DEFC14A: Jack in the Box Faces Proxy Battle, Outlines 'JACK on Track' Plan

Jack in the Box Inc. is soliciting shareholder votes for its 2026 Annual Meeting amidst a proxy contest with Biglari Capital Corp., while detailing its 'JACK on Track' plan and fiscal 2025 financial results.

Summary

• The 2026 Annual Meeting of Shareholders will be held virtually on February 27, 2026, at 8:30 a.m. Pacific Time.
• Shareholders will vote on the election of ten directors, ratification of KPMG LLP as independent registered public accountants, an advisory vote on executive compensation, approval of an amendment to the 2023 Omnibus Incentive Plan, and ratification of the Stockholder Protection Rights Agreement.
• Biglari Capital Corp. (the 'Biglari Group') has threatened a 'withhold campaign' against one or more directors, and the Board recommends disregarding their solicitation materials.
• In fiscal 2025, the company launched its multi-faceted 'JACK on Track' plan to improve performance, strengthen the balance sheet by paying down debt, accelerate cash flow, and transition to an asset-light business model.
• The divestiture of Del Taco was announced and subsequently closed on December 22, 2025, for an aggregate purchase price of $115.0 million in cash.
• Brand building initiatives, including 'Jack's Way,' innovation, and digital experience improvements, are in progress.
• Fiscal 2025 financial results include total revenues of $1.5 billion and Adjusted EBITDA of $270.9 million.
• System same-store sales decreased 4.2% year-over-year for Jack in the Box and 3.7% year-over-year for Del Taco.
• Net units decreased by 55 for Jack in the Box (31 openings, 86 closures, including 51 'JACK on Track' block closures) and by 18 for Del Taco (14 openings, 32 closures).
• The company returned approximately $5.0 million to shareholders through stock buybacks and $16.6 million in dividends in fiscal 2025, but discontinued its dividend in April 2025 as part of the 'JACK on Track' plan.
• Executive annual incentive payouts for fiscal 2025 were below target at 47.6%, and the FY 2023-2025 Performance Share Units (PSUs) achieved a payout of 98.2% of target.
• The Board's size increased from eight to ten directors, with Alan Smolinisky and Mark King appointed as independent directors effective November 7, 2025, under the GreenWood Cooperation Agreement.
• The Stockholder Protection Rights Agreement, adopted July 1, 2025, and amended September 8, 2025, was a response to the Biglari Group's accumulation of approximately 9.9% of common stock and intent to increase its stake, aiming to protect shareholder interests and facilitate the 'JACK on Track' plan.

Sentiment

Score: 4

Explanation: The filing presents a mixed picture. While strategic initiatives like 'JACK on Track' and the Del Taco divestiture aim for long-term improvement, immediate fiscal 2025 financial results show declines in same-store sales, net unit count, and negative GAAP net earnings. The discontinuation of dividends is a negative for income investors. The ongoing proxy contest adds uncertainty and potential costs. The below-target executive compensation payouts reflect the underperformance.

Positives

• The company initiated the 'JACK on Track' plan to improve long-term performance, strengthen the balance sheet, and accelerate cash flow, focusing on an asset-light business model.
• The divestiture of Del Taco for $115.0 million in cash aligns with the company's strategic shift towards an asset-light model and re-focusing on the core Jack in the Box brand.
• Progress is being made on brand building initiatives, including 'Jack's Way,' innovation, and enhancing the digital experience for guests.
• Customer excitement and brand recognition are noted in new markets, and franchisees and employees demonstrate strength and resilience despite industry pressures.
• The Board has undergone refreshment with the appointment of two new independent directors, Alan Smolinisky and Mark King, in November 2025, bringing diverse expertise.
• An advisory capital allocation committee has been established to support strategic capital decisions, including portfolio optimization and capital structure.
• The company maintains strong corporate governance practices, including an independent Non-Executive Chairman, regular executive sessions, and robust stock ownership requirements for directors and executives.
• Shareholders have consistently approved Say on Pay proposals with over 80% favorable votes since 2014, indicating general satisfaction with executive compensation alignment.

Negatives

• System same-store sales decreased 4.2% for Jack in the Box and 3.7% for Del Taco in fiscal 2025, indicating a decline in core restaurant performance.
• Net units decreased across both brands in fiscal 2025, with Jack in the Box closing 55 units (86 closures vs. 31 openings) and Del Taco closing 18 units (32 closures vs. 14 openings), primarily due to underperforming restaurants.
• The company discontinued its dividend in April 2025 as part of the 'JACK on Track' plan, which may negatively impact income-focused shareholders.
• Executive annual incentive payouts for fiscal 2025 were below target, at 47.6% of the target payout, reflecting underperformance against established goals.
• The company reported a GAAP net loss of $(80,719) thousand in fiscal 2025, following a loss of $(36,695) thousand in fiscal 2024.
• Significant impairment of goodwill and intangible assets was recorded, totaling $209,556 thousand in fiscal 2025 and $162,624 thousand in fiscal 2024.

Risks

• An ongoing proxy contest with Biglari Capital Corp. threatens a 'withhold campaign' against one or more directors, potentially causing disruption and incurring substantial additional costs (estimated up to $5,000,000).
• Uncertain market conditions generally pose a challenge to the restaurant industry, which could impact future financial performance.
• Challenges in forecasting are noted due to the rapid pace of investments required for business growth and technology system upgrades, including digital platforms.
• The Stockholder Protection Rights Agreement, while intended to protect shareholders from coercive takeover tactics, may also have an anti-takeover effect, potentially making mergers or acquisitions more difficult if not approved by the Board.
• There is a risk of not having sufficient shares available for equity incentive awards if the proposed amendment to the 2023 Omnibus Incentive Plan is not approved, which could hinder the ability to attract, retain, and motivate key talent.
• The company's stock price decrease at fiscal year-end caused some directors to fall below their stock ownership requirements, indicating potential market volatility concerns.

Future Outlook

The company anticipates that continued progress on the 'JACK on Track' plan, coupled with a re-focus on Jack in the Box as a standalone brand and an enhanced guest experience, will drive shareholder value and unlock growth potential in 2026 and beyond. The proposed amendment to the 2023 Omnibus Incentive Plan is crucial for maintaining competitive equity compensation to attract and retain talent, supporting long-term growth. The Stockholder Protection Rights Agreement, if ratified, is intended to secure long-term shareholder value and protect against coercive takeover tactics until July 1, 2028.

Management Comments

• We continue to be encouraged by the customer excitement and brand recognition as we enter new markets and by the strength and resilience of our franchisees and employees, despite a pressured industry backdrop.
• Entering 2026, we believe further progress on the 'JACK on Track' plan and re-focusing on Jack in the Box as a standalone brand and the overall guest experience will deliver shareholder value and unlock the growth potential of Jack in the Box.
• The Company continues to offer a viable long-term opportunity for shareholders seeking a value-oriented stock with a growth-focused strategy in place.
• The Board believes Mr. Tucker and Ms. Hooper are uniquely qualified to better position the Company for higher performance over the long-term and drive performance that our shareholders expect from our iconic brand and a profitable business model.
• Both Mr. Tucker and Ms. Hooper have extensive experience within the restaurant industry and financial acumen that is well-timed to match with the Company's current priorities and executing the 'JACK on Track' initiatives.

Industry Context

The company acknowledges operating in a 'pressured industry backdrop,' indicating broader challenges within the restaurant sector. Its 'JACK on Track' plan and the divestiture of Del Taco are strategic responses aimed at streamlining operations and focusing on the core Jack in the Box brand to navigate these industry conditions and enhance competitiveness. The company compares its performance metrics, such as Adjusted EBITDA and System Same-Store Sales, against a peer group of other restaurant concepts and companies to gauge its relative success in the market.

Comparison to Industry Standards

• The Compensation Committee utilizes market compensation data from a peer group of restaurant companies and general industry surveys to ensure executive compensation remains competitive.
• The peer group for fiscal 2025 includes: BJ's Restaurants, Inc., Bloomin Brands, Inc., Brinker International Inc., Cracker Barrel Old Country Store, Inc., Denny's Corporation, Dine Brands Global Inc., Domino's Pizza, Inc., El Pollo Loco Holdings, Inc., Krispy Kreme, Inc., Papa Johns International Inc., Restaurant Brands International Inc., Shake Shack Inc., Texas Roadhouse, Inc., The Cheesecake Factory Inc., The Wendys Company, and Wingstop Inc.
• The company's System Same-Store Sales performance is benchmarked against competitors within the industry to measure success in growing top-line sales and revenues.
• Adjusted EBITDA is a common performance metric within the industry, allowing for comparison of the company's operational performance relative to other restaurant concepts.

Management Changes

Corporate Governance

Legal Proceedings

• Biglari Capital Corp. has threatened to engage in a 'withhold campaign' against one or more directors at the Annual Meeting, indicating an ongoing proxy contest.
• The company expects to incur substantial additional costs, estimated up to approximately $5,000,000, related to the solicitation of proxies due to the Biglari Group's campaign.
• The Stockholder Protection Rights Agreement was adopted in response to the Biglari Group's accumulation of common stock and stated intent to increase its stake, aiming to protect the interests of all shareholders from coercive or otherwise unfair takeover tactics.

Stakeholder Impact

• Shareholders: Directly impacted by the proxy contest, the strategic 'JACK on Track' plan, the Del Taco divestiture, the discontinuation of dividends, and the proposed equity plan amendment. The Stockholder Protection Rights Agreement is intended to protect their long-term value.
• Employees: Affected by executive leadership changes, retention equity awards, and the 2023 Omnibus Incentive Plan, which aims to attract, retain, and motivate talent.
• Customers/Guests: The company's strategic focus includes improving the digital experience and overall guest experience, which should benefit customers.
• Franchisees: Recognized for their 'strength and resilience' and are integral to the 'JACK on Track' plan's success in improving the restaurant system.

Next Steps

• Shareholders are urged to vote on the election of directors and other proposals at the 2026 Annual Meeting on February 27, 2026.
• The company will continue to execute its multi-faceted 'JACK on Track' plan to improve performance, strengthen the balance sheet, and accelerate cash flow.
• Management will re-focus on Jack in the Box as a standalone brand and enhance the overall guest experience to unlock growth potential.
• The newly established advisory Capital Allocation Committee plans to hold its first meeting in February 2026 to review strategic capital decisions.
• The company will seek shareholder approval for an amendment to the 2023 Omnibus Incentive Plan to increase the number of shares available for issuance.
• Shareholders will be asked to ratify the adoption of the Stockholder Protection Rights Agreement, which, if approved, will extend its expiration to July 1, 2028.

Key Dates

Recommendation

The company is undergoing significant strategic shifts with the 'JACK on Track' plan and the Del Taco divestiture, which could unlock long-term value. However, fiscal 2025 performance showed declines in key metrics like same-store sales and net earnings, and the discontinuation of dividends is a negative. The ongoing proxy contest with Biglari Capital Corp. introduces considerable uncertainty and potential costs, which could weigh on the stock in the short term. While the new management and board additions are positive for governance and strategic execution, the immediate challenges and activist pressure suggest a 'Hold' recommendation until there is clearer evidence of the 'JACK on Track' plan's success and resolution of the proxy contest.

Keywords

Jack in the Box, Proxy Statement, Annual Meeting, Shareholder Rights, Corporate Governance, Executive Compensation, Restaurant Industry, Fast Food, Del Taco, Divestiture, Stockholder Protection Rights Agreement, Omnibus Incentive Plan, Biglari Capital Corp., Proxy Contest, Same-Store Sales, Adjusted EBITDA, Capital Allocation, Franchise, Risk Management