What is the purpose of the unfunded, non-qualified deferred compensation plan maintained by Del Taco?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
requirements to defer a percentage of their pay on a pre-tax basis. Our contributions under these plans were $3.3 million, $2.3 million, and $2.1 million in each fiscal years 2024, 2023 and 2022, respectively.
We also maintain an unfunded, non-qualified deferred compensation plan for key executives and other members of management whose compensation deferrals or company matching contributions to the qualified savings plan are limited due to IRC rules. Effective January 1, 2016, this non-qualified plan was amended to replace the company matching contribution with an annual restoration match that is intended to "restore" up to the full match for participants whose elective deferrals (and related company matching contributions) to the qualified savings plan were limited due to IRC rules. A participant's right to the Company restoration match vests immediately. This plan allows participants to defer up to 50% of their salary and 85% of their bonus
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the company maintains an unfunded, non-qualified deferred compensation plan for key executives and other members of management. This plan addresses situations where compensation deferrals or company matching contributions to the qualified savings plan are limited due to IRS rules. The plan was amended effective January 1, 2016, to replace the company matching contribution with an annual restoration match. This "restores" up to the full match for participants whose elective deferrals and related company matching contributions to the qualified savings plan were limited by IRS rules. A participant's right to the Company restoration match vests immediately.
This plan allows participants to defer up to 50% of their salary and 85% of their bonus on a pre-tax basis. Del Taco's contributions to this non-qualified deferred compensation plan amounted to $0.2 million in fiscal year 2024, $0.1 million in fiscal year 2023, and less than $0.1 million in fiscal year 2022.
For a prospective franchisee, this information is relevant in understanding the overall compensation and benefits structure for Del Taco's key executives. While it doesn't directly impact the franchisee's operations, it provides insight into how Del Taco attracts and retains its leadership team, which can indirectly affect the stability and strategic direction of the franchise system. The deferred compensation plan is a tool used to provide additional benefits to key employees beyond what is allowed under standard qualified savings plans due to IRS limitations.