If big changes come to Noodles & Company in the next year—like say, a sale of the company—top executives have some new incentives to stick around.
The fast-casual chain’s board last week approved an agreement for retention bonuses to be paid to four top execs in the event of a change in control, according to a filing with the U.S. Securities and Exchange Commission.
The chain earlier this year said it was exploring strategic alternatives, including a possible sale, but also the option of refinancing debt or refranchising. Noodles is about two years into an attempted turnaround to revive flagging sales.
The retention bonuses, however, would only kick in if control of the company changes, including the loss of a majority on the board through an actual or threatened election or proxy fight, for example, as well as an outright acquisition, merger or sale of assets.
If any of those changes in control occur, President and CEO Joe Christina would get a bonus equal to 100% his base salary. CFO Michael Hynes would get a bonus of 75% his base salary.
And both Corey Kline, executive vice president, technology, and Chief Accounting Officer Kathy Lockhart would receive bonuses worth half their respective base salary.
The bonus would apply only if the executive remains employed by the company for 90 days after closing, or is terminated without cause within 30 days prior or 90 days after closing. The executives must also adhere to strict covenants, including confidentiality and good faith cooperation to help lead the company to whatever transaction results in that change of control.
The right to any bonus, however, expires on Dec. 31, 2026, if no change in control has happened before then.
Noodles is also facing two warnings in recent months that its stock price has fallen too low, threatening the chain’s Nasdaq compliance. Noodles' share price was 65 cents at close on Monday, close to the 52-week low of 55 cents.
Still, Noodles' overhaul efforts appear to be showing results. In the third quarter, the fast-casual chain’s same-store sales were up 4% systemwide. And though traffic was down 0.6% at the end of the quarter, that number was trending up. In October, for example, same-store sales were up 8% with traffic up 1.5%.
The Broomfield, Colorado-based chain is also in the process of a plan to close up to 49 underperforming restaurants by the end of next year.
The chain upgraded its projections for the year, saying same-store sales are expected to range between 3.6% to 4.2%, higher than earlier projections of an increase between 2.5% and 4%.
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