CHEESECAKE FACTORY INC

​

executives require approval from the Compensation Committee and, in considering whether to approve such equity grants, the Compensation Committee considers past grants, corporate and individual performance, the valuation of grants, and recommendations of our CEO and the Compensation Committee’s compensation consultant. The Compensation Committee has not established formal guidelines for the size of individual equity grants for our Named Executive Officers, but considers the factors listed above as well as market data in making such decisions. See “Market Positioning” above.

Our Compensation Committee generally makes grants to our corporate executives, including our Named Executive Officers, on an annual basis, except in the case of newly hired executives, promotions or other extraordinary events.

Equity Grants in 2025. For fiscal 2025, the Compensation Committee determined, with the assistance of its independent compensation consultant, that Named Executive Officers should continue to receive a designated value of equity comprised of a mix of 50% performance-based restricted stock subject to achievement of three equally weighted performance conditions (total annual revenue growth; adjusted annual earnings per share; and adjusted annual controllable profit goals, as described in further detail below, in each case, over a three-year performance period), and 50%, based upon each executive’s designated preference, of all stock options (with the number of options to be granted determined based on a Black Scholes valuation), an equal mix between stock options and time-based restricted stock, or all restricted stock (see table below for actual equity awards granted based on each executive’s election). The Compensation Committee believes that regardless of the choice elected by each executive, the resulting mix would strongly align the interests of our executives with those of our stockholders and our long-term performance. In the future, this allocation may vary, new performance targets may be chosen, and other forms of equity may be used.

Non-qualified Stock Options. The exercise price of our stock options is the closing price of our stock on the grant date. Generally, our stock options vest 20% on each of the first five anniversaries of the grant date.

Time-Based Restricted Stock Awards. The time-based restricted stock granted to our Named Executive Officers during 2025 vest as to 60% of the shares on the third anniversary of the grant date, and 20% on each of the fourth and fifth anniversaries of the grant date.

Performance-Based Restricted Stock. As described above, the performance-based restricted stock awards granted to the Named Executive Officers in 2025 are subject to the achievement of three equally weighted performance conditions, which are described below. The total annual revenue growth, adjusted annual earnings per share and adjusted annual controllable profit goals are collectively referred to as the “Performance Conditions” and are subject to threshold and maximum potential payouts. Performance achievement is measured against pre-determined performance goals for each year of the three-year performance period, which are set for the full three-year period on the grant date. The number of shares earned at the end of the three-year performance period (if any) will be determined by averaging performance achievement for each of the three individual years. After the conclusion of the performance period, any earned shares are then subject to time-based vesting at the rate of 60% of the shares on February 13, 2028 and 20% of the shares on each of February 13, 2029 and February 13, 2030. If the threshold goal is achieved, 60% to 150% of the target shares will be eligible to vest, based on level of achievement. If the threshold goal is not achieved, the target shares are forfeited. We are not disclosing threshold goals at this time due to the sensitivity of these forecasts and correlation between our projected performance vis-à-vis the Performance Conditions and our stock price. The threshold goals will be disclosed at the end of the performance period along with the achievement levels and corresponding vesting of the performance-based restricted stock awards, if any.

•

“Total Annual Revenue Growth Goal” is based upon the Company’s total annual revenue growth for fiscal years 2025, 2026 and 2027. This metric was selected to support strategic growth objectives.

​

•

“Adjusted Annual Earnings Per Share Goal” is based upon the Company’s adjusted annual earnings per share for the three fiscal years 2025, 2026 and 2027. The adjusted annual earnings per share goal was selected because it is believed to be a significant part of our business strategy, and it has a high correlation with stockholder returns. Adjusted Annual Earnings Per Share measures our adjusted diluted net income per share as defined in reconciled from GAAP in Appendix A of this proxy statement.

​