exercisability or full vesting, or (iv) cancellation of outstanding awards with or without consideration, in all cases with or without the consent of the Selected Participant. The Board or 2010 Stock Plan Committee need not adopt the same rules for each award or Selected Participant.

        Change in Control.    The 2010 Stock Plan Committee will decide the effect of a change in control of the Company on outstanding awards. The 2010 Stock Plan Committee may, among other things, provide that awards will fully vest upon a change in control, or upon a change in control followed by an involuntary termination of employment within a certain period of time, unless a participant's employment agreement, if any, provides otherwise.

        Term of the 2010 Stock Plan.    The 2010 Stock Plan is effective until February 24, 2020, or until earlier terminated by the Board. However, awards that are outstanding as of the termination of the 2010 Stock Plan shall continue to remain outstanding in accordance with their terms. If stockholders approve the proposed Amendment to the 2010 Stock Plan pursuant to this Proposal 3, then the foregoing expiration date will become February 24, 2021.

        Governing Law.    The 2010 Stock Plan is governed by the laws of the State of Delaware (which is the state of our incorporation), except for conflict of law provisions.

        Amendment and Termination of the 2010 Stock Plan.    The Board generally may amend or terminate the 2010 Stock Plan at any time and for any reason, except that it must obtain stockholder approval of material amendments, including any addition of shares or repricing of stock options or stock appreciation rights after the date of their grant as required by NASDAQ Listing Rules.

        Limitations on the Magnitude of Grants.    The 2010 Stock Plan imposes the following fiscal year grant limits on individual Covered Employees' awards:

 
  Share Grant Limit
Per Fiscal Year
 

Stock Options and SARs

  200,000 shares  

Restricted Stock and Stock Units

    100,000 shares  

If stockholders approve the proposed Amendment to the 2010 Stock Plan pursuant to this Proposal 3, then the foregoing limits will be as follows:

 
  Share Grant Limit
Per Fiscal Year
 

Stock Options and SARs

  300,000 shares  

Restricted Stock and Stock Units

    150,000 shares  

The above share grant limits are doubled for awards that are granted (i) in the fiscal year the Covered Employee commences employment, (ii) to an employee who is promoted to the position of our Chief Executive Officer, or (iii) when an employee first becomes a Covered Employee.

15


Table of Contents

        It is impossible to be certain that all 2010 Stock Plan awards or any other compensation paid by the Company to Covered Employees will be tax deductible, and not all awards granted under the 2010 Stock Plan to Covered Employees or other participants include qualified performance-based conditions. Further, the 2010 Stock Plan does not preclude the 2010 Stock Plan Committee from making other compensation payments outside of the 2010 Stock Plan to Covered Employees, even if such payments do not qualify for tax deductibility under Code Section 162(m). See also the section under the heading "Internal Revenue Code Section 162(m) Limits" below for further information on Code Section 162(m).

        Certain Federal Income Tax Information.    The following is a general summary, as of March 1, 2017, of the federal income tax consequences to us and to U.S. participants for awards granted under the 2010 Stock Plan. The federal tax laws may change and the federal, state and local tax consequences for any participant will depend upon his or her individual circumstances. This summary is not intended to be exhaustive and does not discuss the tax consequences of a participant's death or provisions of income tax laws of any municipality, state or other country. We advise participants to consult with a tax advisor regarding the tax implications of their awards under the 2010 Stock Plan.

        Incentive Stock Options.    For federal income tax purposes, the holder of an ISO has no taxable income at the time of the grant or exercise of the ISO. If such person retains the common stock acquired under the ISO for a period of at least two years after the stock option is granted and one year after the stock option is exercised, any gain upon the subsequent sale of the common stock will be taxed as a long-term capital gain. A participant who disposes of shares acquired by exercise of an ISO prior to the expiration of two years after the stock option is granted or before one year after the stock option is exercised will realize ordinary income equal to the lesser of (i) the excess of the fair market value over the exercise price of the shares on the date of exercise, or (ii) the excess of the amount realized on the disposition over the exercise price for the shares. Any additional gain or loss recognized upon any later disposition of the shares would be a short- or long-term capital gain or loss, depending on whether the shares have been held by the participant for more than one year. Utilization of losses is subject to special rules and limitations. The difference between the option exercise price and the fair market value of the shares on the exercise date of an ISO is an adjustment in computing the holder's alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the participant's regular income tax for the year.

        Nonqualified Stock Options.    A participant who receives an nonqualified stock option generally will not realize taxable income on the grant of such option, but will realize ordinary income at the time of exercise of the stock option equal to the difference between the option exercise price and the fair market value of the stock on the date of exercise.

        Restricted Stock.    A participant will generally not have taxable income upon grant of unvested restricted shares unless he or she elects to be taxed at that time pursuant to an election under Code Section 83(b). Instead, he or she will recognize ordinary income at the time(s) of vesting equal to the fair market value (on each vesting date) of the shares or cash received minus any amount paid for the shares.

        Stock Units.    No taxable income is generally reportable when unvested stock units are granted to a participant. Upon settlement of the vested stock units, the participant will recognize ordinary income in an amount equal to the fair market value of the shares issued or payment received in connection with the vested stock units.

        Stock Appreciation Rights.    No taxable income is generally reportable when a stock appreciation right is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received plus the fair market value of any shares received. Income Tax Effects for the Company. We generally will be entitled to a tax deduction in connection with an award under the 2010 Stock Plan in an amount equal to the ordinary income realized by a participant at the time the

16


Table of Contents

participant recognizes such income (for example, upon the exercise of an nonqualified stock option or vesting of restricted stock).

        Internal Revenue Code Section 162(m) Limits.    Section 162(m) of the Code places a limit of $1 million on the amount of compensation that we may deduct in any one fiscal year with respect to a Covered Employee. The 2010 Stock Plan is intended to enable certain awards to constitute performance-based compensation not subject to the annual deduction limitations of Section 162(m) of the Code. However, to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Board has not adopted a policy that all compensation must be tax deductible or be intended to qualify as performance-based compensation, and certain grants made to Covered Employees under the 2010 Stock Plan may not be deductible by the Company, in whole or in part.

        Internal Revenue Code Section 280G.    For certain persons, if a change in control of the Company causes an award to vest or become newly payable, or if the award was granted within one year of a change in control and the value of such award or vesting or payment, when combined with all other payments in the nature of compensation contingent on such change in control, equals or exceeds the safe harbor dollar limit provided in Section 280G of the Code, then the entire amount in excess of one-third of this dollar limit will be considered an excess parachute payment. Generally, the safe harbor dollar limit is equal to three times the five-year historical average of the individual's annual compensation received from the Company. The recipient of an excess parachute payment must pay a 20% excise tax on this excess amount, and the Company cannot deduct the excess amount from its taxable income.

        Internal Revenue Code Section 409A.    Section 409A of the Code governs the federal income taxation of certain types of nonqualified deferred compensation arrangements. A violation of Section 409A of the Code generally results in an acceleration of the recognition of income of amounts intended to be deferred and the imposition of a federal additional tax on the employee of 20% over and above the income tax owed, plus possible penalties and interest. The types of arrangements covered by Section 409A of the Code are broad and may apply to certain awards available under the 2010 Stock Plan (such as stock units). The intent is for the 2010 Stock Plan, including any awards available thereunder, to comply with the requirements of Section 409A of the Code to the extent applicable. As required by Code Section 409A, certain nonqualified deferred compensation payments to specified employees may be delayed to the seventh month after such employee's separation from service.

        New Plan Benefits.    All 2010 Stock Plan awards are granted at the 2010 Stock Plan Committee's discretion, subject to the limitations contained in the 2010 Stock Plan. Therefore, future benefits and amounts that will be received or allocated under the 2010 Stock Plan are not presently determinable. For information with respect to equity grants made to our "Named Executive Officers" (i.e., our Chief Executive Officer, President, Chief Financial Officer, General Counsel and President-The Cheesecake Factory Bakery Incorporated) in fiscal 2016 under the 2010 Stock Plan, please see the sections entitled "Executive Compensation—Equity-Based Compensation—Equity Grants in 2016," "—Equity Grants in 2017" and "Compensation of Named Executive Officers—Outstanding Equity Awards" in this Proxy Statement. As of April 4, 2017 the fair market value of a share of our common stock (as determined by the closing price quoted by the NASDAQ Global Select Market on that date) was $63.49.

        Existing Plan Benefits.    The following table sets forth the number of shares subject to all stock options granted through April 4, 2017 under the 2010 Stock Plan. These share numbers do not take into account the effect of options that have been exercised or were cancelled or that expired unexercised and do not

17


Table of Contents

reflect shares subject to other types of awards that have been granted to participants under the 2010 Stock Plan, such as restricted shares or stock units.

Name and Position
  Number of
Option Shares

 

David Overton, Chairman of the Board and Chief Executive Officer

  880,500  
 

David M. Gordon, President

    115,150  

W. Douglas Benn, Executive Vice President and Chief Financial Officer

  86,550  
 

Debby R. Zurzolo, Executive Vice President, General Counsel and Secretary

    81,450  

Max S. Byfuglin, President, The Cheesecake Factory Bakery Incorporated

  48,675  
 

All current executive officers as a group

    1,212,325  

All non-employee directors as a group*

  0  
 

All employees as a group (excluding executive officers)

    587,400  
*
Non-employee directors are not eligible to participate in the 2010 Stock Plan.

        Required Vote.    Under this Proposal 3, we are asking you to approve the Amendment to the 2010 Stock Plan. Approval of this Proposal 3 constitutes approval of the Amendment and requires the affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the Annual Meeting and entitled to be voted on Proposal 3. Abstentions will be included in the number of shares present and entitled to vote on this Proposal 3 and will have the effect of a vote "AGAINST" this Proposal 3. Broker non-votes will not be considered as present and entitled to vote on this Proposal 3. Therefore, a broker non-vote will not be counted and will have no effect on this Proposal 3 other than to reduce the number of affirmative votes required to approve this proposal.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE 2010 STOCK INCENTIVE PLAN TO, AMONG OTHER THINGS, INCREASE THE MAXIMUM NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR GRANT BY 3,500,000 SHARES, FROM 9,180,000 SHARES TO 12,680,000 SHARES

18


Table of Contents

PROPOSAL FOUR
Non-Binding, Advisory Vote on Executive Compensation

        In accordance with Section 14A of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and as a matter of good corporate governance practices, we are asking our stockholders to approve, on a non-binding, advisory basis, the compensation of our principal executive officer, our principal financial officer and our three most highly compensated executive officers (collectively, the "Named Executive Officers") as disclosed pursuant to the compensation disclosure rules of the SEC (commonly referred to as a "say-on-pay vote"). We intend to present this non-binding, advisory vote on executive compensation to our stockholders on an annual basis. Accordingly, you may vote on the following resolution at the 2017 Annual Meeting:

        "RESOLVED, that the compensation paid to the Company's Named Executive Officers as disclosed pursuant to the compensation disclosure rules, including the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure contained in this Proxy Statement, is hereby APPROVED."

        As described in detail in the "Compensation Discussion and Analysis" section of this Proxy Statement, our compensation programs are designed to motivate our executives to drive the success of our Company. We believe that our compensation programs play a material role in our ability to achieve strong financial results, even during difficult economic times, and attract, retain and motivate a highly experienced and successful team to manage our Company. Our compensation programs reward sustained performance that is aligned with long-term stockholder interests, with a balance of:

Stockholders are encouraged to read the "Compensation Discussion and Analysis," the accompanying compensation tables, and the related narrative disclosure contained in this Proxy Statement for a full description of our executive compensation programs.

        This vote is advisory only and non-binding. The Board and the Compensation Committee, which is comprised solely of independent directors, will consider the outcome of this vote when making future executive compensation decisions to the extent appropriate.

        Required Vote.    The approval of the resolution set forth above requires the affirmative vote of a majority of the shares of common stock present in person or by proxy and entitled to vote on the proposal at the Annual Meeting. Abstentions will be included in the number of shares present and entitled to vote on this Proposal 4 and will count as a vote "AGAINST" Proposal 4. Broker non-votes will not be considered as present and entitled to vote on this Proposal 4. Therefore, a broker non-vote will not be counted and will have no effect on this Proposal 4 other than to reduce the number of affirmative votes required to approve this proposal.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL,
ON A NON-BINDING, ADVISORY BASIS, OF THE RESOLUTION SET FORTH ABOVE.

19


Table of Contents

PROPOSAL FIVE
Non-binding, Advisory Vote on the Frequency of the Stockholder Advisory Vote on
Executive Compensation

        In accordance with Section 14A of the Exchange Act, public companies are required to conduct a non-binding, advisory stockholder vote to approve the compensation of named executive officers (a "say-on-pay vote") at least every three years and to determine, at least once every six years, whether the say-on-pay votes will occur every three, two or one years. In accordance with the Exchange Act, we are seeking a non-binding, advisory vote from our stockholders as to whether the frequency of our stockholders' say-on-pay votes should occur once every three, two or one years.

        While our compensation program is designed to drive long-term value for our stockholders, we nonetheless believe it is most appropriate for stockholders to express their views on our Named Executive Officers' compensation every year so that our Compensation Committee can take such advisory vote into consideration when setting compensation in the succeeding year.

        In addition to favoring a say-on-pay vote each year, we also encourage a dialogue with stockholders to provide a method by which stockholders may express their views about our compensation program, among other matters. Our Board and Compensation Committee may be contacted at any time as described in the section entitled "Stockholder Communications with the Board" in this Proxy Statement.

        While the results of voting on this proposal are only advisory and are non-binding upon our Board, we value our stockholders' opinions and the Board is expected to consider the results of the vote when determining the frequency of our stockholders' say-on-pay votes.

        Required Vote.    Our Board recommends that a non-binding, advisory stockholder vote concerning Named Executive Officer compensation should occur every year. The proxy card provides our stockholders with the opportunity to choose among four alternatives (i.e., holding the vote every three years, two years or one year, or abstaining from the vote) and, therefore, stockholders will not be voting to approve or disapprove the Board's recommendation. The alternative that receives the largest number of votes (other than "Abstain") will be designated the stockholders' preference as to the frequency of the say-on-pay vote.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EVERY ONE YEAR FOR THE
FREQUENCY OF ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION,
WHICH IS ONE OF THE ALTERNATIVES PRESENTED UNDER ITEM 5 ON THE PROXY CARD.



20


Table of Contents

THE BOARD AND CORPORATE GOVERNANCE

Our Board of Director Nominees

        The Board nominated all seven of the Company's current directors for re-election at the Annual Meeting to serve a one-year term expiring at the 2018 annual meeting of stockholders and until their respective successors shall be elected and qualified. At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the seven nominees named in this Proxy Statement.

Name
  Age   Position   Director
Since
  Current Term
Expiration
 

David Overton

  71   Chairman of the Board, Chief Executive Officer   1992   2017  

Edie Ames

    50   Director     2016     2017  

Alexander L. Cappello

  61   Director   2008   2017  

Jerome I. Kransdorf

    78   Lead Director     1997     2017  

Laurence B. Mindel

  79   Director   2012   2017  

David B. Pittaway

    65   Director     2009     2017  

Herbert Simon

  82   Director   2011   2017  

        David Overton has served as our Chairman of the Board and Chief Executive Officer since our incorporation in 1992. He co-founded the Company with his parents, Evelyn and Oscar Overton. Mr. Overton created the Company's namesake concept and opened the first The Cheesecake Factory restaurant in 1978 in Beverly Hills, California. He grew The Cheesecake Factory® into an international brand and created two other concepts, Grand Lux Cafe® and RockSugar Pan Asian Kitchen®. Under Mr. Overton's leadership, the Company's revenues reached $2.3 billion in 2016, with The Cheesecake Factory leading the casual dining industry in average annual sales per restaurant of $10.7 million in fiscal 2016. Mr. Overton's professional honors include the International Foodservice Manufacturers Association "Silver Plate Award," recognizing the most outstanding and innovative talent in foodservice operations; the "Executive of the Year Award" from Restaurants & Institutions Magazine; the "MenuMasters Hall of Fame Award" from Nation's Restaurant News, for his outstanding contributions to menu design and foodservice research and development; the "Entrepreneur of the Year" in the Food Services category for the Los Angeles region by Ernst & Young, for his demonstrated excellence and extraordinary success in innovation, performance and personal commitment to The Cheesecake Factory and the communities our restaurants serve; and the "Leadership Roundtable-Industry Leadership Award." Mr. Overton is also one of the founding members and directors of The Cheesecake Factory Oscar and Evelyn Overton Charitable Foundation ("Foundation"), a 501(c)(3) qualified, non-profit charitable organization which raises funds for a variety of worthy causes and provides a means for the Company's approximately 38,800 staff members to perform charitable work in their communities.

        Edie Ames brings 30 years of restaurant industry experience across the casual dining, fast casual and fine dining segments. Ms. Ames currently serves as President of The Counter and Built Custom Burgers where she oversees company-owned operations and supports the growth of its franchise business. Previously, she held numerous leadership roles, including Executive Vice President of Wolfgang Puck Catering, Chief Operating Officer of both Real Mex Restaurants and Del Frisco's Restaurant Group, as well as President of Morton's Restaurant Group. Earlier in her career she spent 11 years at California Pizza Kitchen, Inc. where she held positions of increasing responsibility.

        Alexander L. Cappello has led several public and private companies over the past 43 years, including Cappello Global, LLC, a global investment bank, whose principals have transacted business in over 50 countries. He is also a director of California Ethanol & Power, Gusmer Enterprises, Virco Manufacturing Corporation (NASDAQ), Santa Maria Energy Holdings, LLC and Caldera Medical Corp.

21


Table of Contents


Mr. Cappello is a director of RAND Corporation's Center for Middle East Public Policy, the Center for Global Risk and Security, and the RAND-Russia Forum. Mr. Cappello is a former Chairman of Intelligent Energy, PLC (London), Inter-Tel (NASDAQ), and Geothermal Resources Intl. (AMEX), and a former director of California Republic Bank.

        Jerome I. Kransdorf has more than 45 years of investment management experience. Mr. Kransdorf retired in 2014 as President of JaK Direct, a division of Muriel Siebert & Co., Inc. where he worked from 2001 to 2014. From 1997 to 2001, Mr. Kransdorf served as Senior Vice President of J. & W. Seligman & Co. Incorporated, an investment advisory firm. From 1959 to 1997, he was employed in investment and senior management positions at Wertheim & Co. and its successor companies.

        Laurence B. Mindel has 47 years of experience as a restaurant creator, developer and operator and is currently the Managing Partner of Poggio Trattoria, an award-winning Italian restaurant, and Copita Tequileria Y Comida, a "modern" Mexican restaurant, both located in Sausalito and Convivo, a "nomad Italian" restaurant in Santa Barbara, California. In 1970, he co-founded Spectrum Foods whose restaurant portfolio included, among others, California-based restaurants Ciao, Prego, MacArthur Park, Guaymas and Harry's Bar. Following the acquisition of Spectrum Foods by Saga Corp. (NYSE) in 1984, Mr. Mindel served as President of Saga's restaurant group where he directed the operations of more than 200 restaurants with combined revenue of over $375 million. When Saga was acquired in 1986, Mr. Mindel founded Il Fornaio, a restaurant and bakery company which became public in 1997 (NASDAQ) and was subsequently taken private in 2001. His professional honors include Nation's Restaurant News "Golden Chain" award, International Foodservice Manufacturers Association "Gold Plate" award, Food Arts Magazine "Silver Spoon" award Leadership Roundtable Conference award for Distinguished & Exemplary Leadership in the Food Service Industry and, in 1998, he was inducted into the California Restaurant Association's Hall of Fame. In 1985, Mr. Mindel became the first American and the first person of non-Italian descent to be awarded the Caterina de Medici Medal from the Italian government, recognizing excellence in the preservation of Italian heritage outside of Italy.

        David B. Pittaway is Senior Managing Director, Senior Vice President and Secretary of Castle Harlan, Inc., a private equity firm. He has been with Castle Harlan since 1987. Mr. Pittaway also has served as a member of the Board and Senior Managing Director of Branford Castle, Inc., an investment company, since October 1986. From 1987 to 1998, Mr. Pittaway was Vice President, Chief Financial Officer and a director of Branford Chain, Inc., a marine wholesale company, where he is now a director and Vice Chairman. Previously, Mr. Pittaway was Vice President of Strategic Planning and Assistant to the President of Donaldson, Lufkin & Jenrette, Inc., an investment banking firm. Mr. Pittaway is a member of the boards of Bravo Brio Restaurant Group (BRIO) and the Dystrophic Epidermolysis Bullosa Research Association of America. He was formerly a director of Morton's Restaurant Group and McCormick & Schmick's Seafood Restaurants. In addition, he is a director and co-founder of the Armed Forces Reserve Family Assistance Fund.

        Herbert Simon is the Chairman Emeritus of the board of Indianapolis-based Simon Property Group, Inc., a member of the S&P 500 and the largest U.S. publicly-traded real estate investment trust. Mr. Simon has served on its board since 1993. Throughout his career, Mr. Simon has maintained a leadership position within the retail property industry by developing high profile retail facilities, including, but not limited to, The Forum Shops at Caesars, Roosevelt Field in Long Island, and The Fashion Centre at Pentagon City. Additional diversified business interests beyond real estate include ownership of a National Basketball Association's franchise, the Indiana Pacers. Mr. Simon also served as the former Chairman of the National Basketball Association's Board of Governors and continues to serve as a member of such board. He is also active in numerous community and civic organizations.

        Except as set forth above, each nominee has been engaged in his or her principal occupation described above during the past five years. There are no family relationships between any of our directors or executive officers as defined under NASDAQ rules.

22


Table of Contents

Director Independence

        The Board has determined each of the following directors to be an "independent director" as defined under SEC and NASDAQ rules: Edie Ames; Alexander L. Cappello; Jerome I. Kransdorf; Laurence B. Mindel; David B. Pittaway and Herbert Simon. In this Proxy Statement, these six directors are referred to individually as an "Independent Director" and collectively as the "Independent Directors."

Board Leadership Structure and Lead Director

        Our Chief Executive Officer, David Overton, also serves as Chairman of our Board. Mr. Overton, who founded the Company along with his parents, Oscar and Evelyn Overton, was the driving force behind the creation and opening of The Cheesecake Factory restaurant concept and has served in a combined role as Chief Executive Officer and Chairman since 1992. We believe this leadership structure enables Mr. Overton to function as the critical link between the Board and the operating organization. It also streamlines communications with and among the Board on key topics such as our strategic objectives, long-term planning and enterprise risk management.

        In addition to Mr. Overton's leadership on the Board, we determined that the appointment of an independent, lead director ("Lead Director") would be appropriate in order to establish another layer of Board oversight, share certain responsibilities with, and facilitate communication between, our Chairman and our Independent Directors, and continue to follow best practices in corporate governance. To this end, the Board adopted a policy regarding the appointment of a Lead Director—one Independent Director who is selected annually by the Independent Directors. Mr. Kransdorf currently serves as Lead Director.

        The role of the Lead Director is to preside at executive sessions of the Independent Directors, serve as principal liaison between the Independent Directors and the Chairman, work with the Chairman to set and approve the schedule and agenda for meetings of our Board and its committees, direct the retention of advisors and consultants who report directly to the Board, serve as liaison for consultation and communication with stockholders, oversee the annual evaluation of our Board and its committees and evaluate, in cooperation with the Compensation Committee and all members of the Board, the Chief Executive Officer's performance and meet with the Chief Executive Officer to discuss the Board's evaluation. For information on our Board leadership, including the role of our Chairman and Lead Director, please see the section below entitled "Corporate Governance Principles and Guidelines; Corporate Governance Materials Available on Our Website."

Role of the Board in Risk Oversight

        While the Audit Committee of the Board monitors risks related to our financial statements, the Board has determined that oversight of Company-wide risk should remain with the full Board due to the strategic nature of enterprise risk management and the Board's desire to receive feedback from a broad spectrum of disciplines regarding management's plans with respect thereto. The Board meets periodically with our management to review the effectiveness of processes for identifying and managing significant risks. The Board also reviews with management the strategic objectives that may be affected by identified risks, the level of appropriate risk tolerance, our plans for monitoring, mitigating and controlling risk, the effectiveness of such plans and our disclosure of risk.

Meeting Attendance

        During fiscal 2016, the Board held ten meetings and the Independent Directors held three executive sessions without management present. Meetings include both in-person and telephonic meetings. For information regarding committee composition and number of committee meetings held during fiscal 2016, please see the section below entitled "Committees of the Board of Directors." All of our directors attended at least 75% of the aggregate number of meetings of the Board and the committees on which he or she served while they were on the Board.

23


Table of Contents

        Our policy regarding Board members' attendance at our annual meeting of stockholders and our procedure for annual committee membership and chair assignments are both available on our website in our Corporate Governance Guidelines. For information on where to access this document, please see the section below entitled "Corporate Governance Principles and Guidelines; Corporate Governance Materials Available on Our Website." The following directors were present at the 2016 annual meeting: David Overton, Alexander L. Cappello, Jerome I. Kransdorf, Laurence B. Mindel and David B. Pittaway.

Committees of the Board

        The Board has three standing committees: the Audit Committee, the Compensation Committee, and the Governance Committee. Committee membership as of the date of this Proxy Statement is as follows:

Board Member

  Audit Committee   Compensation
Committee
  Corporate
Governance and
Nominating
Committee

David Overton, Chairman of the Board

  -   -   -

Edie Ames

  -   -   Member

Alexander L. Cappello

  Member*   Chair   -

Jerome I. Kransdorf, Lead Director

  Member   Member   Chair

Laurence B. Mindel

  -   Member   Member

David B. Pittaway

  Chair*   -   -

Herbert Simon

  -   Member   Member

Number of Meetings in 2016

  8   11   3
*
Designated by the Board as an "audit committee financial expert."

        The Board determined that each member of the committees of the Board in service for all of fiscal 2016 met the independence requirements applicable to those committees under SEC and NASDAQ rules. The Governance Committee recommends committee membership and chair assignments to the Board, which the Board considers when making committee membership and committee chair assignments at its meeting held in conjunction with each annual meeting of stockholders. Changes to committee assignments are also made from time to time during the course of the year, as deemed appropriate by the Board. The role of each committee is described below.

        Audit Committee.    The Audit Committee operates pursuant to a written charter and is primarily responsible for monitoring the quality and integrity of our financial statements and related disclosure, and systems of internal controls regarding risk management, finance and accounting; our compliance with legal and regulatory requirements; our independent auditor's qualifications and independence; and the performance of our internal audit function and independent auditors. The Audit Committee provides an avenue of communication among the independent auditors, management and the Board and issues the report of the Audit Committee required by the SEC to be included in our proxy statement. Our Vice President of Internal Audit reports directly to the Audit Committee and is responsible for conducting comprehensive audits of our internal financial controls and the operational effectiveness of related activities and systems.

        The Audit Committee conducts an annual performance evaluation of its composition, compliance procedures, financial oversight responsibilities and other matters. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of our public accounting firm engaged to issue an audit report or perform other audit, review or attest services. The Audit Committee pre-approves the audit work, as well as all non-audit work, to be performed by our external auditors after considering its permissibility under SEC rules and its impact on our auditor's

24


Table of Contents

independence. The Audit Committee also reviews material written communications the external auditors may provide to management and discusses any concerns with the auditors and management.

        We have adopted a written Code of Ethics for our directors, executive officers and senior financial officers, a copy of which is available on our website. Our Code of Ethics requires prompt reporting of potential conflicts to the Audit Committee.

        Our Audit Committee also has oversight over the recoupment of any bonus awards paid to our executive officers if we were required by applicable law or applicable accounting or auditing principles to restate our financial statements to correct an accounting error in any interim or annual financial statement filed with the SEC as a result of material noncompliance with applicable financial reporting requirements and the bonus was directly based on such financial statement.

        Pursuant to its charter, the Audit Committee reviews our policies and procedures relating to conflicts of interest and approves any proposed "related party transaction." For this purpose, "related party transaction" means a related person transaction required to be disclosed pursuant to Item 404 of Regulation S-K adopted by the SEC. For a discussion of our policies with respect thereto, see "Policies Regarding Review, Approval or Ratification of Transaction with Related Persons" in this Proxy Statement. The Audit Committee conducts an annual evaluation of its charter.

        Compensation Committee.    The Compensation Committee operates pursuant to a written charter. The Compensation Committee is responsible for determining the compensation of our Chief Executive Officer and all other executive officers. The Compensation Committee reviews and approves all employment, retention and severance agreements for executive officers and prepares, or causes to be prepared, the report of the Compensation Committee required by the SEC to be included in our proxy statement. The Compensation Committee is directly responsible for the appointment, compensation and oversight of the work of any compensation advisor retained by the Compensation Committee. The Compensation Committee also makes recommendations to the Board concerning non-employee director compensation.

        The Compensation Committee approves and administers our incentive compensation programs, including our long-term equity and short-term bonus incentive plans. The Compensation Committee makes recommendations to the Board with respect to incentive and equity compensation plan structure and periodically reviews and makes recommendations concerning existing or new executive compensation, performance incentives, employee benefits, stock plans or management perquisites. The Compensation Committee authorizes and approves all grants of equity compensation to our employees under our equity compensation plan. The Compensation Committee conducts an annual evaluation of its charter.

        Governance Committee.    The Governance Committee operates pursuant to a written charter. The Governance Committee is responsible for evaluating issues and developments related to corporate governance and making recommendations to the Board with respect to corporate governance standards, corporate governance proposals from stockholders and the establishment and composition of committees of the Board. The Governance Committee is responsible for overseeing and recommending programs and activities for the continuing education of directors. The Governance Committee also identifies potential candidates for nomination or appointment as directors and makes recommendations to the Board concerning nominees to be presented for stockholder approval and to fill any vacancies. The Governance Committee assists the Chief Executive Officer in succession planning for key executive positions. The Governance Committee conducts an annual evaluation of its charter.

        Other Committees.    The Board has the discretion to establish other committees and subcommittees from time to time. No additional committees or subcommittees were established or active in fiscal 2016.

        Committee Charters.    All of our committee charters are available on our website. For information on where to access these documents, please see the section entitled "Corporate Governance Principles and Guidelines; Corporate Governance Materials Available on Our Website."

25


Table of Contents

Designation of Audit Committee Financial Experts

        With the assistance of our outside legal counsel, the Board reviewed the applicable legal standards for independence and criteria for determination as to each individual who may be deemed an "audit committee financial expert," as well as responses to annual questionnaires completed by the directors, and has determined that David B. Pittaway, Chairman of the Audit Committee, and Audit Committee member Alexander L. Cappello are each an "audit committee financial expert" as such term is defined in Item 407(d)(5)(ii) of Regulation S-K adopted by the SEC.

Corporate Governance Principles and Guidelines; Corporate Governance Materials Available on Our Website

        Our Board is committed to ethical business practices and believes that good corporate governance is important to ensure that the Company is managed for the long-term benefit of our stockholders. In the spirit of this commitment, the Board has adopted a "Summary of Corporate Governance Principles and Guidelines" ("Corporate Governance Guidelines") which includes, among other topics, the size and operations of our Board and its committees, independence of directors, selection and responsibilities of our Lead Director, Board membership criteria, service by our Board members on boards of other publicly-traded companies, director and executive officer stock ownership guidelines, and our policy on communicating concerns to our Board.

        Our Corporate Governance Guidelines, as well as other corporate governance information listed below, are available on our website at investors.thecheesecakefactory.com, by clicking on the link for "Corporate Governance:"

        Throughout this Proxy Statement, we may refer to various documents that are available on our website. The contents posted on our website are not incorporated by reference into this Proxy Statement or any of our filings with the SEC and may be revised by us (in whole or in part) at any time and from time to time.

26


Table of Contents

Stockholder Communications with the Board

        Our Corporate Governance Guidelines described above include the policy our Board has adopted for stockholders and employees who wish to communicate any concern directly to the Board. Please refer to Section VI of our Corporate Governance Guidelines at investors.thecheesecakefactory.com for a description of this process.

Director Nominations Process

        The Board adopted "Policies and Procedures Regarding Board of Director Candidates" ("Nominations Policy"). The Nominations Policy is available on our website at investors.thecheesecakefactory.com, by clicking on the link for "Corporate Governance." The purpose of the Nominations Policy is to describe the process by which candidates are selected for possible inclusion in the Board's recommended slate of director nominees. The Governance Committee of the Board administers the Nominations Policy and is responsible for identifying candidates for nomination or appointment to the Board. To fulfill this function, the Governance Committee at least annually reviews the size and composition of the Board and its committees, including the number of directors eligible for election at the annual meeting of stockholders, in accordance with our Certificate of Incorporation and Bylaws. The Governance Committee may solicit recommendations for nominees from other directors, members of management or others. In addition, the Governance Committee will consider recommendations of a stockholder of record or beneficial owners who timely comply with the Nominations Policy.

        Minimum Qualifications.    The Nominations Policy contains the following minimum qualifications for candidates for nomination to the Board:

27


Table of Contents

        Criteria for Evaluating Candidates; Diversity.    The Nominations Policy provides that, in evaluating nominations, the Governance Committee will take into consideration a balance of different capabilities and overall diversity in its broadest sense including in the areas of personal and professional experiences, age, gender, ethnicity, geography, financial and managerial and operational knowledge; variety of opinions and perspectives; and other differentiating characteristics with the goal of seeking and selecting candidates who will enhance the Board's ability to perform its responsibilities, increase stockholder value and adhere to good corporate governance practices.

        The Governance Committee will consider the following criteria in evaluating candidates for nomination in light of the size and composition of the Board and its committees:

28


Table of Contents

        In addition, the Governance Committee may consider whether the nomination and election of the candidate would result in less than two-thirds of the Board being "independent directors" as defined in our policies and procedures.

        Qualifications of Current Directors and Director Nominees.    As described above, the Governance Committee of the Board evaluates the qualifications of our director nominees prior to each annual meeting of stockholders. As part of this evaluation process, the Governance Committee reviews the current composition of the Board and assesses whether the qualifications of each director continue to meet the Committee's requirements for Board service. The following is a description of the particular experience, qualifications, attributes and skills that led the Governance Committee to recommend, and the Board to nominate, each person listed below as a director of the Company.

        David Overton has served as our Chief Executive Officer and Chairman of the Board since our incorporation in February 1992. When evaluating Mr. Overton's qualifications for continuation of his Board service, the Governance Committee and the Board considered Mr. Overton's essential leadership role with us, his unique perspective and understanding of our mission, vision and values, the extent and depth of his knowledge and experience related to us and our concepts, and the importance of Mr. Overton's strategic vision.

        Edie Ames was appointed to the Governance Committee and the Board in December 2016. When evaluating Ms. Ames' qualifications for Board service, the Governance Committee and the Board considered Ms. Ames' more than 30 years of restaurant industry experience, including operational experience, domestic and international licensing and franchise experience, numerous leadership roles with a variety of restaurant concepts across the casual dining, fast casual and fine dining segments, and her current status as an "independent director" under NASDAQ and SEC rules.

        Alexander L. Cappello has served on the Board since 2008. When evaluating Mr. Cappello's qualifications for continuation of his Board service, the Governance Committee and the Board considered Mr. Cappello's extensive executive management and financial background, international business experience, international management and marketing experience, prior service as Lead Director of our Company, service as the Chair of our Compensation Committee and member of our Audit Committee, designation by our Board as an "audit committee financial expert," former service on the boards of other public companies, including another restaurant company, corporate governance expertise, and his current status as an "independent director" under NASDAQ and SEC rules.

        Jerome I. Kransdorf has served on the Board since 1997. When evaluating Mr. Kransdorf's qualifications for continuation of his Board service, the Governance Committee and the Board considered Mr. Kransdorf's more than 45 years' of investment management experience, his depth of knowledge and experience specific to us, his current service as Lead Director, Chair of the Governance Committee and member of the Audit Committee and Compensation Committee, and his current status as an "independent director" under NASDAQ and SEC rules.

        Laurence B. Mindel has served on the Board since 2012. When evaluating Mr. Mindel's qualifications for continuation of his Board service, the Governance Committee and the Board considered Mr. Mindel's more than 47 years' experience in the restaurant industry, both as a concept creator and an operator, his experience guiding a publicly-traded restaurant company, his current service as a member of the Compensation Committee and Governance Committee, his prior service as a member of the Compensation Committee and his current status as an "independent director" under NASDAQ and SEC rules.

        David B. Pittaway has served on the Board since 2009. When evaluating Mr. Pittaway's qualifications for continuation of his Board service, the Governance Committee and the Board considered his extensive financial and industry experience, including his service on audit committees of other public restaurant companies, his legal background and familiarity with SEC rules and regulations related to public

29


Table of Contents

companies, his service as a member (and now Chairman) of our Audit Committee, his designation by our Board as an "audit committee financial expert" and his current status as an "independent director" under NASDAQ and SEC rules.

        Herbert Simon has served on the Board since 2011. When evaluating Mr. Simon's qualifications for continuation of his Board service, the Governance Committee and the Board considered Mr. Simon's considerable domestic and international commercial real estate experience, including his tenure with Simon Property Group, Inc., a publicly-held real estate investment trust of which he is Chairman Emeritus and a member of the board of directors, his service as a member of the Compensation Committee and the Governance Committee, and his current status as an "independent director" under NASDAQ and SEC rules.

        Stockholder Recommendations to the Governance Committee for Nomination of Directors.    The Nominations Policy provides that the Governance Committee will consider recommendations for nominations submitted by stockholders of record or beneficial owners. In order to give the Governance Committee sufficient time to evaluate a recommended candidate, the recommendation must be received by our Secretary at our principal executive offices no later than the 120th calendar day before the date that our proxy statement was released to stockholders in connection with the previous year's annual meeting of stockholders. With respect to the 2018 annual meeting of stockholders, recommendations must be received on or before December 26, 2017. The stockholder's recommendation must include all of the following:

        Evaluation of Candidates.    All qualified candidates identified through the process outlined above, including incumbents, will be evaluated based on the same criteria. If, based on the initial evaluation, a new candidate continues to be of interest, the Chair of the Governance Committee will interview the candidate and communicate his or her evaluation to the other committee members and the Chairman of the Board. Other members of the Governance Committee and senior management will conduct subsequent interviews. Ultimately, background and reference checks will be conducted, and the Governance Committee will meet to finalize its list of recommended candidates for consideration by the full Board. If an incumbent is nominated, the interview process may be abbreviated at the discretion of the Chair of the Governance Committee. If the Chair of the Governance Committee is being considered for re-nomination, the other Governance Committee members may appoint another member of the Governance Committee to head the review process for the Chair's reconsideration.

        Future Revisions to the Nominations Policy.    The Governance Committee's Nominations Policy is intended to provide a flexible set of guidelines for the effective functioning of the director nominations process. The Governance Committee intends to review this policy and procedure at least annually and anticipates that modifications will be necessary from time to time as our needs and circumstances evolve, and to conform with changes in applicable legal or listing standards.

30


Table of Contents

        General Nomination Right of All Stockholders.    Stockholders may nominate one or more persons for election as a director of the Company at an annual meeting of stockholders if the stockholder complies with the advance notice, information and consent provisions contained in our Bylaws. Stockholder nominations for the election of directors may be made only by a stockholder of record on both the date of giving notice and on the record date for such meeting by giving timely written notice to our Secretary at our principal executive offices. Such notice must be received no less than 90 days or more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. If notice or prior public disclosure of the date of the annual meeting is given or made to the stockholders for a meeting date that is not within 30 days before or after the anniversary of the immediately preceding annual meeting of stockholders, notice by the stockholder will be timely if received not later than the close of business on the tenth day following the day on which such notice was mailed or such public disclosure was made, whichever is first, or no less than 90 days or more than 120 days prior to the annual meeting. For further information on the timely nomination of a person for election as a director of the Company at the 2018 annual meeting of stockholders, see "Stockholder Proposals for the 2018 Annual Meeting of Stockholders."

        In the event that we increase the number of directors to be elected and we make no public announcement, at least 100 days prior to the first anniversary of the preceding year's annual meeting, in which we name all of the nominees for director or specify the size of the increased Board, a stockholder's notice will be considered timely, but only with respect to nominees for any new positions created by the increase, if the notice is delivered to, or mailed and received at, our principal executive offices (addressed to our Secretary) no less than ten calendar days following the day on which we make the public announcement. In the case of a special meeting of stockholders called for the purpose of electing directors, notice will be timely if the stockholder provides written notice to our Secretary not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the meeting date was made, whichever first occurs, or no less than 90 or more than 120 days prior to the meeting. The stockholder's notice must include all of the information required by our Bylaws. If the stockholder provides a statement that the stockholder intends to deliver a proxy statement and form of proxy, the nomination may not be brought before the meeting unless the stockholder has delivered a proxy statement and form of proxy to holders of a percentage of our voting shares reasonably believed by the stockholder to be sufficient to elect the nominee or nominees proposed by the stockholder.

        The foregoing summary is not a complete description of the provisions of our Bylaws pertaining to stockholder nominations and proxies. Stockholders may obtain, without charge, a copy of our Bylaws upon written request to our Secretary at our principal executive offices. Our Bylaws are also available on our website at investors.thecheesecakefactory.com, by clicking on the link for "Corporate Governance."

Compensation Committee Interlocks and Insider Participation

        During fiscal 2016, Messrs. Cappello, Kransdorf, Mindel and Simon served on the Compensation Committee, with Mr. Cappello serving as Chair. During fiscal 2016, no member of the Compensation Committee was an officer or employee of ours, a former officer of ours or of our subsidiaries or had a relationship requiring disclosure by us under Item 407(e) of Regulation S-K. None of our executive officers served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of our Board or the Compensation Committee during fiscal 2016.

31


Table of Contents

Directors Compensation

        The following table sets forth information regarding the cash compensation arrangements for Independent Directors who served on our Board in fiscal 2016. Any member of the Board who is not an Independent Director does not receive fees for service on the Board or its committees. On February 11, 2016, the Board approved recommendations from the Compensation Committee and Farient Advisors to increase (i) the annual cash payment in lieu of equity by $10,000 to $105,000, (ii) the Lead Director's annual fee by $5,000 to $25,000, and (iii) the Compensation Committee Chair's annual fee by $2,500 to $12,500, in each case effective as of the commencement of the 2016 fiscal year.

Board of Directors Fees(1)
  Fiscal 2016
 

Annual cash retainer

  $ 75,000  
 

Annual cash payment in lieu of equity grant in 2016(2)

  $ 105,000  

Lead Director annual fee

  $ 25,000  
 

Audit Committee Chair annual fee

  $ 15,000  

Compensation Committee Chair annual fee

  $ 12,500  
 

Governance Committee Chair annual fee

  $ 7,500  
(1)
All fees and cash payments are payable in equal monthly installments, as earned, following the end of each calendar month.

(2)
The Board authorized a cash payment of $105,000, annually, to each director in lieu of an equity award. Rather than offering equity awards to non-employee directors under an equity plan, we have adopted stock ownership guidelines for our directors in order to better align their interests with those of our stockholders.

        In order to continue to assure that the interests of our Independent Directors are aligned with the long-term interests of our stockholders, we adopted "Director Stock Ownership Guidelines" which require our non-employee directors to acquire and thereafter maintain ownership of shares of our Company's common stock equal in fair market value to three times their annual cash retainer. For a more detailed description of our stock ownership policy, please see "Director and Executive Stock Ownership Guidelines, Holding Periods and Other Requirements" below.

        On February 16, 2017, the Board approved a recommendation from the Compensation Committee and its independent compensation consultant, Farient Advisors LLC ("Farient Advisors"), to increase the annual cash retainer by $10,000 to $85,000 and the cash payment in lieu of equity by $5,000 to $110,000, effective as of the first day of the 2017 fiscal year, to more appropriately align director pay with the pay levels of similarly positioned directors within our Executive Compensation Peer Group (see "Market Positioning—Executive Compensation Peer Group" for a description of our Executive Compensation Peer Group and how it was selected). On February 16, 2017, the Board approved a recommendation from the Compensation Committee and Farient Advisors to limit total compensation which Board members may receive in any one fiscal year to $500,000.

32


Table of Contents

        The following table sets forth certain information regarding the compensation earned by each Independent Director who served on our Board in fiscal 2016. Mr. Overton, as an employee of the Company, is not an Independent Director and is not compensated for his services on the Board.


DIRECTOR COMPENSATION FOR FISCAL 2016

Name
  Fees Earned or
Paid in Cash ($)

  Total ($)
 

Edie Ames

  $ 7,500   $ 7,500  
   

Alexander L. Cappello

  $ 192,500   $ 192,500  

Jerome I. Kransdorf(1)

  $ 212,500   $ 212,500  
   

Laurence B. Mindel

  $ 180,000   $ 180,000  

David B. Pittaway

  $ 195,000   $ 195,000  
   

Douglas L. Schmick

  $ 90,000   $ 90,000  

Herbert Simon

  $ 180,000   $ 180,000  
(1)
Fees were earned and paid into a nonqualified deferred compensation plan account administered under The Cheesecake Factory Incorporated Executive Savings Plan. See "Director Eligibility for Participation in the Executive Savings Plan" below.

        As of January 3, 2017, the end of our 2016 fiscal year, Mr. Kransdorf held options to purchase 12,514 shares of our common stock under our Non-Employee Director Stock Plan, which plan expired in May 2007. All of his outstanding options are fully vested. Messrs. Cappello, Mindel, Pittaway, and Simon and Ms. Ames have not been granted equity in connection with their Board service.

        Director Eligibility for Participation in the Executive Savings Plan.    Members of the Board are eligible to participate in our Executive Savings Plan, a nonqualified deferred compensation plan, by contributing all or a portion of their director fees to this plan. We do not match contributions made by non-employee members of the Board to the Executive Savings Plan. Additional information regarding the Executive Savings Plan appears in the section of this Proxy Statement entitled "Nonqualified Deferred Compensation."

        Reimbursement of Expenses and Other Perquisites.    Each Independent Director is entitled to reimbursement for reasonable out-of-pocket expenses incurred in connection with travel to and from, and attendance at, meetings of the Board or its committees and related activities, including director education courses and materials. Independent Directors also receive dining privileges at our restaurants.

Indemnification of Officers and Directors

        As permitted by the Delaware General Corporation Law, our Certificate of Incorporation limits the personal liability of our directors for monetary damages for breach of fiduciary duty of care as a director. Liability is not eliminated for (a) any breach of the director's duty of loyalty to us or our stockholders, (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) unlawful payment of dividends or stock purchases or redemptions pursuant to Section 174 of the Delaware General Corporation Law, and/or (d) any transaction from which the director derived an improper personal benefit. Our Certificate of Incorporation also provides that we shall indemnify and advance indemnification expenses on behalf of all directors and officers of ours to the fullest extent permitted by Delaware law. Article VIII of our Bylaws also requires us, subject to certain limitations, to indemnify directors and officers and advance expenses. The indemnification and advancement of expenses provisions of Article VIII are not exclusive of any other rights of indemnification or advancement of expenses.

33


Table of Contents

        We also entered into indemnification agreements with all of our directors and Named Executive Officers. Each indemnification agreement requires us to indemnify and hold harmless the director or Named Executive Officer to the fullest extent authorized by the laws of the State of Delaware. Each indemnification agreement also requires us, subject to specific terms and conditions, to advance expenses to the director or officer. Each indemnification agreement also sets forth various procedures and definitions with respect to indemnification and advancement of expenses. We also are obligated to maintain directors' and officers' liability insurance. With specified exceptions, we are not obligated to provide indemnification or advance expenses with respect to actions initiated by the director or officer or to indemnify the director or officer in connection with proceedings by us to enforce non-compete or non-disclosure agreements or our Clawback Policy. To the extent the provisions of the indemnification agreements exceed the indemnification permitted by applicable law, such provisions may be unenforceable or may be limited to the extent they are found by a court of competent jurisdiction to be contrary to public policy.

Director and Executive Officer Stock Ownership Guidelines, Holding Periods and Other Requirements

        Stock Ownership Guidelines for Directors.    The Board adopted stock ownership guidelines for non-employee directors in order to further align the interests of our directors with the long-term interests of our stockholders. The guidelines provide that, on or before December 31, 2013, all non-employee directors who were members of the Board at the time of adoption of the guidelines were required to acquire (and thereafter maintain ownership of) a minimum number of shares of our common stock with a fair market value equal to three times the annual base cash retainer for non-employee directors (the product of such amount being $225,000 as of the end of fiscal year 2016, based upon the 2016 annual cash retainer of $75,000). In addition, within three years of their respective appointments, all non-employee director appointed after adoption of the guidelines are required to acquire (and thereafter maintain ownership of) a minimum number of shares of our common stock with a fair market value equal to three times the annual base cash retainer payable to the non-employee directors ($255,000 for fiscal year 2017). For purposes of this policy, stock ownership includes any shares owned by a director or his or her immediate family members or held by him or her as part of a tax or estate plan in which the director retains beneficial ownership. The value of shares held is calculated once per year, on the first day of the fiscal year. For purposes of determining compliance with the policy, "value" means an assumed per-share value based on the average of the closing price of our common stock on the last day of each of the previous four fiscal quarters. A director is not required to acquire shares of our common stock in accordance with the stock ownership guidelines if the purchase would result in a violation of our Special Trading Policy and Procedures and the addendum thereto. In such a scenario, the director is required to comply with the stock ownership guidelines as soon as reasonably feasible thereafter.

        All of our non-employee directors are in compliance with our non-employee director stock ownership policy as of the first day of our 2017 fiscal year, except for Ms. Ames who joined the Board in December 2016 and is required to meet the stock ownership guidelines within three years of her appointment.

        Stock Ownership Guidelines for Executive Officers; Hedging and Pledging.    In fiscal 2010, the Board adopted stock ownership guidelines for certain of our executive officers, including all current Named Executive Officers, in order to align the interests of our key executives with the long-term interests of our stockholders. The ownership guidelines provide that, on or before December 31, 2015, all executives who, at the time of adoption of the guidelines, held the positions with the Company listed below are required to acquire (and thereafter maintain ownership of) a minimum number of shares of the Company's common

34


Table of Contents

stock with a value equal to the multiple of such executive's annual base salary (excluding bonus), as follows:

Position with Company
  Multiple of Salary

Chief Executive Officer of the Company

  6 times annual base salary

President of the Company or of our wholly owned subsidiaries, The Cheesecake Factory Restaurants, Inc. or The Cheesecake Factory Bakery Incorporated

  2 times annual base salary

Executive Vice President of the Company

  2 times annual base salary

        In addition, within five years of the appointment of any officer appointed after the time of adoption of the guidelines, in the positions designated above (other than a newly-appointed Chief Executive Officer, who has seven years to comply), the newly appointed executive is required to acquire (and thereafter maintain ownership of) shares of our common stock with the value set forth above. For purposes of this policy, stock ownership includes (i) any shares owned by an executive or his or her immediate family members or held by him or her as part of a tax or estate plan in which the executive retains beneficial ownership, and (ii) unvested restricted stock or restricted stock units. The value of shares held is calculated once per year, on the first day of the fiscal year. For purposes of determining compliance with the policy, "value" means an assumed per-share value based on the average of the closing price of our common stock on the last day of each of the previous four fiscal quarters. An executive subject to this policy is not required to acquire shares of our common stock in accordance with the stock ownership guidelines if acquisition at such time would result in a violation of our Special Trading Policy and Procedures and the addendum thereto, in which event the executive is required to comply with the guidelines as soon as reasonably feasible thereafter. Certain hardship exceptions are available at the discretion of the Compensation Committee, but no exceptions have been solicited or granted to date.

        All of our Named Executive Officers are in compliance with our executive stock ownership policy as of the first day of our 2017 fiscal year.

        Members of our Board and our officers and staff members are prohibited from trading in any interest or position relating to the future price of our securities, such as a put, call or short sale, or using our stock as collateral for margin loans.

Policies Regarding Review, Approval or Ratification of Transactions with Related Persons

        In accordance with its charter, our Audit Committee reviews and approves any proposed transactions with a "related person." Any related person transaction will be disclosed in the applicable filing as required by the rules promulgated by the SEC. For purposes of these procedures, "related person" and "transaction" have the meanings as defined in Item 404 of Regulation S-K. We had no reportable transactions with related persons required to be disclosed under Item 404 of Regulation S-K since the beginning of fiscal 2016.

FORWARD LOOKING STATEMENTS

        Certain information included in this Proxy Statement, including the section entitled "Compensation Discussion and Analysis" set forth below, and other materials filed or to be filed by us with the SEC, as well as information included in oral or written statements made by us or on our behalf, may contain forward-looking statements about our current and presently expected performance trends, growth plans, business goals and other matters. These statements may be contained in our filings with the SEC, in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers. Words or phrases such as "believe," "plan," "will likely result," "expect," "intend,"

35


Table of Contents

"will continue," "is anticipated," "estimate," "project," "may," "could," "would," "should" and similar expressions are intended to identify forward-looking statements. These statements, and any other statements that are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Acts"), and are based on our current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in such statements.

        In connection with the "safe harbor" provisions of the Acts, we have identified and are disclosing important factors, risks and uncertainties that could cause our actual results to differ materially from those projected in forward-looking statements made by us or on our behalf (See Item 1A—Risk Factors of our Annual Report on Form 10-K for the fiscal year ended January 3, 2017, and our quarterly reports on Form 10-Q and current reports on Form 8-K, as filed with the SEC). These cautionary statements are to be used as a reference in connection with any forward-looking statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of our subsequent filings with the SEC. Because of these factors, risks and uncertainties, we caution against placing undue reliance on forward-looking statements. Although we believe that the assumptions underlying forward-looking statements are currently reasonable, any of the assumptions could be incorrect or incomplete, and there can be no assurance that forward-looking statements will prove to be accurate. Forward-looking statements speak only as of the date on which they are made. Except as may be required by law, we do not undertake any obligation to modify or revise any forward-looking statement to take into account or otherwise reflect subsequent events, corrections in underlying assumptions or changes in circumstances arising after the date that the forward-looking statement was made.

NON-GAAP FINANCIAL MEASURES

        In addition to the results determined in accordance with generally accepted accounting principles ("GAAP"), this Proxy Statement includes non-GAAP financial measures that present income from operations, operating margin, net income, and diluted net income per share excluding the impact of items we do not consider indicative of our ongoing operations. We believe these adjusted measures provide additional information to facilitate the comparison of our past and present financial results. We utilize results that both include and exclude the identified items in evaluating business performance. Our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. In the future, we may incur expenses or generate income similar to the adjusted items. Non-GAAP financial measures should be considered in addition to, not as a substitute for measures of performance prepared in accordance with GAAP. Our methods for determining non-GAAP financial measures may differ from methods used by other companies for the same or similar non-GAAP financial measures. Accordingly, these non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

36


Table of Contents

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

        This "Compensation Discussion and Analysis" explains our strategy, design of, and decision-making related to our compensation programs and practices for our principal executive officer, our principal financial officer and our three other most highly compensated executive officers (collectively, "Named Executive Officers"). This "Compensation Discussion and Analysis" also explains how the compensation of our Named Executive Officers aligns with the interests of our stockholders, and is intended to provide perspective on the compensation information contained in the tables that follow this discussion.

        For fiscal 2016, our Named Executive Officers were:

        While the principal purpose of this "Compensation Discussion and Analysis" is to review Named Executive Officer compensation, many of the programs discussed apply to other members of senior management who, combined with the Named Executive Officers, are collectively referred to herein as "executives."

Executive Summary

        2016 "Say-on-Pay" Advisory Vote on Executive Compensation and Changes to Executive Compensation Program. We have provided stockholders a "say-on-pay" advisory vote regarding our Named Executive Officers' compensation for several years, and we intend to continue to provide stockholders with a "say-on-pay" advisory vote on an annual basis. At the Company's 2016 annual meeting of stockholders, our stockholders approved, by a vote of approximately 96% of shares represented in person or by proxy (not counting broker non-votes), the compensation program and policies and the compensation paid to the Company's Named Executive Officers as presented in the proxy statement for the 2016 annual meeting of stockholders. In light of this favorable "say on pay" vote, the Compensation Committee did not materially adjust the Company's compensation programs and strategies for 2017.

        Our stockholders' approval of the "say-on-pay" advisory vote in 2016 was at 96%, following a 79% favorable vote in 2015. We attribute the increase in favorable support to adjustments we made to our compensation practices after discussions held with many of our stockholders concerning their vote in 2015, and review of proxy advisory companies' (Institutional Shareholder Services Inc. and Glass, Lewis & Co.) analyses of our executive compensation practices. Based upon such discussions and review, in 2016 we adjusted our long-term equity program for our Named Executive Officers to better align pay with performance; introduced restricted stock units, which do not accrue dividends; and entered into new employment agreements with our Named Executive Officers (other than our Chief Executive Officer) which, among other things, eliminated the severance payments tax "gross up" payment for excise taxes under Section 280G of the Code; and conformed the definition of a "change in control" to more stringent standards, including by clarifying that a change in control alone would not trigger acceleration of any equity or payment of any other benefits. In 2017, we entered into a new employment agreement with our Chief Executive Officer which also included these features among others discussed below. See "Employment AgreementsNamed Executive Officers."

37


Table of Contents

        Our Company seeks to ensure that its executive compensation program is aligned with stockholder interests, as described in the summary below:

What We Do
  What We Don't Do

Tie a significant portion of executive compensation to stockholder value creation, as well as Company and individual performance

  Pay dividend equivalents on unearned, restricted shares or stock units

Emphasize long-term equity awards in executive pay mix

  Provide automatic "single trigger" acceleration of equity or other benefits in the event of a change in control

Apply stock ownership guidelines to align executives' interests with stockholder interests

  Provide automatic acceleration of equity awards upon retirement

Apply clawback provisions to both our annual incentive program and equity program, when warranted

  Provide perquisites to Named Executive Officers that are not available to other senior management generally

Neutralize the impact of dilution from employee equity grants with a share repurchase program

  Gross-up excise taxes that may be imposed in connection with a change in control

Conduct annual stockholder say-on-pay vote

  Permit short sales and transactions in derivatives of Company securities, including hedging transactions

        2016 Key Pay Decisions.    The following summarizes our key pay decisions for fiscal 2016:

   


(1)
See "Market Positioning-Executive Compensation Peer Group" for a description of our Executive Compensation Peer Group and how it was selected.

38


Table of Contents

        Fiscal 2016 Business Summary.    We accomplished many important financial, strategic and operational objectives in fiscal 2016 despite a year-over-year decline in guest traffic and continued wage pressure, including:

   


(1)
See footnote(1) to table below, describing our calculation and use of non-GAAP measures of performance.

(2)
See "Market Positioning-2016 Financial Peer Group" for a description of our 2016 Financial Peer Group and how it was selected.

(3)
FORTUNE and FORTUNE 100 Best Companies to Work For are registered trademarks of Time Inc. and are used under license.

39


Table of Contents

        The following table provides additional information related to our fiscal 2016 performance as compared to fiscal 2015.

 
Fiscal 2016(2)
Fiscal 2015
 
(in thousands, except percentage and per share amounts)
Revenues $ 2,275,719 $ 2,100,609
The Cheesecake Factory comparable restaurant sales 1.2 % 2.6 %
Income from operations $ 200,993 $ 165,246
Diluted net income per share $ 2.83 $ 2.30
Operating margin 8.8 % 7.9 %
Adjusted income from operations(1) $ 201,107 $ 171,257
Adjusted diluted net income per share(1) $ 2.83 $ 2.37
Adjusted operating margin(1) 8.8 % 8.2 %
Stock price per share as of fiscal year-end $ 59.43 $ 46.83
(1)
We calculate the non-GAAP measures presented above by eliminating the impact of items we do not consider indicative of our ongoing operations. We believe these adjusted measures provide additional information to facilitate the comparison of our past and present financial results. We utilize results that both include and exclude the identified items in evaluating business performance. However, our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. In the future, we may incur expenses or generate income similar to the adjusted items.

(2)
Fiscal 2016 consisted of 53 weeks. Fiscal 2015 consisted of 52 weeks.

        Following is a reconciliation of income from operations, net income and diluted net income per share to the corresponding adjusted measures (in thousands, except per share data):

 
  2016(2)   2015  

Income from operations

  $ 200,993   $ 165,246  

Pre-tax impact from:

             

Impairment of assets and lease terminations(1)

  114   6,011  
   

Adjusted income from operations

  $ 201,107   $ 171,257  

Net income

  $ 139,494   $ 116,523  

After-tax impact from:

             

Impairment of assets and lease terminations(1)

  68   3,607  
   

Adjusted net income

  $ 139,562   $ 120,130  

Diluted net income per share

  $ 2.83   $ 2.30  

After-tax impact from:

             

Impairment of assets and lease terminations

  0.00   0.07  
   

Adjusted diluted net income per share

  $ 2.83   $ 2.37  

(1)
Fiscal 2016 includes $0.1 million of pre-tax accelerated depreciation expense related to the planned relocation of one The Cheesecake Factory restaurant. Fiscal 2015 includes $6.0 million of pre-tax impairment expense related to our RockSugar Pan Asian Kitchen restaurant. These amounts were recorded in impairment of assets and lease terminations in the condensed consolidated statements of income.

(2)
Fiscal 2016 consisted of 53 weeks. Fiscal 2015 consisted of 52 weeks.

40


Table of Contents

Overview of Compensation Program

        Compensation Philosophy.    In order to maintain a leadership position in our industry and to continue growing our concepts, both domestically and internationally, we need to attract and retain highly motivated executives who bring experience, innovation and operational excellence to our Company. With this in mind, our compensation philosophy centers on:

        Elements of Compensation Program.    During fiscal 2016, our executive compensation and benefits consisted of the components listed in the table below, which provides a brief description of the principal types of compensation, how performance is factored into each type of compensation, and the primary objectives served by each element.

41


Table of Contents


FISCAL 2016 PRINCIPAL ELEMENTS OF EXECUTIVE COMPENSATION

Element
  Description
  Performance Considerations
  Primary Objectives
Base Salary  

Fixed cash payment

 

Based on level of responsibility, experience, tenure in role, individual performance, and expected future value/contribution

 

Attract and retain talent

Provide competitive compensation

Recognize career experience

Reward individual performance

Performance Incentive Plan  

Performance-based annual cash incentive, tied to achieving a stockholder approved financial goal and other annually selected strategic goals

 

Amount of bonus tied to certified level of achievement of objectives as well as management position, measured as a percentage of base salary

Satisfaction of a stockholder approved performance criteria required for any pay out

 

Promote and reward high performance

Motivate achievement of Company and divisional annual financial and strategic objectives

Long-term Stock Incentive Plan  

Nonqualified stock options, generally vesting ratably over five years

Restricted shares and stock units with performance goals, generally vesting over three to five years if performance goals are achieved

 

Value of award directly linked to long-term stock price performance

Named Executive Officers' restricted share/unit grants include stockholder approved performance criteria as a vesting condition

 

Align executive interests with stockholder interests

Attract and retain talent

Reward individual performance

Retirement and Welfare Benefits  

Medical, dental, vision, life and long-term disability insurance

Non-qualified deferred compensation plan

Defined benefit retirement agreement (for Chief Executive Officer only)

 

Not applicable

 

Attract and retain talent

Provide competitive compensation

Provide reasonable security to allow executives to perform at their best level

Executive Perquisites  

Company-leased vehicle or car allowance

Biennial health physical for executives at Senior Vice President level and above

Relocation benefits on a case-by-case basis

Vacation and sabbatical leave program

 

Not applicable

 

Attract and retain talent

Provide competitive compensation

Promote health and wellbeing of senior executives (executive physical perquisite, vacation and sabbatical leave program only)

        Factors Considered in Making Compensation Decisions.    Our compensation strategy is flexible and enables us to appropriately differentiate and reward executives by taking into account:

42


Table of Contents

        All of the factors set forth above are considered by the Compensation Committee in establishing Named Executive Officer compensation, in a subjective manner, without any specific formula. For additional information regarding elements of compensation, please refer to the graphs below entitled "CEO Target Pay" and "Other NEO Target Pay" as well as the section below entitled "Principal Elements of Compensation."

Pay for Performance

        We believe in driving high performance by tying compensation to our financial, operating, and strategic goals and results, and by providing appropriate rewards. The Compensation Committee considers our competitive environment and historical financial performance when establishing performance targets for the next fiscal year. The Compensation Committee adjusts base salary and performance incentive compensation to reward Named Executive Officers when our financial and strategic objectives are accomplished and may withhold or limit salary increases and disapprove or reduce performance incentive compensation when we fail to fully accomplish our goals and drive results.

        Consistent with our belief in pay for performance, we design our executive compensation program, and particularly the compensation of our Chief Executive Officer, to reflect the Company's performance and our stock performance over time. With respect to our 2015 Amended and Restated Annual Performance Incentive Plan ("Performance Incentive Plan"), there has been significant variability in payout year over year based upon the level of achieved results:

Fiscal Year
  Achieved Percent
of Operating
Income Objective

  Achieved Percent of
Strategic Objectives

  Payout of
Target Bonus

 

2016

  105.6 % 100 % 125 %

2015

    102.3 %   100 %   110 %

2014

  82.0 % 100 % 25 %
   

        With respect to long-term incentives (targeted for fiscal 2016 at approximately 63% for our Chief Executive Officer's total target compensation), the potential gains that could be realized from option exercises and restricted share and unit vesting are directly impacted by our continued ability to drive even better financial performance in the future, resulting in increased share price. In addition, long-term incentives, including stock units and restricted shares granted to our other Named Executive Officers in 2016 and 2017, also included stockholder approved performance criteria as a condition for vesting.

        Starting in 2016, the Compensation Committee added a three-year performance target based upon growing earnings per share ("EPS"), in addition to a two-year or three-year performance target based upon achieving a specified EBITDA, as performance conditions to vesting two-thirds, cumulatively, of the equity we granted under our long-term incentive program. Significant research was conducted to select the correct performance metric, appropriate goal levels, and amount of awards. See "Equity-Based Compensation" below for a full discussion of our equity awards.

        In order to assess whether or not compensation strategies are rewarding high performance, the Compensation Committee looks at different analytical assessments, including an alignment methodology performed by Farient Advisors, which assesses the relationship between our Named Executive Officers' compensation and the Company's long-term performance. In addition to conducting quantitative analyses

43


Table of Contents

commonly relied upon by independent proxy governance organizations to test the alignment of our Chief Executive Officer's pay and performance, Farient Advisors also used its proprietary pay for performance alignment model to test the alignment of our Chief Executive Officer's average annualized performance-adjusted compensation ("PAC") (including salary, actual bonus, and the performance-adjusted value of long-term incentives) and performance, as indicated by total stockholder return ("TSR," defined as stock price appreciation plus dividends, as if those dividends had been reinvested in the Company's stock, over time). In doing so, Farient Advisors compared our Chief Executive Officer's average annualized PAC over successive three-year rolling periods (beginning with the three-year period from January 1, 2003 to December 31, 2005 and ending with the three-year period from January 1, 2014 to December 31, 2016) to our compound annual TSR for the same three-year rolling periods and tested the results against the companies in our Executive Compensation Peer Group identified in the section entitled "Market Positioning, Comparison Group for Fiscal 2016" (excluding Chipotle Mexican Grill, Inc. due to its pay practices being substantially different than that of the other peer group companies). As indicated by the chart below, Farient Advisors' analysis of the Company's pay for performance shows that our Chief Executive Officer's pay historically has been and continues to be strongly aligned with the Company's performance and, accordingly, our stockholders' interests. This is indicated by the fact that our Chief Executive Officer's annualized PAC has trended with the Company's performance over time. Specifically, when our TSR is higher, our Chief Executive Officer's PAC is higher, and conversely, when our TSR is lower, our Chief Executive Officer's PAC is lower. In addition, Farient Advisors' analysis indicated that our Chief Executive Officer's average annual PAC, considering the Company's size and performance, has been and continues to be reasonable. Farient Advisors considers PAC to be reasonable for companies that generally pay Chief Executive Officers on a performance-adjusted basis, below the upper boundary of a competitive pay range that Farient Advisors deems to be acceptable based on a company's size, peer group pay practices, and performance. See "Market Positioning-Executive Compensation Peer Group" for a description of our Executive Compensation Peer Group and how it was selected.

        Additionally, Farient Advisors concluded that we achieved compensation alignment for our Chief Executive Officer through our:


(1)
See "Market Positioning-Executive Compensation Peer Group" for a description of our Executive Compensation Peer Group and how it was selected.

44


Table of Contents


The Cheesecake Factory CEO Total PACTM
vs. ISS Peer Group(1)
Pay for Performance Alignment
Over 3 Year Period Ending in Year Shown

GRAPHIC


(1)
Excludes data for Chipotle Mexican Grill, Inc. due to its pay practices being substantially different than that of the other Executive Compensation Peer Group companies. See "Market Positioning-Executive Compensation Peer Group" for a description of our Executive Compensation Peer Group and how it was selected.

        Pay Mix.    A significant portion of our Named Executive Officers' compensation is at risk through short- and long-term incentive programs. We do not use specific percentages to allocate between cash and non-cash compensation and short-term versus long-term compensation; however, we believe a significant portion of our Named Executive Officers' pay should be performance-based. For fiscal 2016, 62% of our Named Executive Officers,' other than our Chief Executive Officer, compensation is performance-based. Mr. Overton had and continues to have a proportionately greater percentage (82%) of performance-based compensation as compared to other Named Executive Officers (62%) because we believe he has a greater ability to influence both short-term and long-term performance of the Company.

45


Table of Contents

        The following charts show each element of our compensation as a percentage of the target total compensation for our Chief Executive Officer and other Named Executive Officers for fiscal years 2016, 2015 and 2014.

GRAPHIC

GRAPHIC

46


Table of Contents

        Performance-based pay remains a significant portion of total compensation for our Chief Executive Officer and our other Named Executive Officers, which aligns our executive compensation programs with the interests of our stockholders. This alignment is strengthened further by:


(1)
See "Market Positioning-Executive Compensation Peer Group" for a description of our Executive Compensation Peer Group and how it was selected.

Market Positioning

        Our Compensation Committee, in collaboration with our Chief Executive Officer and Senior Vice President of Human Resources, reviews market data related to pay practices among comparable companies, but does not target specific market positioning of pay when determining compensation for individual Named Executive Officers. Rather, the Compensation Committee uses comparative market data as one of several factors when making individual compensation decisions.

        The Compensation Committee analyzed whether the work of Farient Advisors as a compensation consultant has raised any conflict of interest, taking into consideration the following factors: (i) the provision of other services to the Company by Farient Advisors; (ii) the amount of fees from the Company paid to Farient Advisors as a percentage of the firm's total revenue; (iii) Farient Advisors' policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of Farient Advisors or the individual compensation advisors employed by the firm with an executive officer of the Company; (v) any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and (vi) any stock of the Company owned by Farient Advisors or the individual compensation advisors employed by the firm. The Committee has determined, based on its analysis of the above factors, that the work of Farient Advisors and the individual compensation advisors employed by Farient Advisors as compensation consultants to the Company has not created any conflict of interest.

47


Table of Contents

        As part of its compensation review process for fiscal 2016, the Compensation Committee reviewed an analysis prepared by Farient Advisors of market pay practices for positions similar to the positions of our Named Executive Officers, adjusted to take into account differences, if any, between the scope of our Named Executives Officers' responsibilities compared to their counterparts in positions with similar titles in comparable companies. This analysis used pay comparisons from comparable companies in the restaurant and hotel industry as compiled from their proxy disclosures and other SEC filings as well as a recognized market survey source, the Mercer Executive Remuneration Suite Survey. For the Chief Executive Officer and the Chief Financial Officer, size-adjusted data from the comparable companies listed below was weighted at 50% and the survey was weighted at 50% for purposes of determining market pay positions in such analysis. Farient Advisors determined that there was not sufficient comparable representation in the proxy data for the other Named Executive Officers, and thus the survey was the primary data source in such analysis.

        Comparison Groups.    When we compare ourselves to other companies, we must account for differences between us and others in terms of ownership structure, dining industry segment, size and complexity of operations, sourcing pool for executive talent, and other differentiators. We use two different peer groups for purposes of comparison depending upon what matter is being compared. The first comparison group, which we refer to as the "Financial Peer Group," is used to determine appropriate objectives for our Performance Incentive Plan (see "Fiscal 2016 Performance Incentive Plan Design"). We use this group because their business model, dining industry segment, and operational structure most closely compares with ours. We use the second peer group, which we refer to as the "Executive Compensation Peer Group," for executive compensation comparisons and compensation program design comparisons, as we believe this group reflects companies most similar in size and complexity of operations and with which we compete for executive talent.

        2016 Financial Peer Group.    The peer group against which the Compensation Committee compared us for fiscal 2016 (the "2016 Financial Peer Group") is comprised of the following restaurant companies:

    BJ's Restaurants   Darden Restaurants   Texas Roadhouse, Inc.    
       
    Bloomin' Brands Inc.   Ignite Restaurant Group        
  Bravo Brio Restaurant Group   Ruby Tuesday      
       

        In order to be in the 2016 Financial Peer Group, each company had to remain publicly traded with units that are at least 75% company-operated. The potential peer group is evaluated by the Compensation Committee on an annual basis. First, all publicly traded, full service restaurants were reviewed for potential inclusion as peers. Next, the group was further segmented into casual dining (including bar and grill) and upscale casual dining, but excluding companies with revenue of less than $250 million. Finally, the Compensation Committee focused on company-owned concepts (in which less than 25% of the store units are franchised). The Compensation Committee believes the 2016 Financial Peer Group is a sufficiently large sample and was the most representative competitive set for which data is regularly available.

        2016 Executive Compensation Peer Group.    The Compensation Committee reviewed the composition of our Executive Compensation Peer Group for 2016 (the "2016 Executive Compensation Peer Group") to ascertain whether the group of companies we use as part of our compensation analyses for fiscal 2016 adequately represented those companies that are similar to us in size and complexity of operations and with whom we compete for executive talent. The companies against which we compared ourselves for Named Executive Officers' compensation decisions made for fiscal 2016 were comprised of the following companies that (i) had revenue between $650 million and $6 billion (approximately 0.3 times to 3 times our

48


Table of Contents

revenue), and (ii) in the aggregate, had an overall median revenue of $2.1 billion as of fiscal 2015, which was approximately equal to our revenue:

    BJ's Restaurants Inc.    Cracker Barrel Old Country Store, Inc.   Red Robin Gourmet Burgers    
       
    Bloomin' Brands Inc.   Darden Restaurants Inc.(1)   Ruby Tuesday Inc.    
  Bob Evans Farms   DineEquity Inc.   Texas Roadhouse Inc.    
       
    Brinker International   Hyatt Hotels Corp.   Wyndham Worldwide Corporation    
  Buffalo Wild Wings Inc.   Ignite Restaurant Group Inc.      
       
    Chipotle Mexican Grill Inc.   Panera Bread Co.        
(1)
Included in our comparison group because of its importance as an industry leader in casual dining, even though its revenues are greater than the $6 billion upper range limit.

        Due to the size differences among these companies and us, Farient Advisors used regression analyses to size-adjust the results and corroborated the findings with data from our survey sources.

        While this comparison group provides the Compensation Committee with an important general frame of reference, the Compensation Committee does not target our Named Executive Officers' compensation at any specific percentile or within a specific range of the 2016 Executive Compensation Peer Group's pay levels. Based upon its review of the size-adjusted competitive market data for the companies set forth above and the Company's stock price assumptions applicable during the period in which compensation levels were being reviewed, the Compensation Committee determined the appropriate total direct compensation (which includes base salary, short-term incentive bonus, and long-term incentives) for fiscal 2016. For our Chief Executive Officer, the data resulted in him being positioned at approximately the 65th percentile compared to our Executive Compensation Peer Group, reflecting his experience, contributions, and long tenure as founder of the Company. For our other Named Executive Officers as a group, the data resulted in them being positioned at approximately the 50th percentile compared to our 2016 Executive Compensation Peer Group.

        2017 Financial Peer Group.    For fiscal 2017, the Compensation Committee reviewed the Financial Peer Group, using the same criteria as described above for 2016. The only change was the addition of Chuy's Holdings Inc., as such company met the financial criteria and had a similar management structure as other members in the 2017 Financial Peer Group, and the Committee felt it was prudent to add an additional company in order to expand the range of performance data reviewed.

        2017 Executive Compensation Peer Group.    In the last quarter of fiscal 2016, the Compensation Committee again reviewed the composition of our Executive Compensation Peer Group for compensation decisions to be made for fiscal 2017. No changes were made to the Executive Compensation Peer Group as the underlying financial assumptions remained relatively stable year over year.

        For fiscal 2017, the Compensation Committee reviewed the competitive pay data presented by Farient Advisors, which indicated that executive pay did show variability in growth by position, and agreed that considering the pay positioning of our Executive Compensation Peer Group, increases in the range of approximately 3-4% were appropriate, excluding our Chief Executive Officer. These increases (described in greater detail below) position our Named Executive Officers' total direct compensation at between the 50th and 75th percentile of the Executive Compensation Peer Group's pay levels. For the Chief Executive Officer, the Committee found that the compensation paid to comparable positions in our Executive Compensation Peer Group increased substantially since 2016, resulting in Mr. Overton's current total direct compensation being at approximately the 60th percentile of the Executive Compensation Peer Group's pay levels as compared to the 75th percentile in 2015. The Committee determined that maintaining a substantially similar level for 2017 would be appropriate and only approved an increase to Mr. Overton's

49


Table of Contents

long-term incentive compensation, which at the time amounted to a 2.9% increase in Mr. Overton's total direct compensation.

Principal Elements of Compensation

        Base Salary.    In accordance with our compensation objectives, base salaries for our Named Executive Officers are determined by the Compensation Committee and administered to reflect the individual executive's career experience, contribution and performance, as well as the value of the position relative to the marketplace. During its annual review of base salaries, the Compensation Committee has historically considered each Named Executive Officer's performance during the prior year and the recommendations of our Chief Executive Officer (except with respect to his own compensation), as well as market data provided by Farient Advisors, as discussed above.

        Without using any particular formula or assigning a specific weight to any factor, the Compensation Committee also considers:

        The following chart shows the annualized base salaries for our Named Executive Officers for fiscal years 2017, 2016 and 2015 and their respective increases, which the Compensation Committee determined were reasonable and appropriate based on the factors described above.


FISCAL 2017, 2016 AND 2015 ANNUALIZED BASE SALARIES

 

Fiscal 2017 Fiscal 2016 Fiscal 2015  

Name and Principal Position

$ % Increase $ % Increase $  

David Overton
Chairman of the Board and Chief Executive Officer


$ 995,000 0.0 % $ 995,000 0.0 % $ 995,000  

David Gordon
President, The Cheesecake Factory Incorporated

$ 600,000 4.3 % $ 575,000 5.5 % $ 545,000  

W. Douglas Benn
Executive Vice President and Chief Financial Officer


$ 531,000 3.1 % $ 515,000 3.1 % $ 499,500  

Debby R. Zurzolo
Executive Vice President, General Counsel and Secretary

$ 497,000 3.1 % $ 482,000 3.3 % $ 466,500  

Max S. Byfuglin
President, The Cheesecake Factory Bakery Incorporated


$ 438,000 3.1 % $ 425,000 3.2 % $ 412,000  

50


Table of Contents

        Annual Cash Performance Incentive Compensation.    Annual cash performance incentive compensation under the Performance Incentive Plan ("Bonus") for our executives is based on our performance against specific financial and strategic objectives approved by our stockholders at the 2015 annual meeting, such as earnings per share, sales growth, consolidated income from operations, customer satisfaction, product development, net operating profit, cash flow, and/or market share and revenues, among others.

        Each Named Executive Officer is assigned a threshold, target and maximum Bonus opportunity, all calculated as a percentage of base salary, and he or she may earn a Bonus within that range based on the level of the Company's achievement of performance objectives. At the beginning of each fiscal year, the Compensation Committee establishes both the performance objectives and the formula for computing the Bonus if the performance objectives are achieved within such range. Bonuses are payable, if at all, in the first quarter of the following fiscal year, after the Compensation Committee verifies performance relative to the pre-established objectives and certifies to what extent, if any, Bonuses were earned within the range between and including the threshold and the maximum Bonus opportunity.

        The Compensation Committee retains negative discretion under our Performance Incentive Plan with respect to payment of Bonuses and may award Bonuses that are less than, and may not award any non-discretionary Bonuses that are higher than, the ranges established under such plan for the applicable fiscal year. In addition, under the terms of our Performance Incentive Plan, the amount of any individual Bonus in any fiscal year may not exceed $2.5 million.

        Fiscal 2016 Performance Incentive Plan Design.    For fiscal 2016, the Compensation Committee made no change to the minimum, threshold, target and maximum Bonus opportunities by position for our Named Executive Officers under our Performance Incentive Plan, as set forth below. Actual payouts depend upon performance results with ranges as follows:

 

Performance Incentive Plan Bonus as % of Pro-rated
Salary(1)
 

Name

Minimum Threshold(2) Target(3) Maximum(4)  

Chief Executive Officer

0 % 20.6 % 110 % 192.5 %  

President

0 % 14.1 % 75 % 131.3 %  

Executive Vice President

0 % 12.2 % 65 % 113.8 %  

Subsidiary President

0 % 12.2 % 65 % 113.8 %  
(1)
Awards are calculated based upon the Named Executive Officer's effective salary for fiscal 2016 and reflect a prorated amount of base salary for fiscal year 2016 as a result of salary adjustments occurring prior to ninety (90) days from the commencement of the fiscal year.

(2)
The threshold award assumes the achievement of 85% of the Company-wide operating income target and none of the strategic objectives.

(3)
The target award assumes the achievement of 100% of the Company-wide operating income target and 100% of the strategic objectives.

(4)
The maximum award assumes achievement of 115% or more of the Company-wide operating income target and 100% of the strategic objectives.

        Under the Performance Incentive Plan for 2016, for executives other than those in our bakery division, the Compensation Committee established that 75% of potential awards would be based on a Company-wide consolidated operating income objective and that 25% would be based on strategic objectives. However, the 25% of potential awards based on strategic objectives only could be achieved if the Company also achieved a threshold consolidated operating income objective, the achievement of which, in and of itself, would not result in any award. For our bakery division executives, the Compensation Committee established that 50% of potential awards would be based on a bakery division operating income objective, 25% of would be based on a Company-wide consolidated operating income objective,

51


Table of Contents

and 25% would be based on bakery division strategic objectives. However, the 25% of potential awards based on bakery division strategic objectives only could be achieved if the bakery also achieved a threshold bakery division consolidated operating income objective, the achievement of which, in and of itself, would not result in any award.

        For fiscal 2016, the Compensation Committee approved the following potential payout schedules for executives of both the Company as a whole and our bakery division:


FISCAL 2016 COMPANY BONUS SCHEDULE (EXCLUDES BAKERY)

    Company Operating Income
Achievement (75% weight)
  Award Payout %       Company Strategic
Initiative Achievement
(25% weight)(3)
  Award Payout %    
  115%   200% (max)       100%   100% (max)    
       
    101%-114%   + approx. 6.7% of award for 1% additional achievement(1)       1%-99%   +1% of award for 1% additional achievement(4)    
  100%   100% (target)       0%   0%    
       
    86%-99%   +5% of award for 1% additional achievement(2)                
  85%   25% (threshold)                
   
    <85%   0%                
(1)
For example, 101% achievement would pay out at approximately 107%; 102% achievement would pay out at approximately 113%; up to a maximum of 200% at 115% achievement.

(2)
For example, 86% achievement would pay out at 30%; 87% achievement would pay out at 35%.

(3)
Required achievement of a Company-wide threshold consolidated operating income objective of $155 million.

(4)
For example (assuming achievement of a Company-wide threshold consolidated operating income objective of $155 million), 50% achievement would pay 50% of award and 85% achievement would pay 85% of award.


FISCAL 2016 BAKERY BONUS SCHEDULE

Bakery
Operating
Income
Achievement
(50% weight)
  Award Payout %       Company
Operating
Income
Achievement
(25% weight)
  Award Payout %       Bakery
Strategic
Initiatives
Achievement
(25%)(3)
  Award Payout %
115%   200% (max)       115%   200% (max)       100%   100% (max)
     
101%-114%   + approx. 6.7% of award for 1%
additional
achievement(1)
      101%-114%   + approx. 6.7% of award for 1%
additional
achievement(1)
      1%-99%   +1% of award for 1% additional achievement(4)
100%   100% (target)       100%   100% (target)       0%   0%
     
86%-99%   +5% of award for 1% additional achievement(2)       86%-99%   +5% of award for 1% additional achievement(2)            
85%   25% (threshold)       85%   25% (threshold)            
   
<85%   0%       <85%   0%            
(1)
For example, 101% achievement would pay out at approximately 107%; 102% achievement would pay out at approximately 113%; up to a maximum of 200% at 115% achievement.

52


Table of Contents

(2)
For example, 86% achievement would pay out at 30%; 87% achievement would pay out at 35%.

(3)
Required achievement of a bakery specific threshold consolidated operating income objective of $7 million.

(4)
For example (assuming achievement of a Company-wide threshold consolidated operating income objective), 50% achievement would pay 50% of award and 85% achievement would pay 85% of award.

        Fiscal 2016 Performance Objectives.    At the time the Compensation Committee was considering financial and strategic performance objectives for our Performance Incentive Plan for fiscal 2016, industry experts, such as Technomic, were forecasting modest sales growth trends for fiscal 2016 as compared to both 2015 and 2014. While consumer confidence had improved somewhat, the underlying drivers of under-employment and slow discretionary income growth had not changed significantly and continued to negatively impact the Company's assumptions around customer traffic growth (casual dining still losing share to fast casual and other dining options) and the ability to take pricing which otherwise might have driven a potential increase in average check. Casual dining was expected to have significant cost headwinds and uncertainty in fiscal 2016, including wage increases and ongoing commodity volatility.

        Given these concerns, any of which could adversely impact stockholder value, the Compensation Committee decided to continue to select operating income as the most heavily weighted performance target. Operating income is a key driver of stockholder value in that it (i) affects not only earnings per share but also overall cash flow from operations, (ii) supports return on invested capital percentage rates, and (iii) is a key driver of a publicly-traded restaurant company's stock multiple. With respect to the specific operating income goals for the Company as a whole, the Compensation Committee took into consideration the operating environment for casual dining restaurant companies that was anticipated for fiscal 2016, Company specific attributes such as certain cost factors and development and growth objectives, as well as ensuring general alignment with the Company's publicly announced longer-term strategic priorities, including its financial objective to deliver mid-teens total return to shareholders, on average. For this purpose, we define total return to shareholders as earnings per share growth plus dividend yield. The operating income growth objectives, when combined with the targeted share repurchase program announced by the Company, were consistent with this longer-term earnings growth positioning. In addition, the operating income goals were consistent with the Company's annual operating plan approved by the Board for fiscal 2016.

        Additional factors considered by the Compensation Committee included:

   


(1)
See "Market Positioning-Executive Compensation Peer Group" for a description of our Executive Compensation Peer Group and how it was selected.

53


Table of Contents

        Additionally, the Compensation Committee considered factors that were important to the continued growth and success of our bakery division, including:

        Taking all of these factors into account, the Compensation Committee set the following performance objectives under the Performance Incentive Plan for fiscal 2016, which the Compensation Committee believed at that time were appropriate, reasonably difficult to achieve and, if achieved, would likely deliver significant value to the Company and our stockholders:


2016 TARGETS FOR EXECUTIVES OTHER THAN BAKERY DIVISION

Weight
  Performance Targets
75%   Company consolidated operating income target of $191 million.(1)

25%

 

Additional strategic objectives, including:
   

Minimum consolidated operating income threshold of $155 million for any strategic objectives to pay out.(2)

   

Fiscal 2016 operating margin greater than the average of our 2016 Financial Peer Group.(3)

   

Opening of The Cheesecake Factory restaurant in Disneytown at the Shanghai Disney Resort in China, including completing design and supporting construction of the site, completing product review and approval process for Shanghai, and supporting staffing / training / operational programs for a successful opening.

   

Development of a sustainable sourcing policy and creating a timeline for the transition of sourcing of specified products.


(1)
See "Fiscal 2016 Performance Objectives" for a discussion regarding the Compensation Committee's considerations when selecting this target. See "Fiscal 2016 Company Bonus Schedule" for award payout percentages based upon achievement of a Company-wide operating income objective, with 85% threshold achievement required for payment of any award. This threshold target of Company-wide operating income objective was intended to reward substantial achievement of the Company's financial objective. If achieved, this consolidated operating income target would equal a 11.5% increase over fiscal 2015 consolidated operating income of $171 million.

(2)
This threshold target based upon a Company-wide operating income objective was intended both to satisfy the requirements under Code Section 162(m) that performance-based compensation be paid only on account of attainment of pre-established and objective performance goals that have been approved by the stockholders and to provide a threshold target of consolidated operating income before rewarding achievement of any strategic objectives. If achieved, this threshold consolidated operating income target would equal 91% of fiscal 2015 consolidated operating income of $171 million and approximately 81% of the 2016 consolidated operating income target of $191 million.

(3)
See "Market Positioning-2016 Financial Peer Group" for a description of our 2016 Financial Peer Group and how it was selected.

54


Table of Contents


2016 TARGETS FOR BAKERY DIVISION EXECUTIVES (INCLUDING MR. BYFUGLIN)

Weight
  Performance Targets
50%   Bakery division operating income target of $8.75 million.(1)

25%

 

Company-wide consolidated operating income target of $191 million.(2)

25%

 

Additional strategic objectives, including:
   

Minimum bakery specific consolidated operating income threshold of $7 million for any strategic objectives to pay out.(3)

   

Develop a comprehensive project plan, including architectural and engineering drawings, equipment specifications and layout, budgets, timelines, and permits for the West Coast bakery infrastructure upgrade (including freezer upgrade and other modernizations) and begin implementation per project plan.

   

Improve East Coast bakery staff engagement by a minimum of 2 points from the 2015 staff engagement survey through various management actions, communications, policy updates, and process changes.

   

Enhance bakery commodities management through analysis, reporting, evaluation of risk management alternatives, and achieving specific results for targeted commodity classes.


(1)
When selecting the bakery operating income target, the Compensation Committee considered the bakery division's role in helping the Company achieve its strategic priorities. Factors considered included, but were not limited to, the bakery division's direct support of our restaurant division (as its largest customer); the forecasted economic conditions and expected operating environment for casual dining restaurants (see "Fiscal 2016 Performance Objectives"); the total Company financial performance objectives; and the specific rate of return targeted to be generated by the bakery division. If achieved, this bakery operating income target would equal a $1.6 million decrease from fiscal 2015 bakery operating income of $10.3 million. The decrease was considered appropriate given challenging commodity pricing (mostly dairy) and a decision to limit internal price increases.

(2)
See "Fiscal 2016 Performance Objectives" for a discussion regarding the Compensation Committee's considerations when selecting this target. See "Fiscal 2016 Company Bonus Schedule" for award payout percentages based upon achievement of a Company-wide operating income objective, with 85% threshold achievement required for payment of any award.

(3)
This threshold target is intended both to satisfy the requirements under Code Section 162(m) that performance-based compensation be paid only on account of attainment of pre-established and objective performance goals that have been approved by the stockholders and to provide a threshold target of bakery specific consolidated operating income before achievement of any bakery strategic objectives. If achieved, this bakery operating income target would equal approximately 68% of fiscal 2015 bakery consolidated operating income target of $10.3 million and approximately 80% of the bakery's 2016 consolidated operating income target.

        The performance targets were selected from a stockholder-approved list of performance incentive targets under our Performance Incentive Plan intended to qualify for deductibility by us under Section 162(m) of the Code. However, due to the complexities of Code Section 162(m) and technical requirements related thereto that may change from time to time, we can provide no assurance regarding deductibility under Section 162(m) of the Code.

55


Table of Contents

        Fiscal 2016 Performance Objective Achievement.    In February 2017, the Compensation Committee reviewed our performance against the Company's performance objectives for fiscal 2016 and certified that we achieved the following results:

 
  Target   Actual   Performance
vs. target

Operating Income Target (75% of award):(1)

           

Fiscal 2016 Company consolidated operating income

  $191mm   $201.6mm     105.6%

Strategic Initiatives (25% of award):(2)

 

 

 

 

 

 

Threshold operating income

  $155mm   $201.6mm     100%(2)

—Fiscal 2016 operating margin greater than the average of the 2016 Financial Peer Group(3)

  >4.4%   8.8%(4)   Achieved

—Successful opening of The Cheesecake Factory restaurant in Disneytown at the Shanghai Disney Resort in China, including completing design and supporting construction of the site, completing product review and approval process for the new country, and supporting staffing/training/operational programs for a successful opening(5)

            Achieved

—Development of a sustainable sourcing policy and creating a timeline for the transition of sourcing of specified products(5)

      Achieved

(1)
Achievement of the consolidated operating income objective is measured only after accruals for performance achievement awards have been made, and excluding the effect of items we do not consider indicative of our ongoing operations such as FAS 144 impairment charges, acquisitions and divestitures, significant accounting changes, unplanned restructuring costs and gain/loss on the sale of assets.

(2)
Payable only if a threshold operating income target of $155 million is achieved. Maximum payout for strategic objectives is 100% of target.

(3)
See "Market Positioning-2016 Financial Peer Group" for a description of our 2016 Financial Peer Group and how it was selected.

(4)
Achieved fiscal 2016 operating margin 100% greater than our 2016 Financial Peer Group.

(5)
For a discussion of these specific milestones, see "2016 Targets for Executives Other than Bakery Division."

56


Table of Contents

        The Compensation Committee then reviewed our bakery division's performance against its performance objectives for fiscal 2016 and certified that the bakery division achieved the following results:

 
  Target   Actual   Performance
vs. target

Bakery Operating Income Target (50% of award):

           

Fiscal 2016 bakery division operating income

  $8.75mm   $10.3mm     117.4%

Company Consolidated Operating Income (25% of award):(1)

 

 

 

 

 

 

Fiscal 2016 Company consolidated operating income

  $191mm   $201.6mm     105.6%

Bakery Strategic Objectives (25% of award):(2)

 

 

 

 

 

 

—Threshold bakery operating income

  $7mm   $10.3mm     100%(2)

—Develop a comprehensive project plan, including architectural and engineering drawings, equipment specifications and layout, budgets, timelines, and permits for the West Coast bakery infrastructure upgrade (including freezer upgrade and other modernizations) and begin implementation per project plan(3)

      Partially Achieved

—Improve East Coast bakery staff engagement by a minimum of 2 points from the 2015 engagement survey through various management actions, communications, policy updates, and process changes(3)

            Achieved

—Enhance bakery commodities management through analysis, reporting, evaluation of risk management alternatives, and achieving specific results for targeted commodity classes(3)

      Achieved

(1)
Achievement of the consolidated operating income objective is measured only after accruals for performance achievement awards have been made, and excluding the effect of items we do not consider indicative of our ongoing operations such as FAS 144 impairment charges, acquisitions and divestitures, significant accounting changes, unplanned restructuring costs and gain/loss on the sale of assets.

(2)
Payable only if bakery consolidated operating income is at least $7 million. Maximum payout for strategic objectives is 100% of target. While the threshold bakery consolidated operating income amount was exceeded, the Compensation Committee determined that our bakery division achieved 93.3% of its other strategic objectives for fiscal 2016.

(3)
For a discussion of these specific milestones, see "2016 Targets for Bakery Division Participants (including Mr. Byfuglin)."

        The following payout percentages, as a percentage of the target opportunity, were then calculated based on the payout schedules approved by the Compensation Committee as set forth above:


COMPANY

Component
% Attained
% Payout
Weighted
Actual Payout as
% of Target

Company Consolidated Operating Income

105.6 % 133.3 % 75 % 100 %

Strategic Objectives

100.0 % 100.00 % 25 % 25 %

Total Award

125 %

57


Table of Contents


BAKERY DIVISION

Component
% Attained
% Payout
Weighted
Actual Payout
as % of Target

Bakery Operating Income

117.4 % 200 % 50 % 100 %

Company Consolidated Operating Income

105.6 % 133.3 % 25 % 33.3 %

Bakery Strategic Objectives

93.3 % 93.3 % 25 % 23.3 %

Total Award

      156.6 %

        As a result of the Company's fiscal 2016 performance, our Named Executive Officers received Bonuses under our fiscal 2016 Performance Incentive Plan, as follows:

Name
Target
Performance
Incentive as
% of Salary

Actual
Payout as %
of Target

Actual
Payout
as % of
Salary(1)

2016
Performance
Incentive
Award

David Overton

110 % 125.00 % 137.5 % $ 1,368,125

David Gordon

75 % 125.00 % 93.8 % $ 534,287

W. Douglas Benn

65 % 125.00 % 81.3 % $ 416,299

Debby R. Zurzolo

65 % 125.00 % 81.3 % $ 389,486

Max S. Byfuglin

65 % 156.6 % 101.8 % $ 430,544
(1)
Refer to "Summary Compensation Table."

        Fiscal 2017 Performance Incentive Plan Design.    In late fiscal 2016 and early fiscal 2017, the Compensation Committee, with the assistance of Farient Advisors, reviewed the design of our performance incentive program for fiscal 2017 under the Performance Incentive Plan. No changes were made to the plan design with respect to the potential payout schedules for fiscal 2017 for the Company as a whole. However, for the bakery division, the weighting of the Company consolidated operating income component was increased to 50% from 25%, and the bakery operating income component was reduced to 25% from 50%. This change was made to recognize that the primary role of our bakery operations is to produce innovative, high-quality cheesecakes and other baked desserts for sale at our restaurants and those of our international licensees and to avoid the significant year over year volatility of bakery operating income results vs. target.

Equity-Based Compensation

        We believe that equity-based compensation should be a significant component of total executive compensation to align executive compensation with our long-term performance and to encourage executives to make value-enhancing decisions for the benefit of our stockholders. Each of our Named Executive Officers is eligible to receive equity compensation, which historically consisted of a mix of nonqualified stock options and restricted stock, and more recently, restricted stock units, to encourage a focus on long-term stockholder value and to foster long-term retention. In 2016, we revised our equity-based compensation program to introduce additional performance criteria as a condition to vesting restricted stock units. For a description of these performance criteria, see the section below entitled "Equity Grants in 2016."

        Nonqualified Stock Options.    The Compensation Committee believes that nonqualified stock options are an appropriate equity vehicle for a portion of long-term equity compensation because they are intrinsically performance-based since they provide value only if our stock price increases over time, which aligns our executives' interests with those of our stockholders. Our stock option grants generally have a

58


Table of Contents

five-year prorated vesting period and are exercisable over an eight-year period from grant, once vesting has occurred.

        Restricted Shares/Restricted Stock Units.    The Compensation Committee historically granted a portion of equity awards in the form of restricted shares of our Company's common stock, not only to align our executives' interests with those of our stockholders with respect to increases in stock value, but also to enhance executive retention, since the executive would receive some economic value even if our stock price were to remain flat or decline (provided that the executive remains with the Company for a minimum period of time, historically starting at three years). Commencing in 2013 for our Chief Executive Officer, and in 2014 for all of our other Named Executive Officers, the restricted share grants all were conditioned upon the Company achieving a long-term financial goal measured by cumulative EPS over a two-year period or, if the goal was not initially achieved, a three-year period. If the goal was achieved, 60% of the award would vest after three years from the grant date, and the remaining 40% of the award would be subject to time-based vesting equally over two years. In 2016, two-thirds of the equity granted to Named Executive Officers was in the form of restricted stock units which do not accrue dividends (in lieu of restricted shares), subject to specified financial goals and time-based vesting as described below.

        Optimizing Share Usage.    Because we approach equity compensation grants by considering the overall value of the grant (as opposed to a focus on the number of nonqualified stock options, restricted shares, and/or stock units granted), as our stock price increases, we anticipate using fewer shares overall, while still delivering equivalent value to our executives. In addition, the combined use of nonqualified stock options, restricted shares and stock units reduces our total share usage versus granting only nonqualified stock options. The Compensation Committee approves equity grants to all staff members, including Named Executive Officers and other executives and, in doing so, considers past grants, corporate and individual performance, the valuation of grants, and recommendations of our Chief Executive Officer and its consultant, Farient Advisors. The Compensation Committee has not established formal guidelines or performance criteria for the size of individual equity grants for our Named Executive Officers. However, the Compensation Committee considers total direct compensation market data in making such decisions. See "Market Positioning" above.

        Our equity incentive program includes our restaurant GMs, EKMs, ADOs and AKOMs. Grants under this program provided for nonqualified stock options in the past and now provide for stock units. These stock units vest at the end of an initial five-year period commencing upon entry into the respective position. Additional grants of stock units typically occur every five years thereafter, vesting over a three-year to five-year period, while the individual continues to serve in our management program. We believe that making these awards at the restaurant management level encourages our managers to think and act as business owners, assists in long-term retention of restaurant management, and aligns our managers' interests with those of our stockholders.

        The exercise price of nonqualified stock options is the closing price of our stock on the grant date, which is also used to calculate the grant date fair value of shares of restricted stock and restricted stock units. We do not time our release of material non-public information for the purpose of affecting the value of our executives' compensation, nor do we time our grants of equity-based compensation to take advantage of material non-public information. While our equity plan allows awards to be made on a more frequent basis, our Compensation Committee generally makes grants to our corporate executives, including our Named Executive Officers, on an annual basis, except in the case of newly hired executives, mid-year promotions or other extraordinary events. We believe that making awards on an annual basis enables the Compensation Committee to evaluate individual and corporate performance over a reasonable period of time and to adjust the size and terms of the equity grants accordingly. Our equity grant procedures are available on our website at investors.thecheesecakefactory.com, by clicking on the link for "Corporate Governance."

59


Table of Contents

        Equity Grants in 2016.    As part of its annual review of executive compensation, in March 2016, the Compensation Committee determined that an equity mix of approximately one-third nonqualified stock options, one-third restricted stock units (subject to EPS performance condition) and one-third restricted stock units (subject to EBITDA performance condition) best aligned the interests of our executives with those of our stockholders and the long-term performance of the Company.

        In March 2016, the Compensation Committee approved grants under the 2010 Stock Plan of nonqualified stock options and restricted stock units as set forth below to our Named Executive Officers in recognition of their performance during fiscal 2015 and expected future contributions, to target competitive compensation levels appropriate to the executive's tenure in his or her role, and to align their interests with the long-term interests of our stockholders:

   
Name
  Number of
Nonqualified Stock
Options(1)

  Number of
Restricted Stock
Units-EPS Target(2)

  Number of
Restricted Stock
Units-EBITDA
Target(3)

  Value of Combined
Grants (thousands)

 
   

David Overton

  82,000   25,000   25,000   $ 3,729  
   

David Gordon

    19,300     5,750     5,750   $ 864  
   

W. Douglas Benn

  10,200   3,050   3,050   $ 458  
   

Debby R. Zurzolo

    8,900     2,650     2,650   $ 398  
   

Max S. Byfuglin

  8,100   2,400   2,400   $ 361  
   
(1)
See "Nonqualified Stock Options" below for a description of exercise price and applicable time-based vesting conditions.

(2)
See "Restricted Stock Units (with EPS Performance Condition)" below for a description of applicable performance and time-based vesting conditions.

(3)
See "Restricted Stock Units (with EBITDA Performance Condition)" below for a description of applicable performance and time-based vesting conditions.

        Nonqualified Stock Options.    In 2016, one-third of the equity granted to Named Executive Officers was in the form of options to purchase the Company's common stock, granted at an exercise price of $50.26 per share, which was the closing price of our common stock on the date of grant. The options are subject to time-based vesting at a rate of 20% per year over five years after the date of grant and expire eight years after the date of grant.

        Restricted Stock Units (with EPS Performance Condition).    EPS is one of the performance conditions approved by stockholders under the 2010 Stock Plan. Significant research was conducted to select the correct performance metric, appropriate goal levels, and amount of awards. In 2016, one-third of the equity granted to Named Executive Officers was in the form of restricted stock units subject to achievement of a three-year EPS performance target. These grants provide that the award and the number of shares vesting are subject to achieving a targeted cumulative diluted EPS for fiscal years 2016, 2017, and 2018, measured once, after the end of the 2018 fiscal year. Fiscal year 2016 was the first time the Compensation Committee granted restricted stock units with a defined three-year performance hurdle and a one-time ability to achieve such goal under the 2010 Stock Plan. The Compensation Committee determined that it was appropriate to include this type of award in the long-term incentive program to achieve even more alignment of pay with Company long-term performance, which is demonstratively connected to shareholder return. This performance condition was selected based upon the following considerations:

60


Table of Contents

        Based on these considerations, the Compensation Committee decided that cumulative EPS growth over a three-year period is an appropriate metric to use for a portion of the restricted stock unit grants.

Threshold Payout

  80-90% Probability

Target Payout

  50-60% Probability

Maximum Payout

  10-20% Probability

        In addition to such algorithms, the Compensation Committee also evaluated the Company's EPS growth rates versus our Executive Compensation Peer Group's EPS, to ensure that the targets and growth rates were reasonable given our industry's historic performance.

  Below Threshold   0% of restricted stock units subject to vesting    
     
    Threshold   60% of restricted stock units subject to vesting    
  Between Threshold and Target   Specified range between 60%-100% of restricted stock units subject to vesting    
     
    Target   100% of restricted stock units subject to vesting    
  Between Target and Maximum   Specified range between 100%-125% of restricted stock units subject to vesting    
     
    Maximum   125% of restricted stock units subject to vesting    

61


Table of Contents

        Restricted Stock Units (with EBITDA performance condition).    EBITDA is one of the performance conditions approved by stockholders under the 2010 Stock Plan. Significant research was conducted to select the appropriate performance metric, appropriate goal levels, and amount of awards. In 2016, one-third of the equity grants to Named Executive Officers were in the form of restricted stock units subject to the EBITDA of the Company being equal to or greater than (i) a combined, cumulative target for fiscal 2016 and 2017, or (ii) a combined, cumulative target for fiscal 2016, 2017 and 2018, whichever occurs earlier. If the EBITDA performance condition is satisfied, the grants then would be subject to time-based vesting at the rate of 60% on March 3, 2019, and 20% of the shares on each of March 3, 2020 and March 3, 2021. The Compensation Committee determined that it was appropriate to include this type of award in the long-term incentive program based upon the following considerations:

        Equity Grants in 2017.    As part of its annual review of executive compensation, in March 2017 the Compensation Committee determined that the same equity mix as 2016 of approximately one-third nonqualified stock options, one-third restricted stock units (subject to EPS performance condition) and one-third restricted stock units (subject to EBITDA performance condition) was still appropriate. In the future, this allocation may vary, new performance targets may be chosen and other forms of equity may be used.

        In March 2017, the Compensation Committee approved grants under the 2010 Stock Plan of nonqualified stock options and restricted stock units as set forth below to our Named Executive Officers in recognition of their performance during fiscal 2016 and expected future contributions, to target

62


Table of Contents

competitive compensation levels appropriate to such executive's tenure in his or her role, and to align their respective interests with the long-term interests of our stockholders:

   
Name
  Number of
Nonqualified stock
options(1)

  Number of
Restricted Stock
Units-EPS Target(2)

  Number of
Restricted Stock
Units-EBITDA
Target(3)

  Value of Combined
Grants (thousands)

 
   

David Overton

  73,500   21,700   21,700   $ 3,767