What changed in this filing

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Item 9A. Controls and Procedures

2023-03-02 compared with 2022-03-10 · 254 added, 221 removed, 615 unchanged (44% of the section changed)

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MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by SEC rules for newly public companies.

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

With the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 25, 2022 based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 25, 2022 was effective.

We have not engaged an independent registered accounting firm to perform an audit of our internal control over financial reporting as of any balance sheet date or for any period reported in our financial statements.

Our independent public registered accounting firm will first be required to attest to the effectiveness of our internal control over financial reporting for our Annual Report on Form 10-K for the first year we are no longer an “emerging growth company” or a “non-accelerated filer.”

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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Susan Shelton 63 General Counsel and Secretary

Jill Waite 44 Chief Human Resources Officer

Sherri Abruscato 67 Chief Development & Supply Chain Officer

Jill Waite 45 Chief People Officer

Michael Ellis 60 Chief Development Officer

Derrick Pratt 55 Chief Operating Officer

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Shelton holds a Bachelor of Arts degree in Economics from Wheaton College and a Juris Doctorate from the DePaul University College of Law.

Jill Waite is the Chief Human Resources Officer at Portillo’s and has been since she joined in June 2019.

Jill Waite is the Chief People Officer at Portillo’s and has been since she joined in June 2019.

Prior to joining Portillo’s, Ms.

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Waite has a Bachelor of Science degree from the University of Florida.

Sherri Abruscato

Sherri Abruscato has served as the Chief Development & Supply Chain Officer of Portillo’s since August 2014.

Abruscato is responsible for the oversight of Real Estate & Development and Facilities & Supply Chain, which includes food safety and the management of Portillo’s commissaries.

Abruscato joined Portillo’s Hot Dogs as a restaurant team member in 1970, then was hired at Portillo’s in 1983, where she has held numerous positions related to operation support, negotiating with manufacturers, vendors and suppliers and coordinating new construction projects.

Mike Ellis has served as the Chief Development Officer of Portillo's since August 2022.

Prior to joining Portillo's, Mr.

Ellis served as Vice President of Real Estate and Development of Cracker Barrel from July 2020 to August 2022, where he spearheaded growth development strategy, new restaurant openings and the development of a new prototype that significantly improved operational efficiencies.

Prior to working at Cracker Barrel, Mr.

Ellis held senior development roles with Ruby Tuesday, Einstein Noah Restaurant Group and other restaurant brands.

Ellis received a Political Science degree from Delta College.

Derrick Pratt

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Pratt was Vice President of Operations for the Southeast Market at Starbucks where he oversaw all operational performance and metrics in the southeast market for 800 Starbucks locations and managing $1.4 billion in annual revenue.

Pratt attended high school at the Fort George Meade Military Base and received a Master in Business Administration from Texas Christian University.

Pratt attended high school at the Fort George Meade Military Base and received a Masters in Business Administration from Texas Christian University.

Rick Cook has served as the Senior Vice President of Technology of Portillo’s since January 2020.

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Ann Bordelon has served as a member of the Board of Portillo’s since March 2020.

Bordelon is Vice Chancellor for Finance & Administration at the University of Arkansas, a position she took on in 2020.

Bordelon is Executive Vice Chancellor for Finance & Administration at the University of Arkansas, a position she took on in 2022.

Prior to that, she served as Vice Chancellor for Finance & Administration at the University of Arkansas from July 2022 to December 2022.

Prior to that, she served as Chief Financial Officer for Mitchell Communications and NOWDiagnostics.

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Paulette Dodson has served as a member of the Board of Portillo’s since December 2021.

Dodson is General Counsel and Corporate Secretary for Alight, Inc.

Dodson was General Counsel and Corporate Secretary for Alight, Inc.

ALIT), a cloud-based provider of integrated digital human capital and business solutions.

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Hart has served as a member of the Board of Portillo’s since 2016.

Hart most recently served as the Chief Executive Officer of Torchy’s Tacos, a high-growth, fast-casual restaurant chain.

Hart is the President and Chief Executive Officer of Red Robin Gourmet Burgers Inc.

Prior to his role at Red Robin, Mr.

Hart served as the Chief Executive Officer of Torchy’s Tacos, a high-growth, fast-casual restaurant chain.

He retired from this position as of November 2021, after holding it since 2018.

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Hart led the expansion of Texas Roadhouse from 60 to 450 locations.

Hart also serves on the board of Red Robin Gourmet Burgers, Inc.

We believe that Mr.

Hart is well qualified to serve on our Board due to his relevant experience in managing high growth restaurant chains.

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Lubin has served as a member of the Board of Portillo’s since August 2014.

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Lubin is well qualified to serve on our Board due to his decades of experience serving as a director of numerous private and public companies.

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Lutzker has served as a member of the Board of Portillo’s since August 2014.

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Our Board is currently composed of eight directors, which may be increased or decreased from time to time by our Board.

Our current directors will serve until the first annual meeting of our stockholders or until their successors are duly elected and qualified.

Our directors will be elected annually to serve until the next annual meeting of stockholders, or until their successors are duly elected and qualified.

Our directors are elected annually to serve until the next annual meeting of shareholders, or until their successors are duly elected and qualified.

Director Independence

Our Board is composed of a majority of independent directors and our Compensation Committee and our Nominating and Corporate Governance Committee are composed entirely of independent directors for purposes of serving on such committees.

We are in compliance with the requirements of Sarbanes-Oxley and the Nasdaq, which require that our Audit Committee be composed of at least three members, at least one of whom was independent upon the listing of our common stock, a majority of whom was independent within 90 days of listing and each of whom will be independent within one year of listing.

Our Board has affirmatively determined that each of Ms.

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Miles is an independent director under applicable Nasdaq rules.

Accordingly, our Board is composed of a majority of independent directors and, as further discussed below, each of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are composed entirely of independent directors for the purposes of serving on such committees.

Board Committees

Our Board currently has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.

Each committee has a charter that has been approved by our Board and that is available on our website.

Each committee has a charter that has been approved by our Board and that is available on our investor relations website.

Each committee has the composition and responsibilities described below.

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Form 10-K | 92

Our Audit Committee is composed of Ms.

As of December 25, 2022, our Audit Committee is composed of Ms.

Bordelon, Mr.

Glass and Mr.

Glass and Ms.

Bordelon serves as chair of the Audit Committee.

Bordelon, Mr.

Glass and Mr.

Miles each qualify as an “audit committee financial expert” as such term has been defined by the SEC in Item 407(d) of Regulation S-K.

Bordelon and Mr.

Glass qualifies as an independent director for the purposes of serving on the Audit Committee under applicable Nasdaq rules and Rule 10A-3 under the Exchange Act.

As noted above, we are in compliance with the permitted phase-in rules under applicable Nasdaq and SEC rules with respect to the composition of our Audit Committee.

Glass each qualify as an “audit committee financial expert” as such term has been defined by the SEC in Item 407(d) of Regulation S-K.

Bordelon, Mr.

Glass and Ms.

Dodson qualifies as an independent director for the purposes of serving on the Audit Committee under applicable Nasdaq rules and Rule 10A-3 under the Exchange Act.

The Audit Committee is governed by a charter that complies with the rules of the Nasdaq and is available on our investor relations website.

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Our Compensation Committee is composed of Mr.

Miles and Mr.

Lutzker, each of whom qualifies as an independent director for purposes of serving on the Compensation Committee.

Miles serves as chair of the Compensation Committee.

Effective October 4, 2022, Mr.

Hart serves as chair of the Compensation Committee.

Lubin and Mr.

Lutzker is considered to be a “non-employee director” as defined under Rule 16b-3 promulgated under the Exchange Act and, therefore, it is expected that the full Board will approve all equity awards granted to directors and officers of the Company for so long as they are members of the Compensation Committee, unless the Compensation Committee delegates such authority to a subcommittee in accordance with applicable law and its authority under its charter.

Lutzker qualifies as a “non-employee director” as defined under Rule 16b-3 promulgated under the Exchange Act and, therefore, it is expected that the full Board will approve all equity awards granted to directors and officers of the Company for so long as they are members of the Compensation Committee, unless the Compensation Committee delegates such authority to a subcommittee in accordance with applicable law and its authority under its charter.

The Compensation Committee is governed by a charter that complies with the rules of the Nasdaq and is available on our investor relations website.

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• identifying and screening individuals qualified to serve as directors;

• recommending to the Board candidates for nomination for election or reelection at the annual meeting of stockholders or to fill Board and committee vacancies;

• recommending to the Board candidates for nomination for election or reelection at the annual meeting of shareholders or to fill Board and committee vacancies;

• recommending to the Board the structure and membership of Board committees;

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Our Board has adopted corporate governance guidelines that serve as a flexible framework within which our Board and its committees operate.

These guidelines cover a number of areas including the duties and responsibilities of the Board, director independence, Board leadership structure, majority-voting Board resignation policy, executive sessions, Chief Executive Officer evaluations, management development and succession planning, director nomination, qualification and election, director orientation and continuing education, Board agenda, materials, information and presentations, director access to company employees and independent advisers, Board communication with stockholders and others, director compensation and annual Board and committee performance evaluations.

These guidelines cover a number of areas including the duties and responsibilities of the Board, director independence, Board leadership structure, majority-voting Board resignation policy, executive sessions, Chief Executive Officer evaluations, management development and succession planning, director nomination, qualification and election, director orientation and continuing education, Board agenda, materials, information and presentations, director access to company employees and independent advisers, Board communication with shareholders and others, director compensation and annual Board and committee performance evaluations.

A copy of our corporate governance guidelines is available on our website.

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As a result, we are permitted to and rely on exemptions from certain disclosure requirements that are applicable to other companies that are not emerging growth companies.

Accordingly, we have included compensation information for only our principal executive officer and our two next most highly compensated executive officers serving at fiscal year-end and have not included a compensation discussion and analysis of our executive compensation programs or tabular compensation information other than the Summary Compensation Table and the Outstanding Equity Awards table.

In addition, for so long as we are an emerging growth company, we will not be required to submit certain executive compensation matters to our stockholders for advisory votes, such as “say-on-pay” and “say-on-frequency” of say-on-pay votes.

This section discusses the material components of the executive compensation program for our executive officers who are names in the "Summary Compensation Table" below (our “named executive officers” or “NEOs”) for the fiscal year ended December 26, 2021 (“Fiscal 2021”).

Accordingly, we have included compensation information for only our:

(1) principal executive officer (PEO);

(ii) two most highly compensated executive officers serving at fiscal year-end (other than the PEO);

and former executive officer who would have been among our two most highly compensated executive officers (other than the PEO) if she had been an executive officer at fiscal year-end.

Additionally, we have not included a compensation discussion and analysis of our executive compensation programs or tabular compensation information other than the Summary Compensation Table and the Outstanding Equity Awards table.

In addition, for so long as we are an emerging growth company, we will not be required to submit certain executive compensation matters to our shareholders for advisory votes, such as “say-on-pay” and “say-on-frequency” of say-on-pay votes.

This section discusses the material components of the executive compensation program for our "named executive officers” or “NEOs” for the fiscal year ended December 25, 2022 (“Fiscal 2022”).

Our NEOs for Fiscal 2022 were:

– Michael Osanloo President and Chief Executive Officer

– Sherri Abruscato Chief Development and Supply Chain Officer

– Michelle Hook Chief Financial Officer and Treasurer

– Derrick Pratt Chief Operating Officer

– Sherri Abruscato Former Chief Development and Supply Chain Officer

Portillo's Inc.

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The following table sets forth certain information regarding the total compensation awarded to, earned by or paid to our named executive officers in respect of Fiscal 2022 and the fiscal year ended December 26, 2021 ("Fiscal 2021").

Name and principal position Year Salary ($) (1) Bonus ($) (2) Stock awards ($)(3) Option awards ($)(4) Nonequity incentive plan compensation ($) (5) Nonqualified deferred compensation earnings ($) All other compensation ($) (6) Total ($)

Michael Osanloo, President and Chief Executive Officer 2021 $ 791,167 $ 1,719,150 $ 3,938,000 $ 23,728,075 $ 1,018,464 $ — $ 49,351 $ 31,244,207

Name and principal position Year Salary ($) (1) Bonus ($) (2) Stock awards ($)(3) Option awards ($)(4) Nonequity incentive plan compensation ($) (5) All other compensation ($) (8) Total ($)

Michael Osanloo,

President and Chief Executive Officer 2022 $ 821,398 $ — $ 413,746 $ — $ — $ 53,704 $ 1,288,848

2021 791,167 1,719,150 3,938,000 23,728,075 1,018,464 49,351 31,244,207

Sherri Abruscato, Chief Development and Supply Chain Officer 2021 385,035 474,597 264,000 4,879,503 247,826 — 12,887 6,263,848

Michelle Hook,

Chief Financial Officer and Treasurer 2022 438,740 — 110,497 — — 42,505 591,742

2021 370,137 103,149 1,500,000 2,985,558 242,666 41,299 5,242,809

Michelle Hook, Chief Financial Officer and Treasurer 2021 370,137 103,149 1,500,000 2,985,558 242,666 — 41,299 5,242,809

Derrick Pratt,

Chief Operating Officer 2022 448,620 — 112,784 — — 28,934 590,338

Sherri Abruscato, Former Chief Development and Supply Chain Officer (6) 2022 334,332 83,093 — 192,096 — 11,244 620,765

2021 385,035 474,597 264,000 4,879,503 247,826 12,887 6,263,848

(1) The base salary amounts represent the amount earned during Fiscal 2022 and Fiscal 2021.

(2) The 2021 amounts represent a payment upon completion of the Transactions as described in "Equity Compensation" below.

The 2020 amounts represents an additional 10% discretionary bonus payment in recognition of the performance of the Company.

(2) The 2022 amounts reported represent a discretionary bonus payment to Ms.

See "Bonus" below.

(3) The 2022 amounts reported represent restricted stock awards ("RSAs") granted on December 23, 2022 to executive officers in recognition of their work and accomplishments in 2022.

See "Restricted Stock Awards" below.

The 2021 amounts reported represent the aggregate grant date fair value of restricted stock units granted on October 21, 2021 in connection with the IPO under the 2021 Plan.

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Equity-Based Compensation to our consolidated financial statements.

(4) The amounts reported represent the (1) aggregate grant date fair value of the performance-based option awards granted on October 21, 2021 in connection with the IPO under the 2021 Plan as described under "IPO Equity Awards" below, determined using a Monte-Carlo simulation model, and (2) the incremental fair value of modified performance options from the 2014 Plan as described under “Equity Compensation” below.

Abruscato, the 2022 amounts reported reflect the incremental fair value of the option awards that were modified and remain outstanding in connection with Ms.

Abruscato’s retirement.

See “Equity Compensation” below for additional information.The 2021 amounts reported represent the (1) aggregate grant date fair value of the performance-based option awards granted on October 21, 2021 in connection with the IPO under the 2021 Plan as described under "IPO Equity Awards" below, determined using a Monte-Carlo simulation model, and (2) the incremental fair value of modified performance options from the 2014 Plan as described under “Equity Compensation” below.

The fair values were computed in accordance with ASC Topic 718, excluding the effect of forfeitures.

Equity-Based Compensation to our consolidated financial statements.

(5) Represents performance-based amounts earned in Fiscal 2021 and Fiscal 2020 under the 2021 Bonus Program and 2020 Bonus Program as described below.

(5) Represents performance-based amounts earned in Fiscal 2022 and Fiscal 2021 described under "Nonequity Incentive Plan Pay" below.

Abruscato ceased to be an executive officer of the Company as of October 31, 2022.

(7) Payments to our NEOs included in the “All other compensation” column include the following:

Name Year Commuter benefits ($) Cell phone stipend ($) Health Insurance ($) Ayco Investment ($) 401(k) match ($) Total ($)

Name Year Commuter benefits ($) Cell phone stipend ($) Employee Share Purchase Plan ($) Health Insurance ($) Personal Financial Management ($) 401(k) match ($) Total ($)

Michael Osanloo 2022 $ 6,945 $ 720 $ 2,667 $ 27,943 $ 13,000 $ 2,429 $ 53,704

Sherri Abruscato 2021 — 720 9,667 — 2,500 12,887

Michelle Hook 2022 — 720 953 27,832 13,000 — 42,505

Compensation Overview

The Portillo’s total rewards philosophy seeks to provide executives with a total compensation package that is competitive with the larger industry in which we operate and compete for talent, with total compensation that rewards executives for individual performance and company results.

In Fiscal 2021, we primarily compensated our NEOs through a combination of base salary and annual cash incentive awards.

Generally, we may grant equity awards to our executive officers upon hire or promotion.

Our NEOs are also entitled to certain other benefits, subject to their enrollment, including a 401(k) plan with matching contributions, deferral of compensation through the Executive Nonqualified Excess Plan as described under “Employee Benefit Plans” below, access to certain investment advice and tax return preparation through Ayco Personal Financial Management as described under “Other Benefits and Perquisites,” and medical, dental, vision, life, accidental death and dismemberment, short-term disability and long-term disability insurance.

Derrick Pratt 2022 8,590 720 291 19,333 — — 28,934

Sherri Abruscato 2022 — 600 — 8,144 — 2,500 11,244

Portillo's Inc.

Form 10-K | 95

Compensation Overview

The Portillo’s total rewards philosophy seeks to provide executive officers with a total compensation package that is competitive with the larger industry in which we operate and compete for talent, with total compensation that rewards executive officers for individual performance and company results.

In Fiscal 2022, we primarily compensated our NEOs through a combination of base salary and restricted stock awards.

Generally, we may grant equity awards to our executive officers upon hire or promotion.

Our NEOs are also entitled to certain other benefits, subject to their enrollment, including a 401(k) plan with matching contributions, deferral of compensation through the Executive Nonqualified Excess Plan as described under “Executive Nonqualified Excess Plan” below, access to certain investment advice and tax return preparation through Ayco Personal Financial Management as described under “Other Benefits and Perquisites,” and medical, dental, vision, life, accidental death and dismemberment, short-term disability and long-term disability insurance.

Elements of Compensation

We pay base salaries to provide executives with a secure, fixed base of cash compensation in recognition of individual responsibilities and job performance.

We pay base salaries to provide executive officers with a secure, fixed base of cash compensation in recognition of individual responsibilities and job performance.

Current salaries are based on market conditions and experience of the executive.

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As of December 25, 2022, the base salaries for our NEOs were as follows:

Hook $425,000.

We consider annual merit-based salary increases based on a comparative analysis of base salaries for similar positions among the market data set provided by our independent compensation consultant and upon approval from the Compensation Committee.

Upon market data review in partnership with our independent compensation consultant, Ms.

Hook received a $25,000 base salary increase effective June 28, 2021 and a $50,000 base salary increase effective November 1, 2021 to recognize Ms.

Hook's experience and performance.

In connection with our initial public offering ("IPO"), each option holder received a cash bonus in respect of his or her options (whether vested or unvested).

The amounts included for NEOs for Fiscal 2021 represent this payment.

The amounts included for NEOs for Fiscal 2020 represent a 10% discretionary bonus payment in recognition of the performance of the Company throughout the COVID-19 pandemic.

In Fiscal 2022, we awarded Ms.

Abruscato a cash bonus of 50% of her target performance-based annual cash incentive award, pro-rated through her retirement date in recognition of her work and accomplishments in 2022.

In connection with our initial public offering in October 2021 ("IPO"), each option holder received a cash bonus in respect of his or her options (whether vested or unvested).

The bonus amounts included for NEOs for Fiscal 2021 represent this payment.

Nonequity Incentive Plan Pay

In Fiscal 2021, we awarded performance-based annual cash incentive opportunities to each of our NEOs under the Executive Discretionary Bonus Plan (the “2021 Bonus Program”), which is a key component of our total rewards philosophy.

The 2021 Bonus Program was designed to motivate and drive executives to achieve company results by linking performance-based annual cash incentives, up to a pre-established maximum amount, to the achievement of specified performance targets.

We believe that the executive discretionary bonus plan encourages, reinforces and rewards delivery of stockholder value by linking annual cash awards with the achievement of quantifiable performance measures.

For Fiscal 2021, performance under the 2021 Bonus Program, payable in March 2022, was measured based on the Company’s growth in Adjusted EBITDA.

In Fiscal 2022, there were no performance-based annual cash incentives awarded.

We previously awarded performance-based annual cash incentive opportunities to each of our NEOs under the Executive Discretionary Bonus Plan (the “Executive Bonus Program”), which is a key component of our total rewards philosophy.

The Executive Bonus Program was designed to motivate and drive executive officers to achieve company results by linking performance-based annual cash incentives, up to a pre-established maximum amount, to the achievement of specified performance targets.

We believe that the executive discretionary bonus plan encourages, reinforces and rewards delivery of shareholder value by linking annual cash awards with the achievement of quantifiable performance measures.

For Fiscal 2021, performance under the Executive Bonus Program, payable in March 2022, was measured based on the Company’s growth in Adjusted EBITDA.

The target payment amounts for our NEOs were as follows:

100% of base salary for Mr.

50% of base salary for Ms.

and 50% of base salary for Ms.

Osanloo, 50% of base salary for Ms.

Hook and 50% of base salary for Ms.

Hook's cash incentive was prorated based on her adjustments in base salary.

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The Compensation Committee approved a 128% calculated cash incentive payment.

Based on growth in internal Adjusted EBITDA in Fiscal 2020, our Compensation Committee approved an 87% cash incentive payment, plus an additional 10% discretionary bonus payment as described above under "Bonus".

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Form 10-K | 96

Equity Compensation

We believe that long-term equity-based compensation provides direct alignment between the interest of our executives and stockholders and helps to ensure long-term retention of key executive talent.

We believe that long-term equity-based compensation provides direct alignment between the interest of our executives and shareholders and helps to ensure long-term retention of key executive talent.

To balance incentives to achieve both short-term and long-term success, upon hire or promotion our executive officers receive equity award grants.

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As further described below, all outstanding awards under the 2014 Plan were assumed by the 2021 Plan in connection with the IPO and no further awards will be granted under such plan.

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In connection with the IPO, each option under the 2014 Plan that was outstanding, whether vested or unvested at such time, was substituted for an option to purchase a number of shares of Class A common stock.

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Following the IPO, no further options will be granted under the 2014 Plan.

Additionally, in connection with the IPO, we granted to our executive officers, including our NEOs, restricted stock units (“RSUs”) and options as described below under “IPO Equity Awards.”

In connection with Ms.

Abruscato’s retirement, among other things, the Board determined that the options previously granted to Ms.

Abruscato under the 2014 Plan will remain outstanding and exercisable in accordance with their terms until December 10, 2024.

See the “Option Awards” column of the "Summary Compensation Table” above for the incremental fair value of the modification to permit the award to remain outstanding.

IPO Equity Awards

In connection with the IPO, we granted 882,875 RSUs under the 2021 Plan to certain employees and directors, including our named executive officers.

With respect to our NEOs, the number of shares subject to such awards was determined by dividing $3,938,000 (in the case of Mr.

Osanloo), $264,000 (in the case of Ms.

Abruscato) and $1,500,000 (in the case of Ms.

Hook) by the IPO price (rounded down to the nearest whole share).

In connection with the IPO, we granted 882,875 RSUs under the 2021 Plan to certain employees and directors, including our NEOs.

The RSUs will vest one-third (1/3rd) on each of the first three (3) anniversaries of the date of grant subject to continued service on such date.

In connection with the IPO, we granted 1,794,195 performance-based stock options to purchase an equal number of shares of our Class A common stock (“Options”) under the 2021 Plan to certain executives.

With respect to our NEOs, the number of shares subject to such Options was based on an option pricing model value of $7,302,000 (in the case of Mr.

Osanloo), $416,000 (in the case of Ms.

Abruscato) and $2,000,000 (in the case of Ms.

The Options have an exercise price equal to the IPO price of $20.00.

The Options will be eligible to vest in three (3) tranches based on stock performance conditions.

The Options will be eligible to vest in three (3) tranches based on stock performance conditions, as described in Note 13.

Equity-Based Compensation to our consolidated financial statements.

See the “Outstanding Equity Awards at Fiscal Year End” table below for more detail about awards granted in connection with the IPO in October 2021.

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Restricted Stock Awards

On December 23, 2022, the Company granted 57,870 RSAs to certain of its executive officers in recognition of their work and accomplishments in 2022.

The RSAs vested immediately upon grant with certain transfer restrictions.

RSAs surrendered to fulfill withholding tax obligation were not subject to any transfer restrictions, and 50% of the balance of the underlying shares were subject to a one-year holding requirement, and the other 50% of the balance of underlying shares was subject to a two-year holding requirement.

The fair value of the RSAs surrendered was determined using Portillo's closing stock price on the date of grant, which was $17.19.

The fair value of the awards with post-vesting restrictions was determined using the Black-Scholes option pricing model.

With respect to our NEOs, the number of shares subject to such awards was determined by dividing $413,751 (in the case of Mr.

Osanloo), $110,500 (in the case of Ms.

Hook) and $112,785 (in the case of Mr.

Pratt) by the $17.19 closing stock price on December 23, 2022 (rounded down to the nearest whole share).

2021 Equity Incentive Plan

In connection with the IPO, we adopted a new equity incentive plan, the 2021 Plan.

The 2021 Plan provides flexibility to motivate, attract and retain our employees, officers, and directors, and other service providers who are expected to make significant contributions to our success and allow participants to share in such success.

The purpose of the 2021 Plan is to align the interests of eligible participants with our stockholders by providing incentive compensation tied to the Company’s performance.

The intent of the 2021 Plan is to advance the Company’s interests and increase stockholder value by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of our business is largely dependent.

The 2021 Plan provides flexibility to motivate, attract and retain our employees, officers, directors, and other service providers who are expected to make significant contributions to our success and allow participants to share in such success.

The purpose of the 2021 Plan is to align the interests of eligible participants with our shareholders by providing incentive compensation tied to the Company’s performance.

The intent of the 2021 Plan is to advance the Company’s interests and increase shareholder value by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of our business is largely dependent.

Under the 2021 Plan, we may grant stock options (both incentive and non-qualified), stock appreciation rights ("SARs"), restricted stock awards, RSUs and stock-based awards to our employees, officers, non-employee directors or any natural person who is a consultant or other personal service provider to the Company or any of its subsidiaries or affiliates.

All awards granted to participants under the 2021 Plan are represented by an award agreement.

As of March 3, 2022, ap proximately 4.5 million share s of Class A common stock are available for awards under the 2021 Plan.

As of February 23, 2023, approximately 4.5 million shares of Class A common stock are available for awards under the 2021 Plan.

The share reserve will be reduced by one share for each share subject to an award, other than shares issued pursuant to options granted under the 2014 Plan.

If any award granted under the 2021 Plan (excluding, for the avoidance of doubt, any options granted under the 2014 Plan that are assumed under the 2021 Plan) is cancelled, expired, forfeited, or surrendered without consideration or otherwise terminated without delivery of the shares to the participant, then such unissued shares will be returned to the 2021 Plan and be available for future awards under the 2021 Plan.

If any award granted under the 2021 Plan (excluding, for the avoidance of doubt, any options granted under the 2014 Plan that are assumed under the 2021 Plan) is canceled, expired, forfeited, or surrendered without consideration or otherwise terminated without delivery of the shares to the participant, then such unissued shares will be returned to the 2021 Plan and be available for future awards under the 2021 Plan.

Additionally, shares that are withheld from any award in payment of the exercise, base or purchase price or taxes related to such an award, not issued or delivered as a result of the net settlement of any award, or repurchased by the company on the open market with the proceeds of a stock option will be deemed to have been delivered under the Plan and will not be returned to the 2021 Plan nor be available for future awards under the 2021 Plan.

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Equity awards granted under the 2021 Plan to our directors and officers who are subject to Rule 16b-3 promulgated under the Exchange Act may be granted by the full Board or by a sub-committee of two or more “non-employee directors” as defined under such Rule as delegated by the Compensation Committee in order to ensure their exemption under Rule 16b-3, as permitted under the 2021 Plan and under applicable law.

Portillo's Inc.

Form 10-K | 92

Executive Nonqualified Excess Plan

Portillo’s approved the Executive Nonqualified Excess Plan in February 2016 to provide a means by which certain management employees may elect to defer receipt of current compensation to provide for retirement, and also have access to Ayco Personal Financial Management to provide certain investment advice and services as well as tax return preparation.

This plan is an unfunded nonqualified deferred compensation plan, in compliance with Section 409A of the Internal Revenue Code.

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In Fiscal 2022, Ms.

Abruscato took advantage of this perquisite and Mr.

Abruscato took advantage of this perquisite.

In connection with Ms.

Abruscato's retirement, Ms.

Abruscato received a partial distribution.

Portillo's Inc.

Form 10-K | 98

Personal Financial Management

Certain management employees of the Company have access to Ayco Personal Financial Management to provide certain investment advice and services as well as tax return preparation.

In Fiscal 2022, Mr.

Osanloo and Ms.

Hook took advantage of the personal financial management perquisite.

Employee Stock Purchase Plan

The Company maintains the Employee Stock Purchase Plan (the “ESPP”), adopted in June 2022, to provide employees, including our named executive officers, with an opportunity to purchase shares of the Company’s common stock through payroll deductions at a 15% discount from the market price, subject to Company discretion.

The ESPP is a non-qualified plan under Section 423 of the Internal Revenue Code.

The Compensation Committee believes the ESPP is an attractive benefit that assists the Company in retaining key employees, securing new qualified employees and providing incentives for employees to work towards achieving the Company’s key objectives because it gives employees access to the Company’s equity at a discounted price.

In Fiscal 2022, Mr.

Pratt took advantage of the ESPP.

Other Benefits and Perquisites

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The following is a summary of the material terms of the employment arrangements that we have with Mr.

Abruscato and Ms.

The Company generally does not have any other employment agreements or change in control agreements for its executive officers.

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Osanloo’s start date and an award of 15,000,000 options granted under the 2014 Plan, split equally between options that are subject to time-vesting and time-vesting and performance-vesting.

Osanloo was also provided the opportunity to invest up to $1,500,000 for the purchase of Class A common units of the Company, at the then fair market value.

Osanloo was also provided the opportunity to invest up to $1,500,000 for the purchase of LLC Units of the Company, at the then fair market value.

In the event of termination by the Company without cause, by Mr.

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(i) earned but unpaid annual bonus (if any), and (ii) pro-rata bonus annual cash bonus based on actual performance for the year of termination.

Sherri Abruscato - The Company entered into an employment agreement with Ms.

Abruscato (the “Abruscato Employment Agreement”) on August 1, 2014, when the original founder of the Company sold to Berkshire Partners LLC.

The Abruscato Employment Agreement provides for a 3-year initial term and renews year-to-year thereafter.

The Abruscato Employment Agreement further provides for a base salary of $325,000 as well as annual incentive cash compensation with an annual target equal to 50% of base salary.

The Abruscato Employment Agreement further provided that Ms.

Abruscato would be eligible to participate in an incentive equity plan, upon adoption of such a plan and approval of the award by the Board.

In the event of termination by the Company without cause, by Ms.

Abruscato for good reason or upon the Company’s non-renewal of the term, Ms.

Abruscato is entitled to base salary continuation for 12 months.

In the event of termination due to death or disability, Ms.

Abruscato or her legal representatives will be entitled to any earned but unpaid annual bonus.

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Form 10-K | 93

Michelle Hook - The Company entered into an offer letter with Ms.

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Hook received a sign-on bonus of $115,000, which is subject to full or partial repayment upon certain terminations of employment prior to the second anniversary of the employment start date.

Portillo's Inc.

Form 10-K | 99

Derrick Pratt - The Company entered into an offer letter with Mr.

Pratt (the “Pratt Offer Letter”) on August 10, 2020.

The Pratt Offer Letter provides for at-will employment.

The Pratt Offer Letter further provides for a base salary of $400,000, as well as annual incentive cash compensation with an annual target equal to 50% of base salary commencing in 2021.

The Pratt Offer Letter further provides that Mr.

Pratt is eligible to participate in the Company’s incentive equity plan.

Pursuant to the Pratt Offer Letter, Mr.

Pratt received a sign-on bonus of $85,000 and a retention bonus of $150,000, both of which is subject to full or partial repayment upon certain terminations of employment prior to the second anniversary of the employment start date.

Sherri Abruscato - The Company entered into an employment agreement with Ms.

Abruscato (the “Abruscato Employment Agreement”) on August 1, 2014, when the original founder of the Company sold to Berkshire Partners LLC.

The Abruscato Employment Agreement provided for a 3-year initial term and renewed year-to-year thereafter.

The Abruscato Employment Agreement further provides for a base salary of $325,000 as well as annual incentive cash compensation with an annual target equal to 50% of base salary.

The Abruscato Employment Agreement further provided that Ms.

Abruscato would be eligible to participate in an incentive equity plan, upon adoption of such a plan and approval of the award by the Board.

In the event of termination by the Company without cause, by Ms.

Abruscato for good reason or upon the Company’s non-renewal of the term, Ms.

Abruscato was entitled to base salary continuation for 12 months.

In the event of termination due to death or disability, Ms.

Abruscato or her legal representatives would have been entitled to any earned but unpaid annual bonus.

Abruscato retired from her position as Chief Development and Supply Chain Officer on October 31, 2022.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

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— — 963,325 20.00 10/21/2031 131,267 2,256,480 — —

Sherri Abruscato 440,840 — — 3.30 12/10/2024 — — — —

Michelle Hook 48,670 73,004 — 5.77 3/2/2031 — — — —

— — 263,852 20.00 10/21/2031 50,000 859,500 — —

Derrick Pratt 48,670 73,004 — 4.37 9/14/2030 — — — —

— — 263,852 20.00 10/21/2031 41,677 716,428 — —

Michelle Hook 24,335 97,339 — 5.77 3/2/2031 — — — —

Sherri Abruscato (4) 440,840 — — 3.30 12/10/2024 — — — —

55,105 — — 5.45 12/10/2024 — — — —

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(3) Value calculated based on $17.19, the closing stock price on December 23, 2022, the last trading day of Fiscal 2022.

(4) Reflects option awards that remain outstanding in connection with Ms.

Abruscato’s retirement.

Potential Payments Upon Termination

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There are no arrangements pursuant to which payments are triggered upon a change in control.

Under the 2021 Plan, to the extent that outstanding awards are not continued, assumed or substituted upon or following a change in control, the Compensation Committee may, but is not obligated to, make adjustments to the terms and conditions of outstanding awards, including without limitation (i) acceleration of exercisability, vesting and/or payment immediately prior to, upon or following such event, (ii) upon written notice, provided that any outstanding stock option and SAR must be exercised during a period of time immediately prior to such event or other period (contingent upon the consummation of such event), and at the end of such period, such stock options and SARs shall terminate to the extent not so exercised, and (iii) cancellation of all or any portion of outstanding awards for fair value (in the form of cash, shares, other property or any combination of the foregoing.

Portillo's Inc.

Form 10-K | 100

Director Compensation

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Lubin — 200,000 — — 200,000

(1) The amounts represent 6,000 RSUs at a grant date fair value of $20 per unit.

(2) Represents incremental fair value of modified performance options from the 2014 Plan determined in accordance with ASC Topic 718.

Each of our directors has the following number of stock options outstanding:

Bordelon received 29,822 Class A unit options at a incremental fair market value of $16.20;

Glass received 29,822 Class A unit options at a incremental fair market value of $16.20;

Hart received 29,821 Class A unit options at a incremental fair market value of $16.20.

(3) The amounts represent a payment upon completion of the Transactions as described in "Equity Compensation" above.

Directors are also provided an opportunity to invest up to $500,000 in Class A units at the fair market value in place at time of purchase.

Prior to the IPO, Mr.

Miles, as Chairman of the Board, received an annual retainer of $250,000, payable monthly in arrears, along with reimbursement of reasonable direct out of pocket travel expenses incurred as a result of his service as Chairman.

Other independent directors, received an annual $50,000 retainer, paid pro rata during their first year of service, as well as a stock grant in connection with commencing service as a director, split equally divided into time-based vesting and time and performance-based vesting option awards.

The awards vest ratably over the requisite service period, which is generally five years and are generally exercisable within a 10-year period from the date of the grant.

Non-Employee Director Compensation Program Following Our Initial Public Offering

In connection with our IPO, our Board approved a new compensation program for our non-employee directors beginning January 1, 2022, subject to certain awards that were granted at the time of the IPO, as discussed below.

Pursuant to this new program, directors will receive an annual retainer of $200,000, of which $120,000 will be in the form of time-based RSUs that generally will vest one-year from the date of grant, and $80,000 will be in cash.

Additionally, the Audit Committee chair will receive $20,000, the Compensation Committee chair will receive $15,000 and the Nominating and Corporate Governance Committee chair will receive $10,000.

Miles will also receive a $50,000 fee for his service as the Board chair.

Directors may elect to receive any or all of their cash fees in RSUs rather in cash, if they prefer.

Certain of our non-employee directors received their 2022 equity grants of 6,000 RSUs based on the initial stock price of $20 per share in connection with the IPO, while others received the same number of RSUs in 2022.

(1) The amounts represent restricted stock units granted on January 18, 2022, some of which will vest in equal installments on each of October 21, 2022, October 21, 2023 and October 21, 2024 based on the initial stock price of $20.00 per unit and some of which vested in full on December 31, 2022 at a stock price of $37.54 per unit, the closing stock price on December 31, 2021.

(2) The number of stock options and RSUs outstanding held by each non-employee director (representing unexercised stock options and unvested RSUs) at December 25, 2022 is as follows:

Miles has 553,555 unexercised stock options and 4,000 unvested RSUs, Ms.

Bordelon has 23,858 unexercised stock options and 4,000 unvested RSUs, Mr.

Glass has 59,644 unexercised stock options and 4,000 unvested RSUs, Ms.

Dodson has 4,000 unvested RSUs, Mr.

Hart has has 59,642 unexercised stock options and 4,000 unvested RSUs, Mr.

Lutzker has 4,000 unvested RSUs and Mr.

Lubin has 4,000 unvested RSUs.

Non-Employee Director Compensation Program

Under our non-employee director compensation program, our directors receive a cash retainer and an annual equity award as well as additional cash fees for service as Board chair or committee chair.

Directors may elect to receive any or all of their cash fees in equity rather than cash, if they prefer.

Effective as of January 1, 2022, non-employee directors receive an annual retainer of $200,000, of which $120,000 is in the form of time-based RSUs that generally will vest one-year from the date of grant, and $80,000 in cash.

Certain of our non-employee directors received their 2022 equity grants of 6,000 RSUs based on the initial stock price of $20.00 per share in connection with the IPO in 2021, while others received the same number of RSUs in 2022.

These RSUs tied to the IPO price will vest in three equal installments starting on the anniversary of the IPO.

Certain directors also opted to receive all or a portion of their cash compensation in RSUs, which were granted in January 2022.

Such RSUs will vest on December 31, 2022.

Certain directors also opted to receive all or a portion of their cash compensation in RSUs, which were granted in January 2022 and vested on December 31, 2022.

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Form 10-K | 101

Additionally, for their service in 2022, the Audit Committee Chair received $20,000, the Compensation Committee Chair received $15,000 and the Nominating and Corporate Governance Committee Chair received $10,000.

Miles also received a $50,000 fee for his service as Board Chair.

Effective January 1, 2023, the compensation for the Board Chair increased to $95,000 per year, the compensation for the Audit Committee Chair increased to $25,000 per year, the compensation for the Compensation Committee Chair increased to $20,000 per year, and the compensation for the Nominating and Corporate Governance Committee Chair increased to $15,000 per year.

Compensation Committee Interlocks and Insider Participation

The members of our Compensation Committee during 2021 were Mr.

The members of our Compensation Committee as of December 25, 2022 were Mr.

Lutzker, and Mr.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The table below sets forth certain information regarding the beneficial ownership of our Class A common stock as of March 3, 2022 (except as otherwise stated) by the following:

The table below sets forth certain information regarding the beneficial ownership of our Class A common stock as of February 23, 2023 (except as otherwise stated) by the following:

• Each person known to us to own beneficially more than 5% of our outstanding common stock;

• Each of the directors and named executive offers individually;

• Each of the directors and named executive officers individually;

• All directors and officers as a group.

The following table assumes that the certain pre-IPO LLC members (the "pre-IPO LLC Members") redeem or exchange all of their LLC Units and shares of Class B common stock for newly issued shares of our Class A common stock on a one-for-one basis.

In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to securities and includes the shares issuable pursuant to stock options that are exercisable within 60 days of March 3, 2022.

In computing the number of shares of our Class A common stock beneficially owned by a person and the percentage ownership, we deemed outstanding shares of our Class A common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of March 3, 2022.

The following table assumes that certain pre-IPO LLC members (the "pre-IPO LLC Members") redeem or exchange all of their LLC Units and shares of Class B common stock for newly issued shares of our Class A common stock on a one-for-one basis.

We did not deem these shares of our Class A common stock outstanding, however, for the purpose of computing the percentage ownership of any other person.

Unless otherwise indicated, the address for each listed stockholder is:

Unless otherwise indicated, the address for each listed shareholder is:

c/o Portillo’s Inc., 2001 Spring Road, Suite 400, Oak Brook, Illinois 60523.

To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock.

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Shares of Class A Common Stock Beneficially Owned

Name and Address of Beneficial Owner Number of Shares Percentage of Outstanding Class A Common Stock

5% stockholders

5% shareholders

Funds managed by Berkshire (1) 30,133,396 42.74%

Select Equity Group, L.P.

(2) 3,771,957 5.28%

Orbis Investment Management Limited ("OIML");

Allan Gray Australia Pty Limited ("AGAPL") (2) 4,651,417 9.58%

The Vanguard Group (3) 3,712,442 7.65%

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Michael Osanloo 1,967,454 3.90%

Sherri Abruscato 551,050 *

Michelle Hook 70,603 *

Derrick Pratt 67,192 *

Sherri Abruscato 501,368 1.02%

849,455 1.72%

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*Less than 1%

Portillo's Inc.

Form 10-K | 96

(1) Represents (i) 8,164,752 shares of Class A common stock owned by Berkshire Fund VIII-A, L.P.

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The address of all the entities and the managing members mentioned above is 200 Clarendon Street, 35th Floor, Boston, Massachusetts 02116-5021.

(2) According to a Schedule 13G filed on February 14, 2022, Select Equity Group, L.P., a Delaware limited partnership (“Select LP”), SEG Partners II, L.P., a Delaware limited partnership (“SEG Partners II”), and George S.

Loening, a United States citizen (“Loening”), who is the majority owner of Select LP and managing member of its general partner, and the managing member of SEG Partners II’s general partner, share voting control and investment discretion over part or all of the interests shown as follows:

(i) Select LP shares voting and investment discretion over 3,771,957 shares, (ii) SEG Partners II shares voting and investment discretion over 2,266,552 shares and (iii) Loening shares voting and investment discretion over 3,771,957 shares.

The business address of each Select LP, SEG Partners II and Loening is 380 Lafayette Street, 6th Floor, New York, New York 10003.

(3) According to a Schedule 13G filed on February 10, 2022, The Vanguard Group, shares voting control and investment discretion as follows:

(2) Represents beneficial ownership by Orbis Investment Management Limited ("OIML");

Allan Gray Australia Pty Limited ("AGAPL"), according to a Schedule 13G filed on February 14, 2023, reporting:

sole voting power over 4,651,417 shares and sole dispositive power over 4,651,417 shares, in the aggregate.

The business address of OIML is Orbis House, 25 Front Street, Hamilton Bermuda HM11 and the business address of AGAPL is Level 2, Challis House, 4 Martin Place, Sydney NSW2000, Australia.

(3) Represents beneficial ownership by The Vanguard Group, according to a Schedule 13G filed on February 9, 2023, reporting:

shared voting power over 52,909 shares, sole dispositive power over 3,626,897 shares, and shared dispositive power over 85,545 shares.

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Lutzker disclaim beneficial ownership of the securities held by the Berkshire Entities except to the extent of their respective pecuniary interests therein.

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Form 10-K | 103

Securities Authorized for Issuance under Equity Compensation Plans

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December 25, 2022:

Number of securities to be

issued upon exercise of

outstanding options,

warrants and rights (1) Weighted-average exercise

price of outstanding

options, warrants and

rights Number of securities

remaining available for

future issuances under

equity compensation plans

Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuances under equity compensation plans (3)

Equity compensation plans approved by security holders 8,247,480 $ 8.26 4,458,590

(1) Includes shares issuable pursuant to stock options, restricted stock units, restricted stock awards, stock appreciation rights and other stock-based awards under the Company's 2021 Plan.

Represents shares under the 2021 Plan, including 5,830,723 shares assumed from the 2014 Plan.

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(2) The weighted-average exercise price set forth in this column is calculated excluding restricted stock units or other awards for which recipients are not required to pay an exercise price to receive the shares subject to the awards.

(3) This amounts represents shares of common stock available for issuance under the 2021 Plan, which include stock options, restricted stock units, restricted stock awards, stock appreciation rights and other stock-based awards.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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Other than as described below, there have not been, nor are there any currently proposed, transactions or series of similar transactions meeting this criteria to which we have been or will be a party other than compensation arrangements.

Stock Subscription

We previously issued 1,449,275 LLC Units to our Chief Executive Officer and President for a stock subscription receivable of $1.0 million.

As of December 26, 2021 and December 27, 2020, the Company had $0.0 million and $0.5 million recorded as subscription receivable, respectively.

On August 13, 2021, the remaining stock subscription receivable of $0.2 million was fully repaid.

The table below sets forth the consideration in LLC Units and Class B common stock received by our directors, officers and 5% equity holders in the Transactions:

Name Class B Common Stock and LLC Units Issued in the Transactions

Funds managed by Berkshire 33,211,485

Michael Osanloo 293,900

Ann Bordelon 17,789

Noah Glass 23,309

Secondary Offerings

In the third and fourth quarters of 2022, in connection with the secondary offerings previously discussed throughout this Annual Report on Form 10-K, we purchased LLC Units and shares of Class A common stock using the proceeds of the secondary offering at a price equal to the public offering price less the underwriting discounts and commissions from certain pre-IPO LLC Members and shareholders of the Blocker Companies, including from funds affiliated with Berkshire Partners LLC, which is our controlling shareholder that beneficially owns approximately 42.8% of the Company as of December 25, 2022.

In the aggregate, we paid to the funds affiliated with Berkshire Partners LLC approximately $348.9 million to purchase the LLC Units and shares of Class A common stock with the proceeds of the secondary offerings in 2022.

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Form 10-K | 104

Amended Portillo’s OpCo Agreement

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As such, through our officers and directors, we are responsible for all operational and administrative decisions of Portillo’s OpCo and the day-to-day management of Portillo’s OpCo’s business.

We will fund any dividends to our stockholders by causing Portillo’s OpCo to make distributions to the holders of LLC Units and us, subject to the limitations imposed by our debt agreements.

Portillo's Inc.

Form 10-K | 98

We will fund any dividends to our shareholders by causing Portillo’s OpCo to make distributions to the holders of LLC Units and us, subject to the limitations imposed by our debt agreements.

The holders of LLC Units will generally incur U.S.

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Shares of Class B common stock will be canceled on a one-for-one basis if we, following a redemption request of a holder of an LLC Unit, redeem or exchange LLC Units of such holder of an LLC Unit pursuant to the terms of the Amended LLC Agreement.

The Amended LLC Agreement provides that, in the event that a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization or similar transaction with respect to our Class A common stock is proposed by us or our stockholders and approved by our Board or is otherwise consented to or approved by our Board, the holders of LLC Units will be permitted to participate in such offer by delivery of a notice of redemption or exchange that is effective immediately prior to the consummation of such offer.

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Form 10-K | 105

The Amended LLC Agreement provides that, in the event that a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization or similar transaction with respect to our Class A common stock is proposed by us or our shareholders and approved by our Board or is otherwise consented to or approved by our Board, the holders of LLC Units will be permitted to participate in such offer by delivery of a notice of redemption or exchange that is effective immediately prior to the consummation of such offer.

In the case of any such offer proposed by us, we are obligated to use our reasonable best efforts to enable and permit the holders of LLC Units to participate in such offer to the same extent or on an economically equivalent basis as the holders of shares of our Class A common stock without discrimination.

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Subject to certain exceptions, Portillo’s OpCo will indemnify all of its members and their officers and other related parties, against all losses or expenses arising from claims or other legal proceedings in which such person (in its capacity as such) may be involved or become subject to in connection with Portillo’s OpCo’s business or affairs or the Amended LLC Agreement or any related document.

Portillo's Inc.

Form 10-K | 99

Portillo’s OpCo may be dissolved upon (i) the determination by us to dissolve Portillo’s OpCo or (ii) any other event which would cause the dissolution of Portillo’s OpCo under the Delaware Limited Liability Company Act, unless Portillo’s OpCo is continued in accordance with the Delaware Limited Liability Company Act.

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tax purposes that held LLC Units prior to the Transactions ("Blocker Companies") (including net operating losses and the Blocker Companies' allocable share of existing tax basis), (iii) increases in our allocable share of then existing tax basis in depreciable or amortizable assets, and adjustments to the tax basis of the tangible and intangible assets, of Portillo’s OpCo and its subsidiaries, as a result of (x) sales or exchanges of interests in Portillo’s OpCo in connection with the IPO and (y) future exchanges of LLC Units by pre-IPO LLC Members for Class A common stock, and (iv) certain other tax benefits related to entering into the Tax Receivable Agreement, including payments made under the Tax Receivable Agreement.

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Form 10-K | 106

W e expect that the payments we will be required to make under the Tax Receivable Agreement will be substantial.

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Under this scenario, we would be required to pay the TRA Parties approximately 85% of such amount, or $252.8 million, primarily over the next 15 years, substantially declining in year 16 through year 47.

We expect a payment of $0.8 million to be paid within the next 12 months.

The a ctual amounts we will be required to pay may materially differ from these amounts, because potential future tax savings that we will actually realize or be deemed to realize, and the Tax Receivable Agreement payments made by us, will be calculated based in part on the market value of our Class A common stock at the time of each exchange of an LLC Unit for a share of Class A common stock and the prevailing applicable federal tax rate (plus the assumed combined state and local tax rate) applicable to us over the life of the Tax Receivable Agreement and will depend on our generating sufficient taxable income to realize the tax benefits that are subject to the Tax Receivable Agreement.

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• the price of shares of our Class A common stock at the time of the redemption or exchange —the increase in any tax deductions, as well as the tax basis increase in other assets, of Portillo’s OpCo, is directly proportional to the price of shares of our Class A common stock at the time of the redemption or exchange;

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Form 10-K | 100

• the extent to which such redemptions or exchanges are taxable —if an exchange is not taxable for any reason, increased tax deductions as a result of the Section 754 election mentioned above will not be available to generate payments under the Tax Receivable Agreement;

• the extent to which such redemptions or exchanges are taxable —if an exchange is not taxable for any reason, increased tax deductions as a result of the Section 754 election under the Internal Revenue Code will not be available to generate payments under the Tax Receivable Agreement;

• the amount of Blocker tax attributes —the amount of applicable tax attributes of the Blocker Companies at the time of the IPO impacts the amount and timing of payments under the Tax Receivable Agreement;

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In addition, the depreciation and amortization periods that apply to the increases in tax basis, the timing and amount of any earlier payments that we may have made under the Tax Receivable Agreement and the portion of our payments under such Tax Receivable Agreement that constitute imputed interest or give rise to depreciable or amortizable tax basis are also relevant factors.

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Form 10-K | 107

Decisions made by the Pre-IPO LLC Members in the course of running our business may influence the timing and amount of payments that are received by an exchanging or selling existing owner under the Tax Receivable Agreement.

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The Tax Receivable Agreement provides that (1) in the event that we breach any of our material obligations under the Tax Receivable Agreement, (2) upon certain changes of control or (3) if, at any time, we elect an early termination of the Tax Receivable Agreement, our obligations under the Tax Receivable Agreement (with respect to all LLC Units, whether or not LLC Units have been exchanged or acquired before or after such transaction) would accelerate and become payable in a lump sum amount equal to the present value of the anticipated future cash tax benefits calculated based on certain assumptions, including that we would have sufficient taxable income to fully utilize the deductions arising from the tax deductions, tax basis and other tax attributes subject to the Tax Receivable Agreement.

The change of control provisions in the Tax Receivable Agreement may result in situations where the TRA Parties have interests that differ from or are in addition to those of our other stockholders.

The change of control provisions in the Tax Receivable Agreement may result in situations where the TRA Parties have interests that differ from or are in addition to those of our other shareholders.

The present value of such anticipated future cash tax benefits are discounted at a rate equal to the lesser of (i) 6.5% per annum and (ii) one year LIBOR (or its successor rate) plus 100 basis points.

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Finally, because we are a holding company with no operations of our own, our ability to make payments under the Tax Receivable Agreement depends on the ability of Portillo’s OpCo to make distributions to us.

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Registration Rights Agreement

In connection with the IPO, we entered into a registration rights agreement with Berkshire and certain of our other stockholders.

In connection with the IPO, we entered into a registration rights agreement with Berkshire and certain of our other shareholders.

This agreement will provide Berkshire, and their permitted transferees, with “demand” registrations, which will require us to register shares of our common stock under the Securities Act.

Each of our stockholders that is a party to the registration rights agreement will also be entitled to customary “piggyback” registration rights and entitled to participate on a pro rata basis in any registration of our common stock under the Securities Act that we may undertake.

The registration rights agreement will also require us to maintain an effective shelf registration statement with respect to shares registered pursuant to the registration rights agreement, require that we will pay certain expenses relating to such registrations and require that we indemnify the stockholders party to the registration rights agreement against certain liabilities which may arise under the Securities Act.

Repayment of Redeemable Preferred Units

Pursuant to a unit purchase agreement, dated August 1, 2014, between Portillo’s OpCo and Broad Street Principal Investments, Portillo’s OpCo issued 100,000 redeemable preferred units (the “redeemable preferred units”) in exchange for a capital contribution.

In connection with the Transactions and the IPO, Portillo’s OpCo used a portion of the net proceeds from the IPO to repay the redeemable preferred units (including any redemption premium) in full.

Each of our shareholders that is a party to the registration rights agreement will also be entitled to customary “piggyback” registration rights and entitled to participate on a pro rata basis in any registration of our common stock under the Securities Act that we may undertake.

The registration rights agreement will also require us to maintain an effective shelf registration statement with respect to shares registered pursuant to the registration rights agreement, require that we will pay certain expenses relating to such registrations and require that we indemnify the shareholders party to the registration rights agreement against certain liabilities which may arise under the Securities Act.

As of December 25, 2022, the related parties’ receivables consisted of a receivable balance due from C&O of $0.3 million, which was included in accounts receivable in the consolidated balance sheet.

Noah Glass, a member of our Board, is the founder and CEO of Mobo Systems, Inc.

(also known as“Olo”), a platform Portillo’s OpCo uses in connection with its mobile ordering application and delivery.

The Company incurred the following Olo-related costs for Fiscal 2021 (in millions):

Fiscal Years Ended

Noah Glass, a member of our Board, is the founder and CEO of Olo, Inc.

("Olo"), a platform the Company uses in connection with its mobile ordering application and delivery.

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Form 10-K | 108

The Company incurred the following Olo-related costs for Fiscal 2022 (in thousands):

Fiscal Year Ended

December 25, 2022

2 unchanged sentences

Net Olo-related costs $ 2,451

As of December 26, 2021, there were no amounts payable to Olo.

Portillo's Inc.

Form 10-K | 102

Operating Leases and Consulting Agreement

Portillo’s OpCo leases 23 real properties from entities owned and controlled by Richard Portillo.

Portillo was the former President, CEO, and Owner of the Company, as comprised at the date of the merger transaction in August 2014 through which the Company was acquired by funds affiliated or managed by Berkshire Partners LLC.

The Company made $7.9 million in rental payments during the year ended December 26, 2021.

Beginning in 2014 through July 31, 2021, Mr.

Portillo served as a consultant, under an agreement with Portillo's Holdings, LLC (the "Consulting Agreement").

Under the terms of the Consulting Agreement, $2.0 million was paid annually for various consulting services, which was included in general and administrative expenses in the statements of operations.

The Consulting Agreement terminated on July 31, 2021 and has not been renewed.

As of December 25, 2022, $0.2 million was payable to Olo.

Related Party Transactions, Policies and Procedures

In connection with the IPO, we adopted a written Related Person Transaction Policy (the “Policy”), which sets forth our policy with respect to the review, approval, ratification and disclosure of all related person transactions by our Audit Committee.

We have a written Related Person Transaction Policy (the “Policy”), which sets forth our policy with respect to the review, approval, ratification and disclosure of all related person transactions by our Audit Committee.

In accordance with the Policy, our Audit Committee has overall responsibility for implementation of and compliance with the Policy.

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In reviewing and approving any related party transaction, the Audit Committee is tasked to consider all of the relevant facts and circumstances, and consideration of various factors enumerated in the Policy.

The Policy also provides that the Audit Committee review certain previously approved or ratified related person transactions that are ongoing to determine whether the related person transaction remains in our best interests and the best interests of our stockholders.

Additionally, we will make periodic inquiries of directors and executive officers with respect to any potential related person transaction to which they may be a party or of which they may be aware.

1 unchanged sentence

"Director Independence” and Item 10.

"Board Committees” above for a discussion of the matters required by Item 407(a) of

Regulation S-K.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Board selected Deloitte & Touche LLP to serve as our independent registered public accounting firm for Fiscal 2021.

Aggregate fees billed to the Company for the fiscal years ended December 26, 2021 and December 27, 2020 by the Company's principal accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatus Limited, and their related entities (collectively, "Deloitte") were approximately (in thousands):

"Board Committees” above for a discussion of the matters required by Item 407(a) of Regulation S-K.

Portillo's Inc.

Form 10-K | 109

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Board selected Deloitte & Touche LLP to serve as our independent registered public accounting firm for Fiscal 2022.

Aggregate fees billed to the Company for the fiscal years ended December 25, 2022 and December 26, 2021 by the Company's principal accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited, and their related entities (collectively, "Deloitte") were approximately (in thousands):

Audit fees (1) $ 1,798 $ 2,757

Audit-related fees (2) 2 2

Tax fees (2) 795 1,225

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(1) These are fees for professional services performed by Deloitte for the audit of our annual financial statements and review of financial statements included in our Form 10-Q filings, as well as services that are normally provided in connection with statutory and regulatory filings or engagements.

(2) These are fees related to accounting research database subscription services.

(2) These are fees for professional services performed by Deloitte with respect to tax compliance, tax advice and tax planning.

Fees incurred principally relate to review of tax returns, preparation of tax returns or supporting documentation and consultation with regard to various tax planning issues.

(3) These are fees related to accounting research database subscription services.

Our Audit Committee's charter provides that the Audit Committee, or the chair of the Audit Committee, must pre-approve any audit or non-audit service provided to us by Deloitte, unless the engagement is entered into pursuant to appropriate pre-approval policies established by the Audit Committee or if the service falls within available exceptions under SEC rules.

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Consolidated Statements of Operations

Consolidated Statements of Stockholders' and Member s ' Equity

Consolidated Statements of Stockholders' and Members ' Equity

Consolidated Statements of Cash Flows

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All other financial statement schedules are omitted since they are not required or are not applicable, or the required information is included in the Consolidated Financial Statements or notes thereto.

The exhibits listed on the accompanying Exhibit Index are filed or incorporated as part of this report and such Exhibit Index is incorporated herein by reference.

The exhibits listed on the accompanying Exhibit Index are filed or incorporated by reference as part of this report and such Exhibit Index is incorporated herein by reference.

FORM 10-K SUMMARY

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Amended and Restated Certificate of Incorporation of Portillo's Inc.

(incorporated by reference to the Company's Form 10- Q filed on November 1 8 , 202 1 ).

Amended and Restated Bylaws of Portillo’s Inc.

Description of Capital Stock

(incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).

Description of Capital Stock (incorporated by reference to the Company's Form 10-K filed on March 10, 2022).

First Lien Credit Agreement, dated as of August 1, 2014, among Portillo's Holdings, LLC, as Borrower, PHD Intermediate LLC, UBS AG, Stamford Branch, as administrative agent and collateral agent and ledgers from time to time party thereto (incorporated by reference to the Company's Registration Statement on Form S-1 filed on September 27, 2021).

6 unchanged sentences

Portillo’s Inc.

2021 Equity Incentive Plan

2021 Equity Incentive Plan (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).

Registration Rights Agreement, dated as of October 21, 2021, by and among Portillo's Inc.

and the other parties hereto

and the other parties hereto (incorporated by reference to the Company's Form 10-K filed on March 10, 2022).

Form of Restricted Stock Unit Award Agreement under Portillo’s Inc.

2021 Equity Incentive Plan

2021 Equity Incentive Plan (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).

Form of Option Award Agreement under Portillo’s Inc.

2021 Equity Incentive Plan

2021 Equity Incentive Plan (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).

Form of 2021 Executive Officer and Director Indemnification Agreement for Portillo’s Inc.

1 unchanged sentence

Employment Agreement between PHD Group Holdings LLC and Michael Osanloo, entered into as of August 3, 2018 (incorporated by reference to the Company's Registration Statement on Form S-1 filed on September 27, 2021).

Employment Agreement between PHD Group Holdings LLC and Sherri Abruscato, entered into as of August 1, 2014 (incorporated by reference to the Company's Registration Statement on Form S-1 filed on September 27, 2021).

Letter Agreement between PHD Group Holdings LLC and Michelle Hook entered into as of November 14, 2020 (incorporated by reference to the Company's Registration Statement on Form S-1 filed on September 27, 2021).

Portillo's Inc.

Form 10-K | 112

Letter Agreement between PHD Group Holdings LLC and Jill Waite entered into as of May 22, 2019 (incorporated by reference to the Company's Registration Statement on Form S-1 filed on September 27, 2021).

Tax Receivable Agreement among Portillo’s Inc.

and the Parties named therein

Second Amended and Restated LLC Agreement of PHD Group Holdings LLC

and the Parties named therein (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).

Second Amended and Restated LLC Agreement of PHD Group Holdings LLC (incorporated by reference to the Company's Form 10-Q filed on November 18, 2021).

† Portillo's Inc.

Employee Stock Purchase Plan (incorporated by reference to the Company's Form 10-Q filed on August 4, 2022)

Form of Stock and Unit Purchase Agreement by and among Portillo’s Inc.

and the parties named therein (incorporated by reference to the Company's Registration Statement on S-1 filed on August 8, 2022)

† Form of Restricted Stock Award Agreement under Portillo’s Inc.

2021 Equity Incentive Plan

Credit Agreement, dated as of February 2, 2023, by and among PHD Intermediate LLC, Portillo’s Holdings, LLC, the Subsidiaries of the Borrower Party, Fifth Third Bank, National Association as Administrative Agent, L/C Issuer and Swing Line Lender and the other lenders party thereto (incorporated by reference to the Company's Current Report on Form 8-K filed on February 6, 2023).

Subsidiaries of Portillo's Inc.

44 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures