Three top executives of troubled restaurant chain collector Fat Brands are receiving large pay increases and retention bonuses should the company file for bankruptcy, according to federal securities filings on Wednesday.
Two of the executives who will receive those bonuses are sons of Fat Brands founder and CEO Andy Wiederhorn, Thayer Wiederhorn and Taylor Wiederhorn.
Thayer, who is the chief operating officer, and Taylor, the chief development officer, will each receive $550,000 in retention bonuses. CFO Kenneth Kuick will receive $500,000.
Those bonuses, which were paid late last week, are subject to their employment through June 30 of this year—or if the company files for bankruptcy protection.
(Check out this deep dive into Fat Brands’ financial problems.)
Fat Brands warned of a potential bankruptcy in November after the trustee on the company’s securitization financing demanded full payment on the company’s debt. Fat Brands, which owns Fazoli’s, Fatburger, Johnny Rockets and other chains, owes about $1.4 billion to bondholders.
In addition, each of the Wiederhorn brothers and Kuick received increases in their base salary from $550,000 to $950,000, according to the filing.
The executives would be required to repay their retention bonus and salary increase if they were to leave on their own in the meantime, or if they are fired for cause.
Retention bonuses in particular are commonplace among companies facing major changes, including a bankruptcy filing or a potential sale process. They are designed to ensure that people do not leave during a transition process.
Fat Brands used a series of whole business securitizations to buy up about $900 million worth of restaurant chains in 2020 and 2021. Many of those chains have struggled in recent years. The company did not have enough available funds to make a debt payment late last year, prompting the trustee on those financing instruments to demand full payment.
Fat Brands has also been sued by franchisees of multiple brands accusing the company of raiding their marketing funds.
The company has hoped to cut costs through a variety of manners to help pay off debt, including the end of legal issues arising from a federal lawsuit against Fat Brands over an apparent $47 million loan scheme. The U.S. Justice Department has dismissed those charges and Andy Wiederhorn recently reached a deal with the SEC over civil charges.
The company is also hoping to raise funds through Twin Peaks, which Fat Brands controls, which could help cut its debt.
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