DEF 14A: Portillo's Inc. Announces 2024 Annual Meeting and Details Executive Compensation

Portillo's Inc. releases its proxy statement detailing the agenda for the 2024 Annual Meeting of Shareholders, including the election of directors and advisory votes on executive compensation and auditor ratification.

Summary

• Portillo's Inc. has released its proxy statement for the 2024 Annual Meeting of Shareholders, scheduled for June 3, 2024.
• The meeting will be held virtually, and shareholders of record as of April 4, 2024, are entitled to vote.
• The agenda includes the election of seven directors, an advisory vote on executive compensation ('Say on Pay'), a vote on the frequency of future 'Say on Pay' votes, and the ratification of Deloitte & Touche LLP as the independent registered public accounting firm for 2024.
• The board recommends voting for all director nominees, for the approval of executive compensation, for 'one year' as the frequency for future executive compensation votes, and for the ratification of Deloitte & Touche LLP.
• The proxy statement details the company's performance in 2023, including revenue of $679.9 million, an average unit volume of $9.1 million, and the opening of 12 new restaurants.
• It also outlines the company's strategic initiatives for 2024, focusing on operational excellence, innovation, restaurant growth, and team member care.
• The document provides information on director compensation, executive compensation, corporate governance, and related party transactions.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for Portillo's, highlighting strong financial performance, growth initiatives, and a commitment to its team members. The board's recommendations on voting matters also suggest confidence in the company's direction.

Positives

• Portillo's achieved strong financial results in 2023, including $679.9 million in revenue and 24% restaurant-level profitability.
• The company successfully opened 12 new restaurants in 2023, demonstrating its growth potential.
• The 'Kitchen '23' initiative is improving efficiency and reducing costs for new restaurants.
• The company is focused on strategic initiatives to drive long-term sustainable value to shareholders.
• The company has a strong commitment to its team members, as evidenced by being recognized as one of the best brands to work for by QSR Magazine.
• The company has a robust shareholder engagement program.

Risks

• The company's future performance is subject to various risks, including economic conditions, competition, and supply chain disruptions.
• The company's growth strategy depends on the availability of suitable new restaurant sites.
• Increases in food and other operating costs could negatively impact profitability.
• Cybersecurity risks and potential failures of information technology systems could disrupt operations.
• The company's success depends on attracting and retaining qualified employees in a competitive labor market.

Future Outlook

The company aims to increase its number of restaurants by approximately 12% to 15% annually, focusing on the Sunbelt region and filling in existing markets.

Management Comments

• 'Thanks to the tireless efforts of our team, Portillos had a terrific year in 2023,' said Michael A. Miles, Jr., Chairman of the Board, and Michael Osanloo, Chief Executive Officer.
• They emphasized the importance of the company's culture and team members, stating, 'People are the heart of Portillos.'

Industry Context

Portillo's is operating in the competitive restaurant industry, facing competition from both national chains and local restaurants. The company's focus on operational excellence, menu innovation, and customer experience is aimed at differentiating itself from competitors and driving growth.

Comparison to Industry Standards

• The document mentions that industry market research studies consistently show Portillo's among the elite in net promoter score.
• The document mentions that the company's average unit volumes are industry-leading.
• The document mentions that the company's retention of management and hourly Team Members is top quartile in the industry.

Management Changes

Corporate Governance

Related Party Transactions

• In connection with the IPO, we entered into a registration rights agreement with Berkshire and certain of our other shareholders.
• In the first quarter of 2023, in connection with the secondary offerings previously discussed in our most recent Form 10-K, we purchased LLC Units and shares of Class A common stock using the proceeds of the secondary offering at a price equal to the public offering price less the underwriting discounts and commissions from certain pre-IPO LLC Members and shareholders of the entities treated as corporations for U.S. tax purposes that held LLC Units prior to the Transactions (Blocker Companies), including from funds affiliated with Berkshire Partners LLC, which beneficially owned approximately 30.6% of the Company as of December 31, 2023.
• In the aggregate, we paid to the funds affiliated with Berkshire Partners LLC approximately $172.1 million to purchase the LLC Units and shares of Class A common stock with the proceeds.
• In connection with the IPO transactions, Portillos Inc., Portillos OpCo and each of the pre-IPO LLC Members entered into the Amended LLC Agreement.
• Upon completion of the IPO, we became party to a Tax Receivable Agreement with certain of our pre-IPO LLC Members (TRA Parties).
• Noah Glass, a member of our Board, is the founder and CEO of Olo, Inc. (Olo), a platform the Company uses in connection with its mobile ordering application and delivery.

Stakeholder Impact

• Shareholders are encouraged to participate in the Annual Meeting and vote on the proposals.
• The company's strategic initiatives are aimed at creating long-term value for shareholders.
• The company is committed to taking care of its team members, providing competitive compensation and benefits.
• The company supports the communities in which it operates through various fundraising and donation initiatives.
• The company is focused on sourcing and sustainability initiatives to minimize its environmental impact.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will hold its Annual Meeting of Shareholders on June 3, 2024.
• The company will continue to execute its strategic initiatives for 2024, focusing on operational excellence, innovation, restaurant growth, and team member care.

Key Dates

Keywords

proxy statement, annual meeting, executive compensation, directors, Deloitte & Touche, restaurant, Portillo's, governance, shareholders, audit