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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

 

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April 21, 2011

Dear Stockholder:

        You are cordially invited to attend The Cheesecake Factory Incorporated annual meeting of stockholders on Wednesday, June 1, 2011, at 10:00 a.m., Pacific Daylight Time. The meeting will be held at the Janet and Ray Scherr Forum Theatre, Thousand Oaks Civic Arts Plaza, 2100 Thousand Oaks Boulevard, Thousand Oaks, California 91362. The matters to be acted upon at the meeting are described in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.

        Pursuant to rules adopted by the Securities and Exchange Commission ("SEC"), we are providing access to our proxy materials over the Internet. This method helps us expedite your receipt of the proxy materials, lowers our cost of delivery and helps to conserve natural resources. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials ("Notice") to certain stockholders. All stockholders receiving the Notice can request a printed set of proxy materials. We are also mailing a full set of proxy materials, including a proxy card, to certain stockholders beginning on the date we file the attached Proxy Statement with the SEC. All stockholders can access the proxy materials at www.proxyvote.com. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice and in the attached Proxy Statement. In addition, stockholders may request proxy materials in printed form by mail or electronically by email on an ongoing basis.

        YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting of Stockholders, we urge you to vote and submit your proxy by the Internet, telephone or mail (see below for instructions) in order to ensure the presence of a quorum. If you attend the meeting, you will have the right to revoke your proxy and vote your shares in person. If you hold your shares through an account with a brokerage firm, bank or other nominee, please follow the instructions you receive from them to vote your shares.

Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to Be Held on June 1, 2011:
The Proxy Statement and Annual Report to Stockholders are available at www.proxyvote.com.

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THE CHEESECAKE FACTORY INCORPORATED
26901 Malibu Hills Road
Calabasas Hills, California 91301

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
on
June 1, 2011

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        The 2011 annual meeting of stockholders of The Cheesecake Factory Incorporated, a Delaware corporation ("Company"), will be held at the Janet and Ray Scherr Forum Theatre, Thousand Oaks Civic Arts Plaza, 2100 Thousand Oaks Boulevard, Thousand Oaks, California 91362, on Wednesday, June 1, 2011, beginning at 10:00 a.m., Pacific Daylight Time ("Annual Meeting"), for the following purposes:

1.

To elect seven (7) nominees to serve as directors of the Company for a term to expire at the Company's 2012 annual meeting of stockholders and until their respective successors shall be elected and qualified;



2.

To approve an amendment to the 2010 Stock Incentive Plan to increase the number of shares available for issuance by 1,000,000 shares, to a total of 4,800,000 shares from 3,800,000 shares;



3.

To ratify the selection of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for fiscal year 2011, ending January 3, 2012;



4.

To approve, on a non-binding, advisory basis, the compensation of the Company's Named Executive Officers as disclosed pursuant to the compensation disclosure rules of the SEC;



5.

To approve, on a non-binding, advisory basis, the frequency of the stockholder advisory vote on executive compensation (a "say-on-pay vote") on a three-, two- or one-year basis; and



6.

To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

        The Board of Directors has fixed the close of business on April 5, 2011 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof.

 

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THE CHEESECAKE FACTORY INCORPORATED

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PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 1, 2011

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INTRODUCTION

General

        This Proxy Statement is furnished to the stockholders of The Cheesecake Factory Incorporated, a Delaware corporation ("Company" and "we," "us" or "our"), in connection with the solicitation of proxies by our Board of Directors ("Board") for use at the annual meeting of stockholders to be held at the Janet and Ray Scherr Forum Theatre, Thousand Oaks Civic Arts Plaza, 2100 Thousand Oaks Boulevard, Thousand Oaks, California 91362, on Wednesday, June 1, 2011, beginning at 10:00 a.m., Pacific Daylight Time, and at any adjournment or postponement thereof ("Annual Meeting"). We intend to cause this Proxy Statement and proxy voting materials to be available to stockholders on or about April 21, 2011.

Internet Availability of Proxy Materials

        Pursuant to rules adopted by the Securities and Exchange Commission ("SEC"), we are providing access to our proxy materials over the Internet. Accordingly, we sent a Notice of Internet Availability of Proxy Materials ("Notice") to certain stockholders. Our stockholders can access the proxy materials at www.proxyvote.com or request a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy can be found in the Notice and in this Proxy Statement.

        In addition, the Notice provides instructions to stockholders regarding receiving proxy materials in printed form by mail or electronically by email on an ongoing basis in the future. Choosing to receive future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.

Voting; Quorum; Abstentions and Broker Non-Votes

        On April 5, 2011, the record date fixed by the Board for the Annual Meeting ("Record Date"), 58,162,927 shares of our common stock were outstanding, and there were no outstanding shares of any other class of stock. Each holder of common stock is entitled to one vote for each share of common stock held of record. Only stockholders of record at the close of business on April 5, 2011 will be entitled to notice of and to vote at the Annual Meeting.

        The required quorum for the transaction of business at the Annual Meeting is a majority of the issued and outstanding shares of our common stock entitled to vote at the Annual Meeting, whether present in person or represented by proxy. Our Bylaws provide that unless otherwise provided by law, by the Certificate of Incorporation or the Bylaws, all elections and questions shall be decided by the vote of the holders of a majority of the shares of stock entitled to vote thereon present in person or by proxy at the Annual Meeting. Shares of stock represented by a properly signed and returned proxy will be treated as present at the Annual Meeting for purposes of determining a quorum, regardless of whether the proxy is marked as casting a vote or abstaining. Shares of voting stock represented by "broker non-votes" shall be treated as present for purposes of determining a quorum, but shall not be counted or deemed present for

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the purpose of determining whether stockholders approve a proposal. "Broker non-votes" are shares of stock held in record name by brokers or nominees for which instructions have not been received from the beneficial owners or persons entitled to vote and (i) the broker or nominee does not have discretionary voting power under applicable rules or the instrument under which it serves in such capacity; or (ii) the record holder has indicated on the proxy card or has executed a proxy and otherwise notified us that it does not have authority to vote such shares on that matter.

        For Proposal 1, our Bylaws require that, in an uncontested election (such as the election to be held at this Annual Meeting), each director will be elected by the vote of the majority of votes cast. An uncontested election means that there are as many candidates standing for election as there are vacancies on the Board. A majority of votes cast means that the number of shares cast "for" a director's election exceeds the number of votes cast "against" that director. A stockholder whose ballot is marked as "abstain" or a broker non-vote shall not be considered a vote cast and therefore will have no effect on the outcome of the vote, other than to reduce the number of affirmative votes required to elect a director.

        Proposals 2, 3 and 4 require the approval of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Abstentions as to these proposals will count as votes "against" the proposal. Proposal 5 requires the holders of a majority of our shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on Proposal 5 to choose among alternatives of "3 years," "2 years," "1 year" or "Abstain." The choice with the highest number of votes cast will be considered our stockholders' preference for the frequency of stockholders' non-binding, advisory votes concerning our Named Executive Officers' compensation. A stockholder whose ballot is marked as "abstain" or a broker non-vote shall not be considered a vote cast and therefore will have no effect on the outcome of the vote for the proposals, other than to reduce the number of affirmative votes required to approve the proposals.

Proxies

        Proxies delivered pursuant to this solicitation are revocable prior to their exercise and at the stockholder's option by (i) attendance and voting at the Annual Meeting (although attendance at the Annual Meeting itself will not revoke a proxy), or (ii) filing a written notice with Debby R. Zurzolo, our Secretary, revoking the proxy, or (iii) submitting another duly executed proxy bearing a later date. Unless previously revoked, all proxies representing shares entitled to vote that are delivered pursuant to this solicitation will be voted at the Annual Meeting by the named attorneys-in-fact and agents, to the extent authorized, in accordance with the directions contained therein.

        If no directions are given, the shares represented by such proxies will be voted:

•

FOR the election of the Board's nominees for director: David Overton; Allen J. Bernstein; Alexander L. Cappello; Thomas L. Gregory; Jerome I. Kransdorf; David B. Pittaway; and Herbert Simon;



•

FOR approval of an amendment to the 2010 Stock Incentive Plan to increase the number of shares available for issuance under the 2010 Stock Incentive Plan by 1,000,000 shares, to a total of 4,800,000 shares from 3,800,000 shares;



•

FOR the ratification of the selection of PricewaterhouseCoopers LLC as our independent registered public accounting firm for the fiscal year 2011, ending January 3, 2012;



•

FOR approval of, on a non-binding, advisory basis, the compensation of the Company's Named Executive Officers as disclosed pursuant to the compensation disclosure rules of the SEC; and



•

FOR approval of, on a non-binding, advisory basis, the frequency of the advisory vote on executive compensation (a "say-on-pay vote") at "3 years".

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        The named proxies may vote in their discretion upon such other matters as may properly come before the Annual Meeting, including any motion made for adjournment or postponement (including for purposes of soliciting additional votes).

Solicitation

        We will pay for the cost of preparing, assembling and mailing the Notice of Annual Meeting and Proxy Statement and the cost of this solicitation. Our directors, officers and other staff members may solicit proxies, without additional remuneration, in person or by telephone, facsimile or email transmission. We have also retained Innisfree M&A Incorporated to assist with the solicitation for an estimated fee of $15,000 plus reasonable out-of-pocket expenses. Banks, brokerage houses and other custodians, nominees or fiduciaries will be asked to forward soliciting material to their principals and to obtain authorization for the execution of proxies, and we will reimburse them for their reasonable out-of-pocket expenses incurred in that regard.

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PROPOSAL ONE
Election of Directors

General

        Our Bylaws provide for a board of directors consisting of no less than five and no more than thirteen members, the exact number within this range being determined by resolution of the Board. The Board currently has set the number of directors at seven. At the 2008 annual meeting of stockholders, our stockholders approved amendments to our Certificate of Incorporation to eliminate our classified board structure and, as a result, all directors will stand for election to one-year terms beginning with this 2011 Annual Meeting of stockholders.

Nominees

        The Corporate Governance and Nominating Committee of the Board ("Governance Committee") recommended the nomination, which the Board approved, of the following individuals for re-election to the Board for a term that will expire at the 2012 annual meeting of stockholders and until their respective successors are elected and duly qualified: David Overton; Allen J. Bernstein; Alexander L. Cappello; Thomas L. Gregory; Jerome I. Kransdorf; and David B. Pittaway. Agnieszka Winkler has notified us that she will not stand for re-election to the Board at this Annual Meeting. In addition, the Governance Committee recommended, and the Board approved, Herbert Simon for election to the Board for a term that will expire at the 2012 annual meeting of stockholders and until his successor is elected and duly qualified. Each nominee has indicated his willingness to serve. For biographical information regarding the director nominees, please see the section entitled Our Board of Directors and Director Nominees in this Proxy Statement.

        Unless a stockholder specifies otherwise, the shares represented by each returned proxy will be voted FOR the election of David Overton; Allen J. Bernstein; Alexander L. Cappello; Thomas L. Gregory; Jerome I. Kransdorf; David B. Pittaway; and Herbert Simon.

        In the event that any of the nominees becomes unable or declines to serve as a director at the time of the Annual Meeting, the proxy holders will vote the proxies for any substitute nominee who is designated by the Board to fill the vacancy.

Required Vote

        Our Bylaws require that, in an uncontested election, each director will be elected by the vote of the majority of votes cast. An uncontested election means that the number of board seats available is the same

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as the number of nominees. A majority of votes cast means that the number of shares cast "for" a director's election exceeds the number of votes cast "against" that director. A stockholder whose ballot is marked as "abstain" or broker non-votes to which a stockholder otherwise gives no authority or direction shall not be considered a vote cast and, therefore, will have no effect on the outcome of the vote other than to reduce the number of affirmative votes required to elect a director.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION
OF DAVID OVERTON; ALLEN J. BERNSTEIN; ALEXANDER L. CAPPELLO; THOMAS L. GREGORY; JEROME I. KRANSDORF; DAVID B. PITTAWAY; AND HERBERT SIMON TO THE BOARD OF DIRECTORS.

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PROPOSAL TWO
Approval of an Amendment to the 2010 Stock Incentive Plan
to Increase Authorized Shares

        On April 7, 2011, the Board approved an amendment to our 2010 Stock Incentive Plan (the "2010 Stock Plan") to increase the number of shares of common stock authorized for issuance under the plan to 4,800,000 shares from 3,800,000 shares, an increase of 1,000,000 shares (the "Amendment"). As of March 1, 2011, options to purchase 674,750 shares of our common stock, and 177,750 shares of restricted stock were outstanding under the 2010 Stock Plan, and 2,769,750 shares remained available for future equity grants under the 2010 Stock Plan.

        Our Board believes that a balanced approach to compensation requires both short-term and long-term incentives. Our ability to provide long-term incentives in the form of equity compensation aligns management's interests with the interests of our stockholders and fosters an ownership mentality that drives optimal decision-making for the long-term health and profitability of our Company. Equally important, equity compensation is critical to our continuing ability to attract, retain and motivate qualified corporate executives and restaurant management as well as other restaurant, bakery and corporate employees. Our ability to grant equity compensation has been important to our past success and is expected to be crucial to achieving our long-term growth strategy. However, the current authorization under our 2010 Stock Plan is limited and provides only enough shares for us to grant equity compensation through December 31, 2012.

        The proposed Amendment is intended to provide us with a sufficient number of shares to satisfy our equity grant requirements for the next three years, based on the current scope and structure of our equity incentive programs and the rate at which we expect to grant stock options, restricted stock or other forms of equity compensation. We consider a three-year pool of shares to be important from a compensation planning perspective. If we do not receive approval of the proposed Amendment at this annual meeting, our next opportunity to request stockholder approval of additional shares will be at the 2012 annual meeting, at which point we will have nearly exhausted the shares available for grant under the 2010 Stock Plan. This uncertainty with respect to the availability of sufficient equity places our long-term equity compensation planning at risk and would result in instability in our compensation programs that could be detrimental to our goals of attracting, retaining and motivating our employees and aligning their interests with the interests of our stockholders.

        At the Annual Meeting, stockholders will be asked to approve the Amendment to the 2010 Stock Plan to increase the number of shares available for grant under the 2010 Stock Plan. The proposed Amendment requires approval by the vote of a majority of the shares of stock entitled to vote thereon, whether present in person or by proxy at the Annual Meeting.

Background for the Current Request

        The 2010 Stock Plan was approved by our stockholders at our 2010 annual meeting and replaced our Amended and Restated 2001 Omnibus Stock Incentive Plan ("2001 Stock Plan") with respect to grants of future equity compensation awards to certain employees and consultants (collectively, "Selected Participants"). Any remaining authorized but unissued shares available for grant under the 2001 Plan were canceled.

        The 2010 Stock Plan permits the discretionary award of incentive stock options ("ISOs"), nonstatutory stock options ("NSOs"), restricted stock, stock units and/or stock appreciation rights ("SARs") to Selected Participants. Non-employee members of our Board are excluded from participating in the 2010 Stock Plan. As of March 2011, our equity compensation programs have included only grants of NSOs and restricted stock.

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        Our Board encourages stockholders to consider the following in voting to approve the proposed Amendment to increase the number of shares available for grant under the 2010 Stock Plan. The following points summarize why the Board strongly believes the proposed Amendment to the 2010 Stock Plan is essential for our future success:

•

Alignment with our Stockholders.  Achieving superior, long-term results for our stockholders remains one of our primary objectives. In order for our employees to think and act like owners, we use equity as an important component of our overall compensation strategy at multiple levels of management within our Company. We believe that stock ownership enhances the alignment of the long-term economic interests of our employees and our stockholders.

We historically have granted annual equity awards at the beginning of each fiscal year. As of March 1, 2011, the 2010 Stock Plan has only 2,769,750 unissued shares available for future grant. If the proposed Amendment to the 2010 Stock Plan is not approved by stockholders, our ability to adequately plan for future annual equity grants after fiscal 2011 will be jeopardized. In addition, if we were to accelerate the pace of our restaurant growth and hire additional employees who would be eligible for equity grants, the share reserve under the 2010 Stock Plan likely would be depleted by the end of fiscal 2012. If we are unable to continue our current equity compensation program, our ability to align our employees' long-term economic interests with those of our stockholders will be significantly hampered.

•

Attract, Motivate and Retain High Performers.  We compete for corporate and restaurant management talent in a variety of markets and strive to maintain compensation programs that are competitive in our industry in order to attract, motivate and retain high performers.

Our use of equity compensation is not limited to corporate executives, but also extends to our General Managers and Executive Kitchen Managers—the individuals responsible for the day-to-day operations in our restaurants. As of March 1, 2011, approximately 94 corporate executives, restaurant management, bakery management and corporate support staff members were awarded equity grants under the 2010 Stock Plan. We believe the equity component of our compensation package contributes to the retention of these talented employees and helps us maintain one of the lowest turnover rates in our industry for these positions. If we are unable to grant equity as part of our overall compensation strategy due to the lack of adequate share authorization under our 2010 Stock Plan, our ability to attract and retain all levels of talent we need to successfully operate our business will be significantly harmed.

•

Equity vs. Cash Compensation.  If the Amendment to the 2010 Stock Plan is not approved by stockholders in 2011, we will likely be required to substantially alter our historically-successful compensation program which includes equity as well as cash compensation. Any changes to our program would need to occur by the end of the current fiscal year, as our fiscal 2012 compensation plan is developed in fiscal 2011. If we adopted alternative compensation programs that were more cash-based, we believe that the level of cash compensation required to offset the lack of availability of equity grants could result in (i) an increase in our compensation costs, which would be detrimental to our future operating results, and (ii) a decrease in our cash flow, which would reduce cash available to be returned to stockholders through means such as stock repurchase plans.



•

Balanced Approach to Compensation.  We believe that a balanced approach to executive compensation, using a mix of salaries, performance-based bonus incentives and long-term equity incentives, encourages management to make decisions that favor long-term stability and profitability, rather than short-term results. Without a sufficient share pool from which to grant long-term equity awards, an overemphasis on shorter term results becomes more difficult to manage as employees who formerly received equity compensation become unsure of the likelihood of receiving additional equity grants in future years. If the proposed Amendment to the 2010 Stock Plan is not approved by stockholders, our ability to continue to retain this balanced approach to compensation, which we believe inhibits an over-emphasis on short-term results and preserves cash for other important Company needs, would be hampered.

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•

Commitment to Stockholders.  In fiscal 2010, we made a commitment to our stockholders that, over fiscal years 2009, 2010 and 2011, we would grant equity awards at an average rate less than or equal to 3.1% of our basic weighted-average shares outstanding ("Commitment"). This Commitment represents our average industry mean plus one standard deviation for the 2009 and 2010 combined average, as defined by Institutional Shareholder Services. If our stockholders approve this Amendment to the 2010 Stock Plan, the 1,000,000 additional shares of common stock available for grant would represent approximately 1.7% of the number of shares of common stock currently outstanding. For purposes of calculating the number of ISOs, NSOs, restricted stock, stock units and/or SARs that we may grant in a fiscal year, any "full-value" awards (such as restricted stock and stock units) count as the equivalent of two shares, which recognizes the greater intrinsic value of full-value awards.

During fiscal 2010, we met our Commitment and granted only 949,000 shares for an average annual rate of approximately 1.6%. We anticipate that our future three year average grant rate will continue to be consistent with our Commitment to our stockholders of less than or equal to 3.1%. Accordingly, we expect to continue to meet our Commitment for fiscal years 2011 and 2012, and believe our stockholders' approval of the Amendment to the 2010 Stock Plan would not adversely affect our Commitment.

Proposed Amendment and Text of 2010 Stock Plan

        Under the proposed Amendment, Section 5(a) of the 2010 Stock Plan would be amended in full to read as follows

        "Section 5. SHARES SUBJECT TO PLAN AND PLAN LIMITS.

        (a)    Basic Limitations and Fungible Share Counting.    The Common Stock issuable under the Plan shall be authorized but unissued Shares or treasury Shares. Subject to adjustment as provided in Section 11, the aggregate number of Shares reserved for issuance under the Plan shall not exceed 3,800,000 Four Million Eight Hundred Thousand (4,800,000) Shares ("Share Issuance Limit"). Subject to Section 5(b), the number of Shares available for issuance under the Plan shall be reduced: by one (1) Share for each Share issued pursuant to an exercise of an Option or an SAR and by two (2) Shares for each Share issued pursuant to a Restricted Stock Grant or settlement of Stock Units (for avoidance of doubt, two (2) Shares shall again become available for issuance for every Share of a Restricted Stock Grant that is forfeited back to the Company under Section 5(b)). In addition, the following Shares may not again be made available for issuance under the Plan and shall count on a one-for-one basis against the Share Issuance Limit: (i) Shares not issued or delivered as a result of the net settlement of an outstanding SAR or Option, (ii) Shares used to pay the Exercise Price or withholding taxes related to an outstanding Award, or (iii) Shares repurchased on the open market with the proceeds of an Option's Exercise Price. The aggregate number of Shares that may be issued in connection with ISOs under the Plan shall not exceed 3,800,000 Shares."

        Stockholders are urged to review the 2010 Stock Plan and the proposed Amendment together with the following information, which is qualified in its entirety by reference to the complete text of the 2010 Stock Plan, as amended by our Board on April 7, 2011 (conditioned upon approval by our stockholders at this annual meeting) and attached as Appendix A hereto. If there is any inconsistency between this Proposal 2 and the 2010 Stock Plan terms, or if there is any inaccuracy in this Proposal 2, the terms of the 2010 Stock Plan shall govern.

Summary of the 2010 Stock Plan

        Background and Purpose of the 2010 Stock Plan.    The purpose of the 2010 Stock Plan is to promote our long-term success and the creation of stockholder value by:

•

Attracting and retaining the services of employees and certain key service providers who would be eligible to receive grants as Selected Participants,

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Aligning Selected Participants' interests with the interests of our stockholders through compensation that is based upon the performance of our common stock,



•

Motivating Selected Participants, through the award of equity compensation grants, to achieve long-term performance goals,



•

Providing a vehicle to grant equity compensation awards which allows us to provide a balanced mix of compensation arrangements for our Selected Participants, and



•

Providing a long-term compensation program that is competitive compared to other companies.

        Eligibility to Receive Awards.    Employees and consultants of ours and certain of our affiliated companies are eligible to receive awards under the 2010 Stock Plan. The 2010 Stock Plan Committee determines, in its discretion, the Selected Participants who will be granted awards under the 2010 Stock Plan. As of March 1, 2011, approximately 510 employees (including four executive officers plus one executive officer who is also an employee director) are eligible to participate in the 2010 Stock Plan. The total number of employees employed by us as of March 1, 2011 is approximately 30,837. Non-employee directors are not eligible to participate in the 2010 Stock Plan.

        Shares Subject to the 2010 Stock Plan.    If stockholders approve the proposed Amendment to the 2010 Stock Plan pursuant to this Proposal 2, the maximum number of common shares that can be issued under the 2010 Stock Plan will increase from 3,800,000 shares to 4,800,000 shares. We recognize the greater intrinsic value of restricted stock and stock units and, accordingly, the 2010 Stock Plan is designed so that shares that are issued as restricted stock and stock units, and which are not forfeited, count as two shares against this limit. The shares underlying forfeited or terminated awards become available again for issuance under the 2010 Stock Plan, but shares that are utilized to pay an award's exercise price or tax withholding obligations count against the 2010 Stock Plan's share limit.

        Administration of the 2010 Stock Plan.    The 2010 Stock Plan is administered by the 2010 Stock Plan Committee which must consist of three or more independent Board members. The members of the 2010 Stock Plan Committee must be independent "non-employee directors" under Rule 16b-3 of the Securities Exchange Act of 1934, and "outside directors" under Section 162(m) of the Code. The Board has designated its Compensation Committee as the 2010 Stock Plan Committee. Subject to the terms of the 2010 Stock Plan, the 2010 Stock Plan Committee has the sole discretion, among other things, to:

•

Select the individuals who will receive awards,



•

Determine the terms and conditions of awards (for example, performance conditions, if any, and vesting schedule),



•

Correct any defect, supply any omission, or reconcile any inconsistency in the 2010 Stock Plan or any award agreement,



•

Accelerate the vesting, extend the post-termination exercise term or waive restrictions of any awards at any time and under such terms and conditions as it deems appropriate, subject to the limitations set forth in the 2010 Stock Plan, and



•

Interpret the provisions of the 2010 Stock Plan and outstanding awards.

        The 2010 Stock Plan Committee also may use the 2010 Stock Plan to issue shares under other plans or subplans as may be deemed necessary or appropriate, such as to provide for participation by non-U.S. employees and those of any of our subsidiaries and affiliates. In addition, awards may be subject to any policy that the Board may implement on the recoupment of compensation (referred to as a "clawback" policy). The members of the Board, the 2010 Stock Plan Committee and their delegates shall be indemnified by the Company to the maximum extent permitted by applicable law for actions taken or not taken with respect to the 2010 Stock Plan.

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Types of Awards

        Awards issued under the 2010 Stock Plan are evidenced by a written agreement executed by and between the Company and the Selected Participant. Such written agreement recites the specific terms and conditions of the award.

        Stock Options.    A stock option is the right to acquire shares at a fixed exercise price over a fixed period of time. The 2010 Stock Plan Committee determines the number of shares covered by each stock option and the exercise price of the shares subject to each stock option, but such per share exercise price cannot be less than the fair market value of a share of our common stock on the date of grant of the stock option.

        Stock options granted under the 2010 Stock Plan may be either ISOs or NSOs. As required by the Code and applicable regulations, ISOs are subject to various limitations not imposed on NSOs. For example, the exercise price for any ISO granted to any employee owning more than 10% of our common stock may not be less than 110% of the fair market value of the common stock on the date of grant and such ISO must expire not later than five years after the grant date. The aggregate fair market value (determined at the date of grant) of common stock subject to all ISOs held by a participant that are first exercisable in any single calendar year cannot exceed $100,000. ISOs may not be transferred other than upon death, or to a revocable trust where the participant is considered the sole beneficiary of the stock option while it is held in trust. The 2010 Stock Plan provides that no more than 3,800,000 shares may be issued pursuant to the exercise of ISOs.

        A stock option granted under the 2010 Stock Plan generally cannot be exercised until it becomes vested. The 2010 Stock Plan Committee establishes the vesting schedule of each stock option at the time of grant. The maximum term life for stock options granted under the 2010 Stock Plan may not exceed ten years from the date of grant although the 2010 Stock Plan Committee may establish a shorter period at its discretion.

        The exercise price of each stock option granted under the 2010 Stock Plan must be paid in full at the time of exercise, either with cash or through a broker-assisted "cashless" exercise and sale program, or through another method approved by the 2010 Stock Plan Committee. The optionee must also make arrangements to pay any taxes that we are required to withhold at the time of exercise.

        Stock Appreciation Rights ("SARs").    An SAR is the right to receive, upon exercise, an amount equal to the difference between the fair market value of the shares on the date of the SAR's exercise and the fair market value of the shares covered by the exercised portion of the SAR on the date of grant. The 2010 Stock Plan Committee determines the terms of SARs, including the exercise price (provided that such per share exercise price cannot be less than the fair market value of a share of our common stock on the date of grant), the vesting and the term of the SAR. The maximum term life for SARs granted under the 2010 Stock Plan may not exceed ten years from the date of grant, subject to the discretion of the 2010 Stock Plan Committee to establish a shorter period. The 2010 Stock Plan Committee may determine that an SAR will only be exercisable if we satisfy performance goals established by the 2010 Stock Plan Committee. Settlement of an SAR may be in shares of common stock or in cash, or any combination thereof, as the 2010 Stock Plan Committee may determine.

        Restricted Stock.    Awards of restricted stock are shares of common stock that vest in accordance with the terms and conditions established by the 2010 Stock Plan Committee. The 2010 Stock Plan Committee also will determine any other terms and conditions of an award of restricted stock. In determining whether an award of restricted stock should be made, and/or the vesting schedule for any such award, the 2010 Stock Plan Committee may impose whatever conditions to vesting it determines to be appropriate; provided, however, that generally no vesting will be permitted until at least one year after grant. For example, the 2010 Stock Plan Committee may determine that an award of restricted stock will vest only if we satisfy performance goals established by the 2010 Stock Plan Committee.

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        Stock Units.    Stock units are the right to receive an amount equal to the fair market value of the shares covered by the stock unit at some future date after the grant. The 2010 Stock Plan Committee determines all of the terms and conditions of an award of stock units, including the vesting period; provided, however, that generally no vesting will be permitted until at least one year after grant. Upon each vesting date of a stock unit, a Selected Participant will be entitled to receive an amount equal to the then fair market value of the shares on the settlement date. The 2010 Stock Plan Committee may determine that an award of stock units will vest only if we satisfy performance goals established by the 2010 Stock Plan Committee. Payment for vested stock units may be in shares of common stock or in cash, or any combination thereof, as the 2010 Stock Plan Committee may determine. Settlement of stock units shall generally occur within thirty days of vesting unless the Selected Participant has timely elected to defer such compensation.

        Performance Conditions and Annual Grant Limits.    The 2010 Stock Plan specifies performance conditions that the 2010 Stock Plan Committee may include in awards intended to qualify as performance-based compensation under Code Section 162(m). These performance criteria are limited to one or more of the following target objectives involving us or a subsidiary or affiliate of ours: return on equity; earnings per share; net income; earnings per share growth; return on invested capital; return on assets; economic value added; earnings before interest and taxes (EBIT); revenue growth; gross margin return on inventory investment; fair market value or price of the Company's shares (including, but not limited to, growth measures and total stockholder return); operating profit; consolidated income from operations; cash flow (including, but not limited to, cash flow from operations and free cash flow); cash flow return on investments (which equals net cash flow divided by total capital); internal rate of return; net present value; costs or expenses; market share; guest satisfaction; corporate transactions including without limitation mergers, acquisitions, dispositions and/or joint ventures; product development; capital expenditures; earnings before interest, taxes, depreciation and amortization (EBITDA), and/or revenues.

        The 2010 Stock Plan imposes the following individual annual grant limits on awards that are intended to constitute qualified performance-based compensation under Code Section 162(m): stock options and SARs representing 200,000 shares; and 100,000 shares of restricted stock and stock units. These share grant limits are doubled for awards that are granted in the fiscal year a Covered Employee (as defined in the 2010 Stock Plan) commences employment, an employee is promoted to the position of our chief executive officer, or when an employee first becomes a Covered Employee.

        However, it is impossible to be certain that all 2010 Stock Plan Awards or any other compensation paid by the Company to Covered Employees will be tax deductible. Further, the 2010 Stock Plan does not preclude the 2010 Stock Plan Committee from making other compensation payments outside of the 2010 Stock Plan to Covered Employees even if such payments do not qualify for tax deductibility under Code Section 162(m). See also the section under the heading "Internal Revenue Code Section 162(m) Limits" below for further information on Code Section 162(m).

        Limited Transferability of Awards.    Awards granted under the 2010 Stock Plan generally are not transferrable other than upon death or pursuant to a court-approved domestic relations order. However, the 2010 Stock Plan Committee may in its discretion permit the transfer of awards other than ISOs. Generally, where transfers are permitted, they will be permitted only by gift to a member of the Selected Participant's immediate family or to a trust or other entity for the benefit of the member(s) of the Selected Participant and/or his or her immediate family.

        Termination of Employment, Death or Disability.    The 2010 Stock Plan determines the effect of the termination of employment on awards, which determination may be different depending on the nature of the termination, such as terminations due to cause, resignation, death, disability or retirement, and the status of the award as vested or unvested, unless the Award agreement or a Selected Participant's employment agreement provides otherwise.

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        Adjustments upon Changes in Capitalization.    In the event of a stock split of our outstanding shares, stock dividend, dividend payable in a form other than shares in an amount that has a material effect on the price of the shares, consolidation, combination or reclassification of the shares, recapitalization, spin-off, or other similar occurrence, then the number and class of shares issued under the 2010 Stock Plan and subject to each award, as well as the number and class of shares available for issuance under the 2010 Stock Plan, shall each be equitably and proportionately adjusted by the 2010 Stock Plan Committee.

        Corporate Transaction.    In the event that we are a party to a merger or other reorganization, outstanding 2010 Stock Plan awards will be subject to the agreement of merger or reorganization. Such agreement may provide for (i) the continuation of the outstanding awards by us if we are a surviving corporation, (ii) the assumption of the outstanding awards by the surviving corporation or its parent, (iii) full exercisability or full vesting, or (iv) cancellation of outstanding awards with or without consideration, in all cases with or without consent of the Selected Participant. The Board or 2010 Stock Plan Committee need not adopt the same rules for each award or Selected Participant.

        Change in Control.    The 2010 Stock Plan Committee will decide the effect of a change in control of the Company on outstanding awards. The 2010 Stock Plan Committee may, among other things, provide that awards will fully vest upon a change in control, or upon a change in control followed by an involuntary termination of employment within a certain period of time.

        Term of the 2010 Stock Plan.    The 2010 Stock Plan is effective until February 24, 2020, or until earlier terminated by the Board.

        Governing Law.    The 2010 Stock Plan is governed by the laws of the State of Delaware (which is the state of our incorporation), except for conflict of law provisions.

        Amendment and Termination of the 2010 Stock Plan.    The Board generally may amend or terminate the 2010 Stock Plan at any time and for any reason, except that it must obtain stockholder approval of material amendments, including any addition of shares or repricing of stock options or stock appreciation rights after the date of their grant as required by NASDAQ Listing Rules.

Certain Federal Income Tax Information

        The following is a general summary, as of March 2011, of the federal income tax consequences to us and to U.S. participants for awards granted under the 2010 Stock Plan. The federal tax laws may change and the federal, state and local tax consequences for any participant will depend upon his or her individual circumstances. This summary is not intended to be exhaustive and does not discuss the tax consequences of a participant's death or provisions of income tax laws of any municipality, state or other country. We advise participants to consult with a tax advisor regarding the tax implications of their awards under the 2010 Stock Plan.

        Incentive Stock Options.    For federal income tax purposes, the holder of an ISO has no taxable income at the time of the grant or exercise of the ISO. If such person retains the common stock acquired under the ISO for a period of at least two years after the stock option is granted and one year after the stock option is exercised, any gain upon the subsequent sale of the common stock will be taxed as a long-term capital gain. A participant who disposes of shares acquired by exercise of an ISO prior to the expiration of two years after the stock option is granted or before one year after the stock option is exercised will realize ordinary income as of the date of exercise equal to the difference between the exercise price and fair market value of the stock. Any additional gain or loss recognized upon any later disposition of the shares would be a short- or long-term capital gain or loss, depending on whether the shares have been held by the participant for more than one year. The difference between the option exercise price and the fair market value of the shares on the exercise date of an ISO is an adjustment in

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computing the holder's alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the participant's regular income tax for the year.

        Nonstatutory Stock Options.    A participant who receives an NSO generally will not realize taxable income on the grant of such option, but will realize ordinary income at the time of exercise of the stock option equal to the difference between the option exercise price and the fair market value of the stock on the date of exercise. Any additional gain or loss recognized upon any later disposition of the shares would be short- or long-term capital gain or loss, depending on whether the shares had been held by the participant for more than one year.

        Stock Appreciation Rights.    No taxable income is generally reportable when a stock appreciation right is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received plus the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of any shares received would be a short- or long-term capital gain or loss, depending on whether the shares had been held by the participant for one year or more.

        Restricted Stock.    A participant will generally not have taxable income upon grant of unvested restricted shares unless he or she elects to be taxed at that time pursuant to an election under Code Section 83(b). Instead, he or she will recognize ordinary income at the time(s) of vesting equal to the fair market value (on each vesting date) of the shares or cash received minus any amount paid for the shares.

        Stock Units.    No taxable income is generally reportable when unvested stock units are granted to a participant. Upon settlement of the vested stock units, the participant will recognize ordinary income in an amount equal to the value of the payment received pursuant to the vested stock units.

        Income Tax Effects for the Company.    We generally will be entitled to a tax deduction in connection with an award under the 2010 Stock Plan in an amount equal to the ordinary income realized by a participant at the time the participant recognizes such income (for example, upon the exercise of an NSO).

        Internal Revenue Code Section 162(m) Limits.    Section 162(m) of the Code places a limit of $1 million on the amount of compensation that we may deduct in any one fiscal year with respect to our principal executive officer and each of the other three most highly compensated officers (other than the principal financial officer) ("Covered Employees"). The 2010 Stock Plan is intended to enable certain awards to constitute performance-based compensation not subject to the annual deduction limitations of Section 162(m) of the Code. However, to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Board has not adopted a policy that all compensation must be tax deductible.

        Internal Revenue Code Section 409A.    Section 409A of the Code governs the federal income taxation of certain types of nonqualified deferred compensation arrangements. A violation of Section 409A of the Code generally results in an acceleration of the recognition of income of amounts intended to be deferred and the imposition of a federal excise tax of 20% on the employee over and above the income tax owed, plus possible penalties and interest. The types of arrangements covered by Section 409A of the Code are broad and may apply to certain awards available under the 2010 Stock Plan (such as stock units). The intent is for the 2010 Stock Plan, including any awards available thereunder, to comply with the requirements of Section 409A of the Code to the extent applicable. As required by Code Section 409A, certain nonqualified deferred compensation payments to specified employees may be delayed to the seventh month after such employee's separation from service.

        New Plan Benefits.    All 2010 Stock Plan awards are granted at the 2010 Stock Plan Committee's discretion, subject to the limitations contained in the 2010 Stock Plan. Therefore, future benefits and amounts that will be received or allocated under the 2010 Stock Plan are not presently determinable. For information with respect to equity grants made to our Named Executive Officers under the 2010 Stock

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Plan since its approval by stockholders in June 2010, please see the section entitled Outstanding Equity Grants in this Proxy Statement.

Equity Compensation Plan Information

        The following table sets forth information concerning the shares of common stock that may be issued upon exercise of options under all of our equity compensation plans as of December 28, 2010.

Required Vote

        We are asking you to approve the Amendment to the 2010 Stock Incentive Plan to increase the share authorization under such plan by 1,000,000 shares, to 4,800,000 shares from 3,800,000 shares. This approval will require the affirmative vote of a majority of the shares of our common stock present or represented by proxy at the Annual Meeting and entitled to be voted on Proposal 2. Abstentions will be included in the number of shares present and entitled to vote on this Proposal 2 and, accordingly, will have the effect of a vote "AGAINST" this Proposal 2. Broker non-votes will not be considered as present and entitled to vote on this Proposal 2. Therefore, a broker non-vote will not be counted and will have no effect on this Proposal 2 other than to reduce the number of affirmative votes required to approve this proposal.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF
THE AMENDMENT TO THE 2010 STOCK INCENTIVE PLAN
TO INCREASE THE SHARE AUTHORIZATION

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PROPOSAL THREE
Ratification of Selection of Independent Registered Public Accounting Firm

        The Audit Committee of our Board has selected PricewaterhouseCoopers LLP ("PwC") as our independent registered public accounting firm to conduct the audit of our books and records for fiscal 2011, ending January 3, 2012. PwC has served as our independent registered public accounting firm since our initial public offering in 1992. Representatives of PwC are expected to be present at the Annual Meeting to respond to appropriate questions and to make a statement should they so desire.

        Although our governing documents do not require submission of this matter to stockholders, the Board believes that submission is consistent with current best practices in corporate governance and is seeking ratification of the appointment by stockholders. In the event that stockholders fail to ratify the selection of PwC, the Audit Committee will regard such vote a direction to consider the selection of a different independent registered public accounting firm. Even if the selection of PwC is ratified by the stockholders at the Annual Meeting, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time if it determines that a change would be in our and our stockholders' best interests.

Independent Registered Public Accounting Firm Fees and Services

        The following table sets forth the aggregate fees billed by PwC to us during the last two fiscal years:

        Audit Fees represent the aggregate fees billed by PwC for the audit of our annual financial statements included in the Annual Report on Form 10-K, review of financial statements included in the Quarterly Reports on Form 10-Q, the audit of our internal control over financial reporting with the objective of obtaining reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects, and services normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings or engagements.

        Tax Fees represent the aggregate fees billed by PwC for tax compliance services.

        All Other Fees represent the aggregate fees billed by PwC for services other than those reported in the above categories. For fiscal 2009, the nature of services consisted of review and consultation related to our response to communications from the SEC.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Our Independent Registered Public Accounting Firm

        The Audit Committee is responsible for appointing, setting compensation for and overseeing the work of our independent registered public accounting firm. The Audit Committee has established a policy requiring that it pre-approve all audit and permissible non-audit services provided by the independent auditor. The Audit Committee considers whether such services are consistent with SEC rules on auditor independence as well as whether the independent auditor is best positioned to provide the most effective and efficient service, for reasons such as familiarity with our business, staff members, culture, accounting systems, risk profile and other factors, and input from our management. The Audit Committee's charter authorizes the Audit Committee to delegate to one or more of its members the pre-approval of audit and

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permissible non-audit services, provided that those members report any pre-approvals to the full Audit Committee. Pursuant to this authority, the Audit Committee has delegated to its Chair the authority to address any requests for pre-approval of services between Audit Committee meetings, provided that the amount of fees for any particular services requested does not exceed $10,000 and the Chair reports any pre-approval decisions to the Audit Committee at its next scheduled meeting. The policy prohibits the Audit Committee from delegating to management the Audit Committee's responsibility to pre-approve permitted services of the independent registered public accounting firm. In addition, the policy prohibits our auditors from providing internal control-related services to us unless such engagement has been specifically pre-approved by the Audit Committee. None of the services related to the Tax Fees described above was approved by the Audit Committee pursuant to the waiver of pre-approval provisions set forth in applicable rules of the SEC.

Required Vote

        The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal 2011 ending January 3, 2012, requires the affirmative vote of a majority of the shares of common stock present in person or by proxy and entitled to vote on the proposal at the Annual Meeting. Abstentions will be included in the number of shares present and entitled to vote on this Proposal 3 and, accordingly, will have the effect of a vote "AGAINST" Proposal 3. Broker non-votes will not be considered as present and entitled to vote on this Proposal 3. Therefore, a broker non-vote will not be counted and will have no effect on this Proposal 3 other than to reduce the number of affirmative votes required to approve this proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLC AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2011, ENDING JANUARY 3, 2012.

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PROPOSAL FOUR
Non-binding Advisory Vote on Executive Compensation

        In accordance with the recently adopted Section 14A of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and as a matter of good corporate governance practices, we are asking our stockholders to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers as disclosed pursuant to the compensation disclosure rules of the SEC (commonly referred to as a "say-on-pay vote"). Accordingly, you may vote on the following resolution at our 2011 Annual Meeting:

        "RESOLVED, that the compensation paid to the Company's Named Executive Officers as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure contained in this Proxy Statement, is hereby APPROVED."

        As described in detail in the Compensation Discussion and Analysis section of this Proxy Statement, our compensation programs are designed to motivate our executives to drive the success of our Company. We believe that our compensation programs have played a material role in our ability to achieve strong financial results, even during difficult economic times, and to attract and retain a highly experienced, motivated and successful team to manage our Company. Our compensation programs, with a balance of short-term incentives (including performance-based cash bonus awards), long-term incentives (including stock options and restricted stock awards that generally vest over five years) and executive stock ownership guidelines, reward sustained performance that is aligned with long-term stockholder interests. Stockholders are encouraged to read the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure contained in this Proxy Statement for a full description of our executive compensation programs.

        This vote is advisory only and nonbinding. The Board and the Compensation Committee, which is comprised solely of independent directors, will consider the outcome of this vote when making future executive compensation decisions to the extent appropriate.

Required Vote

        The approval of the resolution set forth above requires the affirmative vote of a majority of the shares of common stock present in person or by proxy and entitled to vote on the proposal at the Annual Meeting. Abstentions will be included in the number of shares present and entitled to vote on this Proposal 4 and, accordingly, will have the effect of a vote "AGAINST" Proposal 4. Broker non-votes will not be considered as present and entitled to vote on this Proposal 4. Therefore, a broker non-vote will not be counted and will have no effect on this Proposal 3 other than to reduce the number of affirmative votes required to approve this proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL, ON A NON-BINDING, ADVISORY BASIS, OF THE RESOLUTION SET FORTH ABOVE.

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PROPOSAL FIVE
Non-binding, Advisory Vote on the Frequency of the
Stockholder Advisory Vote on Executive Compensation

        In accordance with Section 14A of the Exchange Act, public companies are required to conduct a non-binding, advisory stockholder vote to approve the compensation of named executive officers (a "say-on-pay vote") at least every three years (see Proposal 3 above) and to determine, at least once every six years, whether the say-on-pay votes will occur every three, two or one years. In accordance with the Exchange Act, we are seeking a non-binding, advisory vote from our stockholders as to whether the frequency of our stockholders' say-on-pay votes should occur once every three, two or one years.

        Our compensation program is designed to drive long-term value for our stockholders. Accordingly, we believe it is most appropriate for stockholders to express their views on our Named Executive Officers' compensation every three years. Requiring a vote on a more frequent basis could encourage a short-term view of compensation and may not provide a meaningful period of time in which to evaluate the success of our compensation programs.

        While we favor a say-on-pay vote every three years, we also encourage a dialogue with stockholders and have provided another method by which stockholders may express their views about our compensation program, among other matters. Our Board and Compensation Committee may be contacted at any time as described in the Stockholder Communications with the Board of Directors section of this Proxy Statement.

        While the results of voting on this proposal are only advisory and are non-binding upon our Board, we value our stockholders' opinions and the Board is expected to consider the results of the vote when determining the frequency of our stockholders' say-on-pay votes.

Required Vote

        Our Board recommends that a non-binding, advisory stockholder vote concerning Named Executive Officer compensation should occur every three years. The proxy card provides our stockholders with the opportunity to choose among four alternatives (i.e., holding the vote every three years, two years or one year, or abstaining from the vote) and, therefore, stockholders will not be voting to approve or disapprove the Board's recommendation. The alternative that receives the largest number of votes (other than "Abstain") will be designated the stockholders' preference as to frequency of the say-on-pay vote.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EVERY "THREE YEARS" FOR THE FREQUENCY OF ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION, WHICH IS ONE OF THE ALTERNATIVES PRESENTED UNDER ITEM 5 ON THE PROXY CARD.

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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Our Board of Directors and Director Nominees

        The names of our current directors and director nominees, their ages as of the Record Date, and certain other information are set forth below:

Director Nominees

        David Overton co-founded our predecessor company with his parents, Oscar and Evelyn Overton. He has served as our Chairman of the Board and Chief Executive Officer since our incorporation in February 1992.

        Allen J. Bernstein is the President of Endeavor Restaurant Group, Inc. He founded and served as Chairman and Chief Executive Officer of Morton's Restaurant Group, Inc. from 1989 through 2005 and presently serves as its Chairman Emeritus. He currently serves on the boards of directors of Caribbean Restaurants, LLC; Bravo Brio Restaurant Group; and as non-executive Chairman of the Board of Perkins & Marie Callender's, Inc. Previously, Mr. Bernstein served as a director on the boards of directors of Charlie Brown's Steakhouse, McCormick & Schmick's Seafood Restaurants, and Dave & Busters, Inc. He also serves on the board of trustees of the American Film Institute.

        Alexander L. Cappello is Chairman and Chief Executive Officer of Cappello Capital Corp., a global merchant banking firm, which has conducted business in over 50 countries where its principals have completed over $110 billion in transactions. Mr. Cappello has more than 30 years of global experience in corporate management, corporate finance, and investment banking and merchant banking. He currently serves as a Trustee for the University of Southern California and past President of its Alumni Association Board of Governors. In addition, he serves as a Trustee of the City of Hope and as a director of California Republic Bank and the RAND Corporation Center for Middle East Public Policy. Mr. Cappello previously served as Chairman of the International Board of the Young Presidents Organization and Chairman of Inter-Tel (Delaware), Incorporated and has served as a director for a number of public companies prior to their acquisition or privatization, including Koo Koo Roo, Inc., Cytrx Corp., and Genius Products, Inc.

        Thomas L. Gregory has over 50 years of experience in the food service industry. He served as Vice Chairman of the board of directors of Sizzler International, Inc., a restaurant chain, until August 1994. Mr. Gregory served as President, Chief Executive Officer and a member of the board of directors of Sizzler from 1982 to 1991, and then served as President of its successor company until his retirement in 1992.

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From 1974 to 1991, he served as Vice President for Collins Foods International, Inc., a food service company, and retained such position concurrently with his positions at Sizzler. Mr. Gregory served as a member of the board of directors of Regis Corporation, the world's largest chain of retail hair care operations, from 1996 through October 2010.

        Jerome I. Kransdorf has more than 40 years of investment management experience. He currently serves as President of JaK Direct, a division of Muriel Siebert & Co., Inc. From 1997 to 2001, Mr. Kransdorf served as Senior Vice President of J. & W. Seligman & Co. Incorporated, an investment advisory firm. From 1959 to 1997, he was employed in investment and senior management positions at Wertheim & Co. and its successor companies.

        David B. Pittaway is Senior Managing Director, Senior Vice President and Secretary of Castle Harlan, Inc., a private equity firm. He has been with Castle Harlan since 1987. Mr. Pittaway also has been Vice President and Secretary of Branford Castle, Inc., an investment company, since October 1986. From 1987 to 1998, Mr. Pittaway was Vice President, Chief Financial Officer and a director of Branford Chain, Inc., a marine wholesale company, where he is now a director and Vice Chairman. Previously, Mr. Pittaway was Vice President of Strategic Planning and Assistant to the President of Donaldson, Lufkin & Jenrette, Inc., an investment banking firm. Mr. Pittaway is also a member of the boards of directors of Morton's Restaurant Group, Inc., Perkins & Marie Callender's Inc., Caribbean Restaurants, LLC, Bravo Brio Restaurant Group, and the Dystrophic Epidermolysis Bullosa Research Association of America. He served on the board of directors of McCormick & Schmick's Seafood Restaurants from 2001 through 2010. In addition, he is a director and co-founder of the Armed Forces Reserve Family Assistance Fund.

        Herbert Simon is the Chairman Emeritus of the board of Indianapolis-based Simon Property Group, Inc., a member of the S&P 500 and the largest U.S. publicly-traded real estate company, and has served on its board since 1993. Throughout his career, Mr. Simon has maintained a leadership position within the retail property industry by developing high profile retail facilities, including, but not limited to, The Forum Shops at Caesars, Roosevelt Field, and The Fashion Centre at Pentagon City. Additional diversified business interests beyond real estate include ownership of the National Basketball Association's franchise Indiana Pacers. Mr. Simon also served as the former Chairman of the National Basketball Association's Board of Governors and continues to serve as a member of such board. He is also active in numerous community and civic organizations.

        Except as set forth above, each nominee has been engaged in his or her principal occupation described above during the past five years. There are no family relationships between any of our directors or executive officers as defined under SEC and NASDAQ rules.

Director Independence

        The Board has determined each of the following directors to be an "independent director" as such term is defined under SEC and NASDAQ rules and under the Company's Policies and Procedures Regarding Board of Director Candidates discussed below in the Director Nominations Process section of this Proxy Statement: Allen J. Bernstein; Alexander L. Cappello; Thomas L. Gregory; Jerome I. Kransdorf; David B. Pittaway; and Agnieszka Winkler. In this Proxy Statement, these six directors are referred to individually as an "Independent Director" and collectively as the "Independent Directors." In addition, the Board has determined that, if elected, Herbert Simon would qualify as an Independent Director of our Company.

Board Leadership Structure and Lead Director

        Our Chief Executive Officer, David Overton, also serves as Chairman of our Board. Mr. Overton, who founded the Company along with his parents, Oscar and Evelyn Overton, was the driving force behind the creation and opening of The Cheesecake Factory restaurant concept and has served in a combined role as

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CEO and Chairman since 1992. We believe this leadership structure enables Mr. Overton to effectively function as the critical link between the Board and the operating organization. It also streamlines communications with and among the Board on key topics such as our strategic objectives and long-term direction.

        In addition to Mr. Overton's leadership on the Board, we determined that the appointment of an independent, lead director ("Lead Director") would be appropriate in order to establish another layer of Board oversight, share certain responsibilities with, and facilitate communication between, our Chairman and our Independent Directors, and continue to follow best practices in corporate governance. To this end, in June 2008, the Board adopted a policy regarding the appointment of a Lead Director—one Independent Director who is selected annually by the Independent Directors. Mr. Cappello has served as Lead Director since July 2008.

        The Lead Director presides at executive sessions of the Independent Directors, serves as principal liaison between the Independent Directors and the Chairman of the Board, coordinates the agenda and materials for meetings of the Board, advises the Chairman of the Board concerning scheduling of meetings, makes recommendations to the Chairman of the Board regarding the retention of advisors and consultants who report directly to the Board, make recommendations to the Board and the Chairman regarding significant corporate governance issues, oversees the Governance Committee's review of our compliance with corporate governance policies adopted by the Board, and oversees the annual evaluation of the Board and its committees. Our policy regarding the responsibilities of our Lead Director is available on our website. For information on where to access this document, please see the section below entitled Corporate Governance Principles and Guidelines; Corporate Governance Materials Available on Our Website.

Role of Board of Directors in Risk Oversight

        Our Board retains responsibility for oversight of risks related to our operations. While the Audit Committee of the Board monitors risks related to our financial statements, the Board has determined that oversight of enterprise-wide risk should remain with the full Board due to the strategic nature of enterprise risk management and the Board's desire to receive feedback from a broad spectrum of disciplines regarding management's plans with respect thereto. The Board meets regularly with our management to review the effectiveness of processes for identifying and managing significant risks. The Board also reviews with management the strategic objectives that may be affected by identified risks, the level of appropriate risk tolerance, our plans for monitoring, mitigating and controlling risk, the effectiveness of such plans and our disclosure of risk.

        The Board receives information regarding risk management from members of our executive management. In addition, we formed an Enterprise Risk Management Committee ("ERM") with specific responsibilities and duties, led by our Vice President of Internal Audit and our Vice President of Risk Services. The ERM provides periodic reports to the Board. In addition, the Board recently formed an Enterprise Risk Management Advisory Committee ("ERM Advisory Committee") that will meet periodically with members of executive management and the ERM, will oversee the Company's efforts to manage its risks and establishment and implementation of a risk oversight framework, and review the effectiveness of the risk oversight framework.

Meeting Attendance

        During fiscal 2010, the Board held eight meetings and the Independent Directors held four executive sessions. Meetings include both in-person and telephonic meetings. For information regarding committee composition and number of committee meetings held during fiscal 2010, please see the section below entitled Committees of the Board of Directors. Each of our directors attended at least 75% of the aggregate number of meetings of the Board and the committees on which he or she served.

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        Our policy regarding Board members' attendance at our annual meeting of stockholders and our procedure for annual committee membership and chair assignments is available on our website in our Corporate Governance Guidelines. For information on where to access this document, please see the section below entitled Corporate Governance Principles and Guidelines; Corporate Governance Materials Available on Our Website. All of our directors then in office attended our 2010 annual meeting of stockholders.

Committees of the Board of Directors

        The Board has four standing committees: the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee, and the Enterprise Risk Management Advisory Committee. Committee membership since our 2010 annual meeting of stockholders was as follows:

        The Board determined that each member of the committees of the Board in service for part or all of fiscal 2010 met the independence requirements applicable to those committees prescribed by SEC and NASDAQ rules (other than the ERM Advisory Committee which is not required under such rules to be comprised solely of Independent Directors). The Governance Committee recommends to the Board committee membership and chair assignments, and the Board considers such recommendations and makes committee and committee chair assignments at its meeting immediately following the annual meeting of stockholders, although changes to committee assignments are also made from time to time during the course of the year, as deemed appropriate by the Board. The roles of each committee are described below.

        Audit Committee.    The Audit Committee operates pursuant to a written charter and is primarily responsible for monitoring the quality and integrity of our financial statements and related disclosure, and systems of internal controls regarding risk management, finance and accounting; monitoring our compliance with legal and regulatory requirements; monitoring our independent auditor's qualifications and independence; monitoring the performance of our internal audit function and independent auditors; providing an avenue of communication among the independent auditors, management and the Board; and issuing the report of the Audit Committee required by the SEC to be included in our proxy statement.

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directly responsible for the appointment, compensation, retention and oversight of the work of our public accounting firm engaged to issue an audit report or perform other audit, review or attest services. The Audit Committee pre-approves the audit work, as well as all non-audit work, to be performed by our external auditors after considering its permissibility under SEC rules and its impact on auditor independence. The Audit Committee also reviews material written communications the external auditors may provide to management and discusses any concerns with the auditors and management.

        We have adopted a written Code of Ethics for our directors, executive officers and senior financial officers which is available on our website. Our Code of Ethics requires prompt reporting of potential conflicts to the Audit Committee.

        Pursuant to its charter, the Audit Committee reviews our policies and procedures relating to conflicts of interest and approves any proposed "related person transaction." For this purpose, "related person transaction" means a transaction required to be disclosed pursuant to Item 404 of Regulation S-K adopted by the SEC. For a discussion of our policies with respect thereto, see Policies Regarding Review, Approval or Ratification of Transaction with Related Persons in this Proxy Statement.

        Our Vice President of Internal Audit reports directly to the Audit Committee and is responsible for conducting comprehensive audits of our internal financial controls and the operational effectiveness of related activities and systems.

        Compensation Committee.    The Compensation Committee operates pursuant to a written charter. The Compensation Committee is responsible for determining the compensation of our Chief Executive Officer and all other executive officers. The Compensation Committee reviews and approves all employment, retention and severance agreements for executive officers and prepares, or causes to be prepared, the Compensation Committee Report in our proxy statement. The Compensation Committee also makes recommendations to the Board concerning non-employee director compensation.

        The Compensation Committee approves and administers our incentive compensation programs, including our equity and bonus incentive plans. The Compensation Committee makes recommendations to the Board with respect to incentive and equity compensation plans and periodically reviews and makes recommendations concerning existing or new executive compensation, performance incentives, employee benefits, stock plans or management perquisites. The Compensation Committee authorizes and approves all grants of equity compensation to our employees under our equity compensation plans. The Compensation Committee conducts an annual evaluation of its charter.

        Corporate Governance and Nominating Committee.    The Corporate Governance and Nominating Committee ("Governance Committee") operates pursuant to a written charter. The Governance Committee is responsible for evaluating issues and developments related to corporate governance and making recommendations to the Board with respect to corporate governance standards, corporate governance proposals from stockholders, the establishment and composition of committees of the Board and potential candidates for nomination as Board members. The Governance Committee is responsible for overseeing and recommending programs and activities for the continuing education of directors. The Governance Committee also identifies potential candidates for nomination or appointment as directors and makes recommendations to the Board concerning nominees to be presented for stockholder approval and to fill any vacancies. The Governance Committee conducts an annual evaluation of its charter.

        Enterprise Risk Management Advisory Committee.    The Board established an Enterprise Risk Management Advisory Committee ("ERM Advisory Committee") in February 2010 to assist the Board in oversight of significant risks facing the Company. The ERM Advisory Committee operates pursuant to a written charter which was adopted in April 2011 and its responsibilities include overseeing the Company's efforts to manage its risks and establishment and implementation of a risk oversight framework, and reviewing the effectiveness of such risk oversight framework. As part of its responsibilities, the ERM Advisory Committee will review and evaluate the effectiveness of management's processes for identifying

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the Company's significant risks, including reviewing and evaluating management's timeliness in reporting significant risks to the Board. The ERM Advisory Committee also will review and evaluate the effectiveness of the Company's efforts to manage such risks and of management's communication of the Company's risk management policies, procedures and processes to staff members. The ERM Advisory Committee will also review and evaluate the Company's disclosure of significant risks in all filings with the SEC.

        The ERM Advisory Committee will meet periodically with executive management and management's Enterprise Risk Management Committee and will conduct an annual evaluation of its charter.

        Other Committees.    The Board of Directors has the discretion to establish other committees and subcommittees from time to time.

        Committee Charters. All of our committee charters are available on our website. For information on where to access these documents, please see the section below entitled Corporate Governance Principles and Guidelines; Corporate Governance Materials Available on Our Website.

Designation of Audit Committee Financial Experts

        With the assistance of our outside legal counsel, the Board reviewed the applicable legal standards for independence and criteria for determination as to each individual who may be deemed an "audit committee financial expert," as well as responses to annual questionnaires completed by the directors, and has determined that Thomas L. Gregory, Chair of the Audit Committee, Alexander L. Cappello and David B. Pittaway is each an "audit committee financial expert" as such term is defined in Item 407(d)(5)(ii) of Regulation S-K adopted by the SEC.

Corporate Governance Principles and Guidelines; Corporate Governance Materials Available on Our Website

        Our Board is committed to ethical business practices and believes that good corporate governance is important to ensure that the Company is managed for the long-term benefit of our stockholders. In the spirit of this commitment, the Board has adopted a Summary of Corporate Governance Principles and Guidelines ("Corporate Governance Guidelines") which includes, among other topics, the size and operations of our Board and its committees, independence of directors, selection and responsibilities of our Lead Director, Board membership criteria, service by our Board members on boards of other publicly traded companies, director and executive officer stock ownership guidelines and holding periods, our Board member retirement policy, and our policy on communicating concerns to our Board. In addition, the Corporate Governance Guidelines address certain requirements for continuing education of our directors.

        Our Corporate Governance Guidelines, as well as other information related to corporate governance of the Company, are available on our website at www.thecheesecakefactory.com, by clicking on the links for "Investors" and "Corporate Governance", including:

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Bylaws



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Code of Ethics for Executive Officers, Senior Financial Officers and Directors



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Code of Ethics and Code of Business Conduct



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Policy on Lead Director



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Committee Charters (Audit, Compensation, Corporate Governance and Nominating, Enterprise Risk Management Advisory Committee)

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•

Equity Grant Procedures



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Policy on Reimbursement of Incentive Payments



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Policies Regarding Board of Director Candidates



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Succession Planning Policy Statement



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Director and Executive Officer Stock Ownership Guidelines

Stockholder Communications with the Board of Directors

        Our Corporate Governance Guidelines described above include the policy our Board has adopted for stockholders and employees who wish to communicate any concern directly to the Board. Please see Section VI of our Corporate Governance Guidelines, a copy of which is available on our corporate website (see above), for a description of this process.

Director Nominations Process

        The Board has adopted a policy and procedure regarding Board candidates ("Nominations Policy"). The purpose of the Nominations Policy is to describe the process by which candidates are selected for possible inclusion in the Board's recommended slate of director nominees. The Governance Committee of the Board administers the Nominations Policy and is responsible for identifying candidates for nomination or appointment to the Board. To fulfill this function, the Governance Committee at least annually reviews the size and composition of the Board and its committees, including the number of directors eligible for election at the annual meeting of stockholders, in accordance with our Certificate of Incorporation and Bylaws. The Governance Committee may solicit recommendations for nominees from other directors, members of management or others. In addition, the Governance Committee will consider recommendations of a stockholder of record who timely complies with these policies and procedures.

        We have implemented a majority vote policy which is set forth in our Bylaws such that in order to be considered for nomination by the Board, an individual must agree that, if elected, he or she will submit an irrevocable resignation effective upon (i) the director's failure to receive a majority vote in an uncontested election at which he or she is subject to reelection, and (ii) acceptance of the resignation by the Board.

        Minimum Qualifications.    The Governance Committee has identified the following minimum qualifications for candidates for nomination to the Board:

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Each candidate must consent in writing to be named in our proxy statement as a nominee and to serve as a director of the Company if nominated, elected or appointed, and qualified.



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Each candidate must agree that if elected he or she will submit an irrevocable resignation to our corporate Secretary promptly following his or her election or reelection that will be effective upon (i) such director's failure to receive a "majority vote" for reelection in any "uncontested election" (as those terms are defined in our Bylaws) at which he or she is subject to reelection; and (ii) acceptance of that resignation by the Board in accordance with the Bylaws and any policies and procedures adopted by the Board for such purposes.



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Each candidate's service as a director must not cause us or any of our subsidiaries to lose, or to be threatened with the loss of, any application for, right to the use of, or entitlement to, any material governmental license, authorization or permit.



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Each candidate shall be an individual who has demonstrated integrity and ethics in his or her personal and professional life and has established a record of professional accomplishment in his or her chosen field.

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Each candidate shall be prepared to represent the best interests of all of our stockholders and not just one particular constituency.



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No candidate or family member (as defined under NASDAQ rules) of a candidate may have any current material personal, financial or professional interest in any company which is determined by the Committee to be a significant competitor of ours.



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Each candidate must be prepared to participate fully in Board activities, including active membership on at least one Board committee, and not have other personal or professional commitments that would, in the Governance Committee's sole judgment, interfere with or limit his or her ability to do so.



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Each candidate shall be prepared not to serve as a member of the board of directors of more than two publicly traded companies in addition to ours without prior approval of the majority of the Independent Directors.



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Each candidate shall not have attained the age of 79 as of the date of appointment or election to the Board.

        Criteria for Evaluating Candidates; Diversity.    In evaluating nominations, the Governance Committee will seek to achieve a balance of different capabilities and overall diversity in the areas of personal and professional experiences and backgrounds, financial, managerial and operational knowledge; variety of opinions and perspectives; and other differentiating characteristics with the goal of seeking and selecting candidates who will enhance the Board's ability to adequately perform its responsibilities, increase stockholder value and adhere to good corporate governance practices.

        The Governance Committee will consider the following criteria in evaluating candidates for nomination in light of the size and composition of the Board and its committees:

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Satisfaction of the minimum qualifications established by the Governance Committee.



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Education and other training.



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Relevant personal and professional background, including financial, managerial and operational skills and knowledge and experience in both corporate and non-traditional environments, such as government, academia and non-profit organizations.



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Whether the candidate is a party to any action or arbitration adverse to us or any of our subsidiaries.



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Whether the candidate would qualify as an "independent" director as defined by NASDAQ's listing standards.



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Whether the candidate would qualify as an "independent director" as defined in our "Policies and Procedures Regarding Board of Directors Candidates."



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Whether the nomination and election of the candidate would result in less than two-thirds of the Board being "independent directors" as defined in our "Policies and Procedures Regarding Board of Directors Candidates."



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Whether the candidate would qualify as an "audit committee financial expert."



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Whether the candidate has been involved in any legal proceeding that would be required to be disclosed by us pursuant to Item 401(f) ("Involvement in Certain Legal Proceedings") of Regulation S-K.



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Whether any business relationships exist, or have existed, that would be required to be disclosed pursuant to Item 404 ("Transactions with Related Persons, Promoters and Certain Control Persons") of Regulation S-K.

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The candidate's reputation for judgment and honesty.



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Whether we would be required to disclose any of the relationships described in Item 407(e) of Regulation S-K.



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The number and identity of any other boards of directors of which the candidate is a member.



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Other professional and personal commitments that could affect the candidate's ability to serve.



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Whether the candidate has provided accurate and complete responses to any requests for additional information by the Governance Committee.



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Other relevant characteristics that would enhance the Board's ability to adequately perform its responsibilities, increase stockholder value, and adhere to good corporate governance practices.



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Any history of criminal convictions.



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Whether the candidate has agreed to be interviewed by the Governance Committee, if requested.

        Qualifications of Current Directors and Director Nominees.    As described above, the Governance Committee of the Board evaluates the qualifications of our director nominees prior to each annual meeting of stockholders. As part of this evaluation process, the Governance Committee reviews the current composition of the Board and assesses whether the qualifications of each director continue to meet the Committee's requirements for Board service. The following is a description of the particular experience, qualifications, attributes and skills that led the Governance Committee to recommend, and the Board to nominate, each person listed below as a director of the Company.

        David Overton has served as our CEO and Chairman of the Board since our incorporation in February 1992. When evaluating Mr. Overton's qualifications for continuation of his Board service, the Governance Committee and Board considered Mr. Overton's essential leadership role with us and unique perspective and understanding of our mission, vision and values, the extent and depth of his knowledge and experience related to us and our concepts, and the importance of Mr. Overton's strategic vision.

        Allen J. Bernstein was appointed to the Board in February 2008 to fill a vacancy created by the expansion of the number of directors from six to eight, and was subsequently elected by our stockholders in May 2008. When evaluating Mr. Bernstein's qualifications for continuation of his Board service, the Governance Committee and the Board considered Mr. Bernstein's extensive restaurant industry experience, his current service on our Compensation and Governance Committees, his current status as an "independent" director for purposes of NASDAQ and SEC rules, his experience serving on other boards of nationally-recognized restaurant companies, his ability to serve as an Audit Committee member should the Board choose to designate him as such and his personal accomplishments, including those as a member of the Board of Directors and the Board of Trustees of the American Film Institute.

        Alexander L. Cappello was appointed to the Board in February 2008 to fill a vacancy created by the expansion of the number of directors from six to eight, and was subsequently elected by our stockholders in May 2008. When evaluating Mr. Cappello's qualifications for continuation of his Board service, the Governance Committee and the Board considered Mr. Cappello's extensive executive management and financial background, including as Chairman and CEO of Cappello Capital Corp., a global merchant banking firm with international business experience in over 50 countries, his international management and marketing experience, his designation as Lead Director by his fellow Independent Directors since the role was established in 2008, his prior service as the Chair of our Compensation Committee and current service on our Compensation Committee and Audit Committee, his current status as an "independent director" for purposes of NASDAQ and SEC rules, his designation by our Board as an "audit committee financial expert", his service on the boards of other public companies, including a restaurant company, his corporate governance expertise, and his personal accomplishments, including those as a Trustee both for the University of Southern California and the City of Hope.

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        Thomas L. Gregory first joined the Board in 1992, following our initial public offering. When evaluating Mr. Gregory's qualifications for nomination for re-election to the Board in 2010, the Governance Committee and Board considered Mr. Gregory's over 50 years of experience in the food service industry, his depth of knowledge and experience specific to us, his current service as Chairman of the Audit Committee and his prior service as a member of the Compensation and Governance Committees, his current status as an "independent director" under NASDAQ and SEC rules, his designation as an "audit committee financial expert" and his prior service on a board of another public company.

        Jerome I. Kransdorf first joined the Board in 1997. When evaluating Mr. Kransdorf's qualifications for continuation of his Board service, the Governance Committee and the Board considered Mr. Kransdorf's more than 40 years of investment management experience, his depth of knowledge and experience specific to us, his current service as Chair of the Governance Committee and member of the Compensation Committee, his prior service on the Audit Committee, and his current status as an "independent director" under NASDAQ and SEC rules.

        David B. Pittaway was nominated to the Board and subsequently elected by our stockholders in May 2009. When evaluating Mr. Pittaway's qualifications for continuation of his Board service, the Governance Committee and the Board considered his extensive financial and industry experience, including his service on audit committees of other public restaurant companies, his legal background and familiarity with SEC rules and regulations related to public companies, his current status as an "independent director" for purposes of NASDAQ and SEC rules, his service as a member of our Audit Committee and designation as an "audit committee financial expert" by the Board, and his personal accomplishments, including those as a director and co-founder of the Armed Forces Reserve Family Assistance Fund.

        Herbert Simon came to the attention of the Governance Committee as a candidate for the Board due to his many years of commercial real estate experience and his service with Simon Property Group, Inc., a member of the S&P 500 and the largest publicly-traded real estate company in the United States. The Governance Committee considered several candidates and determined that Mr. Simon was the most qualified of those candidates for nomination for election to the Board given his domestic and international commercial real estate experience. The Governance Committee and the Board noted that Mr. Simon has maintained a leadership position within the retail property industry by developing high profile retail facilities, including, among others, The Forum Shops at Caesars, Roosevelt Field, and The Fashion Centre at Pentagon City.

        The Governance Committee also considered whether Mr. Simon would be deemed an "independent director" for purposes of NASDAQ and SEC rules, as well as the Company's Policy Regarding Board of Directors Candidates, and determined that Mr. Simon would be deemed an independent director. In reaching that conclusion, the Governance Committee took into consideration that 31 of the Company's 169 restaurants are leased from entities affiliated with Simon Property Group, of which Mr. Simon is a director, and that the Company paid aggregate base rents under such leases in fiscal 2010 of approximately $11,935,000. The Governance Committee also considered that the Company paid aggregate base rents for all of its restaurants for fiscal 2010 of approximately $57,522,000. In addition, the Governance Committee considered that 11.5% of the voting shares of the Simon Property Group are held by a group consisting of Mr. Simon, Melvin Simon & Associates, Inc., the estate of Melvin Simon, David Simon, MH Holdings, Inc, and related trusts for the benefit of the preceding, as disclosed in Simon Property Group's Schedule 13G/A (No. 2) as filed with the SEC on February 14, 2011.

        General Nomination Right of All Stockholders.    Stockholders may nominate one or more persons for election as a director of the Company at an annual meeting of stockholders if the stockholder complies with the advance notice, information and consent provisions contained in our Bylaws. Stockholder nominations for the election of directors may only be made by a stockholder of record on both the date of giving notice and on the record date for such meeting by giving timely written notice to our Secretary at our principal offices. Such notice must be received no less than 90 days or more than 120 days prior to the

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anniversary date of the immediately preceding annual meeting of stockholders. If notice or prior public disclosure of the date of the annual meeting is given or made to the stockholders for a meeting date that is not within 30 days before or after the anniversary of the immediately preceding annual meeting of stockholders, notice by the stockholder will be timely if received not later than the close of business on the tenth day following the day on which such notice was mailed or such public disclosure was made, whichever is first, or no less than 90 days or more than 120 days prior to the annual meeting.

        In the event that the number of a class of directors to be elected is increased and we make no public announcement, at least 100 days prior to the first anniversary of the preceding year's annual meeting, in which we name all of the nominees for director or specify the size of the increased Board of Directors, a stockholder's notice will be considered timely, but only with respect to nominees for any new positions created by the increase, if the notice is delivered to, or mailed and received at, our principal executive offices (addressed to our Secretary) no less than 10 calendar days following the day on which we make the public announcement. In the case of a special meeting of stockholders called for the purpose of electing directors, notice will be timely if the stockholder provides written notice to our Secretary not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the meeting date was made, whichever first occurs, or no less than 90 or more than 120 days prior to the meeting. The stockholder's notice must include all of the information required by our Bylaws. If the stockholder provides a statement that the stockholder intends to deliver a proxy statement and form of proxy, the nomination may not be brought before the meeting unless the stockholder has delivered a proxy statement and form of proxy to holders of a percentage of our voting shares reasonably believed by the stockholder to be sufficient to elect the nominee or nominees proposed by the stockholder.

        The foregoing summary is not a complete description of the provisions of our Bylaws pertaining to stockholder nominations and proxies. Stockholders may obtain, without charge, a copy of our Bylaws upon written request to our Secretary at our principal executive offices. Our Bylaws are also available on our website. For information on where to access this document, please see the section above entitled Corporate Governance Principles and Guidelines; Corporate Governance Materials Available on Our Website.

        Stockholder Recommendations to the Governance Committee.    A stockholder of record may also recommend a candidate for consideration by the Governance Committee. In order to give the Governance Committee sufficient time to evaluate a recommended candidate, the recommendation should be received by our Secretary at our principal executive offices no later than the 120^th calendar day before the date of our proxy statement released to stockholders in connection with the previous year's annual meeting of stockholders. With respect to the 2012 annual meeting of stockholders, recommendations must be received on or before December 23, 2011. The stockholder's recommendation must include all of the following:

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The stockholder's name, address and telephone number.



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The recommended candidate's name, address and telephone number.



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The written consent of the recommended candidate to be named in our proxy statement and to serve as a director if nominated, elected or appointed, and qualified to serve.



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A description of all arrangements or understandings in connection with such recommendation between the stockholder and the recommended candidate or between the stockholder and any other person or persons (including their names).



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A description of any business, familial or other financial or personal relationship between the stockholder and the recommended candidate.



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Information regarding the recommended candidate as to each of the criteria identified above for evaluating recommendations.

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        Evaluation of Candidates.    The Governance Committee will consider all candidates identified through the process outlined above and will evaluate each of them, including incumbents, based on the same criteria. If, based on the Governance Committee's initial evaluation a candidate continues to be of interest to the Governance Committee, the Chair of the Governance Committee will interview the candidate and communicate his or her evaluation to the other committee members and the Chairman of the Board. Other members of the Governance Committee and senior management will conduct subsequent interviews. Ultimately, background and reference checks will be conducted and the Governance Committee will meet to finalize its list of recommended candidates for consideration by the full Board. If an incumbent is nominated, the interview process may be abbreviated at the discretion of the Chair of the Governance Committee. If the Chair of the Governance Committee is being considered for re-nomination, the other Governance Committee members shall appoint another member of the Governance Committee to head the review process for the Chair's reconsideration.

        Future Revisions to the Nominations Policy.    The Governance Committee's Nominations Policy is intended to provide a flexible set of guidelines for the effective functioning of the director nomination process. The Governance Committee intends to review this policy and procedure at least annually and anticipates that modifications will be necessary from time to time as our needs and circumstances evolve, and to conform with changes in applicable legal or listing standards.

Compensation Committee Interlocks and Insider Participation

        During fiscal 2010, Ms. Winkler and Messrs. Bernstein, Cappello and Kransdorf served on the Compensation Committee, with Ms. Winkler serving as Chair. No member of the Compensation Committee was, during fiscal 2010, an officer or employee of ours, a former officer of ours or of our subsidiaries or had a relationship requiring disclosure by us under Item 407(e) of Regulation S-K. None of our executive officers have served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of our Board or the Compensation Committee during fiscal 2010.

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Board of Directors Compensation

        The following table sets forth information regarding the cash compensation arrangements for Independent Directors who served on our Board in fiscal 2010.

        Payments with respect to the annual fee, Lead Director fee, committee Chair fees and cash payments in lieu of equity grants for fiscal 2010 are paid quarterly as earned, following the end of each quarter, unless otherwise noted. Payments with respect to Board or committee meeting attendance fees are paid monthly, following the end of each month. No fees are paid to Independent Directors with respect to attendance at executive sessions of the Board.

        We have been unable to grant equity to our Independent Directors since the expiration in May 2007 of our Director Plan. In February 2010, the Board approved a cash payment of $75,000 for services rendered by each of the non-employee directors, to be payable in quarterly installments of $18,750 for each fiscal quarter or portion thereof, as earned, in lieu of an equity grant. In order to continue to assure that the interests of our Independent Directors are aligned with the long-term interests of our stockholders, in 2010 we adopted a Non-Employee Director Stock Ownership Policy which requires our non-employee directors to acquire and thereafter maintain ownership of shares of our Company's common stock equal in fair market value to three times their annual base retainer fee. For a full description of our stock ownership policy, please see Director and Executive Stock Ownership Guidelines, Holding Periods and Other Requirements below.

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        The following table sets forth certain information regarding the compensation earned by each Independent Director who served on our Board in fiscal 2010. Mr. Overton is an employee of the Company and is not compensated for his services as a director.

DIRECTOR COMPENSATION FOR FISCAL 2010

        As of December 28, 2010, the end of our 2010 fiscal year, each Independent Director held options exercisable for the following number of shares of our common stock shown opposite their names in the table below:

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        Director Eligibility for Participation in the Executive Savings Plan.    Members of the Board are eligible to participate in our Executive Savings Plan, a nonqualified deferred contribution plan, by contributing all or a portion of their director fees to this plan. We do not make matching contributions under the Executive Savings Plan with respect to contributions made by non-employee members of the Board. In fiscal 2009, we suspended matching contributions for all participants in the Executive Savings Plan. Additional information regarding the Executive Savings Plan appears in the section of this Proxy Statement entitled Nonqualified Deferred Compensation.

        Reimbursement of Expenses and Other Perquisites.    Each Independent Director is entitled to reimbursement for reasonable out-of-pocket expenses incurred in connection with travel to and from, and attendance at, meetings of the Board or its committees and related activities, including director education courses and materials.

Indemnification of Officers and Directors

        As permitted by the Delaware General Corporation Law, our Certificate of Incorporation limits the personal liability of our directors for monetary damages for breach of fiduciary duty of care as a director. Liability is not eliminated for (a) any breach of the director's duty of loyalty to us or our stockholders, (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) unlawful payment of dividends or stock purchases or redemptions pursuant to Section 174 of the Delaware General Corporation Law, and/or (d) any transaction from which the director derived an improper personal benefit. Our Certificate of Incorporation also provides that we shall indemnify and advance indemnification expenses on behalf of all directors and officers of ours to the fullest extent permitted by Delaware law. Article VIII of our Bylaws also requires us, subject to certain limitations, to indemnify directors and officers and advance expenses. The indemnification and advancement of expenses provisions of Article VIII are not exclusive of any other rights of indemnification of advancement of expenses.

        We also entered into indemnification agreements with all of our directors and Named Executive Officers. Each indemnification agreement requires us to indemnify and hold harmless the director or Named Executive Officer to the fullest extent authorized by the laws of the State of Delaware. Each indemnification agreement also requires us, subject to specific terms and conditions, to advance expenses to the director or officer. Each indemnification agreement also sets forth various procedures and definitions with respect to indemnification and advancement of expenses. We also are obligated to maintain directors' and officers' liability insurance. With specified exceptions, we are not obligated to provide indemnification or advance expenses with respect to actions initiated by the director or officer or to indemnify the director or officer in connection with proceedings by us to enforce non-compete or non-disclosure agreements. To the extent the provisions of the indemnification agreements exceed the indemnification permitted by applicable law, such provisions may be unenforceable or may be limited to the extent they are found by a court of competent jurisdiction to be contrary to public policy.

Director and Executive Officer Stock Ownership Guidelines, Holding Periods and Other Requirements

        Stock Ownership Guidelines for Directors.    The Board adopted stock ownership guidelines for non-employee directors in fiscal 2009 in order to further align the interests of our directors with the long-term interests of our stockholders. These guidelines provide that, on or before December 31, 2012, all current non-employee directors are required to acquire (and thereafter maintain ownership of) a minimum number of shares of our common stock with a fair market value equal to three times the annual base cash retainer (currently $35,000) for non-employee directors. In addition, within three years of their respective appointments, all newly appointed non-employee directors are required to acquire (and thereafter maintain ownership of) a minimum number of shares of our common stock with a value equal to three

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times the annual base cash retainer payable to the non-employee directors. For purposes of this policy, stock ownership includes any shares owned by a director or his or her immediate family members or held by him or her as part of a tax or estate plan in which the director retains beneficial ownership. The value of shares held is calculated once per year, on the first day of the fiscal year. For purposes of determining compliance with the policy, "value" means an assumed per-share value based on the average of the closing price of our common stock on the last day of each of the previous four fiscal quarters. A director is not required to acquire shares of our common stock in accordance with the stock ownership guidelines if the purchase would result in a violation of our Special Trading Policy and Procedures and the addendum thereto. In such a scenario, the director is required to comply with the stock ownership guidelines as soon as reasonably feasible thereafter.

        In addition to the stock ownership guidelines described above, each member of the Board who acquires shares of our common stock through the exercise of a stock option is required to retain 33% of the "net" shares acquired (i.e., net of the tax impact that the stock option exercise has on the individual) for at least nine months following the date of exercise, or earlier time if the individual ceases to be a member of the Board as a result of death, disability, illness, resignation, termination or other reason. This provision applies only to stock option grants awarded after June 4, 2008.

        We also adopted a policy prohibiting any member of the Board, any officer and any staff member of ours from trading in any interest or position relating to the future price of our securities, such as a put, call or short sale, or using our stock as collateral for margin loans.

        Finally, the Company is prohibited from directly purchasing stock from any member of the Board.

        Stock Ownership Guidelines for Executive Officers.    The Board adopted stock ownership guidelines for certain of our executive officers, including all current Named Executive Officers, in fiscal 2010 in order to align the interests of our key executives with the long-term interests of our stockholders. The ownership guidelines provide that, on or before December 31, 2015, all individuals currently holding the positions with the Company listed below are required to acquire (and thereafter maintain ownership of) a minimum number of shares of the Company's common stock with a value equal to the multiple of such executive's annual base salary (excluding bonus), as follows:

        In addition, within five years of the appointment of any newly appointed officer in the positions designated above (other than a newly-appointed CEO, who has seven years to comply), the newly appointed executive is required to acquire (and thereafter maintain ownership of) shares of our common stock with the value set forth above. For purposes of this policy, stock ownership includes (i) any shares owned by an executive or his or her immediate family members or held by him or her as part of a tax or estate plan in which the executive retains beneficial ownership, and (ii) unvested restricted stock or restricted stock units. The value of shares held is calculated once per year, on the first day of the fiscal year. For purposes of determining compliance with the policy, "value" means an assumed per-share value based on the average of the closing price of our common stock on the last day of each of the previous four fiscal quarters. An executive subject to this policy is not required to acquire shares of our common stock in accordance with the stock ownership guidelines if acquisition at such time would result in a violation of our Special Trading Policy and Procedures and the addendum thereto, in which event the executive is required

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to comply with the guidelines as soon as reasonably feasible thereafter. Certain hardship exceptions are available at the discretion of the Compensation Committee, but no exceptions have been solicited or granted to date.

        As of December 29, 2010, the first day of our fiscal 2011, all of the executives subject to our stock ownership policy were in compliance therewith.

        In addition to the stock ownership guidelines described above, each Board-appointed officer (currently our Chief Executive Officer, President of the Company and President of our bakery division, Chief Financial Officer, and Executive Vice President/General Counsel/Secretary) who acquires shares of our common stock through the exercise of a stock option must retain 33% of the "net" shares acquired (i.e., net of the tax impact that the stock option exercise has on the individual) for at least nine months following the date of exercise, or earlier time if the individual ceases to be a Board-appointed officer as a result of death, disability, illness, resignation, termination or other reason. This provision applies only to stock option grants awarded after June 4, 2008.

        We have also adopted a policy prohibiting any officer or staff member of ours from trading in any interest or position relating to the future price of our securities, such as a put, call or short sale, or using our stock as collateral for margin loans.

Policies Regarding Review, Approval or Ratification of Transactions with Related Persons

        In accordance with its charter, our Audit Committee reviews and approves any proposed transactions with a "related person." Any related person transaction will be disclosed in the applicable SEC filing as required by SEC rules. For purposes of these procedures, "related person" and "transaction" have the meanings as defined in Item 404 of Regulation S-K. We had no reportable transactions with related persons required to be disclosed under Item 404 of Regulation S-K since the beginning of fiscal 2010.

FORWARD LOOKING STATEMENTS

        This Proxy Statement, including the section entitled Compensation Discussion and Analysis set forth below, contains "forward looking statements" within the meaning of Section 27A of the Exchange Act. These statements are based on our current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding actions to be taken in the future. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those set forth in the section on forward-looking statements and in the risk factors in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2010, and in our quarterly reports on Form 10-Q and current reports on Form 8-K, as filed with the SEC.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

        This Compensation Discussion and Analysis explains our strategy, design of, and decision-making related to our compensation programs and practices for our principal executive officer, our principal financial officer and our three other most highly compensated executive officers (collectively, "Named Executive Officers"). This Compensation Discussion and Analysis also explains how the compensation of our Named Executive Officers is aligned with the interests of our stockholders, and is intended to place in perspective the compensation information contained in the tables that follow this discussion.

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        For fiscal 2010, our Named Executive Officers were:

•

David Overton, Chairman of the Board and Chief Executive Officer;



•

Michael E. Jannini, President, The Cheesecake Factory Incorporated(1);



•

W. Douglas Benn, Executive Vice President and Chief Financial Officer;



•

Debby R. Zurzolo, Executive Vice President, General Counsel and Secretary; and



•

Max S. Byfuglin, President, The Cheesecake Factory Bakery Inc.

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(1)

Mr. Jannini joined us as President on February 16, 2010.

        While the principal purpose of this Compensation Discussion and Analysis is to review Named Executive Officer compensation, many of the programs discussed apply to other members of senior management who, combined with the Named Executive Officers, are collectively referred to herein as "executives."

Fiscal 2010 Accomplishments

        We believe that our compensation philosophy and strategies have motivated our executives to achieve strategic and operational objectives that contributed to our excellent results for fiscal 2010. A brief summary of our fiscal 2010 accomplishments is as follows:

•

An increase of 33% in adjusted diluted net income per share ("earnings"), despite continued weakness in the economy,



•

Four consecutive quarters of improving comparable restaurant sales, comprised primarily of increases in guest traffic,



•

Increases in guest traffic and our revenues,



•

Nearly $10 million in savings from cost management initiatives implemented in fiscal 2010, and



•

38% appreciation in our stock price in fiscal 2010.

        The following table provides additional information related to our fiscal 2010 performance.

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Overview of Compensation Program

        We currently own and operate 150 The Cheesecake Factory® restaurants, 13 Grand Lux Cafe® restaurants and one RockSugar Pan Asian Kitchen® restaurant. We intend to continue developing The Cheesecake Factory® restaurants in high quality, high profile locations in the United States and plan to selectively pursue other opportunities to leverage the competitive strengths of our restaurant and bakery operations, including Grand Lux Cafe® and RockSugar Pan Asian Kitchen®, as well the potential development or acquisition of new restaurant concepts. In 2011, we announced our initial plans for international development through a licensing arrangement calling for the development of 22 of The Cheesecake Factory® restaurants in five countries in the Middle East by 2016, with the opportunity to license additional locations in North Africa, Central and Eastern Europe, Russia and Turkey. We are selectively reviewing other global opportunities as well.

        Compensation Philosophy.    Our continuing growth requires us to seek and retain highly motivated executives who bring experience, innovation and operational excellence to our Company. With this in mind, our compensation philosophy centers on:

•

Attracting and retaining industry-leading executives by paying competitive compensation as measured against other companies within the restaurant industry, as appropriate for the position, and other industries from which we acquire talent;



•

Driving high performance by connecting compensation to our financial, operating, and strategic goals and results and by appropriately rewarding high performance;



•

Rewarding individual performance and contribution to our success; and



•

Enhancing stock price performance and aligning the interests of our executives with those of our stockholders by tying a substantial portion of our executive compensation to equity incentives and requiring stock ownership for our executive officers and non-employee directors.

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        Elements of Compensation Program.    During fiscal 2010, our executive compensation and benefits consisted of the components listed in the table below, which provides a brief description of the principal types of compensation, how performance is factored into each type of compensation, and the objectives served by each element.

Fiscal 2010 Principal Elements of Executive Compensation

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        Pay for Performance.    We believe in driving high performance by tying compensation to our financial, operating, and strategic goals and results, and by providing appropriate rewards. The Compensation Committee considers our competitive environment and historical financial performance when establishing performance targets for the next fiscal year. In years in which we did not accomplish our financial or strategic objectives, the Compensation Committee did not increase base salaries, other than for promotions or market adjustments, where appropriate, and approved no or substantially reduced performance bonuses. For example, no merit adjustments to base salaries were made between 2008 and 2009, and no performance incentive plan bonuses were awarded in fiscal years 2006, 2007 and 2008.

        Our executives' base salary as a percentage of total target compensation decreased from fiscal 2009 to fiscal 2010 (see Pay Mix discussion below) and performance-based compensation increased as a percentage of total target compensation, which aligns our executive compensation programs with the interests of our stockholders. This alignment is further strengthened by:

•

Longer equity vesting periods than comparable companies in our industry (i.e., generally five years for stock options and restricted stock, versus three to four years for comparable companies);



•

Stock ownership and retention policies for our Chief Executive Officer and other Named Executive Officers who, along with the members of our Board, currently own (or have rights to acquire within 60 days of the Record Date for this Annual Meeting) approximately 9.2% of our common stock; and



•

A "clawback" policy requiring executives to pay back any bonus and equity compensation deemed appropriate by the Audit Committee if we are required by law or applicable accounting or auditing standards to restate our financial statements to correct an accounting error as a result of material noncompliance with financial reporting requirements, and the bonus was directly based on those financial statements (see Clawback Policy in the Other Considerations section of this Compensation Discussion and Analysis).

        Pay Mix.    Our Compensation Committee seeks to maintain a balance between base salary and performance-based compensation in the form of bonus or equity compensation. A significant portion of our executives' compensation is at risk through short- and long-term incentive programs. We do not use specific percentages to allocate between cash and non-cash compensation and short-term versus long-term compensation; however, we believe a significant portion of our executives' pay should be performance-based. Messrs. Overton and Jannini have a proportionately greater percentage of performance-based compensation as compared to other Named Executive Officers because we believe they have a greater ability to influence the long-term performance of the Company.

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        The following table shows each element of our compensation as a percentage of the total compensation for each Named Executive Officer for fiscal years 2010 and 2009:

        Factors Considered in Making Compensation Decisions.    Our compensation strategy with respect to our individual executives is flexible and enables us to appropriately differentiate and reward individuals with different experiences and contributions, while taking into account:

•

Company financial and operational performance;



•

The executive's individual performance, experience and qualifications;



•

The scope of the executive's role;



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The level of total compensation for our other senior executives; and



•

Competitive market data to help us evaluate how our executive pay levels compare to others in our industry.

All of the foregoing factors are considered by the Compensation Committee in a subjective manner without any specific formula or weighting.

Oversight of Executive Compensation

        Compensation Committee.    The Compensation Committee of our Board determines our Named Executive Officers' pay, performance incentive awards, equity compensation plans, and related matters, and is supported in that process by an independent compensation consultant and members of senior management, including our Senior Vice President of Human Resources and Vice President of Compensation and Benefits. The Committee regularly evaluates our compensation programs to ensure they support our business objectives, which include (i) continued quality restaurant growth that generates acceptable returns, (ii) sustainability of our brands and brand expansion as appropriate, (iii) profitability, (iv) operational excellence, and (v) the creation of long-term value for our stockholders. The Committee

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operates according to a written charter which is available on our website at www.thecheesecakefactory.com, by clicking on "Investors" and "Corporate Governance."

        Role of Outside Consultants.    Since fiscal 2008, the Compensation Committee has engaged Farient Advisors LLC ("Farient Advisors"), an independent compensation consulting firm, to provide detailed evaluation and recommendations regarding our executive compensation programs and to advise the Compensation Committee with respect to structuring our compensation plans to achieve our business objectives. Farient Advisors conducts research as directed by the Compensation Committee, and supports the Compensation Committee in the design of executive and Board compensation. Although Farient Advisors works with management, including our Chief Executive Officer, to develop programs that support our business objectives while carrying out its duties for the Compensation Committee, Farient Advisors is retained by and reports directly to the Compensation Committee and does not provide any other services to the Company other than those for which it has been retained by the Compensation Committee.

        Role of Chief Executive Officer in Compensation Decisions.    Our Chief Executive Officer provides the Compensation Committee with his assessment of the performance of each Named Executive Officer (other than himself) and his perspective on the factors described above under Factors Considered in Making Compensation Decisions when developing his recommendations for each Named Executive Officer's compensation (again, other than his own), including salary adjustments, incentive bonuses, annual equity grants and equity grants awarded in conjunction with promotions. The Compensation Committee discusses our Chief Executive Officer's recommendations, consults with Farient Advisors, and then approves or modifies the recommendations in collaboration with the Chief Executive Officer.

        Compensation of our Chief Executive Officer.    Our Chief Executive Officer's compensation is determined solely by the Compensation Committee, which approves the terms of his employment agreement and subsequently makes any adjustments to his base salary, performance incentive compensation and equity awards from year to year. The Compensation Committee approved a new employment agreement for Mr. Overton which took effect in fiscal 2009. Please see the section entitled Employment Agreements in this Proxy Statement for a summary of the material terms of Mr. Overton's employment agreement.

        The Compensation Committee solicits our Chief Executive Officer's perspective on his own compensation, but makes determinations regarding his compensation independently and without him or other Named Executive Officers present. The Compensation Committee reviews Mr. Overton's annual cash, performance incentive and equity compensation at approximately the same time and following the same process as compensation levels are reviewed for all other Named Executive Officers, as further described in this Compensation Discussion and Analysis.

Market Positioning

        Our Chief Executive Officer, Senior Vice President of Human Resources and the Compensation Committee review and analyze market data related to pay practices among comparable companies, but they do not target specific levels of pay when determining compensation for individual Named Executive Officers.

        In fiscal 2010, the Compensation Committee reviewed an analysis prepared by Farient Advisors of market pay practices for positions similar to the positions of our Named Executive Officers and other key executives, adjusted to take into account differences, if any, between the scope of our Named Executives Officers' responsibilities compared to their counterparts in positions with similar titles in comparable companies. This analysis used pay comparisons from (i) comparable companies in the restaurant industry (see below) as compiled from their proxy disclosures and other SEC filings, and (ii) two recognized market survey sources, the Mercer Executive Survey and the Chain Restaurant Compensation Association

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(CRCA) Survey. Data from the comparable companies listed below was weighted at 50% and the surveys were weighted at 25% each for purposes of determining market pay positions.

        The Compensation Committee determined that the following companies compare to us in that they are publicly-traded, casual dining restaurants with over $300 million in revenue (as of the most recently completed fiscal year at the time of review) and are companies against which we compete for executive talent:

        Due to the substantial size differences among these companies and us, Farient Advisors used regression analyses to size-adjust the results and corroborated the findings with data from our survey sources.

        While this comparison group provides the Compensation Committee with an important general frame of reference, the Compensation Committee does not target our Named Executive Officers' compensation at any specific percentile or within a specific range of the comparison group's pay levels. After review of the competitive market data for fiscal 2010, the Compensation Committee found that total direct compensation (i.e., base salary, target bonus, and value of long-term incentives) for all of our Named Executive Officers was positioned between the 50^th and 75^th percentiles compared to our comparable companies.

Principal Elements of Compensation

Base Salary

        In accordance with our compensation objectives, salaries for our Named Executive Officers are set by the Compensation Committee and administered to reflect the individual officer's career experience, contribution and performance, as well as the value of the position relative to the marketplace.

        Fiscal 2010.    During its annual review of base salaries, the Compensation Committee reviewed each Named Executive Officer's performance and recommendations by our Chief Executive Officer, as well as an annual review of historical compensation survey data for positions comparable to our Named Executive Officers in comparable companies provided by Farient Advisors. During its discussions regarding the salary adjustments for fiscal 2010, and without assigning a particular formula or weight, the Compensation Committee considered the following factors:

•

Our performance compared to certain performance objectives established under our performance incentive plan for fiscal 2009,



•

The share value of our common stock at the end of fiscal 2009 compared to the end of fiscal 2008,



•

The role of the Named Executive Officers in driving our overall performance, and



•

As a general point of reference, the market position of our Named Executive Officers' compensation as discussed above in Market Positioning.

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        The Compensation Committee also considered the fact that base salaries for our Named Executive Officers (other than Mr. Overton under his renegotiated employment agreement) had remained the same since January 2008, and that increases proposed for fiscal 2010 (including that for Mr. Overton) were within a competitive range compared to comparable companies. Mr. Overton's increase recognized that he had already received an increase in mid-year 2009 in association with the renewal of his employment agreement. The base salary decisions for fiscal 2010 are set forth in the chart below.

        Fiscal 2011.    During its annual review of base salaries for fiscal year 2011, the Compensation Committee considered each executive's performance during the prior year as well as the market data provided by Farient Advisors, as discussed above in Market Positioning. Without using any particular formula or assigning specific weights to any factor, the Compensation Committee also considered:

•

Our actual performance compared to the performance objectives established under our performance incentive plan for fiscal 2010, and



•

Our operational and financial performance in fiscal 2010 compared to our historic performance.

        Based on the foregoing factors, the Compensation Committee determined that moderate increases in base salaries for fiscal 2011 were appropriate based on individual and Company performance, at percentages that ranged between 2.7% and 4.6%, as set forth below.

ANNUALIZED BASE SALARY

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Annual Cash Incentive Compensation

        Annual cash incentive compensation for our executive officers is based on our performance against specific objectives, such as earnings per share, sales growth, consolidated income from operations, guest satisfaction, product development, net operating profit, cash flow, market share and revenues, among others. Historically, we used only financial performance metrics as performance objectives for our performance incentive plan. However, beginning in fiscal 2009 and continuing in fiscal 2010, we established a Company-wide financial performance objective with respect to 75% of the potential award and a threshold financial objective plus certain strategic objectives with respect to 25% of the potential award in order to better balance rewards for near-term financial performance with the long-term growth of our Company. In the case of Mr. Byfuglin and other executives in our bakery division, the performance objectives for fiscal 2010 included a financial performance objective for the bakery division (75% of the potential award) in addition to that of the Company (25% of the potential award) but did not include strategic objectives.

        Each executive is assigned a minimum, threshold, target and maximum bonus opportunity as a percentage of base salary and he or she may earn a bonus based on the level of achievement of performance objectives within that range. Both the performance objectives and the formula for computing the performance bonus, if the performance objectives are achieved, are established by the Compensation Committee early in each fiscal year. Performance bonuses are payable in the first quarter of the following year, after the Compensation Committee verifies performance relative to the pre-established objectives and certifies to what extent, if any, performance bonuses have been earned within the range between minimum, threshold, target and maximum.

        The Committee retains negative discretion with respect to payment of performance bonuses under the Company's performance incentive plan and may not award performance-based bonuses under the performance incentive plan that are higher than the level established under the incentive plan for the applicable fiscal year. In fiscal 2010, the amount of any performance bonus could not exceed $1 million for any one executive, and any additional discretionary bonus could not exceed 100% of an executive's base salary. In fiscal 2011, the amount of any performance bonus cannot exceed $2.5 million. Historically, we have not awarded discretionary bonuses except on a selective basis for extraordinary individual performance (for example, to Ms. Zurzolo for fiscal 2008 and to Mr. Overton for fiscal 2009).

        Fiscal 2010 Performance Incentive Plan Design.    During its annual review of incentive compensation for fiscal 2010, the Compensation Committee established the following minimum, threshold, target and maximum payout opportunities for the Named Executive Officers under our 2005 Incentive Plan for fiscal 2010. Actual payouts are aligned to performance results and could have ranged as follows:

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        The Compensation Committee then established a potential payout schedule for the fiscal 2010 performance incentive program as follows:

Company Bonus Schedule (excludes Bakery)

Bakery Bonus Schedule:

        See footnotes (1) and (2) in Company Bonus Schedule (excludes Bakery) above.

        Fiscal 2010 Performance Objectives.    During the first quarter of fiscal 2010, when the Compensation Committee was considering financial and strategic performance objectives for the year, the impact from the recession was still weighing heavily on most segments of the restaurant industry. Industry analysts were

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projecting a continuing sales decline within the casual dining segment for 2010, including a projected decrease of approximately 3-4% in comparable store sales and an anticipated 3% decline in overall guest traffic. Although the U.S. Gross Domestic Product was forecast to grow in 2010, job losses were expected to continue and unemployment was projected to remain at approximately ten percent through 2010. We experienced nine consecutive quarters of negative comparable store sales through the end of fiscal 2009, but sequential improvements in each of the four quarters for fiscal 2009 prior to the Compensation Committee's review of proposed financial and strategic performance objectives for fiscal 2010.

        The Compensation Committee set the following Company-wide performance objectives for fiscal 2010 after considering the economic environment and the Company's focus on stabilizing sales, increasing operating margins, and increasing overall guest satisfaction and guest visits. The Compensation Committee believed the performance objectives were appropriate, reasonably difficult to achieve and, if achieved, would be likely to deliver significant value to the Company and our stockholders. The following performance objectives were set by the Compensation Committee for fiscal 2010:

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        In addition, the Compensation Committee set financial performance objectives for fiscal 2010 for our bakery division, including Mr. Byfuglin, as follows:

The operating income objective was selected from a stockholder-approved list of performance objectives under our 2005 Incentive Plan intended to qualify for deductibility by us under Section 162(m) of the Internal Revenue Code.

        The Compensation Committee then determined that the weighting and maximum payout for Named Executive Officers, other than Mr. Byfuglin, related to each performance objective would be as follows:

and the weighting and maximum payout for Mr. Byfuglin would be as follows:

        Fiscal 2010 Performance Objective Achievement.    In February 2011, the Compensation Committee reviewed our performance against the Company's performance objectives for fiscal 2010 and determined that we achieved the following results:

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        In addition, the Committee reviewed our bakery division's performance against its performance incentive objectives established for fiscal 2010 under the 2005 Incentive Plan and determined that the following results were achieved:

        The following payout percentages as a percentage of target opportunity were then calculated based on the payout schedules approved by the Compensation Committee as set forth above:

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