What stock holding requirement is placed on executive officers at Del Taco after their RSUs vest?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Nonvested restricted stock units — Nonvested restricted stock units ("RSUs") are generally issued to employees and non-employee directors. Grants to executive officers of time-vesting RSUs vest ratably over four years or three years, are subject to a stock holding requirement of 50% of after-tax net shares resulting from the vesting of RSUs, and must be held until the multiple of base salary stock ownership is met.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, executive officers who receive grants of time-vesting Restricted Stock Units (RSUs) are subject to a stock holding requirement. Specifically, these officers must hold 50% of the after-tax net shares they receive from the vesting of their RSUs. This means that after taxes are deducted from the shares that vest, the executive must retain half of the remaining shares.
This stock holding requirement remains in place until the executive meets a certain multiple of their base salary in stock ownership. The FDD does not specify what that multiple is. The RSUs granted to executive officers typically vest ratably over either a three-year or four-year period.
This policy aims to align the interests of Del Taco's executive officers with those of the company's shareholders, encouraging them to focus on long-term value creation. By requiring executives to hold a significant portion of their vested shares, Del Taco incentivizes them to make decisions that will positively impact the company's stock price over time. For a prospective franchisee, this indicates that Del Taco's leadership has a vested interest in the overall success and stability of the company.