Michael K. Murtaugh

About Michael K. Murtaugh

Michael K. Murtaugh is Vice President, General Counsel, Secretary, and a Director of BAB, Inc., serving in these roles since the company’s inception; prior to joining BAB, he was a partner at Baker & McKenzie from 1971 to 1993 . He is 80 years old as of the 2025 proxy and is responsible for franchise regulatory matters, negotiating and enforcing franchise/area development agreements, and broader acquisition/business arrangements . BAB’s executive bonus program for executive-director roles (including Murtaugh) references measurable financial criteria such as company profitability and system-wide same-store sales; the company also maintains a clawback policy aligned with Dodd-Frank and SEC rules . For context, BAB’s FY 2024 revenues were $3.545 million versus $3.509 million in FY 2023, and EBITDA was $0.681 million versus $0.619 million, respectively; recent quarterly revenues in FY 2025 have ranged from ~$0.757–$0.808 million in Q1–Q2 and $0.769 million in Q3 (see table; values from S&P Global)* .

Past Roles

External Roles

• No additional public company directorships or committee roles are disclosed in BAB’s 2024 and 2025 proxy statements or FY 2024 10-K .

Fixed Compensation

• The company reports no employment agreements with any executive officers (implies no fixed contractual base/bonus guarantees beyond annual decisions) .

Performance Compensation

• Design: Executive officers who are directors (including Murtaugh) have bonuses determined using measurable financial criteria approved by the Compensation Committee, including company profitability and system-wide same-store sales; CFO bonuses are at CEO discretion .
• Outstanding equity awards: None (no RSUs/PSUs/options outstanding as of November 30, 2024) .

Notes: A portion of bonuses was waived by Mr. Murtaugh (and the CEO) in FY 2023 and FY 2024 . No equity incentives were granted or outstanding, reducing multi-year vesting-related overhang .

Equity Ownership & Alignment

Employment Terms

• Employment agreements: None disclosed for any executive officers .
• Severance / Change-of-Control: No severance or change-of-control terms for Murtaugh are disclosed in the proxies or FY 2024 10-K; no equity acceleration applies given absence of outstanding equity .
• Clawback: BAB maintains an executive compensation clawback policy allowing recovery of incentive-based pay in the event of a material restatement or misconduct; administered by the Audit Committee; generally covers up to 3 years .
• Insider Trading Policy: Prohibits trading while in possession of MNPI and restricts trading in blackout periods; Section 16 individuals include Murtaugh .

Board Governance

• Board and roles: Murtaugh serves as a Director and as Vice President/General Counsel/Secretary (executive-director, not independent) . The four 2025 director nominees included Evans, Murtaugh, Feldman, and Lentz; Feldman and Lentz are independent for Audit purposes .
• Committees:
  • Compensation Committee: Feldman (Chair), Lentz, and CEO Evans; function is to set executive compensation and recommend to the Board .
  • Audit Committee: Feldman and Lentz (both independent); met four times in FY 2024; both deemed financial experts .
• Board leadership structure: CEO Evans also serves as Chairman; the Board believes dual roles promote consistent leadership; risk oversight allocated across Board/committees .
• Attendance: The Board met three times in FY 2024; all members attended; all Board members were present at all meetings except Mr. Lentz did not attend the Company’s Annual Meeting .
• Director compensation: Non-employee directors receive a $1,500 annual retainer and $400 per Board/Compensation Committee meeting and $400 for the Annual Audit Committee and Annual Shareholder Meetings; employee directors (Evans, Murtaugh) are not listed in director fee tables .

Director Service History, Committees, and Dual-Role Implications

• Service: Murtaugh has served as a Director since the Company’s inception .
• Committees: Not listed as a member of Audit or Compensation Committees (which are comprised of Feldman/Lentz and Feldman/Lentz/Evans, respectively) .
• Independence: As an executive officer and director, Murtaugh is not independent; the Board has two independent directors (Feldman and Lentz) .
• Dual-role governance considerations: CEO Evans also chairs the Board, concentrating leadership; while the Board cites benefits of this structure, investors typically scrutinize independence given only two independent directors and the CEO’s seat on the Compensation Committee .

Say-on-Pay & Shareholder Feedback

• 2024 Say-on-Pay: Approved (For 3,856,317; Against 42,030; Abstain 59,798; Broker Non-Votes 1,094,345) .
• Frequency of Say-on-Pay: Shareholders recommended a three-year frequency (1,613,764 for 1-year; 119,385 for 2-year; 2,196,303 for 3-year; 28,693 abstain); the Company will include Say-on-Pay every three years following the shareholder recommendation .

Related Party Transactions and Compliance

• Related party transactions: None in FY 2024 (and FY 2023) .
• Section 16 compliance: The Company believes all Section 16(a) filing requirements were met for FY 2024 and FY 2023 .

Company Performance Context (Revenues and EBITDA)

Values marked with an asterisk (*) retrieved from S&P Global.

Investment Implications

• Pay-for-performance alignment: Murtaugh’s compensation is modest and predominantly cash-based, with bonuses tied to measurable financial criteria (profitability, system-wide same-store sales) and with instances of voluntary bonus waivers; lack of equity awards reduces dilution and vesting-driven selling pressure .
• Skin-in-the-game: A significant 13.33% personal ownership aligns incentives with shareholders; absence of outstanding options/RSUs suggests limited insider selling related to vesting events; no pledging disclosures were found in the proxies/10-K .
• Retention and severance risk: With no employment agreements and no disclosed severance/change-of-control protections, retention depends on ongoing cash compensation and board decisions; clawback provisions add accountability for incentive pay .
• Governance watchpoints: CEO also serves as Chairman and sits on the Compensation Committee; with only two independent directors, investors may monitor the balance of oversight versus management influence, especially on pay decisions .
• Performance backdrop: Revenues and EBITDA have increased year-over-year into FY 2024, with stable sub-$1 million quarterly revenue cadence in FY 2025 to date, supporting measured bonus outcomes without equity reliance (see tables; values from S&P Global and filings)* .